EXHIBIT 10.6
================================================================================
AGREEMENT AND PLAN OF MERGER
Dated as of April 5, 2006,
Among
RIV ACQUISITION HOLDINGS INC.
RIV ACQUISITION INC.
and
RIVIERA HOLDINGS CORPORATION
================================================================================
TABLE OF CONTENTS
Page
ARTICLE I
THE MERGER
Section 1.01 The Merger....................................................
Section 1.02 Closing.......................................................
Section 1.03 Effective Time................................................
Section 1.04 Effect of the Merger..........................................
Section 1.05 Subsequent Actions............................................
Section 1.06 Articles of Incorporation; By-Laws............................
Section 1.07 Directors.....................................................
Section 1.08 Officers......................................................
ARTICLE II
CONVERSION OF SECURITIES
Section 2.01 Conversion of Capital Stock...................................
Section 2.02 Cancellation and Retirement of Company Common Stock...........
Section 2.03 Exchange of Certificates......................................
Section 2.04 Stock Plans...................................................
ARTICLE III
DEPOSIT
Section 3.01 Deposit.......................................................
Section 3.02 Investment of Deposit.........................................
Section 3.03 Opening of and Operation of Escrow............................
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Section 4.01 Organization, Standing and Power..............................
Section 4.02 Capitalization................................................
Section 4.03 Authority; Execution and Delivery; Enforceability.............
Section 4.04 No Conflicts; Consents........................................
Section 4.05 SEC Documents; Undisclosed Liabilities........................
Section 4.06 Information Supplied..........................................
Section 4.07 Absence of Certain Changes or Events..........................
Section 4.08 Taxes.........................................................
Section 4.09 Absence of Changes in Benefit Plans...........................
Section 4.10 Employee Benefit Plans........................................
Section 4.11 Litigation....................................................
Section 4.12 Compliance with Applicable Laws...............................
Section 4.13 Environmental Matters.........................................
Section 4.14 Material Contracts............................................
Section 4.15 Properties....................................................
Section 4.16 Intellectual Property.........................................
Section 4.17 Labor Matters.................................................
Section 4.18 Brokers; Fees and Expenses....................................
Section 4.19 Insurance.....................................................
Section 4.20 WARN Act......................................................
Section 4.21 Bank Accounts.................................................
Section 4.22 Opinion of Financial Advisor..................................
Section 4.23 Compliance with Gaming Laws...................................
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
Section 5.01 Organization, Standing and Power..............................
Section 5.02 Authority; Execution and Delivery; Enforceability.............
Section 5.03 No Conflicts; Consents........................................
Section 5.04 Adequate Funds................................................
Section 5.05 Gaming Approvals..............................................
Section 5.06 Litigation....................................................
Section 5.07 Brokers.......................................................
Section 5.08 Information Supplied..........................................
Section 5.09 Ownership of Parent and Merger Sub............................
Section 5.10 Stock Ownership Status........................................
ARTICLE VI
COVENANTS RELATING TO CONDUCT OF BUSINESS
Section 6.01 Conduct of Business...........................................
Section 6.02 No Solicitation...............................................
ARTICLE VII
ADDITIONAL AGREEMENTS
Section 7.01 Proxy Statement...............................................
Section 7.02 Meeting of Stockholders of the Company........................
Section 7.03 Compliance with Law...........................................
Section 7.04 Notification of Certain Matters...............................
Section 7.05 Access to Information.........................................
Section 7.06 Public Announcements..........................................
Section 7.07 Cooperation...................................................
Section 7.08 Agreement to Defend and Indemnify.............................
Section 7.09 Employee Benefits.............................................
Section 7.10 SEC Reports...................................................
Section 7.11 Delisting.....................................................
Section 7.12 Resignations..................................................
Section 7.13 Communications to Employees...................................
Section 7.14 Transfer Taxes; HSR Fees......................................
Section 7.15 Cooperation with Financing....................................
Section 7.16 Satisfaction of the Indenture Obligation......................
Section 7.17 Regulatory and Other Approvals and Notifications..............
ARTICLE VIII
CONDITIONS PRECEDENT
Section 8.01 Conditions to Each Party's Obligation to Effect the Merger....
Section 8.02 Conditions to Obligations of Parent and Merger Sub............
Section 8.03 Conditions to Obligation of the Company.......................
ARTICLE IX
TERMINATION, AMENDMENT AND WAIVER
Section 9.01 Termination...................................................
Section 9.02 Effect of Termination.........................................
Section 9.03 Amendment.....................................................
Section 9.04 Extension; Waiver.............................................
ARTICLE X
GENERAL PROVISIONS
Section 10.01 No Survival of Representations and Warranties.................
