EXHIBIT 2.1
Agreement and Plan of Merger
dated as of December 19, 1999
among
ISLE OF CAPRI CASINOS, INC.,
BRDC, INC.
and
THE SHAREHOLDERS OF BRDC, INC.
TABLE OF CONTENTS
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ARTICLE I
The Merger
Section 1.1. The Merger................................................... A-1
Section 1.2. Effective Time of the Merger................................. A-1
Section 1.3. Closing...................................................... A-2
Section 1.4. Effect of the Merger......................................... A-2
Section 1.5. Certificate of Incorporation and Bylaws of the Surviving
Corporation.............................................................. A-2
Section 1.6. Directors and Officers of the Surviving Corporation.......... A-2
Section 1.7. Subsidiaries of the Surviving Corporation.................... A-2
ARTICLE II
Effect of the Merger on Securities of the Constituent Corporations
Section 2.1. Conversion of Securities..................................... A-2
Section 2.2. Review of Merger Consideration Calculation................... A-4
Section 2.3. Exchange of Certificates..................................... A-5
ARTICLE III
Representations and Warranties of the Company and the Shareholders
Section 3.1. Organization of the Company and its Subsidiaries............ A-5
Section 3.2. Capitalization.............................................. A-6
Section 3.3. Authority; No Conflict; Required Filings and Consents....... A-6
Section 3.4. Public Filings; Financial Statements........................ A-7
Section 3.5. No Undisclosed Liabilities.................................. A-7
Section 3.6. Absence of Certain Changes or Events........................ A-8
Section 3.7. Taxes....................................................... A-8
Section 3.8. Real Property, Title and Related Matters.................... A-10
Section 3.9. Title to Personal Property; Liens........................... A-11
Section 3.10. Intellectual Property....................................... A-11
Section 3.11. Agreements, Contracts and Commitments....................... A-11
Section 3.12. Litigation.................................................. A-12
Section 3.13. Environmental Matters....................................... A-12
Section 3.14. Employee Benefit Plans...................................... A-13
Section 3.15. Compliance.................................................. A-14
Section 3.16. Labor Matters............................................... A-15
Section 3.17. Insurance................................................... A-15
Section 3.18. Year 2000................................................... A-15
Section 3.19. Brokers..................................................... A-15
Section 3.20. Tax Treatment............................................... A-15
Section 3.21. Acquisition for Investment.................................. A-15
Section 3.22. Proxy Statement............................................. A-16
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ARTICLE IV
Representations and Warranties of Buyer
Section 4.1. Organization of Buyer........................................ A-16
Section 4.2. Authority; No Conflict; Required Filings and Consents........ A-16
Section 4.3. Public Filings; Financial Statements......................... A-17
Section 4.4. Absence of Certain Changes or Events......................... A-17
Section 4.5. Litigation................................................... A-18
Section 4.6. Voting Requirements.......................................... A-18
Section 4.7. Tax Treatment................................................ A-18
Section 4.8. Opinion of Financial Advisor................................. A-18
Section 4.9. Lady Luck Waiver............................................. A-18
ARTICLE V
Covenants
Section 5.1. Conduct of Business......................................... A-18
Section 5.2. Cooperation; Notice; Cure................................... A-21
Section 5.3. Access to Information....................................... A-21
Section 5.4. Governmental Approvals...................................... A-21
Section 5.5. Publicity................................................... A-22
Section 5.6. Indemnification............................................. A-22
Section 5.7. Further Assurances and Actions.............................. A-23
Section 5.8. Tax-free Reorganization..................................... A-23
Section 5.9. Loan Repayment.............................................. A-23
Section 5.10. Related Party Agreements.................................... A-23
Section 5.11. LL Bettendorf Distributions................................. A-23
Section 5.12. Other Distributions......................................... A-24
Section 5.13. Shareholder Guarantees...................................... A-24
Section 5.14. Resale Restrictions......................................... A-24
Section 5.15. Legend...................................................... A-24
Section 5.16. Proxy Statement............................................. A-24
Section 5.17. Special Meeting............................................. A-24
Section 5.18. Registration Rights......................................... A-25
ARTICLE VI
Conditions to the Merger
Section 6.1. Conditions to Each Party's Obligation to Effect the Merger... A-25
Section 6.2. Additional Conditions to Obligations of the Shareholders and
the Company.............................................................. A-25
Section 6.3. Additional Conditions to Obligations of Buyer................ A-26
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ARTICLE VII
Termination and Amendment
Section 7.1. Termination.................................................. A-26
Section 7.2. Effect of Termination........................................ A-27
Section 7.3. Fees and Expenses............................................ A-27
Section 7.4. Amendment.................................................... A-28
Section 7.5. Extension; Waiver............................................ A-28
ARTICLE VIII
Miscellaneous
Section 8.1. Survival of Representations, Warranties, Covenants and
Agreements............................................................... A-28
Section 8.2. Notices...................................................... A-28
Section 8.3. Interpretation............................................... A-29
Section 8.4. Counterparts................................................. A-29
Section 8.5. Entire Agreement; No Third-Party Beneficiaries............... A-29
Section 8.6. Governing Law................................................ A-29
Section 8.7. Assignment................................................... A-29
Section 8.8. Severability; Enforcement.................................... A-30
Section 8.9. Specific Performance......................................... A-30
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Index of Defined Terms
The following terms have the respective meanings specified in the indicated
Sections of the Agreement:
Agreement
Term Section
---- -----------
Additional Tax Distributions.................. 5.11
Adjustment Statement.......................... 2.2(a)
Aggregate Merger Consideration.................2.1(d)
Agreement .................................... Recitals
Allocated Net Income ......................... 2.1(d)
Articles of Merger............................ 1.2
BRDC, LC ..................................... Recitals
Buyer......................................... Recitals
Buyer Balance Sheet........................... 4.3(b)
Buyer Common Stock............................ 2.1(a)
Buyer Disclosure Schedule..................... Article IV
Buyer Indemnified Parties..................... 5.6(b)
Buyer Material Adverse Effect................. 4.1
Buyer SEC Reports............................. 4.3(a)
Buyer Share................................... 2.1(a)
Buyer Share Price............................. 2.1(d)
Buyer Special Meeting......................... 5.16
Buyer Stockholder Approval.................... 4.6
Calculation of Merger Consideration........... 2.1(a)
Case.......................................... 5.6(b)
Cash Distribution Amount...................... 2.1(d)
Certificate of Merger......................... 1.2
CIBC.......................................... 4.8
Closing....................................... 1.3
Closing Date.................................. 1.3
Code.......................................... Recitals
Company....................................... Recitals
Company Audited Financial Statements.......... 3.4(b)
Company Balance Sheet......................... 3.4(c)
Company Closing Balance Sheet................. 2.1(d)
Company Common Stock.......................... 2.1
Company Disclosure Schedule................... Article III
Company Indebtedness.......................... 2.1(d)
Company Indebtedness Adjustment............... 2.1(d)
Company Material Adverse Effect............... 3.1
Company Material Contracts.................... 3.11(a)
Company Underwriter........................... 5.18
DGCL.......................................... 1.1
Discretionary Distributions................... 5.11
DNR Leased Property........................... 3.8(c)
do not ever cancel............................ 3.18
Effective Time................................ 1.2
Employee Plans................................ 3.14(a)
Encumbrances.................................. 3.8(c)
Environmental Law............................. 3.13(b)
Environmental Reports......................... 3.13(a)
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Agreement
Term Section
---- -----------
ERISA............................................................... 3.14(a)
ERISA Affiliate..................................................... 3.14(a)
Exchange Act........................................................ 3.3(c)
Exchange Ratio...................................................... 2.1(d)
GAAP................................................................ 2.1(d)
Gaming Laws......................................................... 3.15(a)
Governmental Approvals.............................................. 5.4
Governmental Entity................................................. 3.3(c)
Green Bridge........................................................ 3.13(a)
Hazardous Substance................................................. 3.13(b)
HSR Act............................................................. 3.3(c)
IBCA................................................................ 1.1
include, includes or including...................................... 8.3
Indebtedness........................................................ 3.11(a)
Independent Accountant.............................................. 2.2(a)
IRS................................................................. 3.7(c)
knowledge........................................................... Article III
Lady Luck........................................................... Recitals
Lady Luck Merger Agreement.......................................... Recitals
Lady Luck SEC Reports............................................... 3.4(b)
Lady Luck Transaction............................................... Recitals
Liens............................................................... 3.1
LLB Closing Statement of Operations................................. 2.1(d)
LL Bettendorf....................................................... Recitals
LL Bettendorf Statement of Changes in Members Equity................ 2.1(d)
Losses.............................................................. 5.6(a)
made available...................................................... 8.3
Merger.............................................................. Recitals
Merger Consideration................................................ 2.1(a)
Multiemployer Plan.................................................. 3.14(e)
Net Adjustment Amount............................................... 2.1(d)
Notifying Party..................................................... 5.4(a)
Outside Date........................................................ 7.1(b)
Owned Real Property................................................. 3.8(c)
PBGC................................................................ 3.14(f)
Permits............................................................. 3.15(a)
Permitted Distributions............................................. 5.11
Permitted Encumbrances.............................................. 3.8(c)
prohibited transactions............................................. 3.14(c)
Proxy Statement..................................................... 5.15
Purchase Agreement.................................................. 5.6(d)
SEC................................................................. 3.3(c)
Securities Act...................................................... 4.3(a)
Services............................................................ 3.18
Settlement Amount................................................... 2.2(a)
Settlement Amount Certificate....................................... 2.2(a)
Settlement Date..................................................... 2.2(c)
Shareholder Indemnified Parties..................................... 5.6(a)
Shareholders........................................................ Recitals
single employer..................................................... 3.14(a)
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Agreement
Term Section
---- ---------
strategic alliances................... 3.11(a)
Subsidiary............................ 3.1
Surviving Corporation................. 1.1
Tax or Taxes.......................... 3.7(a)
Terminating Buyer Breach...............7.1(e)
Terminating Company Breach............ 7.1(d)
the date hereof....................... 8.3
the date of this Agreement............ 8.3
Total Securities...................... 5.18
Transactions.......................... Recitals
Unreimbursed Amounts.................. 5.6(c)
Voting Debt........................... 3.2(c)
Welfare Plan.......................... 3.14(g)
without limitation.................... 8.3
Year 2000 Ready....................... 3.18
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AGREEMENT AND PLAN OF MERGER
Agreement and Plan of Merger (the "Agreement"), dated as of December 19,
1999, by and among Isle of Capri Casinos, Inc., a Delaware corporation
("Buyer"), BRDC, Inc., an Iowa corporation (the "Company"), and ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
(collectively, the "Shareholders").
Whereas, the Company, through its wholly owned subsidiary Bettendorf
Riverfront Development Company, L.C., an Iowa limited liability company
("BRDC, LC"), owns 50% of the membership interests of Lady Luck ▇▇▇▇▇▇▇▇▇▇,
▇.▇., an Iowa limited liability company ("LL Bettendorf");
Whereas, Buyer and Lady Luck Gaming Corporation ("Lady Luck") have entered
into an Agreement and Plan of Merger (the "Lady Luck Merger Agreement"),
pursuant to which Lady Luck would become a wholly owned subsidiary of Buyer
(the "Lady Luck Transaction");
Whereas, upon the closing of the Lady Luck Transaction (the consummation of
which is subject to various conditions precedent) and subject to the terms and
conditions set forth herein, Buyer desires to acquire from the Shareholders,
and the Shareholders desire to transfer to Buyer, all of the outstanding
capital stock of the Company;
Whereas, the Board of Directors of the Company has determined that the
merger of the Company with and into Buyer, upon the terms and subject to the
conditions set forth in this Agreement (the "Merger"), is fair to, and in the
best interests of, the Company and the Shareholders;
Whereas, the Board of Directors of Buyer, acting through a special
committee thereof, has determined that the Merger is fair to, and in the best
interests of, Buyer and its stockholders.
Whereas, the Boards of Directors of Buyer and the Company and the
Shareholders have each approved and adopted this Agreement and approved the
Merger and the other transactions contemplated hereby (the "Transactions");
and
Whereas, the parties intend, by executing this Agreement, to adopt a plan
of reorganization within the meaning of Section 368 of the Internal Revenue
Code of 1986, as amended (the "Code"), and to cause the Merger to qualify as a
reorganization under the provisions of Section 368(a)(1)(A) of the Code.
Now, Therefore, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth below, the
parties agree as follows:
ARTICLE I
The Merger
Section 1.1. The Merger. Upon the terms and subject to the provisions of
this Agreement and in accordance with Section 490.1101 of the Iowa Business
Corporation Act ("IBCA") and Section 252 of the Delaware General Corporation
Law (the "DGCL"), at the Effective Time (as defined in Section 1.2), the
Company shall be merged with and into Buyer. As a result of the Merger, the
separate corporate existence of the Company shall cease and Buyer shall
continue as the surviving corporation (the "Surviving Corporation").
Section 1.2. Effective Time of the Merger. Subject to the provisions of
this Agreement (including Section 7.1 hereof), a certificate of merger (the
"Certificate of Merger") and articles of merger ("Articles of Merger") with
respect to the Merger in appropriate form shall be duly prepared, executed and
acknowledged and thereafter delivered to the Secretary of State of the State
of Delaware and the Secretary of State of the State of Iowa, as applicable,
for filing, as provided in the DGCL and IBCA, as applicable, as early as
practicable on the Closing
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Date (as defined in Section 1.3). The Merger shall become effective at the
later of the date of filing of the Certificate of Merger or the Articles of
Merger (the "Effective Time").
Section 1.3. Closing. The closing of the Merger (the "Closing") will take
place at such time and place to be agreed upon by the parties hereto, on a
date to be specified by Buyer and the Company, which shall be no later than
the third business day after satisfaction or, if permissible, waiver of the
conditions set forth in Article VI and on the closing date of the Lady Luck
Transaction (the "Closing Date"), unless another date is agreed to by Buyer
and the Company.
Section 1.4. Effect of the Merger. Upon becoming effective, the Merger
shall have the effects set forth in the IBCA and DGCL. Without limiting the
generality of the foregoing, and subject thereto, at the Effective Time, all
properties, rights, privileges, powers and franchises of the Company and Buyer
shall vest in the Surviving Corporation, and all debts, liabilities and duties
of the Company and Buyer shall become the debts, liabilities and duties of the
Surviving Corporation.
Section 1.5. Certificate of Incorporation and Bylaws of the Surviving
Corporation. At the Effective Time, the Certificate of Incorporation and
Bylaws of the Buyer in effect immediately prior to the Effective Time shall be
the Certificate of Incorporation and Bylaws of the Surviving Corporation, in
each case until duly amended in accordance with applicable law.