Section 10.02 Notices.......................................................
Section 10.03 Definitions...................................................
Section 10.04 Interpretation................................................
Section 10.05 Severability..................................................
Section 10.06 Counterparts..................................................
Section 10.07 Entire Agreement; Third-Party Beneficiaries...................
Section 10.08 Governing Law.................................................
Section 10.09 Assignment....................................................
Section 10.10 Enforcement...................................................
Section 10.11 Consents......................................................
Section 10.12 WAIVER OF JURY TRIAL..........................................
EXHIBIT
EXHIBIT A Deposit Escrow Agreement
INDEX OF DEFINED TERMS
Defined Term Section
"affiliate" Section 10.03(a)
"Agreement" Preamble
"Articles of Merger" Section 1.03
"Board Committee" Section 10.03(b)
"Board of Directors" Recitals
"business day" Section 10.03(c)
"Certificate" Section 2.02
"Closing" Section 1.02
"Closing Date" Section 1.02
"Code" Section 2.03(h)
"Colorado Gaming Authorities" Section 10.03(d)
"Commonly Controlled Entity" Section 4.09(a)
"Company" Preamble
"Company Benefit Agreements" Section 4.09(b)
"Company Benefit Plans" Section 4.09(a)
"Company By-laws" Section 4.01(a)
"Company Charter" Section 4.01(a)
"Company Common Stock" Section 2.01(b)
"Company Schedule" Article IV
"Company Employees" Section 7.09(a)
"Company Intellectual Property" Section 4.16(b)
"Company Leased Properties" Section 4.15(a)
"Company Material Adverse Effect" Section 10.03(e)
"Company Material Contracts" Section 4.14(a)
"Company Owned Properties" Section 4.15(a)
"Company Properties" Section 4.15(a)
"Company SEC Documents" Section 4.05(a)
"Company Stockholder Approval" Section 4.03(c)
"Company Stockholders Meeting" Section 7.02
"Company Subsidiaries" Section 4.01(a)
"Confidentiality Agreements" Section 10.03(f)
"Consent" Section 4.04(b)
"Contract" Section 4.04(a)
"Controlling Parties" Section 10.03(g)
"Covered Employees" Section 10.03(h)
"Current D&O Policy" Section 7.08(b)
"Current Premium" Section 7.08(b)
"Delinquent" Section 4.15(b)
"Deposit" Section 3.01
"Deposit Amount" Section 3.01
"Deposit Escrow Agreement" Section 3.01
"Development" Section 7.04(a)
"Development Notice" Section 7.04(a)
"Directors' Option Plan" Section 10.03(i)
"Directors' Options" Section 10.03(j)
"Directors' Option Shares" Section 4.02(a)
"$" Section 10.03(k)
"Effective Date" Section 1.03
"Effective Time" Section 1.03
"Environmental Claim" Section 4.13(b)(i)
"Environmental Laws" Section 4.13(b)(ii)
"Environmental Permits" Section 4.13(a)(ii)
"ERISA" Section 4.10(b)
"Escrow" Section 3.01
"Escrow Agent" Section 3.01
"Escrow Fees" Section 10.03(l)
"ESOP" Section 7.09(a)
"Exchange Act" Section 4.04(b)
"Exchange Fund" Section 2.03(a)
"Excluded Shares" Section 2.01(b)
"Extension Notice" Section 10.03(m)
"Filed Company SEC Document" Article IV
"Financing Commitment" Section 10.03(n)
"Foothill Credit Facility" Section 6.01(a)(xi)
"GAAP" Section 4.05(c)
"Gaming Approvals" Section 7.17(b)
"Gaming Authorities" Section 10.03(o)
"Gaming Laws" Section 10.03(p)
"Governmental Entity" Section 4.04(b)
"Hazardous Materials" Section 4.13(b)(iii)
"HSR Act" Section 4.04(b)
"Indemnified Parties" Section 7.08(a)
"Indenture" Section 10.03(q)
"Indenture Obligation" Section 7.16(a)
"Indenture Provisions" Section 7.16(a)
"Intellectual Property" Section 4.16(a)
"Judgment" Section 4.04(a)
"Knowledge of the Company" Section 10.03(r)
"Knowledge of the Controlling Parties" Section 10.03(s)
"Law" Section 4.04(a)
"Lease" Section 4.15(i)
"Liens" Section 4.02(a)
"Major Lease" Section 8.02(g)(i)
"Maximum Premium" Section 7.08(b)
"Merger" Recitals
"Merger Consideration" Section 2.01(c)
"Merger Sub" Preamble
"Mortgage Title Insurance Policy" Section 4.15(c)
"Nevada Gaming Authorities" Section 10.03(t)
"Nevada Law" Section 1.01
"Note Acquisition Deadline" Section 7.16(c)
"Note Funding" Section 7.16(d)
"Noteholder Consent" Section 7.16(b)(i)
"Noteholders" Section 7.16(b)(i)
"Officers" Section 8.02(a)
"Opco" Section 10.03(u)
"Options" Section 2.04(a)
"Option Plans" Section 2.04(a)
"Option Price" Section 2.04(a)
"Option Shares" Section 6.01(a)(iii)
"Other Stock Plan" Section 2.04(b)
"Outside Date" Section 9.01(b)(i)
"Parent" Preamble
"Parent Benefit Plans" Section 7.09(a)
"Parent's Applicants" Section 10.03(v)
"Participant" Section 4.09(a)
"Paying Agent" Section 2.03(a)
"Permits" Section 4.12
"Permitted Liens" Section 4.15(b)
"person" Section 10.03(w)
"Progress Certificate" Section 7.17(b)(iii)
"Property Restrictions" Section 4.15(b)
"Proxy Statement" Section 4.04(b)
"Regulatory Action" Section 10.03(x)
"Regulatory Filing" Section 7.17(b)(i)
"Reimbursement Agreements" Section 4.15(l)
"Release" Section 4.13(b)(iv)
"Representatives" Section 10.03(y)
"Retirement Account Disbursement" Section 10.03(z)
"▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act" Section 4.05(b)
"SEC" Section 4.04(b)
"Secretary of State" Section 1.03
"Securities Act" Section 4.05(b)
"Senior Notes" Section 7.16(a)
"Severance Compensation" Section 10.03(aa)
"Solicitation Documents" Section 7.16(b)(ii)
"Subsidiary" Section 10.03(bb)
"Superior Proposal" Section 6.02(e)
"Surviving Corporation" Section 1.01
"Tail Coverage" Section 7.08(b)
"Tail Policy" Section 7.08(b)
"Takeover Proposal" Section 6.02(e)
"Taxes" Section 4.08(a)
"Tax Return" Section 4.08(a)
"Taxing Authority" Section 4.08(a)
"Termination Fee" Section 9.02(b)
"Third Party" Section 4.15(m)
"Third Party Licenses" Section 4.16(c)
"Topping Fee" Section 9.02(c)
"Transactions" Section 1.01
"Transfer Taxes" Section 7.14(a)
"2005 Option Plans" Section 10.03(cc)
"Voting Company Debt" Section 4.02(a)
"WARN Act" Section 4.20
"▇▇▇▇▇▇▇▇▇ Stock Purchase Agreement" Section 4.02(b)
AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER, dated as of April 5, 2006 (this
"Agreement"), is entered into by Riv Acquisition Holdings Inc., a Delaware
corporation ("Parent"); Riv Acquisition Inc., a Nevada corporation ("Merger
Sub") and a wholly-owned subsidiary of Parent; and Riviera Holdings Corporation,
a Nevada corporation (the "Company").
R E C I T A L S:
WHEREAS, the board of directors of the Company (the "Board of
Directors") and the respective boards of directors of Parent and Merger Sub have
approved and declared advisable this Agreement, providing for the merger of
Merger Sub with and into the Company (the "Merger") upon the terms and subject
to the conditions set forth in this Agreement; and
WHEREAS the Company, Parent and Merger Sub desire to make certain
representations, warranties, covenants and agreements in connection with the
Merger and also to prescribe various conditions to the Merger.
NOW, THEREFORE, the Company, Parent and Merger Sub agree as follows:
ARTICLE I
THE MERGER
Section 1.01 The Merger. On the terms and subject to the conditions
set forth in this Agreement, and in accordance with the Nevada Revised Statutes
("Nevada Law"), Merger Sub shall be merged with and into the Company at the
Effective Time (as defined in Section 1.03). At the Effective Time, the separate
corporate existence of Merger Sub shall cease and the Company shall continue as
the surviving corporation (the "Surviving Corporation") and shall succeed to and
assume all the rights and obligations of Merger Sub in accordance with Nevada
Law. The Merger, the payment of cash in connection with the Merger and the other
transactions contemplated by this Agreement are collectively referred to herein
as the "Transactions."
Section 1.02 Closing. The closing of the Merger (the "Closing")
shall take place at the offices of ▇▇▇▇▇▇ & Silver, Ltd., ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇ at 10:00 a.m. on the second business
day following the satisfaction (or, to the extent permitted by Law, waiver by
all parties) of the conditions set forth in Section 8.01, or, if on such day any
condition set forth in Section 8.02 or 8.03 has not been satisfied (or, to the
extent permitted by Law, waived by the party or parties entitled to the benefits
thereof), as soon as practicable after all the conditions set forth in Article
VIII have been satisfied (other than those conditions that by their nature or by
the terms of this Agreement are to be satisfied at or after the Closing), but
subject to the fulfillment or, to the extent permitted by Law, waiver of those
by parties entitled to the benefits thereof, or at such other place, time and
date as shall be agreed in writing by Parent, Merger Sub and the Company. The
date on which the Closing occurs is referred to in this Agreement as the
"Closing Date."