Section 1.6. Directors and Officers of the Surviving Corporation. The
directors of Buyer immediately prior to the Effective Time shall be the
initial directors of the Surviving Corporation, each to hold office in
accordance with the Certificate of Incorporation and Bylaws of the Surviving
Corporation. The officers of Buyer immediately prior to the Effective Time
shall be the initial officers of the Surviving Corporation, each to hold
office in accordance with the Certificate of Incorporation and Bylaws of the
Surviving Corporation.
Section 1.7. Subsidiaries of the Surviving Corporation. The Surviving
Corporation may undertake transactions having the effect of reorganizing the
structure of the Subsidiaries of the Company from time to time after the
Effective Time provided that such transactions shall not disqualify the Merger
as a reorganization under the provisions of Section 368(a)(1)(A) of the Code.
ARTICLE II
Effect of the Merger on Securities of
the Constituent Corporations
Section 2.1. Conversion of Securities. At the Effective Time, by virtue of
the Merger and without any action on the part of any of the parties hereto or
the holders of any of the following:
(a) Company Common Stock. Each share of common stock, no par value per
share, of the Company ("Company Common Stock") issued and outstanding
immediately prior to the Effective Time (other than shares to be canceled
and retired in accordance with Section 2.1(b)), together with all rights in
respect thereto, shall be converted into and become exchangeable for the
number of shares of Buyer Common Stock, par value $0.01 per share ("Buyer
Common Stock") (each share of Buyer Common Stock, a "Buyer Share," and
collectively, the "Buyer Shares"), as calculated by the Exchange Ratio (as
defined in Section 2.1(d)) (the "Merger Consideration"); provided however,
that the number of shares of Buyer Common Stock issued shall not exceed
6,300,000 shares as provided for in Section 5.11. The Company shall deliver
to Buyer at or before the Closing its good faith estimate of the
calculation of Merger Consideration prepared consistent with the terms
defined in Section 2.1(d) (the "Calculation of Merger Consideration") and
the number of Buyer Shares issued and delivered at Closing shall be based
upon such estimate. Fractional shares shall not be issued, and each
Shareholder shall receive in exchange for each tendered share of Company
Common Stock the nearest number of whole Buyer Shares determined by the
Exchange Ratio. As of the Effective Time, all shares of Company Common
Stock upon which the Merger Consideration is payable
A-2
]pursuant to this Section 2.1(a) shall no longer be outstanding and shall
automatically be canceled and retired and shall cease to exist, and each
holder of a certificate representing any such shares shall cease to have
any ownership or other rights with respect thereto, except the right to
receive the Merger Consideration in exchange for such shares upon the
surrender of such certificate in accordance with Section 2.3.
(b) Cancellation of Treasury Stock. All shares of Company Common Stock
that are owned by the Company as treasury stock shall be canceled and
retired and shall cease to exist, and no consideration shall be delivered
in exchange therefor.
(c) Adjustments to Merger Consideration. The Merger Consideration shall
be adjusted to reflect fully the effect of any stock split, reverse split,
stock dividend (including any dividend or distribution of securities
convertible into Company Common Stock or Buyer Common Stock, as
applicable), reorganization, recapitalization or any other like change with
respect to Company Common Stock or Buyer Common Stock occurring after the
date hereof and prior to the Effective Time.
(d) As used in this Section 2.1, the following terms shall have the
following meanings:
"Exchange Ratio" shall mean the quotient of the Aggregate Merger
Consideration divided by the number of shares of Company Common Stock
outstanding immediately prior to the Closing.
"Aggregate Merger Consideration" shall mean 6,210,000 shares of
Buyer Common Stock as increased (if the Net Adjustment Amount is
positive) or decreased (if the Net Adjustment Amount is negative) by
the quotient of the Net Adjustment Amount divided by the Buyer Share
Price.
"Net Adjustment Amount" shall mean (i) the Allocated Net Income,
minus (ii) the Company Indebtedness Adjustment, minus (iii) the Cash
Distribution Amount.
"Allocated Net Income" shall be equal to one-half of the net income
of LL Bettendorf from October 1, 1999 through and including the
Effective Time as derived from the LLB Closing Statement of Operations.
"LLB Closing Statement of Operations" shall mean the consolidated
statement of operations of LL Bettendorf and its subsidiary for the
period from October 1, 1999 through and including the Effective Time
which shall be prepared by LL Bettendorf in accordance with generally
accepted accounting principles ("GAAP") applied on a basis consistent
with the LL Bettendorf Statement of Operations for the year ended
December 31, 1998.
"Company Indebtedness Adjustment" shall be the difference between
(i) the Company Indebtedness and (ii) $10,200,000, it being understood
that if the Company Indebtedness is less than $10,200,000, the Company
Indebtedness Adjustment shall be a negative number.
"Company Indebtedness" shall mean the total indebtedness of the
Company and BRDC, LC at the Effective Time as derived from the Company
Closing Balance Sheet and shall not include any indebtedness of LL
Bettendorf.
"Company Closing Balance Sheet" shall mean the consolidated balance
sheet of the Company which shall be prepared by the Company in
accordance with GAAP applied on a basis consistent with the Company
Audited Financial Statements for the year ended December 31, 1998 as of
the Effective Time.
"Cash Distribution Amount" shall be equal to the sum of all amounts
distributed by LL Bettendorf to BRDC, LC after September 30, 1999
through and including the Effective Time (excluding payments of rent
and management fees under existing agreements) as reflected on the
Company Statement of Shareholders' Equity.
"LL Bettendorf Statement of Changes in Members' Equity" shall mean
the consolidated statement of changes in members' equity of LL
Bettendorf which shall be prepared as of the Effective Time in
accordance with GAAP applied on a basis consistent with the audited
balance sheet of LL Bettendorf as of December 31, 1998 for the period
from October 1, 1999 through the Effective Time which shall set forth
all distributions to its members.
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"Buyer Share Price" shall be equal to $9.486 per share (the average
per share closing price of the Buyer's Common Stock as quoted on the
Nasdaq Stock Market for the forty-five (45) Nasdaq Stock Market trading
days ended September 22, 1999).
Section 2.2. Review of Merger Consideration Calculation.
(a) The Shareholders shall deliver to Buyer their final Calculation of
Merger Consideration prepared consistent with the terms defined in Section
2.1(d) within 30 days of the Effective Time. The Buyer shall have until 30
days after receipt of the Calculation of Merger Consideration to review the
Calculation of Merger Consideration prepared by the Shareholders and propose
any adjustments thereto, but only on the basis that the Calculation of Merger
Consideration was not made on the basis provided for in Section 2.1(d),
including, without limitation, that the LLB Closing Statement of Operations
and Company Closing Balance Sheet were not prepared in accordance with GAAP,
consistently applied. All adjustments proposed by the Buyer to the Calculation
of Merger Consideration shall be set out in detail in a written statement
delivered to the Shareholders (the "Adjustment Statement"). If within 30 days
after receipt by the Buyer of the Calculation of Merger Consideration, the
Shareholders have not received an Adjustment Statement from the Buyer, the
Calculation of Merger Consideration delivered by the Shareholders shall be
final and binding on the parties. If the Shareholders receive an Adjustment
Statement from Buyer during such 30 day period, the Shareholders and the Buyer
shall use reasonable efforts to resolve the differences, but if a final
resolution thereof is not obtained within 30 days after the Buyer delivers to
the Shareholders the Adjustment Statement, Buyer and the Shareholders shall
promptly retain Deloitte & Touche LLP or another nationally recognized
independent accounting firm acceptable to both the Shareholders and Buyer (the
"Independent Accountant") to resolve any remaining disputes related to the
Adjustment Statement. Either the Shareholders or Buyer may retain the
Independent Accountant upon the expiration of such 30-day period. If the
Independent Accountant is retained, then (i) the Shareholders and Buyer shall
each submit to the Independent Accountant in writing not later than 15 days
after the Independent Accountant is retained their respective positions with
respect to the Adjustment Statement, together with such supporting
documentation as they deem necessary or as the Independent Accountant
requests, (ii) the Independent Accountant shall, within 30 days after
receiving the positions of both the Shareholders and Buyer and all
supplementary supporting documentation requested by the Independent Accountant
or if such information is not received, 30 days after the Independent
Accountant's written request, render its decision as to the disputed items,
which decision shall be final and binding on, and nonappealable by, the
Shareholders and Buyer. The fees and expenses of the Independent Accountant
shall be paid one half by Buyer and one half by the Shareholders. The decision
of the Independent Accountant shall also include a certificate of the
Independent Accountant setting forth the final amount of the Merger
Consideration and the Settlement Amount (the "Settlement Amount Certificate").
The Calculation of Merger Consideration shall be deemed to include all
proposed adjustments not disputed by the Buyer and those adjustments accepted
or made by the decision of the Independent Accountant in resolving the
disputed items (the "Settlement Amount").
(b) On or before the Settlement Date (as hereinafter defined), either:
(i) If the Settlement Amount is greater than zero, Buyer shall deliver
the Settlement Amount in Buyer Shares (the number of Buyer Shares
determined by dividing the Settlement Amount by the Buyer Share Price) to
the Shareholders; or
(ii) If the Settlement Amount is less than zero, Buyer shall make a
claim against the Buyer Shares distributed to the Shareholders (the number
of Buyer Shares determined by dividing the Settlement Amount by the Buyer
Share Price) and the Shareholders shall tender to the Buyer such number of
Buyer Shares.
(c) "Settlement Date" shall mean the following, as the case may be:
(i) If Buyer has not timely delivered an Adjustment Statement to the
Shareholders, 30 days after the date Buyer receives the Calculation of
Merger Consideration;
(ii) If the Shareholders and Buyer have any disputes regarding the
Adjustment Statement and resolve those disputes, five business days after
such resolution;
A-4
(iii) Subject to clause (ii) above, if the Independent Accountant has
been retained, five business days after the date of the Independent
Accountant's decision; or
(iv) Such other date as may be agreed between the Shareholders and
Buyer.
Section 2.3. Exchange of Certificates. At the Closing, (a) the Shareholders
shall deliver to Buyer certificates representing shares of Company Common
Stock, duly endorsed (or accompanied by duly executed stock powers), with
signatures guaranteed by a commercial bank or by a member firm of the New York
Stock Exchange, for transfer to Buyer and (b) Buyer shall deliver to each
Shareholder a Certificate representing the number of whole shares of Buyer
Common Stock that such Shareholder is entitled to receive pursuant to Section
2.1(a).
ARTICLE III
Representations and Warranties of the Company and the Shareholders
The Company and the Shareholders jointly and severally represent and
warrant to Buyer that the statements contained in this Article III are true
and correct except as set forth in the disclosure schedule delivered by the
Company and the Shareholders to Buyer on or before the date of this Agreement
(the "Company Disclosure Schedule"). Any reference in the Agreement to the
"Company's knowledge" or the "Company's best knowledge," or to "the best of
the Company's knowledge," or words of similar import, shall be deemed a
reference to the actual knowledge of any of (i) the Shareholders and (ii)
▇▇▇▇▇▇ ▇. ▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇. The Company Disclosure Schedule has
been prepared based upon the foregoing definition.
Section 3.1. Organization of the Company and its Subsidiaries. The Company
and each of its Subsidiaries (as defined below) is duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
organization and has all requisite corporate or limited liability company
power and authority to carry on its business as now being conducted and as
will be conducted until the Effective Time. Each Subsidiary of the Company is
listed on Section 3.1 of the Company Disclosure Schedule. The Company and each
of its Subsidiaries are duly qualified or licensed to do business and are in
good standing in each jurisdiction in which the property owned, leased or
operated by it or the nature of the business conducted by it makes such
qualification or licensing necessary, except where the failure to be so
qualified, licensed or in good standing would not have a material adverse
effect on the business, properties, condition (financial or otherwise),
prospects or results of operations of the Company and each of its
Subsidiaries, taken as a whole (a "Company Material Adverse Effect"). The
Company has delivered to Buyer a true and correct copy of the Articles of
Incorporation and bylaws of the Company and the Articles of Incorporation, or
Articles of Organization and Operating Agreement of each of its Subsidiaries,
in each case as amended to the date of this Agreement. Assuming the receipt of
all regulatory approvals required to be obtained by Buyer, the respective
organizational documents of the Company and each of its Subsidiaries do not
contain any provision that would limit or otherwise restrict the ability of
Buyer, following the Effective Time, from owning or operating the business
conducted by the Company and its Subsidiaries on the same basis as such
business has been operated to the date hereof by the Company and its
Subsidiaries. Except as set forth on the Company Disclosure Schedule, all the
outstanding shares of capital stock of, or membership or other equity
interests in, each of the Company's Subsidiaries, which are owned by the
Company or its Subsidiaries, have been validly issued and are fully paid and
nonassessable and are owned directly or indirectly by the Company, free and
clear of all pledges, claims, liens, charges, encumbrances, security interests
and rights of others of any kind or nature whatsoever (collectively, "Liens")
and free of any other restriction not set forth in the organizational
documents (including any restriction on the right to vote, sell or otherwise
dispose of such capital stock or interests). As used in this Agreement, the
term "Subsidiary" means, with respect to any party, any corporation or other
organization, whether incorporated or unincorporated, of which (i) such party
or any other Subsidiary of such party is a general partner or (ii) at least
fifty percent (50%) of the securities or other interests having by their terms
ordinary voting power to elect a majority of the Board of Directors or others
performing similar functions with respect to such corporation or other
organization is directly or indirectly owned or controlled by such party or by
any one or more of its Subsidiaries, or by such
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party and one or more of its Subsidiaries; and for the avoidance of doubt the
term "Subsidiary" includes, in the case of the Company, BRDC, LC, LL
Bettendorf and Lady Luck ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Corporation.
Section 3.2. Capitalization.
(a) The authorized capital stock of the Company consists entirely of 10,000
shares of Common Stock, with no par value per share. As of the date hereof,
400 shares of Common Stock were issued and outstanding, all of which are
validly issued, fully paid and nonassessable. The Company directly owns 100%
of the membership interests in BRDC, LC. As of the date hereof, BRDC, LC owns
50% of LL Bettendorf's outstanding membership interests, and all such
membership interests owned by BRDC, LC are validly issued, fully paid and
nonassessable. LL Bettendorf has a single Subsidiary, Lady Luck ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ Corporation.
(b) Except as disclosed in Section 3.2(b) of the Company Disclosure
Schedule, there are no obligations, contingent or otherwise, of the Company or
any of its Subsidiaries to repurchase, redeem or otherwise acquire any shares
of or membership interests in or the capital stock or ownership interests of
any other entity or to provide funds to or make any investment in an amount
greater than $100,000 in the aggregate (in the form of a loan, capital
contribution or otherwise) in any other entity, other than guarantees of bank
obligations or indebtedness for borrowed money of a wholly owned Subsidiary
entered into in the ordinary course of business. All of the outstanding shares
of capital stock or other ownership interests of each of the Company=s
Subsidiaries, which are owned by the Company or its Subsidiaries, are duly
authorized, validly issued, fully paid and nonassessable and all such shares
and ownership interests are owned directly or indirectly by the Company, free
and clear of all Liens and free of any other restriction (including any
restriction on the right to vote, sell or otherwise dispose of such capital
stock or interests).
(c) There are no bonds, debentures, notes or other indebtedness having
voting rights (or convertible into securities having such rights) in
connection with the Transactions ("Voting Debt" of the Company or any of its
Subsidiaries that are issued and outstanding, other than the debt securities
or other indebtedness set forth in Section 3.2(c) of the Company Disclosure
Schedule. Except as set forth in Section 3.2(c) of the Company Disclosure
Schedule, (i) there are no shares of capital stock of any class of the Company
or any equity interests of any of its Subsidiaries, or any security
exchangeable into or exercisable for such capital stock or equity securities,
issued, reserved for issuance or outstanding; (ii) there are no options,
warrants, equity securities, calls, rights, commitments or agreements of any
character to which the Company or any of its Subsidiaries is a party or by
which any of them is bound obligating the Company or any of its Subsidiaries
to issue, deliver or sell, or cause to be issued, delivered or sold,
additional shares of capital stock or other ownership interests (including
Voting Debt) of the Company or any of its Subsidiaries or obligating the
Company or any of its Subsidiaries to grant, extend, accelerate the vesting of
or enter into any such option, warrant, equity security, call, right,
commitment or agreement; and (iii) there are no voting trusts, proxies or
other voting agreements or understandings with respect to the shares of
capital stock of the Company or equity interests of any of the Company's
Subsidiaries.
Section 3.3. Authority; No Conflict; Required Filings and Consents.
(a) The Shareholders and the Company have all requisite power and authority
to enter into this Agreement and to consummate the transactions contemplated
by this Agreement. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby by the Shareholders and
the Company have been duly authorized by all necessary corporate action on the
part of the Company (including a unanimous vote of the Shareholders) and the
Shareholders. This Agreement has been duly executed and delivered by the
Shareholders and the Company and constitutes the valid and binding obligation
of the Shareholders and the Company, enforceable against the Shareholders and
the Company in accordance with its terms.
(b) Other than as disclosed in Section 3.3(b) of the Company Disclosure
Schedule, the execution and delivery of this Agreement by the Shareholders and
the Company do not, and the consummation of the
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transactions contemplated hereby will not, (i) conflict with, or result in any
violation or breach of, any provision of the Articles of Incorporation or
bylaws of Company, Operating Agreement or comparable charter or organizational
documents of any of the Company's Subsidiaries, (ii) result in any violation
or breach of, or constitute (with or without notice or lapse of time, or both)
a default (or give rise to a right of termination, cancellation or
acceleration of any obligation or loss of any material benefit) under, or
require a consent or waiver under, any of the terms, conditions or provisions
of any note, bond, mortgage, indenture, lease, contract or other agreement,
instrument or obligation to which the Shareholders, the Company or any of the
Company's Subsidiaries is a party or by which any of them or any of their
properties or assets may be bound, or (iii) subject to the governmental
filings and other matters referred to in Section 3.3(c) or on the Company
Disclosure Schedule as referred to therein, conflict with or violate any
permit, concession, franchise, license, judgment, order, decree, statute, law,
ordinance, rule or regulation applicable to the Company, any of its
Subsidiaries or any of its or their properties or assets, except in the case
of clauses (ii) and (iii) for any such conflicts, violations, defaults,
terminations, cancellations or accelerations which (x) are not, individually
or in the aggregate, reasonably likely to have a Company Material Adverse
Effect or (y) would not prevent or materially delay the consummation of the
Transactions.
(c) Except as disclosed in Section 3.3(c) of the Company Disclosure
Schedule, no consent, approval, order or authorization of, or registration,
declaration or filing with, any court, administrative agency, commission,
gaming authority or other governmental authority or instrumentality
("Governmental Entity") is required of the Company or the Shareholders in
connection with the execution and delivery of this Agreement, the consummation
of the Transactions contemplated hereby or the operation of the business as
presently conducted by LL Bettendorf from and after the date hereof through
the Effective Time, except for (i) the filing of pre-merger notification
reports under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976, as
amended ("HSR Act"), (ii) the filing of the Certificate of Merger and Articles
of Merger with respect to the Merger with the Secretary of State of the State
of Delaware and the Secretary of State of the State of Iowa, as applicable,
(iii) the filing by Buyer of the Proxy Statement (as such term is defined in
Section 5.15(a) below) with the Securities and Exchange Commission (the "SEC")
in accordance with the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), (iv) any approvals and filing of notices required under any
gaming industry regulation applicable to Buyer, (v) such consents, approvals,
orders, authorizations, permits, filings or registrations related to, or
arising out of, compliance with statutes, rules or regulations regulating the
consumption, sale or serving of alcoholic beverages and (vi) such immaterial
filings and consents as may be required under any environmental, health or
safety law or regulation pertaining to any notification, disclosure or
required approval triggered by the Transactions.
Section 3.4. Public Filings; Financial Statements.
(a) None of the Company or any of its Subsidiaries is required to file
forms, reports and documents with the SEC.
(b) The balance sheets of the Company as of December 31, 1997 and 1998 and
the related statements of operations, retained earnings and cash flows for the
years then ended, audited by McGladrey & ▇▇▇▇▇▇, LLP (the "Company Audited
Financial Statements") present fairly the financial position of the Company in
accordance with GAAP, consistently applied.
(c) The unaudited balance sheet (the "Company Balance Sheet") of the
Company at September 30, 1999 and the related unaudited statements of
operations and retained earnings for the twelve month period then ended
present fairly the financial position of the Company in accordance with GAAP,
consistently applied, subject to normal recurring year-end adjustments and the
absence of notes (that if presented, would not differ materially from those
included in the Company Audited Financial Statements).
Section 3.5. No Undisclosed Liabilities. Except as set forth on the Company
Balance Sheet and in Section 3.5 of the Company Disclosure Schedule and except
for liabilities and obligations incurred since the date of the Company Balance
Sheet in the ordinary course of business consistent with past practice, the
Company and its
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Subsidiaries do not have any liabilities accrued, contingent or otherwise, and
whether due or to become due, required to be reflected in financial
statements, including the notes thereto in accordance with GAAP, consistently
applied.
Section 3.6. Absence of Certain Changes or Events. Except as disclosed in
Section 3.6 of the Company Disclosure Schedule, from the date of the Company
Balance Sheet through the date hereof, the Company and its Subsidiaries have
conducted their respective businesses only in the ordinary course consistent
with past practice, and there has not been (a) any event, series of events,
condition or series of conditions that has had, or could reasonably be
expected to have, a Company Material Adverse Effect; (b) any declaration,
setting aside or payment of any dividend or other distribution (whether in
cash, stock or property) with respect to any of the Company's or any of its
Subsidiaries' membership interests or other equity interests; (c) any split,
combination or reclassification of any of its membership interests or other
equity interests or any issuance or the authorization of any issuance of any
other securities in respect of, in lieu of or in substitution for, its
membership interests; (d) (i) any granting by the Company or its Subsidiaries
to any manager or officer of the Company or its Subsidiaries of any increase
in compensation, except in the ordinary course of business consistent with
prior practice, (ii) any granting by the Company or its Subsidiaries to any
manager or officer of the Company or its Subsidiaries of any options, (iii)
any granting by the Company or its Subsidiaries to any manager or officer of
the Company or its Subsidiaries of any increase in severance or termination
pay; or (iv) any entry by the Company or its Subsidiaries into any employment,
severance or termination agreement with any of its managers, officers or other
employees, consultants or independent contractors; (e) any change in
accounting methods, principles or practices of the Company or its
Subsidiaries, except insofar as may have been required by a change in GAAP;
(f) any Tax election that individually or in the aggregate would have a
Company Material Adverse Effect; or (g) any settlement of pending or
threatened litigation involving the Company or any of its Subsidiaries
(whether brought by a private party or a Governmental Entity).
Section 3.7. Taxes.
(a) For the purposes of this Agreement, a "Tax" or, collectively, "Taxes,"
means any and all federal, state, local and foreign taxes, assessments and
other governmental charges, duties, impositions and liabilities, including
taxes based upon or measured by gross receipts, income, profits, sales, use
and occupation, and value added, ad valorem, transfer, gains, franchise,
withholding, payroll, recapture, employment, excise, unemployment insurance,
social security, business license, occupation, business organization, stamp,
environmental and property taxes, together with all interest, penalties and
additions imposed with respect to such amounts. For purposes of this
Agreement, "Taxes" also includes any obligations under any agreements or
arrangements with any other person with respect to Taxes of such other person
(including pursuant to Treas. Reg. (S) 1.1502-6 or comparable provisions of
state, local or foreign tax law) and including any liability for Taxes of any
predecessor entity.
(b) The Company and its Subsidiaries have: (i) filed all federal, state,
local and foreign Tax returns and reports required to be filed by them prior
to the date of this Agreement (taking into account all applicable extensions),
and such Tax returns and reports (taking into account all amendments thereto)
are true, correct and complete in all material respects; (ii) paid all Taxes
due and payable; (iii) provided for in its books of account all Taxes that are
not yet due and payable that have accrued with respect to or are applicable to
the periods ended on and including the Effective Time; and (iv) paid or
accrued all Taxes for which a notice of assessment or collection has been
received (other than amounts being contested in good faith by appropriate
proceedings with the relevant taxing authority and for which adequate reserves
in accordance with GAAP are being maintained).
(c) Except as set forth in Section 3.7(c) of the Company Disclosure
Schedule, no Tax return of the Company or any of its Subsidiaries is under
examination by the Internal Revenue Service (the "IRS") or any other taxing
authority, and neither the IRS nor any other taxing authority has asserted any
claim for Taxes, or to the Company's knowledge, is threatening to assert any
claims for Taxes. No material issues relating to Taxes were raised by the
relevant taxing authority in any completed audit or examination that can
reasonably be expected to recur in a later taxable period.
A-8
(d) The Company and its Subsidiaries have withheld or collected and paid
over to the appropriate governmental authorities (or are properly holding for
such payment) all Taxes required by law to be withheld or collected. None of
the Company or any of its Subsidiaries has made an election under Section
341(f) of the Code. There are no liens for Taxes upon the assets of the
Company or any of its Subsidiaries (other than liens for Taxes that are not
yet due or delinquent or that are being contested in good faith by appropriate
proceedings with the relevant taxing authority and for which adequate reserves
in accordance with GAAP are being maintained).
(e) None of the Company or any of its Subsidiaries is or has been a member
of an affiliated group of corporations filing a consolidated federal income
tax return (or a group of corporations filing a consolidated, combined or
unitary income tax return under comparable provisions of state, local or
foreign Tax law) other than a group the common parent of which is the Company.
(f) None of the Company or any of its Subsidiaries has any obligation under
any agreement or arrangement with any other person with respect to Taxes of
such other person (including pursuant to Treas. Reg. (S) 1.1502-6 or
comparable provisions of state, local or foreign Tax law) and including any
liability for Taxes of any predecessor entity.
(g) Except as disclosed in Section 3.7(g) of the Company Disclosure
Schedule, none of the Company or any of its Subsidiaries shall be required to
include in a taxable period ending after the Effective Time taxable income
attributable to income that accrued in a Tax period prior to the Effective
Time but that was not recognized in any such prior Tax period as a result of
the installment method of accounting, the completed contract or percentage
contract methods of accounting (including the look-back method under Section
460(b)(2) of the Code), the cash method of accounting or Section 481 of the
Code or any comparable provision of state, local, or foreign Tax law, or for
any other reason.
(h) Except as disclosed in Section 3.7(h) of the Company Disclosure
Schedule, (i) there are no outstanding agreements or waivers extending, or
having the effect of extending, the statutory period of limitation applicable
to any Tax returns required to be filed with respect to the Company or any of
its Subsidiaries, (ii) none of the Company nor any of its Subsidiaries, nor
any affiliated group, within the meaning of Section 1504 of the Code, of which
the Company or any of its Subsidiaries is or has ever been a member, has
requested any extension of time within which to file any Tax return, which
return has not yet been filed, and (iii) no power of attorney with respect to
any Taxes has been executed or filed with any taxing authority by or on behalf
of the Company or any of its Subsidiaries.
(i) Buyer shall not be required to withhold any amounts from the Merger
Consideration pursuant to Section 1445 of the Code and the regulations
thereunder.
(j) Except for the Company's interest in LL Bettendorf and BRDC, LC or as
otherwise disclosed in Section 3.7(j) of the Company Disclosure Schedule,
neither the Company, nor any of its Subsidiaries is subject to any joint
venture, partnership or other arrangement or contract which is treated as a
partnership for federal income tax purposes.
(k) Neither of the Company, nor any of its Subsidiaries has made or become
obligated to make, and will not as a result of any event connected with the
Transactions, become obligated to make any "excess parachute payment" as
defined in Section 280G of the Code (without regard to subsection (b)(4)
thereof).
(l) The Company has been a validly electing S Corporation within the
meaning of Sections 1361 and 1362 of the Code and any similar provisions of
state or local law at all times during its existence and the Company will be
an S corporation up to and including the day before the Effective Time.
(m) Each of BRDC, LC and LL Bettendorf (and any predecessor of BRDC, LC or
LL Bettendorf) has been treated as a partnership or disregarded entity and not
as an association taxable as a corporation or as a "publicly traded
partnership" for federal, state and local income tax purposes at all times
during its existence and will continue to be so treated up to and including
the Effective Time. No election has been made pursuant to Treasury
A-9
Regulations Sections 301.7701-1 through 301.7701-3, or any comparable
provision of state or local law, to treat BRDC, LC or ▇▇▇▇▇▇▇▇▇▇ ▇▇ as an
association taxable as a corporation.
Section 3.8. Real Property, Title and Related Matters.
(a) Section 3.8(a) of the Company Disclosure Schedule sets forth a true and
complete list as of the date of this Agreement of (i) all material contracts
or agreements (including leases, ground leases, licenses, options and other
agreements) relating to Owned Real Property (as defined below) and all
material contracts or agreements (including leases, ground leases, licenses,
options and other agreements) relating to the DNR Leased Property (as defined
below) in which the Shareholders, the Company, BRDC, LC or their respective
affiliates are a party, and (ii) a brief description of each piece of Owned
Real Property. The Company or one of its Subsidiaries, as the case may be, has
good and marketable title to all Owned Real Property and to all fixtures
thereon, free and clear of any Encumbrances (as defined below), except for
Permitted Encumbrances (as defined below). The Company does not lease any real
property. The only real property leased by BRDC, LC is the DNR Leased
Property. BRDC, LC has the right to quiet enjoyment of the DNR Leased Property
for the full term of the lease in accordance with the terms of such lease.
Except as set forth in Section 3.8(a) of the Company Disclosure Schedule,
there are no rights or options of any third party to acquire any of the Owned
Real Property or any ownership therein.