Section 1.03 Effective Time. Prior to the Closing, the parties shall
prepare, and by the Closing Date the Company shall file with the Secretary of
State of the State of Nevada (the "Secretary of State"), articles of merger or
other appropriate documents (in any such case, the "Articles of Merger")
executed in accordance with the relevant provisions of Nevada Law and shall make
all other filings or recordings required under Nevada Law to effect the Merger.
The Merger shall become effective at such time as the Articles of Merger are
duly filed with the Secretary of State, or at such later time as Parent, Merger
Sub and the Company agree and specify in the Articles of Merger (the time the
Merger becomes effective being the "Effective Time" and the date upon which the
Effective Time occurs being the "Effective Date").
Section 1.04 Effect of the Merger. The Merger shall have the effects
set forth in Section 92A.250 of Nevada Law. Without limiting the generality of
the foregoing, and subject thereto, at the Effective Time all the property,
rights, privileges, powers and franchises of the Company and Merger Sub shall
vest in the Surviving Corporation, and all debts, liabilities and duties of the
Company and Merger Sub shall become the debts, liabilities and duties of the
Surviving Corporation.
Section 1.05 Subsequent Actions. If, at any time after the Effective
Time, the Surviving Corporation determines or is advised that any deeds, bills
of sale, assignments, assurances or other actions or things are necessary or
desirable to vest, perfect or confirm of record or otherwise in the Surviving
Corporation its right, title or interest in, to or under any of the rights,
properties or assets of either of the Company or Merger Sub acquired or to be
acquired by the Surviving Corporation as a result of, or in connection with, the
Merger or otherwise to carry out this Agreement, the officers and directors of
the Surviving Corporation shall be authorized to execute and deliver, in the
name and on behalf of either the Company or Merger Sub, all such deeds, bills of
sale, assignments and assurances and to take and do, in the name and on behalf
of each of such corporations or otherwise, all such other actions and things as
may be necessary or desirable to vest, perfect or confirm any and all right,
title and interest in, to and under such rights, properties or assets in the
Surviving Corporation or otherwise to carry out this Agreement.
Section 1.06 Articles of Incorporation; By-Laws. (a) Unless
otherwise determined by Merger Sub and reported to the Company before the
Closing Date, the articles of incorporation of Merger Sub, as in effect
immediately before the Effective Time, shall be the articles of incorporation of
the Surviving Corporation until thereafter amended in accordance with such
articles of incorporation and applicable Law.
(b) The by-laws of Merger Sub, as in effect immediately before the
Effective Time, shall be the by-laws of the Surviving Corporation until
thereafter amended in accordance with applicable Law, the articles of
incorporation of the Surviving Corporation and such by-laws.
Section 1.07 Directors. The directors of Merger Sub immediately
prior to the Effective Time shall be the directors of the Surviving Corporation,
until the earliest of their resignation, their removal or the election and
qualification of their respective successors, as the case may be.
Section 1.08 Officers. The officers of the Company immediately prior
to the Effective Time shall be the officers of the Surviving Corporation, until
the earlier of their resignation, their removal or the appointment and
qualification of their respective successors, as the case may be.
ARTICLE II
CONVERSION OF SECURITIES
Section 2.01 Conversion of Capital Stock. At the Effective Time, by
virtue of the Merger and without any action on the part of Merger Sub, the
Company or their respective stockholders, the shares of stock of the constituent
corporations shall be converted as follows:
(a) Capital Stock of Merger Sub. Each issued and outstanding share
of capital stock of Merger Sub shall be converted into and become one fully paid
and nonassessable share of common stock, par value $0.001 per share, of the
Surviving Corporation.
(b) Cancellation of Treasury Stock and Parent-Owned Stock. Each
issued and outstanding share of common stock, par value $.001 per share, of the
Company ("Company Common Stock") that is owned by the Company, a Company
Subsidiary, Parent or Merger Sub or held in the treasury of the Company
(collectively, "Excluded Shares") shall automatically be canceled and retired
and shall cease to exist, and no consideration shall be delivered or deliverable
in exchange therefor.
(c) Conversion of Company Common Stock. Each share of Company Common
Stock issued and outstanding immediately prior to the Effective Time (other than
any Excluded Shares) shall be converted into the right to receive Seventeen
Dollars ($17.00) in cash following the Effective Time (the "Merger
Consideration").
Section 2.02 Cancellation and Retirement of Company Common Stock. As
of the Effective Time, all shares of Company Common Stock (other than any shares
owned by Parent or any Subsidiary of Parent other than Merger Sub) issued and
outstanding immediately prior to the Effective Time, 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 of Company
Common Stock (a "Certificate") shall, to the extent such Certificate represents
such shares, cease to have any rights with respect thereto, except the right to
receive the Merger Consideration.
Section 2.03 Exchange of Certificates. (a) Paying Agent. Prior to
the Company's mailing of the Proxy Statement, Merger Sub shall select a bank or
trust company to act as paying agent (the "Paying Agent") for payment of the
Merger Consideration upon surrender of Certificates. Parent shall cause the
Surviving Corporation to provide to the Paying Agent on a timely basis, as and
when needed after the Effective Time, cash necessary to pay for the shares of
Company Common Stock converted into the right to receive cash pursuant to
Section 2.01(c) (such cash being referred to as the "Exchange Fund"), upon
surrender of Certificates. Any and all interest earned on such funds made
available to the Paying Agent pursuant to this Agreement shall be paid to
Parent. The Exchange Fund may not be used for any other purpose.
(b) Exchange Procedures. As soon as reasonably practicable after the
Effective Time, the Paying Agent shall mail to all holders of record of
Certificates, which immediately prior to the Effective Time represented
outstanding shares of Company Common Stock and which were converted into the
right to receive the Merger Consideration pursuant to Section 2.01(c), (i) a
letter of transmittal (which shall specify that delivery shall be effected, and
risk of loss and title to the Certificates shall pass, only upon delivery of the
Certificates to the Paying Agent and shall be in such form and have such other
provisions as Parent may reasonably specify) and (ii) instructions for
surrendering Certificates in exchange for the Merger Consideration. Upon
surrender of a Certificate for cancellation to the Paying Agent or to such other
agent or agents as may be appointed by Parent, together with such letter of
transmittal, duly executed, and such other documents as may reasonably be
required by the Paying Agent, each of the holders of such Certificates shall be
entitled to receive in exchange therefor the amount of cash payable in respect
of the shares of Company Common Stock theretofore represented by such
Certificates pursuant to the provisions of this Article II, and each of the
Certificates so surrendered shall forthwith be canceled. In the event of a
transfer of ownership of Company Common Stock that is not registered in the
stock transfer records of the Company, payment may be made to a person other
than the person in whose name the Certificate so surrendered is registered if
such Certificate has been properly endorsed or otherwise is in proper form for
transfer and the person requesting such payment pays any transfer taxes or other
Taxes required by reason of the payment to a person other than the registered
holder of such Certificate or establishes to the satisfaction of Parent that
such Taxes have been paid or are not applicable. Until surrendered as
contemplated by this Section 2.03, each Certificate shall be deemed after the
Effective Time to represent only the right to receive upon such surrender the
Merger Consideration into which the shares of Company Common Stock theretofore
represented by such Certificate have been converted pursuant to Section 2.01(c).
No interest shall be paid or accrue on any cash payable upon surrender of any
Certificate.
(c) Lost Certificates. If any Certificate has been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the person claiming
such Certificate to be lost, stolen or destroyed, the Paying Agent shall issue
in exchange for such lost, stolen or destroyed Certificate the Merger
Consideration deliverable in respect thereof determined in accordance with this
Article II; provided, however, that Parent or the Paying Agent may require the
delivery of a reasonable indemnity or bond against any claim that may be made
against the Surviving Corporation with respect to such Certificate or ownership
thereof.
(d) No Further Ownership Rights in Company Common Stock. The Merger
Consideration paid in exchange for the surrender of Certificates in accordance
with the terms of this Article II shall be deemed to have been paid in full
satisfaction of all rights pertaining to such shares of Company Common Stock
theretofore represented by such Certificates, subject, however, to the Surviving
Corporation's obligation to pay any dividends or make any other distributions,
with a record date prior to the Effective Time, that may have been declared by
the Company on such shares of Company Common Stock in accordance with the terms
of this Agreement or prior to the date of this Agreement and which remain unpaid
at the Effective Time, and after the Effective Time there shall be no further
registration of transfers on the stock transfer books of the Surviving
Corporation of shares of Company Common Stock that were outstanding immediately
prior to the Effective Time. After the Effective Time, any Certificates that are
presented to the Surviving Corporation or the Paying Agent for any reason shall
be canceled and exchanged as provided in this Article II.