(b) Each lease or other contract referred to in Section 3.8(b) of the
Company Disclosure Schedule, relating to Owned Real Property and the DNR
Leased Property is a valid contract or agreement enforceable against the
Company or one of its Subsidiaries, as the case may be, in accordance with its
terms and, to the Company's knowledge, against the other parties thereto. None
of the Company or any of its Subsidiaries is in material default, nor has any
of them received any written notice alleging that it or they are in material
default, under the leases, ground leases, subleases, licenses, options or
other agreements set forth in Section 3.8(b) of the Company Disclosure
Schedule relating to Owned Real Property and the DNR Leased Property. To the
Company's knowledge, no other party to any such leases, ground leases,
licenses, options or other agreements is in material default thereunder.
(c) As used in this Section 3.8, the following terms shall have the
following meanings:
"Encumbrances" means all leases, mortgages, liens, pledges, charges,
options, encumbrances or defects of title of any kind or character.
"DNR Leased Property" means certain real estate on the Mississippi River
bottom leased from Iowa Department of Natural Resources pursuant to that
certain State of Iowa Department of Natural Resources lease of record known as
Lease No. 87-R.
"Owned Real Property" means all of the real property owned by the Company
or BRDC, LC, together with all buildings and other structures, facilities or
improvements currently or hereafter located thereon, all fixtures, systems,
equipment and personal property attached or appurtenant thereto, and all
easements, licenses, rights and appurtenances relating to the foregoing.
"Permitted Encumbrances" means such of the following as to which no
enforcement, collection, execution, levy or foreclosure proceeding shall have
been commenced: (i) Encumbrances that are disclosed in Section 3.8(a) of the
Company Disclosure Schedule, (ii) liens for Taxes, assessments, fees and other
governmental charges or levies which are not yet due, payable or delinquent,
(iii) such survey exceptions or reciprocal easement agreements that would not
prevent the Company or any Subsidiary from continuing to conduct the business
conducted by LL Bettendorf currently conducted and which would not have a
Company Material Adverse Effect, (iv) the provisions of any federal, state or
local law, ordinance or regulation, provided the same are not violated by the
current use of the property, (v) Encumbrances imposed by law, such as
materialmen's, mechanics', carriers', workmen's and repairmen's liens and
other similar liens arising in the ordinary course of business, securing
obligations that are not in excess of $50,000 in the aggregate at any time,
(vi) pledges or deposits to
A-10
secure obligations under workers' compensation laws or similar legislation or
to secure public or statutory obligations, (vii) Encumbrances securing
obligations of LL Bettendorf which are discussed in Section 3.8(a) of the
Company Disclosure Statement, and (viii) Encumbrances securing the Company
Indebtedness, which are discussed in Section 3.8(a) of the Company Disclosure
Statement.
Section 3.9. Title to Personal Property; Liens. Each of the Company and its
Subsidiaries has good and valid title to, or an adequate leasehold interest
in, its respective material tangible personal properties and assets (including
all riverboats, buildings and related fixtures and equipment operated by LL
Bettendorf and its Subsidiary) in order to allow each of them to conduct, and
to continue to conduct through the Effective Time, its respective businesses
as and where currently conducted. Section 3.9 of the Company Disclosure
Schedule is a full and complete list of all leases, licenses and similar
agreements relating to all material tangible personal property used by the
Company and its Subsidiaries in the conduct of their respective businesses
that is not owned by them. Except as disclosed in Section 3.9 of the Company
Disclosure Schedule, all such material tangible personal assets and properties
are sufficiently free of Liens to allow the Company and its Subsidiaries to
conduct, and to continue to conduct, their respective businesses as currently
conducted, and the consummation of the transactions contemplated by this
Agreement will not alter or impair such ability in any respect which,
individually or in the aggregate, would have a Company Material Adverse
Effect.
Section 3.10. Intellectual Property. Section 3.10 of the Company Disclosure
Schedule lists all (i) trademark and service ▇▇▇▇ registrations and
applications owned by the Company or its Subsidiaries, and (ii) trademark,
service ▇▇▇▇ and trade name license agreements to which the Company or its
Subsidiaries is a party or pursuant to which the business of the Company and
its Subsidiaries is conducted. Except as disclosed in Section 3.10 of the
Company Disclosure Schedule, to the Company's knowledge, all material
trademarks, trademark applications, trade names, service marks, trade secrets
(including customer lists and customer databases), copyrights, patents,
licenses, know-how and other proprietary intellectual property rights used in
connection with the businesses of the Company and its Subsidiaries as
currently conducted are without material restrictions or material conditions
on use, and do not conflict with the intellectual property rights of others
which, individually or in the aggregate, would be reasonably likely to have a
Company Material Adverse Effect.
Section 3.11. Agreements, Contracts and Commitments.
(a) Except as disclosed in Section 3.11(a) of the Company Disclosure
Schedule, as of the date of this Agreement, none of the Company or any of its
Subsidiaries is a party to any oral or written (i) agreement, contract,
indenture or other instrument relating to Indebtedness (as defined below) in
an amount exceeding $50,000, (ii) partnership, joint venture or limited
liability or management agreement with any person, (iii) agreement, contract
or other instrument relating to any merger, consolidation, business
combination, share exchange or business acquisition, or for the purchase,
acquisition, sale or disposition of any material assets, of the Company or any
of its Subsidiaries, (iv) agreement, contract or other instrument relating to
any "strategic alliances" (i.e., cross-marketing, affinity relationship,
etc.), (v) contract, agreement or commitment which materially restricts
(geographically or otherwise) the conduct of any line of business by the
Company or any of its Subsidiaries, (vi) any contract, agreement or other
instrument having as a party a partnership, joint venture or limited liability
company in which the Company or any of its Subsidiaries is a partner, joint
venture party or member which would otherwise satisfy the criteria in clauses
(i), (iii), (iv) or (v) if the Company or any such Subsidiary were a party to
such contract, agreement or other instrument, (vii) any other contract,
agreement or commitment that requires annual or remaining payments in excess
of $50,000 after the date hereof or (viii) any other contract, agreement or
commitment that requires annual or remaining payments in excess of $50,000 and
that is not cancelable by the Company or one of its Subsidiaries without
penalty on 30 days' notice or less (collectively, the "Company Material
Contracts"). The term "Indebtedness" as used herein means any liability in
respect of (A) borrowed money, (B) capitalized lease obligations, (C) the
deferred purchase price of property or services (other than trade payables in
the ordinary course of business), and (D) guarantees of any of the foregoing.
Section 3.11(a) of the Company Disclosure Schedule lists all contracts,
agreements, other instruments or commitments, written or oral, between the
Company and any of its Subsidiaries and the Shareholders, any
A-11
officer or director of the Company or any of their affiliates or family
members, which shall continue to be binding on the Surviving Corporation or
any of its Subsidiaries.
(b) Except as disclosed in Section 3.11(b) of the Company Disclosure
Schedule, as of the date of this Agreement, to the Company's knowledge, (i)
each of the Company Material Contracts is valid and binding upon the Company
or its Subsidiaries that is party thereto (and on all other parties thereto)
in accordance with its terms and is in full force and effect, (ii) there is no
breach or violation of or default by the Company or any of its Subsidiaries
under any of the Company Material Contracts, whether or not such breach,
violation or default has been waived which will have a Company Material
Adverse Effect, and (iii) no event has occurred with respect to the Company or
any of its Subsidiaries which, with notice or lapse of time or both, would
constitute such a breach, violation or default, or give rise to a right of
termination, modification, cancellation, foreclosure, imposition of a Lien,
prepayment or acceleration under any of the Company Material Contracts which
will have a Company Material Adverse Effect.
Section 3.12. Litigation. Except as specifically disclosed in Section 3.12
of the Company Disclosure Schedule, (a) there is no action, suit or
proceeding, claim, arbitration or investigation against or affecting the
Company or any of its Subsidiaries pending, or to the Company's knowledge,
threatened against or affecting, the Company or any of its Subsidiaries, or
any property or asset of the Company or any of its Subsidiaries, before any
court, arbitrator, or administrative, governmental or regulatory authority or
body, domestic or foreign, that is not fully covered by insurance; and (b)
there is no judgment, order, injunction or decree of any Governmental Entity
outstanding against the Company or any of its Subsidiaries.
Section 3.13. Environmental Matters.
(a) The Company, BRDC, LC and the Shareholders have delivered to Buyer all
environmental reports related to any property owned, leased or operated by the
Company or its Subsidiaries in their possession or prepared on their behalf
(the "Environmental Reports"). Except as disclosed in the Environmental
Reports and in Section 3.13(a) of the Company Disclosure Schedule: (i) the
Company and BRDC, LC have complied with all applicable Environmental Laws (as
defined in Section 3.13(b)); (ii) to the Company's knowledge neither the
Company nor BRDC, LC is subject to liability for any Hazardous Substance
disposal or contamination on any third party property; (iii) neither the
Company, BRDC, LC nor Green Bridge Company ("Green Bridge") has released any
Hazardous Substance in violation of any Environmental Law; (iv) neither the
Company nor BRDC, LC has received any notice, demand, letter, claim or request
for information alleging that the Company or any Subsidiary may be in
violation of or liable under any Environmental Law; (v) neither the Company
nor BRDC, LC is subject to any orders, decrees, injunctions or other
arrangements with any Governmental Entity or is subject to any indemnity or
other agreement with any third party relating to liability under any
Environmental Law or relating to Hazardous Substances and (vi) there are no
Hazardous Substances (as defined in Section 3.13(b) on, in or under the Owned
Real Property (including soils, groundwater, surface water, buildings or other
structures) which are required to be removed or remediated by, or which give
rise to liability under, any Environmental Laws.
(b) As used in Section 3.13, the following terms shall have the following
meanings:
"Environmental Law" means any federal, state, local or foreign law,
regulation, order, decree, permit, authorization, binding opinion, applicable
common law or agency requirement relating to: (A) the protection,
investigation or restoration of the environment, or natural resources
(including rivers and other waterways), (B) the handling, generation, storage,
transfer, emission, discharge, use, presence, disposal, release or threatened
release of any Hazardous Substance, or (C) noise, odor, wetlands, pollution,
or contamination.
"Hazardous Substance" means any substance that is: (A) listed, classified
or regulated pursuant to any Environmental Law; (B) any petroleum product or
by-product, asbestos-containing material, lead-containing paint or plumbing,
polychlorinated biphenyls, radioactive materials or radon; or (C) any other
substance which is the subject of regulatory action by any Governmental Entity
pursuant to any Environmental Law.
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Section 3.14. Employee Benefit Plans.
(a) Section 3.14(a) of the Company Disclosure Schedule contains a true and
complete list of all employee benefit plans (as defined in Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA")), all
employment, retention, change of control and severance agreements, and all
bonus, stock option, stock purchase, incentive, deferred compensation,
supplemental retirement, severance and other similar employee benefit plans,
programs, policies and agreements, written or otherwise, in each case that is
sponsored, maintained, contributed to or required to be contributed to by the
Company or any of its Subsidiaries or any trade or business (whether or not
incorporated) which, together with the Company or any of its Subsidiaries,
would be deemed a "single employer" under Section 4001(b) of ERISA (an "ERISA
Affiliate"), or to which the Company, any of its Subsidiaries or any ERISA
Affiliate is a party for the benefit of any current or former employee,
consultant, director or independent contractor of the Company or any of its
Subsidiaries (together, the "Employee Plans").
(b) The Shareholders and the Company have delivered or made available to
Buyer all documents related to the Employee Plans, including, without
limitation: (i) true and complete copies of all Employee Plan documents and
any summary plan descriptions, summary annual reports and insurance contracts
relating thereto, (ii) detailed summaries of all unwritten Employee Plans,
(iii) true and complete copies of the most recent financial statements and
actuarial reports with respect to all Employee Plans for which financial
statements or actuarial reports are required or have been prepared, (iv) the
most recent determination letter from the IRS (if applicable) for any such
Employee Plan, and (v) true and complete copies of any filing with or report
to any Governmental Entity with respect to any Employee Plan made by the
Company or any of its Subsidiaries during the twenty-four months prior to the
date of this Agreement, including, without limitation, annual reports for
Employee Plans, and a copy of any correspondence to the Company or any of its
Subsidiaries from any Governmental Entity with respect to any such Employee
Plan during such period.
(c) To the Company's knowledge, all Employee Plans conform in all material
respects to, and are being administered and operated in all material respects
in compliance with, the requirements of ERISA, the Code and all other
applicable laws, including applicable laws of foreign jurisdictions. Except as
set forth in Section 3.14(c) of the Company Disclosure Schedule, there have
not been any "prohibited transactions," as such term is defined in Section
4975 of the Code or Section 406 of ERISA, involving any of the Employee Plans
that could subject the Company or any of its Subsidiaries to any penalties or
taxes imposed under the Code or ERISA. Section 3.14(c) of the Company
Disclosure Schedule sets forth a true and complete list of all outstanding
loans from the Company or any of its Subsidiaries to any current or former
director, officer, employee or consultant.
(d) Except as set forth in Section 3.14(d) of the Company Disclosure
Schedule, any Employee Plan that is intended to be qualified under Section
401(a) of the Code and exempt from tax under Section 501(a) of the Code has
been determined by the IRS to be so qualified, has received a favorable
determination letter from the IRS covering any provision for which the
remedial amendment period (within the meaning of Section 401(b) of the Code)
has not expired, and such determination remains in effect and has not been
revoked. Nothing has occurred since the date of any such determination that is
reasonably likely to affect adversely such qualification or exemption in any
material respect or result in the imposition of material excise taxes or
income taxes on unrelated business income under the Code or ERISA with respect
to any Employee Plan. All contributions or other amounts payable with respect
to each Employee Plan have been paid or accrued in accordance with GAAP,
ERISA, the Code and the terms of each such plan.
(e) Except as set forth in Section 3.14(e) of the Company Disclosure
Schedule, none of the Company, any of its Subsidiaries or any ERISA Affiliate
(i) at any time in the past has had a current or contingent obligation to
contribute to any multiemployer plan (as defined in Section 3(37) of ERISA)
("Multiemployer Plan"), or (ii) at any time in the past has had any liability,
contingent or otherwise, under Title IV of ERISA or Section 412 of the Code.
As of the date of this Agreement, no Employee Plan is subject to Title IV of
ERISA and no Employee Plan is a Multiemployer Plan.
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(f) There are no pending, nor to the Company's knowledge, any threatened or
anticipated claims by or on behalf of any Employee Plan, or by or on behalf of
any individual participants or beneficiaries of any Employee Plan, alleging
any breach of fiduciary duty on the part of the Company or any of its
Subsidiaries or any of their officers, directors, managers or employees under
ERISA or any other applicable regulations, or claiming benefit payments other
than those made in the ordinary operation of such plans, or alleging any
violation of any other applicable laws. The Employee Plans are not the subject
of any investigation, audit or action by the IRS, the Department of Labor or
the Pension Benefit Guaranty Corporation ("PBGC").
(g) With respect to any Employee Plan that is an employee welfare benefit
plan (within the meaning of Section 3(l) of ERISA) (a "Welfare Plan"), (i)
each Welfare Plan for which contributions are claimed as deductions under any
provision of the Code is in compliance in all material respects with all
applicable requirements pertaining to such deduction, and (ii) any Employee
Plan that is a group health plan (within the meaning of Section 4980B(g)(2) of
the Code) complies, and in each and every case has complied in all material
respects with all of the requirements of ERISA and Section 4980B of the Code.
No welfare benefit fund (within the meaning of Section 419(e)(1) of the Code)
or voluntary employees' beneficiary association (within the meaning of Section
501(c)(9) of the Code) has been established or maintained in connection with a
Welfare Plan.
Section 3.15. Compliance.
(a) Except as disclosed in Section 3.15(a) of the Company Disclosure
Schedule, the Company and each of its Subsidiaries, and each of their
respective directors, managers, officers, persons performing management
functions similar to officers, general managers, employees, suppliers and
consultants, hold all permits, registrations, findings of suitability,
licenses, variances, exemptions, certificates of occupancy, orders and
approvals of all Governmental Entities (including all authorizations under
Environmental Laws, the Merchant Marine Act of 1920 and the Shipping Act of
1916, Certificates of Inspection issued by the US Coast Guard and permits and
approvals issued by the United States Army Corps of Engineers and pursuant to
the Gaming Laws (as defined below)), necessary to own, manage and conduct the
businesses and operations of the Company and its Subsidiaries as currently
conducted, each of which is in full force and effect, and no notice of
revocation has been received in respect thereof (the "Permits"). Except as
disclosed in Section 3.15(a) of the Company Disclosure Schedule, to the
Company's knowledge, the businesses of the Company and its Subsidiaries are
not being conducted in violation of any law, ordinance or regulation of any
Governmental Entity which will have a Company Material Affect. Except as
disclosed in Section 3.15(a) of the Company Disclosure Schedule, no
investigation or review by any Governmental Entity with respect to the
business of the Company or its Subsidiaries is pending or, to the Company's
best knowledge, threatened, nor has any Governmental Entity indicated any
intention to conduct the same.
(b) As used herein, the term "Gaming Laws" means any federal, state, local
or foreign statute, ordinance, rule, regulation, permit, consent,
registration, finding of suitability, approval, license, judgment, order,
decree, injunction or other authorization, including any condition or
limitation placed thereon, governing or relating to the current or
contemplated casino and gaming activities and operations of the Company or its
Subsidiaries, including any applicable state gaming law and any federal or
state laws relating to currency transactions.
(c) Except as disclosed in Section 3.15(c) of the Company Disclosure
Schedule, to the Company's knowledge, (i) neither the Company nor any
Subsidiary, nor any manager, officer, key employee or partner of the Company,
or any Subsidiary, has received any written claim, demand notice, complaint,
court order or administrative order from any Governmental Entity in the past
three years under, or relating to any violation or possible violation of, any
Gaming Laws which did or would be reasonably likely to result in fines or
penalties of $10,000 or more; (ii) there are no facts, which, if known to the
regulators under the Gaming Laws, could reasonably be expected to result in
the revocation, limitation or suspension of a license, finding of suitability,
registration, permit or approval of it or them, or any officer, director or
other person performing management functions similar to an officer or partner,
under any Gaming Laws; and (iii) neither the Company nor any Subsidiary has
suffered a suspension or revocation of any material license, finding of
suitability, registration, permit or approval held under the Gaming Laws.
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Section 3.16. Labor Matters. Except as disclosed in Section 3.16 of the
Company Disclosure Schedule, (i) there are no proceedings pending between the
Company or any of its Subsidiaries and any of their respective employees
before the Equal Employment Opportunity Commission, Department of Labor or any
other Governmental Entity; (ii) to the best knowledge of the Company, there
are no activities or proceedings of any labor union to organize any non-
unionized employees; (iii) neither the Company nor any of its Subsidiaries has
received notice of any alleged unfair labor practice charges and/or complaints
pending against the Company or its Subsidiaries or any of their respective
representatives or employees before the National Labor Relations Board or any
current union representation questions involving employees of the Company or
its Subsidiaries; (iv) to the Company's knowledge, the Company's and its
Subsidiaries' employment policies and practices comply in all material
respects with applicable law; and (v) there is no strike, slowdown, work
stoppage, labor dispute or lockout or, to the best knowledge of the Company,
threat thereof, by or with respect to any employees of the Company or any of
its Subsidiaries. Neither the Company nor any of its Subsidiaries are parties
to any collective bargaining agreements or other labor union contracts
applicable to individuals employed or previously employed by the Company or
any of its Subsidiaries and, except as disclosed in Section 3.16 of the
Company Disclosure, no collective bargaining agreement or labor union contract
is being negotiated by the Company or its Subsidiaries.
Section 3.17. Insurance. All material fire and casualty, general liability,
business interruption, product liability, and sprinkler and water damage
insurance policies maintained by the Company or its Subsidiaries are listed on
Section 3.17 of the Company Disclosure Schedule. At the Effective Time, all
such insurance policies, or replacements thereof, will be outstanding and duly
in force. To the Company's knowledge, no notice of termination or non-renewal
of any such insurance policy has been received by the Company or its
Subsidiaries.
Section 3.18. Year 2000. The Company has conducted an initial review of
whether its systems, processes, products, equipment and services are Year 2000
Ready. The Company has provided to Buyer all reports prepared by it or its
outside consultants regarding the Company's Year 2000 Readiness. "Year 2000
Ready" means that the systems, processes, products, equipment and services of
the Company (including any software embedded in any products) ("Services")
will correctly identify, recognize and process four-digit year dates, and the
Services will: (a) continue to function properly with regard to dates before,
during and after the transition to year 2000, including, but not limited to,
the ability to roll dates from December 31, 1999 to January 1, 2000 and beyond
with no errors or system interruptions; (b) accurately perform calculations
and comparisons on dates that span centuries; (c) accept and properly process
dates that could span more than 100 years (e.g., calculating a person's age
from their birth date and the current date); (d) properly sort and sequence
dates that span centuries; (e) understand that the year 2000 starts on a
Saturday; (f) recognize that February 29, 2000 is a valid date and that the
year 2000 has 366 days; (g) prohibit use of date fields for any purpose other
than to store valid dates; (h) preclude the use of 12/31/99 or any other valid
date to indicate something other than a date (e.g., 12/31/99 in a date field
means "do not ever cancel"); and (i) comply with and conform to the
specifications of American National Standard ANSI X3.30-1985, Representation
for Calendar Date and Ordinal Date for Information Interchange. The Company
has made no express or implied warranties regarding its Year 2000 Readiness or
any of its Services, except as disclosed in Section 3.18 of the Company
Disclosure Schedule.
Section 3.19. Brokers. None of the Shareholders, the Company, any of the
Company's Subsidiaries, or any of their respective managers, officers or
employees has employed any broker, financial advisor or finder, or incurred
any liability for any brokerage fees, commissions, finder's or other fees, in
connection with the transactions contemplated by this Agreement.
Section 3.20. Tax Treatment. None of the Shareholders, the Company, or any
of the Company's Subsidiaries has taken or agreed to take any action, or is
aware of any fact or circumstance, that would prevent the Merger from
qualifying as a reorganization within the meaning of Section 368(a)(1)(A) of
the Code.
Section 3.21. Acquisition for Investment. Each Shareholder is acquiring
shares of Buyer Common Stock to be issued in the Merger for investment for his
or her own account and not with a view to, or for sale in connection with, any
distribution thereof, except for distributions made in compliance with the
requirements of the Securities
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Act. Each Stockholder is an "accredited investor" (as defined in Rule 501
promulgated under the Securities Act) and (either alone or together with his
or her advisors) has sufficient knowledge and experience in financial and
business matters so as to be capable of evaluating the merits and risks of its
investment in the shares of Buyer Common Stock and is capable of bearing the
economic risks of such investment.
Section 3.22. Proxy Statement. The information related to the Company and
its Subsidiaries and its Shareholders (other than related to pro forma
financial statements or other forward looking information or projections)
supplied by the Company and the Shareholders for inclusion in the Proxy
Statement (as defined in Section 5.15(a)) pursuant to Items 5 and 14 of
Schedule 14A promulgated by the SEC under the Exchange Act, shall not, on the
date the Proxy Statement is first mailed to stockholders of Buyer, at the time
of the Buyer Special Meeting (as defined in Section 5.16) and at the Effective
Time, contain any statement which, at such time and in light of the
circumstances under which it shall be made, is false or misleading with
respect to any material fact, omit to state any material fact necessary in
order to make the statements made in the Proxy Statement not false or
misleading, or omit to state any material fact necessary to correct any
statement in any earlier communication with respect to the solicitation of
proxies for the Buyer Special Meeting which has become false or misleading.
ARTICLE IV
Representations and Warranties of Buyer
Buyer represents and warrants to the Shareholders and the Company that the
statements contained in this Article IV are true and correct, except as set
forth herein and in the disclosure schedule delivered by Buyer to the
Shareholders and the Company on or before the date of this Agreement (the
"Buyer Disclosure Schedule"). Any reference in this Agreement to Buyer's
"knowledge" or "best knowledge," or to "the best of Buyer's knowledge," or
words of similar import, shall be deemed a reference to the actual knowledge
of any of the corporate officers of Buyer for all purposes, after having made
due inquiry. The Buyer Disclosure Schedule has been prepared based upon the
foregoing definition.
Section 4.1. Organization of Buyer. Buyer is duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
organization and has all requisite corporate power and authority to carry on
its business as now being conducted and as proposed to be conducted. Buyer is
duly qualified or licensed to do business and is in good standing in each
jurisdiction in which the property owned, leased or operated by it or the
nature of the business conducted by it makes such qualification or licensing
necessary, except where the failure to be so qualified, licensed or in good
standing would not have a material adverse effect on the business, properties,
condition (financial or otherwise), prospects or results of operations of
Buyer and its Subsidiaries, taken as a whole (a "Buyer Material Adverse
Effect"). A true and correct copy of the Certificate of Incorporation and
bylaws of Buyer, in each case as amended to the date of this Agreement, are
included as exhibits to the Buyer SEC Reports (as defined herein).
Section 4.2. Authority; No Conflict; Required Filings and Consents.
(a) Buyer has all requisite corporate power and authority to enter into
this Agreement and to consummate the transactions contemplated by this
Agreement. The execution and delivery of this Agreement and the consummation
of the transactions contemplated hereby by Buyer have been duly authorized by
all necessary corporate action on the part of Buyer. This Agreement has been
duly executed and delivered by Buyer and constitutes the valid and binding
obligation of Buyer, enforceable against it in accordance with its terms.
(b) Other than as disclosed in Section 4.2(b) of the Buyer Disclosure
Schedule, the execution and delivery of this Agreement by Buyer does not, and
the consummation of the transactions contemplated hereby will not, (i)
conflict with, or result in any violation or breach of, any provision of the
Certificate of Incorporation or bylaws of Buyer or the comparable charter or
organizational documents of any of its Subsidiaries, (ii) result in any
violation or breach of, or constitute (with or without notice or lapse of
time, or both), a default (or give rise to a right of termination,
cancellation or acceleration of any obligation or loss of any material
benefit) under, or
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require a consent or waiver under, any of the terms, conditions or provisions
of any note, bond, mortgage, indenture, lease, contract or other agreement,
instrument or obligation to which Buyer is a party or by which it or any of
its or its Subsidiaries' properties or assets may be bound, or (iii) subject
to the governmental filings and other matters referred to in Section 4.3(c),
conflict with or violate any permit, concession, franchise, license, judgment,
order, decree, statute, law, ordinance, rule or regulation applicable to Buyer
or any of its Subsidiaries or any of its or their properties or assets, except
in the case of clauses (ii) and (iii) for any such conflicts, violations,
defaults, terminations, cancellations or accelerations which (x) are not,
individually or in the aggregate, reasonably likely to have a Buyer Material
Adverse Effect, or (y) would not impair or materially delay the consummation
of the Transactions.
(c) Except as disclosed in Section 4.2(c) of the Buyer Disclosure Schedule,
no consent, approval, order or authorization of, or registration, declaration
or filing with, any Governmental Entity is required by or with respect to
Buyer or any of its Subsidiaries in connection with the execution and delivery
of this Agreement or the consummation of the transactions contemplated hereby,
other than (i) the filing of the pre-merger notification report under the HSR
Act, (ii) the filing of the Certificate of Merger and Articles of Merger with
respect to the merger with the Secretary of State of the State of Delaware and
the Secretary of State of the State of Iowa, as applicable, (iii) any
approvals and filing of notices required under any applicable gaming industry
regulation, (iv) such consents, approvals, orders, authorizations, permits,
filings or registrations related to, or arising out of, compliance with
statutes, rules or regulations regulating the consumption, sale or serving of
alcoholic beverages, (v) such immaterial filings and consents as may be
required under any environmental, health or safety law or regulation
pertaining to any notification, disclosure or required approval triggered by
the transactions contemplated by this Agreement, and (vi) such other filings,
consents, approvals, orders, registrations and declarations as may be required
under the laws of any jurisdiction in which Buyer or any of its Subsidiaries
conducts any business or owns any assets the failure of which to obtain would
not have a Buyer Material Adverse Effect.
Section 4.3. Public Filings; Financial Statements.
(a) Buyer has filed all forms, reports and documents required to be filed
by Buyer with the SEC since January 1, 1996 (the "Buyer SEC Reports"). The
Buyer SEC Reports (including any financial statements filed as a part thereof
or incorporated by reference therein) (i) at the time filed, complied in all
material respects with the applicable requirements of the Securities Act of
1933, as amended (the "Securities Act"), and the Exchange Act, as the case may
be, and (ii) did not, at the time they were filed (or if amended or superseded
by a filing prior to the date of this Agreement, then on the date of such
filing), contain any untrue statement of a material fact or omit to state a
material fact required to be stated in such Buyer SEC Reports or necessary in
order to make the statements in such Buyer SEC Reports, in the light of the
circumstances under which they were made, not misleading.
(b) Each of the consolidated financial statements (including, in each case,
any related notes) of Buyer contained in the Buyer SEC Reports complied as to
form in all material respects with the applicable published rules and
regulations of the SEC with respect thereto, was prepared in accordance with
GAAP applied on a consistent basis throughout the periods involved (except as
may be indicated in the notes to such financial statements or, in the case of
unaudited statements, as permitted by Form 10-Q under the Exchange Act) and
fairly presented the consolidated financial position of Buyer and its
consolidated Subsidiaries as of the dates and the consolidated results of its
operations and cash flows for the periods indicated, except that the unaudited
interim financial statements were or are subject to normal and recurring year-
end adjustments which, with respect to interim periods since December 31,
1998, were not or are not expected to be material in amount. The audited
balance sheet of Buyer as of April 25, 1999 is referred to herein as the
"Buyer Balance Sheet."