(e) Termination of Exchange Fund. Any portion of the Exchange Fund
that remains undistributed to the holders of Company Common Stock for six months
after the Effective Time shall be delivered to the Surviving Corporation, upon
demand, and any holder of Company Common Stock prior to the Merger who has not
theretofore complied with this Article II shall thereafter look only to Parent
and the Surviving Corporation for payment of its claim for the Merger
Consideration and only as general creditors in respect of such claim.
(f) No Liability. None of Parent, Merger Sub, the Company, the
Surviving Corporation or the Paying Agent, or any employee, officer, director,
agent or affiliate thereof, shall be liable to any person in respect of any cash
from the Exchange Fund delivered to a public official pursuant to any applicable
abandoned property, escheat or similar Law. If any Certificate has not been
surrendered prior to one year after the Effective Time (or immediately prior to
such earlier date on which Merger Consideration would otherwise escheat to or
become the property of any Governmental Entity), any such cash in respect of
such Certificate shall, to the extent permitted by applicable Law, become the
property of the Surviving Corporation, free and clear of all claims or interest
of any person previously entitled thereto.
(g) Investment of Exchange Fund. The Paying Agent shall invest any
cash in the Exchange Fund, as directed by Parent, on a daily basis. Any interest
or other income resulting from such investments shall be paid to Parent.
(h) Withholding Rights. Parent, the Surviving Corporation or the
Paying Agent shall be entitled to deduct and withhold from the consideration
otherwise payable to any holder of Company Common Stock pursuant to this
Agreement such amounts as Parent, the Surviving Corporation or the Paying Agent
may be required to deduct and withhold with respect to the making of such
payment under the Internal Revenue Code of 1986, as amended (the "Code"), or
under any provision of state, local or foreign tax Law. To the extent that
amounts are so withheld and paid over to the appropriate taxing authority by
Parent, the Surviving Corporation or the Paying Agent, such withheld amounts
shall be treated for all purposes of this Agreement as having been paid to the
holder of the shares of Company Common Stock in respect of which such deduction
and withholding was made by Parent, the Surviving Corporation or the Paying
Agent.
Section 2.04 Stock Plans. (a) Options. The Company shall take all
actions necessary to provide that at the Effective Time, (i) each then
outstanding option to purchase shares of Company Common Stock, whether granted
under any of the Company's stock option plans referred to in Section 4.02(c)
(the "Option Plans") or otherwise (collectively, the "Options"), whether or not
then exercisable or vested, shall be cancelled and (ii) in consideration of such
cancellation, the Surviving Corporation shall pay to the holder of each such
Option an amount (subject to any applicable withholding tax) in cash, without
interest, equal to the product of (A) the excess of the Merger Consideration
over the per share exercise price of such Option and (B) the number of shares of
Company Common Stock subject to such Option (such amount being referred to as
the "Option Price"). The Company shall take all actions necessary to ensure that
the cancellation of each Option in exchange for the Option Price shall be deemed
a release of any and all rights the holder had or may have had in respect of
such Option.
(b) Except as provided herein or as otherwise agreed to by the
parties, (i) the Company shall cause the Option Plans to terminate by not later
than the Effective Time and shall provide for the payment of any benefit due
under such Option Plans in cash; (ii) the Company shall cause the provisions of
any other plan, program or arrangement that currently provides or previously
provided for the issuance or grant by the Company of any interest in respect of
the capital stock of the Company, or for payments based on the value of the
capital stock of the Company (each such other plan being referred to as an
"Other Stock Plan"), to terminate by not later than the Effective Time and shall
provide for the payment of any benefit due under such Other Stock Plans in cash;
and (iii) the Company shall take all actions necessary to ensure that following
the Effective Time no holder of Options nor any participant in the Option Plans
or in any Other Stock Plan shall have any right thereunder to acquire any equity
securities of the Company, the Surviving Corporation or any Subsidiary thereof.
ARTICLE III
DEPOSIT
Section 3.01 Deposit. Contemporaneously with its execution of this
Agreement, Parent shall deposit with Wilmington Trust Corp. (the "Escrow
Agent"), by wire transfer of immediately available funds, Fifteen Million
Dollars ($15,000,000) (such amount, as may be increased pursuant to Section
9.01(b)(i), being the "Deposit") to be held in an escrow account established
with the Escrow Agent (the "Escrow") pending the Closing in accordance with the
terms of an escrow agreement, a copy of which is appended hereto as Exhibit A
(the "Deposit Escrow Agreement"). At the Closing, the Deposit and any income
thereon, but less the Escrow Fees under the Deposit Escrow Agreement (the
"Deposit Amount"), shall be returned to Parent, or to such person as Parent may
direct, by wire transfer of immediately available funds to such account as
Parent designates in writing to the Escrow Agent prior to the Closing. In the
event of a termination of this Agreement prior to the Closing, Parent's or the
Company's entitlement to the Deposit Amount shall be determined under Section
9.02.
Section 3.02 Investment of Deposit. The Deposit shall be held by the
Escrow Agent in one or more interest-bearing accounts or, if the parties so
instruct in writing, used to purchase (i) direct obligations of the United
States or any agency thereof, (ii) certificates of deposit issued by Bank of
America, N.A. or Citibank, N.A. or (iii) commercial paper given the highest
rating by a nationally recognized credit rating agency; provided, however, that
the Deposit will not be invested in any manner which would result in any portion
of the Deposit and any income thereon not being immediately available for
release.
Section 3.03 Opening of and Operation of Escrow. Concurrently with
the execution of this Agreement, Parent and the Company shall open the Escrow
with the Escrow Agent by delivery of a fully executed copy of this Agreement and
the Deposit Escrow Agreement to the Escrow Agent and by Parent's delivery of the
Deposit to an account designated in writing by the Escrow Agent. This Agreement
and the Deposit Escrow Agreement shall constitute joint escrow instructions to
the Escrow Agent with respect to the Deposit. In addition, Parent and the
Company agree to execute and be bound by such other reasonable and customary
escrow instructions as may be necessary or reasonably required by the Escrow
Agent or the parties hereto in order to consummate the Transactions, or
otherwise to distribute and pay the funds held in the Escrow as provided in this
Agreement and the Deposit Escrow Agreement; provided that such escrow
instructions are consistent with the terms of this Agreement and the Deposit
Escrow Agreement. In the event of any inconsistency between (x) any such
supplemental escrow instructions and this Agreement and (y) the Deposit Escrow
Agreement and this Agreement, then the terms and provisions of this Agreement
shall control, absent an express written agreement by the parties hereto to the
contrary which acknowledges this Section 3.03. Parent and the Company hereby
designate the Escrow Agent as the "reporting person" for the Transactions
pursuant to Section 6045(e) of the Code.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as set forth in that certain disclosure schedule (with
specific reference to the Section or Subsection of this Agreement to which the
information stated in such disclosure schedule relates) dated as of the date of
this Agreement, from the Company to Parent and Merger Sub and delivered by the
Company to Parent prior to the execution of this Agreement (the "Company
Schedule") or in any Company SEC Documents filed and publicly available prior to
the date of this Agreement (the "Filed Company SEC Documents"), the Company
represents and warrants to Parent and Merger Sub that:
Section 4.01 Organization, Standing and Power. (a) Each of the
Company and its Subsidiaries ("Company Subsidiaries") is duly organized,
existing and in good standing under the laws of the jurisdiction of its
incorporation and has full corporate power and authority to conduct its business
as presently conducted. Each of the Company and the Company Subsidiaries is duly
qualified or licensed as a foreign corporation to do business, and is in good
standing in each jurisdiction where the character of its properties owned,
operated or leased or the nature of its activities makes such qualification or
licensing necessary, except for failures to be so qualified or licensed or to be
in good standing which, individually or in the aggregate, would not reasonably
be likely to have a Company Material Adverse Effect. The Company has delivered
to Parent true and complete copies of the articles of incorporation of the
Company, as amended to the date of this Agreement (as so amended, the "Company
Charter"), and the by-laws of the Company, as amended to the date of this
Agreement (as so amended, the "Company By-laws") and the comparable charter and
organizational documents of each Company Subsidiary, in each case as amended to
the date of this Agreement.
(b) A true and complete list of the Company Subsidiaries and the
percentage of each Company Subsidiary's outstanding equity interests owned by
the Company or another Company Subsidiary is set forth in Section 4.01(b) of the
Company Schedule.
Section 4.02 Capitalization. (a) The authorized capital stock of the
Company consists of 60,000,000 shares of Company Common Stock. At the close of
business on March 30, 2006, (i) 12,451,755 shares of Company Common Stock
(including 191,022 shares held under a deferred compensation plan in a rabbi
trust for the benefit of five participants but excluding shares referred to in
the following clause (ii)) were issued and outstanding, (ii) 4,668,069 shares of
Company Common Stock were held in treasury by the Company, (iii) 216,000 shares
of Company Common Stock were reserved for issuance upon the exercise of
outstanding Options under the Option Plans and (iv) 54,000 shares of Company
Common Stock were reserved for issuance upon the exercise of the Directors'
Options (the "Directors' Option Shares"). Except as set forth above, at the
close of business on March 30, 2006, no shares of capital stock or other voting
securities of the Company, and no securities convertible into or exchangeable
for, or options, warrants, calls, commitments or rights of any kind to acquire,
any shares of capital stock or other equity interests of the Company, were
issued, reserved for issuance or outstanding, except that: (x) ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇,
president of Riviera Operating Company, a Nevada corporation and a Company
Subsidiary, pursuant to the terms of his employment Agreement, is entitled to
receive (A) in his sole discretion, either $25,000 or shares of Company Common
Stock with a value equal to $25,000 on the first business day of each calendar
quarter, and (B) an amount equal to his annual incentive bonus, in his sole
discretion, either in cash or in shares of Company Common Stock with a value
equal to such amount), (y) non-employee directors of the Company may elect to
receive their director fees in the form of shares of Company Common Stock and
(z) a total of 1,150,000 shares of Company Common Stock (including the
Directors' Option Shares) have been reserved for issuance under the 2005 Option
Plans. The Company shall make all reasonable efforts to have ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ and
the Company's non-employee directors accept cash in the exercise of their
respective rights described in the immediately preceding clauses (x) and (y).