Section 4.4. Absence of Certain Changes or Events. Except as disclosed in
the Buyer SEC Reports or in Section 4.4 of the Buyer Disclosure Schedule,
since the date of the Buyer Balance Sheet, Buyer and its Subsidiaries have
conducted their respective businesses only in the ordinary course and in a
manner consistent with past practice, and there has not been (a) any Buyer
Material Adverse Effect, (b) any declaration, setting
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aside or payment of any dividend or other distribution (whether in cash, stock
or property) with respect to any of Buyer's capital stock, (c) any split,
combination or reclassification of any of its capital stock or any issuance or
the authorization of any issuance of any other securities in respect of, in
lieu of or in substitution for shares of its capital stock, (d)(i) any
granting by Buyer or any of its Subsidiaries to any director or officer of
Buyer or its Subsidiaries of any increase in compensation, except in the
ordinary course of business consistent with prior practice or as was required
under employment agreements in effect as of the date of the most recent
financial statements included in the Buyer SEC Reports, (ii) any granting by
Buyer or any of its Subsidiaries to any director or officer of any stock
options, except as was required under employment agreements in effect as of
the date of the most recent financial statements included in the Buyer SEC
Reports, (iii) any granting by Buyer or any of its Subsidiaries to any officer
of any increase in severance or termination pay, except as was required under
any employment, severance or termination agreements, plans or arrangements in
effect as of the date of the most recent financial statements included in the
Buyer SEC Reports or (iv) any entry by Buyer or any of its Subsidiaries into
any employment, severance or termination agreement with any officer, (e) any
change in accounting methods, principles or practices having a material
adverse effect on Buyer, except insofar as may have been required by a change
in GAAP, (f) any Tax election that individually or in the aggregate would have
a Buyer Material Adverse Effect, or (g) any settlement of pending or
threatened litigation involving Buyer or any of its Subsidiaries (whether
brought by a private party or a Governmental Entity) other than any settlement
which is not reasonably likely to have a Buyer Material Adverse Effect.
Section 4.5. Litigation. Except as disclosed in the Buyer SEC Reports or in
Section 4.5 of the Buyer Disclosure Schedule, there is no action, suit or
proceeding, claim, arbitration or investigation against or affecting Buyer or
any of its Subsidiaries pending, or as to which Buyer or any of its
Subsidiaries has received any written notice of assertion against or
affecting, Buyer or any of its Subsidiaries or any property or asset of Buyer
or any of its Subsidiaries, before any court, arbitrator, or administrative,
governmental or regulatory authority or body, domestic or foreign, that
individually or in the aggregate could reasonably be expected to (i) have a
Buyer Material Adverse Effect or (ii) prevent or materially delay the
consummation of the transactions contemplated by this Agreement.
Section 4.6. Voting Requirements. The affirmative vote of the holders of a
majority of Buyer Common Stock present at the Buyer Special Meeting of
Stockholders (at which a quorum is present) in favor of the issuance of Buyer
Common Stock pursuant to this Agreement, consistent with the requirements of
the Nasdaq National Market System (the "Buyer Stockholder Approval"), is the
only vote of the holders of any class or series of Buyer's capital stock
necessary to approve the transactions contemplated by this Agreement.
Section 4.7. Tax Treatment. Neither Buyer nor any of its Subsidiaries has
taken or agreed to take any action, or is aware of any fact or circumstance,
that would prevent the Merger from qualifying as a reorganization within the
meaning of Section 368(a)(1)(A) of the Code.
Section 4.8. Opinion of Financial Advisor. The Board of Directors of Buyer
has received the written opinion of CIBC World Markets Corp. ("CIBC") dated
the date of this Agreement to the effect that the Exchange Ratio is fair to
the Buyer from a financial point of view.
Section 4.9. Lady Luck Waiver. Buyer has obtained the written waiver by
Lady Luck of all rights of Lady Luck arising under Article 8 of the Operating
Agreement for LL Bettendorf arising as a result of the Company entering into
this Agreement.
ARTICLE V
COVENANTS
Section 5.1. Conduct of Business.
(a) By Shareholders and the Company. Except as set forth in Section 5.1(a)
of the Company Disclosure Schedule, during the period from the date of this
Agreement and continuing until the earlier of the termination of this
Agreement or the Effective Time, the Shareholders and the Company agree
(except to the extent that Buyer shall otherwise consent in writing) that they
will use their reasonable best efforts to cause the businesses
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of the Company and its Subsidiaries to be carried on in the usual, regular and
ordinary course in substantially the same manner as previously conducted, to
pay its debts and Taxes when due subject to good faith disputes over such
debts or Taxes, to pay or perform its other obligations when due, and, to the
extent consistent with such business, use all commercially reasonable efforts
consistent with past practices and policies to preserve intact its present
business organization, keep available the services of its present officers and
key employees, and preserve its relationships with customers, suppliers,
distributors and others having business dealings with it. Whenever used in
this Article V, the term "cause" means using a party's reasonable best
efforts, through the exercise of voting and management power and otherwise, to
cause such action to be taken or not taken. Without limiting the generality of
the foregoing, during the period from the date of this Agreement until the
earlier of the termination of this Agreement or the Effective Time, the
Shareholders and the Company agree (except as otherwise contemplated by this
Agreement or to the extent that Buyer shall otherwise consent in writing) as
follows:
(i) Dividends; Changes in Stock. The Company shall not and shall not
cause its Subsidiaries to, except for Permitted Distributions, (A) declare,
set aside or pay any dividends on, or make any other distributions (whether
in cash, stock or property) in respect of, any of its capital stock or
membership interests, (B) split, combine or reclassify any of its capital
stock or membership interest or issue or authorize the issuance of any
other securities in respect of, in lieu of or in substitution for shares of
its capital stock or membership interests, or (C) purchase, redeem or
otherwise acquire any shares of capital stock of the Company or membership
interests of any of its Subsidiaries or any other securities thereof or any
rights, warrants or options to acquire any such shares or other securities.
(ii) Issuance of Securities. The Company shall not, and shall cause its
Subsidiaries not to, issue, deliver, sell, pledge or otherwise encumber any
shares of its capital stock, any other voting securities or any securities
convertible into, or any rights, warrants or options to acquire, any such
shares, voting securities or convertible securities.
(iii) Governing Documents. The Company shall not, and shall cause its
Subsidiaries not to, amend its Certificate of Incorporation, Bylaws,
Articles of Organization, Operating Agreement or other comparable charter
or organizational documents.
(iv) No Acquisitions. The Company shall not, and shall cause its
Subsidiaries not to, acquire or agree to acquire (including, without
limitation, by merger, consolidation or acquisition of stock or assets) any
business or any interest therein, including through the acquisition of any
interest in any corporation, partnership, joint venture, association or
other business organization or division thereof.
(v) No Dispositions. The Company shall not, and shall cause its
Subsidiaries not to, sell, lease, license, mortgage or otherwise encumber,
or otherwise dispose of, any of its properties or assets other than in the
ordinary course of business.
(vi) Indebtedness. The Company shall not, and shall cause its
Subsidiaries not to, (y) incur any indebtedness for borrowed money or
guarantee any such indebtedness of another person, issue or sell any debt
securities or warrants or other rights to acquire any debt securities of
the Company or any of its Subsidiaries, or guarantee any debt securities of
another person, other than short-term bank financing in the ordinary course
of business consistent with past practice, or (z) make any loans, advances
or capital contributions to, or investments in, any other person.
(vii) Employee Benefits. The Company shall not, and shall cause its
Subsidiaries not to, (A) adopt, enter into, terminate or amend any
employment, severance, retention or similar agreement or contract; (B)
negotiate or enter into any collective bargaining agreement or labor union
contract; (C) increase, in any manner, the compensation or fringe benefits
of, or pay any bonus to, any director, officer or employee (except for
normal increases of cash compensation or cash bonuses in the ordinary
course of business, consistent with past practice); (D) adopt or establish
any new benefit plan or amend any existing benefit plan, except as required
by law, or pay any benefit not provided for under any existing plan; (E)
adopt, establish or amend any severance pay plan, or increase in any manner
the severance or termination pay of any officer or employee; (F) modify the
provisions of any stock option plan, adjust or modify the terms of
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any outstanding options, or take any action to accelerate the vesting of,
or cash out rights associated with, any option, or remove existing
restrictions in any option plan or other plan or arrangement; (G) grant any
new awards under any stock option plan or other bonus, incentive,
performance or compensation plan or arrangement, stock appreciation rights,
stock-based or stock-related awards, performance units or restricted stock;
(H) take any action to fund, or in any other way secure, the payment of
compensation or benefits under any employee plan, welfare plan or other
employee plan, agreement, contract or arrangement; (I) hire any individual
as an employee who will be paid an annual base salary that equals or
exceeds $75,000 or who will be other than an "at will" employee; or (J)
hire any independent contractor or consultant, in each case without the
prior written consent of the Buyer.
(viii) Leases or Material Contracts. The Company shall not, and shall
cause its Subsidiaries not to, (i) enter into any lease or agreement of any
nature that would obligate the Company or any of its Subsidiaries to pay
$50,000 or more annually, (ii) enter into any lease or agreement of any
nature that is not terminable by the Company or one of its Subsidiaries
upon 90 days' notice without penalty, or (iii) modify, amend or terminate
any existing agreement of such type or waive, release or assign any
material rights or claims contained therein, except in the ordinary course
of business consistent with past practice.
(ix) Accounting Matters. The Company shall not, and shall cause its
Subsidiaries not to, make any material change in accounting methods,
principles or practices, except as required by GAAP or the applicable
regulations under the Securities Act and the Exchange Act.
(x) Tax Matters. The Company shall not, and shall cause its Subsidiaries
not to, make any material Tax election, enter into any settlement or
compromise with respect to any material income Tax liability, or waive or
extend the statute of limitations in respect of any Taxes.
(xi) Settlement. The Company shall not, and shall cause its Subsidiaries
not to, settle any pending or threatened litigation involving the Company
or any such Subsidiary (whether brought by or against a private party or a
Government Entity), except for settlements that, in the aggregate, involve
payments not covered by insurance, by the Company or any such Subsidiary,
of less than $50,000 and which settle entire claims or causes of action
arising out of the same or similar facts and circumstances or do not impose
any restrictions on the business or operations of the Company or any of its
Subsidiaries.
(xii) Capital Expenditures. Except as set forth in Section 5.1(a)(xii)
of the Company Disclosure Schedule, the Company and its Subsidiaries,
considered as a whole, shall not make capital expenditures in excess of
$50,000 individually or $100,000 in the aggregate.
(xiii) Related Party Transactions. Subject to Section 5.11, the Company
shall not, and shall cause its Subsidiaries not to, enter into or amend the
terms of any transaction of any nature whatsoever with its or its
Subsidiaries' directors, officers, employees, Shareholders, members or
their respective affiliates.
(xiv) Lady Luck Transaction. Neither the Shareholders, the Company nor
BRDC, LC shall take any steps to assert rights they may have as a result of
Lady Luck entering into the Lady Luck Merger Agreement, to (i) purchase
Lady Luck's membership interest in LL Bettendorf or (ii) terminate the
management agreement between Lady Luck and LL Bettendorf; provided,
however, that the Shareholders, the Company and BRDC, LC may take all steps
which they deem necessary to preserve such rights, including, giving any
notices they deem necessary or desirable.
(xv) General. The Company shall not, and shall cause its Subsidiaries
not to, authorize any of, or commit or agree to take any of, the foregoing
actions.
(b) By Buyer. Except as disclosed in the Buyer SEC Reports, during the
period from the date of this Agreement and continuing until the earlier of the
termination of this Agreement or the Effective Time, Buyer agrees as to itself
and its Subsidiaries (except to the extent that the Company shall otherwise
consent in writing) to carry on its business in the usual, regular and
ordinary course in substantially the same manner as previously conducted, to
pay its debts and Taxes when due subject to good faith disputes over such
debts or Taxes, and to pay or perform its other obligations when due.
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Section 5.2. Cooperation; Notice; Cure. Subject to compliance with
applicable law, from the date hereof until the Effective Time, each of Buyer,
the Shareholders and the Company shall confer on a regular and frequent basis
with one or more representatives of the other party to report on the general
status of ongoing operations. Each of the Shareholders, the Company and Buyer
shall promptly notify the other in writing of, and will use all commercially
reasonable efforts to cure before the Closing Date, any event, transaction or
circumstance, as soon as practical after it becomes known to such party, that
causes or will cause any covenant or agreement of the Shareholders and the
Company or Buyer under this Agreement to be breached in any material respect
or that renders or will render untrue in any material respect any
representation or warranty of the Shareholders and the Company or Buyer
contained in this Agreement.
Section 5.3. Access to Information. Upon reasonable notice, the Company
shall, and shall cause its Subsidiaries to, afford to Buyer, and its officers,
employees, accountants, counsel and other representatives, reasonable access,
during normal business hours during the period prior to the Effective Time, to
all its personnel, properties, books, contracts, commitments and records, and
during such period, the Company shall, and shall cause its Subsidiaries to,
furnish promptly to Buyer (a) copies of monthly financial reports and
development reports, (b) a copy of each report, schedule and other document
filed or received by it during such period pursuant to the requirements of
federal or state securities laws, and (c) all other information concerning its
business, properties and personnel as Buyer may reasonably request. Buyer will
hold any such information furnished to it by the Shareholders, the Company or
any such Subsidiary in confidence. No information or knowledge obtained in any
investigation pursuant to this Section 5.3 shall affect or be deemed to modify
any representation or warranty contained in this Agreement or the conditions
to the obligations of the parties to consummate the Transactions.
Section 5.4. Governmental Approvals.
(a) The parties hereto shall cooperate with each other and use all
commercially reasonable efforts to promptly prepare and file all necessary
documentation, to effect all applications, notices, petitions and filings, to
obtain as promptly as practicable without conditions, restrictions or
limitations that are more restrictive than those conditions, restrictions and
limitations applicable to the Company and its Subsidiaries on the date hereof,
all permits, registrations, licenses, findings of suitability, consents,
variances, exemptions, orders, approvals and authorizations of all third
parties and Governmental Entities which are necessary or advisable to
consummate the transactions contemplated by this Agreement ("Governmental
Approvals"). Each of the parties hereto and their respective officers,
managers, directors and affiliates shall file, as necessary, within 60 days
after the date hereof, all required initial applications and documents in
connection with obtaining approvals of the Transactions under the Gaming Laws
and shall file initial applications and documents related to all other
Governmental Approvals within such time as necessary for such Governmental
Approvals to be granted on or before the effective date of the respective
approvals required under the Gaming Laws and shall act reasonably and promptly
thereafter in responding to additional requests in connection therewith. Each
of the Shareholders, the Company and Buyer (the "Notifying Party") will
notify, and the Company shall cause LL Bettendorf to notify, the other parties
reasonably promptly of the receipt of material comments or requests from
Governmental Entities relating to Governmental Approvals, and will supply, and
the Company shall cause LL Bettendorf to supply, the other parties with copies
of all material correspondence documents or descriptions of communications
between the Notifying Party or any of its representatives and Governmental
Entities with respect to Governmental Approvals; provided, however, that the
Notifying Party shall not be required to supply the other parties with copies
of correspondence, documents or descriptions of communications relating to the
personal applications of individual applicants, except for evidence of filing.
(b) The Shareholders, the Company and Buyer shall promptly advise, and the
Company shall cause LL Bettendorf to advise, each other, upon receiving any
communication from any Governmental Entity whose consent or approval is
required for consummation of the transactions contemplated by this Agreement
which causes such party to believe that there is a reasonable likelihood that
any approval needed from a Governmental Entity will not be obtained or that
the receipt of any such approval will be materially delayed. The Shareholders,
the Company and Buyer shall take, and the Company shall cause its Subsidiaries
to take, any and all actions
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reasonably necessary to vigorously defend, lift, mitigate and rescind the
effect of any litigation or administrative proceeding adversely affecting this
Agreement or the transactions contemplated hereby or thereby, including,
without limitation, promptly appealing any adverse court or administrative
order or injunction to the extent reasonably necessary for the foregoing
purposes.
Section 5.5. Publicity. The Shareholders, the Company and Buyer shall agree
on the form and content of the initial press release regarding the
transactions contemplated hereby and thereafter shall consult with each other
before issuing, and shall use all reasonable efforts to agree upon, any press
release or other public statement with respect to any of the transactions
contemplated hereby and shall not issue any such press release or make any
such public statement prior to such consultation, except as may be required by
law or in connection with presentations or discussions with or before gaming
regulators.
Section 5.6. Indemnification.
(a) From and after the Effective Time, Buyer agrees that it will indemnify
and hold harmless the Shareholders, each of their respective heirs, successors
and permitted assigns, their affiliates, and the respective directors,
officers, employees, agents and controlling persons of their affiliates
(collectively, the "Shareholder Indemnified Parties"), against any costs,
expenses (including attorneys' fees), judgments, fines, losses, claims,
damages, liabilities or amounts paid in settlement (collectively, "Losses")
incurred by the Shareholder Indemnified Party as a result of, or arising out
of entering into and consummating the transactions contemplated herein other
than any Loss (i) resulting from or arising out of a breach or inaccuracy of
any representation, warranty or covenant of the Company or the Shareholders
contained in this Agreement solely as they relate to the Company or BRDC, LC
or (ii) for which the Shareholders have an obligation to provide indemnity
under Section 5.6(b).
(b) From and after the Effective Time, each of the Shareholders, jointly
and severally, agrees to indemnify and hold harmless the Buyer, its
affiliates, and the respective directors, officers, employees, agents and
controlling persons of Buyer and its affiliates (collectively, the "Buyer
Indemnified Parties") against any Losses incurred by the Buyer Indemnified
Parties as a result of, or arising out of, (i) any breach or inaccuracy in the
representations and warranties of the Company and the Shareholders contained
in Section 3.8(a), and (ii) notwithstanding the matters disclosed in Section
3.13(a) of the Company Disclosure Schedule and as otherwise known by Buyer,
any Hazardous Substances on, in or under the Owned Real Property at the
Effective Time (including soils, groundwater, surface water, buildings or
other structures) which are required to be removed or remediated by, or which
give rise to liability under any Environmental Laws.
(c) The Buyer Indemnified Parties shall not be entitled to indemnification
hereunder except to the extent that they incur indemnifiable Losses in excess
of $250,000, and then only to the extent of such excess; the aggregate
liability of the Shareholders hereunder shall not exceed $3,000,000; and no
claim for indemnification may be made by any party hereto except in writing
setting forth with reasonable particularity the bases for such claim which is
delivered during the period that the representation, warranty or covenant on
which the claim is based continues to survive as provided in Section 8.1, or
if the claim is made under Section 5.6(b) clause (ii) within 3 years of the
Effective Time. After the Effective Time, the sole and exclusive remedy of the
Buyer Indemnified Parties against the Shareholders for all matters coming
within the scope of the representations and warranties contained in this
Agreement shall be to bring a claim for indemnity under Section 5.6(b),
subject to all of the limitations applicable to such claim.
(d) The Shareholders shall conduct and control the management and
implementation of the clean up, defense, response, proceedings or settlement
relating to any Losses for which the Shareholders have an indemnity obligation
under Section 5.6(b). Buyer and the Shareholders shall cooperate with each
other and Buyer may participate therein at its cost. The Shareholders shall
conduct any clean-up in a manner which does not unreasonably interfere with
the conduct of Buyer's business. Prior to collecting indemnification from the
Shareholders for any Loss related to Owned Real Property other than related to
a breach of the representations and warranties contained in Section 3.8, Buyer
will use all commercially reasonable efforts to have such matter
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addressed to Buyer's satisfaction by J.I. Case Company and its successors or
assigns ("Case") pursuant to the terms of the Purchase/Sale Agreement (the
"Purchase Agreement") dated November 4, 1988 between Case and Green Bridge.
Buyer will assert its rights under the Agreement as a successor in title to
the Owned Property and the Shareholders will cause Green Bridge to cooperate
fully with Buyer and take any steps necessary to pursue its rights under the
Purchase Agreement.
Section 5.7. Further Assurances and Actions.
(a) Subject to the terms and conditions herein, each of the parties hereto
agrees to use its reasonable best efforts to take, or cause to be taken
(including action to be taken by the Company and its Subsidiaries), all
appropriate action, and to do, or cause to be done, all things necessary,
proper or advisable under applicable laws and regulations to consummate and
make effective the transactions contemplated by this Agreement, including,
without limitation, (i) using their respective reasonable best efforts to
obtain all licenses, permits, consents, approvals, authorizations,
qualifications and orders of Governmental Entities and parties to contracts
with each party hereto as are necessary for consummation of the transactions
contemplated by this Agreement, and (ii) to fulfill all conditions precedent
applicable to such party pursuant to this Agreement.
(b) In case, at any time after the Effective Time any further action is
necessary or desirable to carry out the purposes of this Agreement or to vest
the Buyer with full title to all properties, assets, rights, approvals,
immunities and franchises of any of the parties to the transactions
contemplated hereby, the proper officers and/or directors of Buyer and the
Company shall take or cause LL Bettendorf to take, all such necessary action.
Section 5.8. Tax-free Reorganization. Each party will use its commercially
reasonable efforts to cause the Merger to qualify as a reorganization within
the meaning of Section 368(a)(1)(A) of the Code, and will not take any action
reasonably likely to cause the Merger not so to qualify.
Section 5.9. Loan Repayment. Immediately following the Effective Time,
Buyer will cause BRDC, LC to repay in full its loan from Valley Corporation in
the approximate amount of $3,200.000.
Section 5.10. Related Party Agreements. At the request of Buyer, the
Shareholders shall cause and the Company shall cause its Subsidiaries to
terminate all contracts, agreements, other instruments or commitments, written
or oral, between the Company and any of its Subsidiaries on the one hand and
the Shareholders, any officer or director of the Company or any of their
affiliates or family members on the other, that exist but that are not
disclosed as related party agreements in Section 3.11 of the Company
Disclosure Schedule.
Section 5.11. LL Bettendorf Distributions. Anything contained herein to the
contrary notwithstanding, LL Bettendorf will make distributions to BRDC, LC of
the following amounts, which shall be distributed by BRDC, LC to the Company
and by the Company to the Shareholders ("Permitted Distributions"): (i) 45% of
one-half of LL Bettendorf's net income for the month of September, 1999, (ii)
45% of Allocated Net Income ("Additional Tax Distributions") and (iii)
discretionary amounts requested by the Shareholders immediately prior to the
Effective Time (the "Discretionary Distributions") provided that, the sum of
Additional Tax Distributions and Discretionary Distributions shall not (i)
exceed $10,000,000 plus the Allocated Net Income or (ii) result in LL
Bettendorf having less than $2,500,000 in cash or marketable securities at the
Effective Time and provided further, subject to the foregoing limitations,
that the Discretionary Distributions shall not be less than the amount
necessary such that the Aggregate Merger Consideration shall not exceed
6,300,000 Buyer Shares. If not previously made, the Buyer will cause LL
Bettendorf to make the Discretionary Distributions immediately prior to
Closing and shall obtain any required consents of LL Bettendorf's, BRDC LC's
and the Company's lenders as listed in Section 3.3 of the Company Disclosure
Schedule.
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Section 5.12. Other Distributions. Nothing contained in this Agreement
shall restrict in any way the ability of BRDC, LC to make distributions to the
Company and the Company to make distributions to the Shareholders, it being
understood that BRDC, LC and the Company will distribute all available cash to
the Shareholders prior to Closing. During the period prior to the Closing
BRDC, LC shall continue to receive rent payments and management fees from LL
Bettendorf and its affiliates consistent with prior practices, and shall
receive such payments prorated to the Effective Time even if not yet due and
payable. The Buyer will cause LL Bettendorf to make any such payments not
previously made, immediately prior to Closing.
Section 5.13. Shareholder Guarantees. Buyer shall use commercially
reasonable efforts (including, but not limited to, the provision of Buyer's
guarantee but not contingent upon the payment of significant fees or
relinquishing significant rights) prior to the Effective Time to obtain the
release of the Shareholders and all of their affiliates from all guarantees of
indebtedness of the Company or any of its Subsidiaries or of LL Bettendorf and
to obtain the release of all collateral pledged by Shareholders or their
affiliates in connection with such guarantees.
Section 5.14. Resale Restrictions. Each Shareholder agrees that he or she
will not transfer any shares of Buyer Common Stock received pursuant to this
Agreement except (i) pursuant to an effective registration statement under the
Securities Act, (ii) in compliance with Rule 144 promulgated under the
Securities Act, (iii) upon receipt by Buyer of an opinion of counsel to such
Shareholder (which counsel shall be reasonably satisfactory to Buyer) in form
and substance customary in similar situations, or of a no-action letter from
the SEC addressed to Buyer or such Shareholders to the effect that no
registration statement is required under the 1933 Act, (iv) for estate
planning purposes to members of his or her immediate family or to a trust,
family limited partnership, family limited liability company, corporation or
other entity which is owned and controlled by the Shareholder or members of
his or her immediate family, or (v) upon a Shareholder's death to his or her
heirs, provided that the transferee in the case of clauses (iv) and (v) agrees
to be subject to the resale limitations set forth in this Section 5.14.
Section 5.15. Legend. (a) Each Certificate representing shares of Buyer
Common Stock to be received by each Shareholder pursuant to this Agreement
shall be endorsed with legends as may be required by the Securities Act and
applicable state securities laws.
(b) Any certificate issued at any time in exchange or substitution for any
certificate bearing such legends (except a new certificate issued upon the
completion of a transfer pursuant to a registered public offering under the
Securities Act and made in accordance with the Securities Act) shall also bear
such legends, unless shares of Buyer Common Stock represented thereby are in
the reasonable good faith judgment of Buyer (with advice from counsel to
Buyer, as Buyer may deem appropriate), no longer subject to the restrictions
imposed under the Securities Act or state securities laws, in which case the
applicable legend (or legends) may be removed.
Section 5.16. Proxy Statement.
(a) As promptly as practicable after the execution of this Agreement, Buyer
shall prepare and file with the SEC, in preliminary form, a proxy statement to
be sent to Buyer's stockholders in connection with, and for their
consideration of, this Agreement and the Merger (the "Proxy Statement").
(b) Buyer shall make all other necessary filings with respect to the Merger
under the Exchange Act, applicable state blue sky laws and the rules and
regulations thereunder.
Section 5.17. Special Meeting. Buyer shall duly call, give notice of,
convene and hold a special meeting of its stockholders for the purpose of
voting upon this Agreement and the Merger (the "Buyer Special Meeting") as
promptly as reasonably practicable after the date hereof. Except as otherwise
required to comply with the fiduciary duties of the Board of Directors of
Buyer, Buyer shall, through its Board of Directors, recommend to its
stockholders adoption and approval of this Agreement and the Merger and shall
use all reasonable efforts to solicit from its stockholders proxies in favor
of such matters.
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Section 5.18. Registration Rights. If Buyer proposes to file a registration
statement under the Securities Act with respect to an offering by Buyer for
its own account of Buyer Common Stock (other than a registration statement on
Form S-4 or S-8 or any successor or similar form thereto), then Buyer shall
give written notice of such proposed registration and distribution at least 30
days prior to the proposed filing date and offer the opportunity to register
such amount of Buyer Shares as each Shareholder may request in writing.
Subject to the obligations of the Shareholders set forth below, the Buyer
shall use commercially reasonable efforts to cause the managing underwriter or
underwriters of a proposed underwritten offering (the "Company Underwriter")
to permit the Shareholders to participate in the registration for such
offering and to include such Buyer Shares in such offering. Any Buyer Shares
of the Shareholders which have been requested to be registered shall be
included in the offering on the same terms and conditions as the Buyer Common
Stock being offered by Buyer. Notwithstanding the foregoing, if the Company
Underwriter advises Buyer that in its opinion the total amount of Buyer Common
Stock which the Shareholders, Buyer and any other persons or entities who have
a right to participate in the registration intend to include in such offering
(the "Total Securities") is sufficiently large as to have a materially adverse
effect on the distribution of the Total Securities, then the amount of
securities to be offered for the account of the Shareholders and such other
persons or entities shall be reduced pro rata to the extent necessary to
reduce the Total Securities to the amount recommended by the Company
Underwriter. Buyer shall bear all registration expenses in connection with any
registration except for the discounts or commissions of the Company
Underwriter applicable to the Buyer Shares of the Shareholders, which shall be
paid as set forth below. A Shareholder may not participate in any underwritten
registration unless such Shareholder (a) agrees to sell such Shareholder's
Buyer Shares on the basis provided in any underwriting arrangements entered
into by Buyer, (b) completes and executes all questionnaires, powers of
attorney, indemnities, underwriting agreements, custody agreements and other
documents reasonably required under the terms of such underwriting
arrangements and (c) agrees to pay his or her pro rata portion of all
underwriting discounts and commissions of the Company Underwriter and agrees
to cooperate with the Buyer in connection with the preparation and filing of
the registration statement.
ARTICLE VI
Conditions to The Merger
Section 6.1. Conditions to Each Party's Obligation to Effect the Merger.
The respective obligations of each party to this Agreement to effect the
Merger shall be subject to the satisfaction or waiver by each party prior to
the Effective Time of the following conditions:
(a) Stockholder Approval. This Agreement and the Merger shall have been
approved by the stockholders of Buyer in the manner required under the
Rules of the Nasdaq National Market.
(b) No Injunctions. No Governmental Entity shall have enacted, issued,
promulgated, enforced or entered any order, executive order, stay, decree,
judgment or injunction, statute, rule or regulation which is in effect and
which has the effect of making the Merger illegal or otherwise prohibiting
consummation of the Merger.
(c) Governmental Approvals. All Governmental Approvals required to
consummate the transactions contemplated by this Agreement shall have been
obtained, all such approvals shall remain in full force and effect, all
statutory waiting periods in respect thereof (including, without
limitation, under the HSR Act) shall have expired, and no such approval
shall contain any conditions, limitations or restrictions which Buyer
reasonably determines in good faith will have or would reasonably be
expected to have a Company Material Adverse Effect or a Buyer Material
Adverse Effect.
(d) Lady Luck Transaction. The Closing of the Lady Luck Transaction
shall have occurred including Buyer's acquisition of Lady Luck's interest
in LL Bettendorf.
Section 6.2. Additional Conditions to Obligations of the Shareholders and
the Company. The obligations of the Shareholders and the Company to effect the
Merger are subject to the satisfaction of each of the following conditions
prior to the Effective Time, any of which may be waived in writing exclusively
by the Shareholders and the Company:
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(a) Representations and Warranties. The representations and warranties
of Buyer set forth in this Agreement shall be true and correct in all
material respects (except for those qualified as to materiality or a Buyer
Material Adverse Effect, which shall be true and correct) as of the date of
this Agreement and, except to the extent such representations explicitly
speak as of an earlier date, as of the Closing Date as though made on and
as of the Closing Date. The Shareholders and the Company shall have
received a certificate signed on behalf of Buyer by the Chief Executive
Officer and the Chief Financial Officer of Buyer to such effect.
(b) Performance of Obligations of Buyer. Buyer shall have performed in
all material respects all material obligations required to be performed by
it under this Agreement at or prior to the Closing Date, and the
Shareholders and the Company shall have received a certificate signed on
behalf of Buyer by the Chief Executive Officer and the Chief Financial
Officer of Buyer to such effect.
(c) Release of Guarantees. Buyer shall have obtained the release of, or
agreed to indemnify, the Shareholders and all of their affiliates from the
guarantees of indebtedness of the Company or any of its Subsidiaries and
obtained the release of all collateral pledged by Shareholders or their
affiliates in connection with each of the guarantees listed in Section
6.2(c) of the Company Disclosure Schedule.
Section 6.3. Additional Conditions to Obligations of Buyer. The obligations
of Buyer to effect the Merger are subject to the satisfaction of each of the
following conditions prior to the Effective Time, any of which may be waived
in writing exclusively by Buyer:
(a) Representations and Warranties. The representations and warranties
of the Shareholders and the Company set forth in this Agreement shall be
true and correct in all material respects (except for those qualified as to
materiality or a Company Material Adverse Effect, which shall be true and
correct) as of the date of this Agreement and, except to the extent such
representations and warranties explicitly speak as of an earlier date, as
of the Closing Date as though made on and as of the Closing Date. Buyer
shall have received a certificate signed by each Shareholder and signed on
behalf of the Company by the Chief Executive Officer and the Chief
Financial Officer of the Company to such effect.
(b) Performance of Obligations of the Shareholders and the Company. The
Shareholders and the Company shall have performed in all material respects
all material obligations required to be performed by them under this
Agreement at or prior to the Closing Date, including, without limitation,
that pursuant to the agreements listed in Section 3.11 of the Company
Disclosure Schedule, that all consents required under such agreements as a
result of the consummation of the Merger shall have been obtained by the
Company and are in full force and effect except (i) the consents required
by Section 5.11 and (ii) for those agreements as to which the consequences
of the failure to obtain a consent, individually or in the aggregate, would
not constitute a Company Material Adverse Effect. Buyer shall have received
a certificate signed by the Shareholders and signed on behalf of the
Company by the Chief Executive Officer and the Chief Financial Officer of
the Company to such effect.
(c) No Material Adverse Change. No material adverse change shall have
occurred in the business, properties, condition (financial or otherwise),
prospects or results of operations of the Company and its Subsidiaries,
taken as a whole, since September 30, 1999; however, for purposes of the
foregoing, a change as to the financial performance or prospects of LL
Bettendorf shall be disregarded for this condition.
ARTICLE 7
TERMINATION AND AMENDMENT
Section 7.1. Termination. This Agreement may be terminated at any time
prior to the Effective Time (with respect to Sections 7.1(b) through 7.1(g),
by written notice by the terminating party to the other party), whether before
or after approval of the matters presented in connection with the Merger by
the stockholders of Buyer:
(a) by mutual written consent of the Shareholders and the Company and
Buyer; or
(b) by any of the Buyer, the Shareholders or the Company if the Merger
shall not have been consummated by December 31, 2000 (the "Outside Date");
provided that either Buyer or the Shareholders
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or the Company may extend the Outside Date to June 30, 2001 by providing
written notice thereof to the other party between three (3) and five (5)
business days prior to and including December 31, 2000 if (i) the Merger
shall not have been consummated by such date but the Merger Agreement (as
it may have been amended or supplemented to such date) remains in effect;
or
(c) by any of the Buyer, the Shareholders or the Company if a court of
competent jurisdiction or other Governmental Entity shall have issued an
order, decree or ruling, or taken any other final action not subject to
appeal, in each case having the effect of permanently restraining,
enjoining or otherwise prohibiting the Merger; or
(d) by Buyer, (i) upon a material breach of any representation,
warranty, covenant or agreement on the part of the Shareholders, or the
Company set forth in this Agreement, or if any representation or warranty
of the Shareholders or the Company shall have become untrue in any material
respect, in either case such that the conditions set forth in Section 6.3
would not be satisfied (a "Terminating Company Breach"); provided, however,
that, if such Terminating Company Breach is curable by the Shareholders or
the Company through best efforts within 30 days and for so long as the
Shareholders and the Company continue to exercise such best efforts during
such 30-day period, Buyer may not terminate this Agreement under this
Section 7.1(d); or (ii) if at the Buyer Special Meeting (including any
adjournment or postponement), the requisite vote of the stockholders of
Buyer in favor of the approval and adoption of this Agreement and the
Merger shall not have been obtained; or
(e) by the Shareholders or the Company, (i) upon a material breach of
any representation, warranty, covenant or agreement on the part of Buyer
set forth in this Agreement, or if any representation or warranty of Buyer
shall have become untrue in any material respect, in either case such that
the conditions set forth in Section 6.2 would not be satisfied (a
"Terminating Buyer Breach"); provided, however, that, if such Terminating
Buyer Breach is curable by Buyer through best efforts within 30 days and
for so long as Buyer continues to exercise such best efforts during such
30-day period, the Shareholders or the Company may not terminate this
Agreement under this Section 7.1(e); or (ii) if at the Buyer Special
Meeting (including any adjournment or postponement), the requisite vote of
the stockholders of Buyer in favor of the approval and adoption of this
Agreement and the Merger shall not have been obtained;
(f) by Buyer, if (A) any state gaming authority revokes any of LL
Bettendorf's licenses or permits to operate the casino riverboat, or (B) a
gaming regulatory authority imposes fines or penalties against, or requires
other payments by, LL Bettendorf and/or any of its current or former
directors, officers, employees, agents or representatives (to the extent
that LL Bettendorf is responsible for any such fines, penalties or other
payments and such fines, penalties or other payments are not covered by
insurance policies of LL Bettendorf) relating to the actions of LL
Bettendorf and/or its current or former directors, officers, agents or
representatives in an aggregate amount or which impose restrictions upon
operations that would reasonably be expected to have a material adverse
effect on the business of the LL Bettendorf casino (with materiality
determined with respect to the enterprise value of such business); or
(g) by Buyer, if a material adverse change as described in Section
6.3(c) has occurred.
Section 7.2. Effect of Termination. In the event of termination of this
Agreement as provided in Section 7.1, this Agreement shall immediately become
void and there shall be no liability or obligation on the part of Buyer, the
Shareholders or the Company, or their respective officers, directors,
managers, members, Shareholders or affiliates, except as set forth in Sections
5.3 and 7.3, and except that such termination shall not limit liability for a
willful breach of this Agreement; provided that the provisions of this Section
7.2 and Section 7.3 of this Agreement shall remain in full force and effect
and survive any termination of this Agreement.
Section 7.3. Fees and Expenses. All fees and expenses incurred in
connection with this Agreement and the Merger shall be paid by the party
incurring such expenses, whether or not the Merger is consummated except that
Buyer shall reimburse the Shareholders for (i) accounting fees incurred by the
Company related to the Proxy Statement or Buyer SEC Reports, including the
cost of preparing the Company Audited Financial Statements and (ii) any
governmental filing fees incurred by the Shareholders in connection with the
consummation of this transaction.
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Section 7.4. Amendment. This Agreement may be amended by the parties
hereto, by action taken or authorized by their respective Boards of Directors,
at any time before or after approval of the matters presented in connection
with the Merger by the stockholders of Buyer; but, after any such approval, no
amendment shall be made which by law requires further approval by such
stockholders without such further approval. This Agreement may not be amended
except by an instrument in writing signed on behalf of each of the parties
hereto.
Section 7.5. Extension; Waiver. At any time prior to the Effective Time,
the parties hereto, by action taken or authorized by their respective Boards
of Directors may, to the extent legally allowed (i) extend the time for the
performance of any of the obligations or other acts of the other parties
hereto, (ii) waive any inaccuracies in the representations and warranties
contained herein or in any document delivered pursuant hereto, and (iii) waive
compliance with any of the agreements or conditions contained here. Any
agreement on the part of a party hereto to any such extension or waiver shall
be valid only if set forth in a written instrument signed on behalf of such
party.
ARTICLE 8
Miscellaneous
Section 8.1. Survival of Representations, Warranties, Covenants and
Agreements. The representations, warranties, covenants and agreements in this
Agreement or in any instrument delivered pursuant to this Agreement shall not
survive the Effective Time, except for (i) the representations and warranties
contained in Sections 3.8(a) which shall survive for 3 years after the
Effective Time; and (ii) the indemnification provided in Section 5.6, which
shall survive until the expiration of the applicable statute of limitations
related to the claims which are the subject of the loss; and (iii) the
agreements contained in Sections 2.2, 5.7, 5.8, 5.9, 5.13 and 5.18 and Article
VIII, which shall survive the Effective Time indefinitely.
Section 8.2. Notices. Any and all notices, demands or other communications
required or desired to be given hereunder by any party shall be in writing and
shall be validly given or made to another party if served personally, or by
facsimile or air courier, or deposited in the United States mail, certified or
registered, postage prepaid, return receipt requested. If such notice, demand
or other communications be served personally, or by facsimile or air courier,
service shall be conclusively deemed made at the time of such service. If such
notice, demand or other communications be given by mail, it shall be
conclusively deemed given three (3) days after the deposit thereof in the
United States mail, addressed to the party to whom such notice, demand or
other communication is to be given as hereinafter set forth:
(a) if to the Shareholders or the Company, to:
BRDC, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
with copies to:
BRDC, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
and
Lord Bissell & Brook
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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(b) if to Buyer, to:
Isle of Capri Casinos, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: President
with copies to:
Isle of Capri Casinos, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
and
▇▇▇▇▇, ▇▇▇▇▇ & ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Section 8.3. Interpretation. When a reference is made in this Agreement to
Sections, such reference shall be to a Section of this Agreement unless
otherwise indicated. The table of contents and headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement. Whenever the words "include,"
"includes" or "including" are used in this Agreement, they shall be deemed to
be followed by the words "without limitation." The phrase "made available" in
this Agreement shall mean that the information referred to has been made
available if requested by the party to whom such information is to be made
available. The phrases "the date of this Agreement,""the date hereof," and
terms of similar import, unless the context otherwise requires, shall be
deemed to refer to December 19, 1999.
Section 8.4. Counterparts. This Agreement may be executed in two or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when two or more counterparts have been signed by each
of the parties and delivered to the other parties, it being understood that
all parties need not sign the same counterpart.
Section 8.5. Entire Agreement; No Third-Party Beneficiaries. This Agreement
and all documents and instruments referred to herein (a) constitute the entire
agreement and supersedes all prior agreements and understandings, both written
and oral, among the parties with respect to the subject matter hereof, and (b)
except as provided in Section 5.6, are not intended to confer upon any person
other than the parties hereto any rights or remedies hereunder. Each party
hereto agrees that, except for the representations and warranties contained in
this Agreement, none of Buyer, the Shareholders or the Company makes any other
representations or warranties, and each hereby disclaims any other
representations and warranties made by itself or any of its officers,
directors, employees, agents, financial and legal advisors or other
representatives, with respect to the execution and delivery of this Agreement
or the transactions contemplated hereby, notwithstanding the delivery or
disclosure to any of them or their respective representatives of any
documentation or other information with respect to any one or more of the
foregoing.
Section 8.6. Governing Law. This Agreement shall be governed by and
construed, and the obligations, rights and remedies of the parties hereunder
shall be determined, in accordance with the laws of the State of Iowa without
reference to the conflicts of law or choice of law doctrine of such state.
Section 8.7. Assignment. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any of the parties
hereto (whether by operation of law or otherwise) without the prior written
consent of the other party. Subject to the preceding sentence, this Agreement
will be binding upon, inure to the benefit of and be enforceable by the
parties and their respective successors and assigns.
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Section 8.8. Severability; Enforcement. Except to the extent that the
application of this Section 8.8 would have a Buyer Material Adverse Effect
with respect to Buyer or a Company Material Adverse Effect with respect to the
Shareholders and the Company, the invalidity of any portion hereof shall not
affect the validity, force or effect of the remaining portions hereof.
If it is ever held that any covenant hereunder is too broad to permit
enforcement of such covenant to its fullest extent, each party agrees that a
court of competent jurisdiction may enforce such covenant to the maximum
extent permitted by law, and each party hereby consents and agrees that such
scope may be judicially modified accordingly in any proceeding brought to
enforce such covenant.
Section 8.9. Specific Performance. The parties hereto agree that the remedy
at law for any breach of this Agreement will be inadequate and that any party
by whom this Agreement is enforceable shall be entitled to specific
performance in addition to any other appropriate relief or remedy. Such party
may, in its sole discretion, apply to a court of competent jurisdiction for
specific performance or injunctive or such other relief as such court may deem
just and proper in order to enforce this Agreement or prevent any violation
hereof, and, to the extent permitted by applicable laws, each party hereto
waives any objection to the imposition of such relief.
In Witness Whereof, Isle of Capri Casinos, Inc., BRDC, Inc. and the
Shareholders have caused this Agreement to be signed by their respective duly
authorized officers or have signed personally as of the date first written
above.
Isle of Capri Casinos, Inc.
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
By: _________________________________
Its: Executive Vice President
___________________________________
BRDC, Inc.
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
By: _________________________________
Its: President
___________________________________
Shareholders of BRDC, Inc.
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
_____________________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
_____________________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
_____________________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
_____________________________________
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
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