Between December 31, 2005 and the date of this Agreement, no shares of capital
stock or other voting securities of the Company, and no securities convertible
into or exchangeable for, or options, warrants, calls, commitments or rights of
any kind to acquire, any shares of capital stock or other equity interests of
the Company, were issued by the Company, except for shares of Company Common
Stock issued upon the exercise of Options outstanding as of December 31, 2005.
There are no outstanding stock appreciation rights linked to the price of
Company Common Stock and granted under the Option Plans or otherwise by the
Company or any Company Subsidiary. All outstanding shares of Company Common
Stock are, and all such shares that may be issued prior to the Effective Time
will be when issued, duly authorized, validly issued, fully paid, nonassessable
and not subject to or issued in violation of any right of first refusal,
preemptive right, subscription right or any similar right under any provision of
Nevada Law, the Company Charter, the Company By-laws or any Contract to which
the Company is a party. All outstanding shares of Company Common Stock were
issued, and all such shares that may be issued prior to the Effective Date will
be when issued, free and clear of all liens, security interests pledges,
agreements, claims, charges or encumbrances (collectively "Liens") and will be
delivered free and clear of all Liens other than such Liens as may be created by
the holders thereof. There are no bonds, debentures, notes or other indebtedness
of the Company having the right to vote (or convertible into, or exchangeable
for, securities having the right to vote) on any matters on which holders of
Company Common Stock may vote ("Voting Company Debt"). Except as set forth
above, as of the date of this Agreement, there are no options, warrants, rights,
convertible or exchangeable securities, stock appreciation rights, stock-based
performance units, commitments, Contracts, arrangements or undertakings of any
kind by which the Company or any Company Subsidiary is bound obligating the
Company or any Company Subsidiary to issue, deliver or sell additional shares of
capital stock or other equity interests in, or any security convertible or
exercisable for or exchangeable into any capital stock of or other equity
interest in, the Company or any Company Subsidiary or any Voting Company Debt.
As of the date of this Agreement, there are no outstanding contractual
obligations of the Company or any Company Subsidiary to repurchase, redeem or
otherwise acquire any shares of capital stock of the Company or any Company
Subsidiary.
(b) All of the outstanding capital stock of each of the Company
Subsidiaries is .duly authorized, validly issued, fully paid and nonassessable
and is owned by the Company or a Company Subsidiary free and clear of any Liens.
There are no existing options, calls, warrants or similar rights, agreements,
arrangements or commitments relating to the capital stock or other securities of
any Company Subsidiary. Except for the Company Subsidiaries, the Company does
not directly or indirectly own any equity interest in, or any interest
convertible into or exchangeable or exercisable for, any equity interest in any
other corporation, partnership or other business association or entity. Neither
the Company nor any Company Subsidiary is under any obligation to make a capital
contribution or investment in or loan to, or to assume any liability or
obligation of, any corporation, partnership or other business association or
entity.
(c) Section 4.02(c) of the Company Schedule sets forth a true,
complete and correct list of all Directors' Options and outstanding Options; the
number of shares of Company Common Stock subject to each such Option; the grant
dates, expiration dates, exercise price and vesting schedule of each such
Option; the name of the holder of each Option; and all stock option plans of the
Company pursuant to which any outstanding Options were granted or under which
any shares of Company Common Stock have been reserved for issuance. No option
agreement contains terms that are in any material respect inconsistent with, or
in addition to, the terms contained in the Company's standard forms of Option
agreements set forth in Section 4.02(c) of the Company Schedule.
Section 4.03 Authority; Execution and Delivery; Enforceability. (a)
The Company has all requisite corporate power and authority to execute and
deliver this Agreement. The execution and delivery by the Company of this
Agreement and the consummation by the Company of the Merger and the other
Transactions have been duly authorized by all necessary corporate action on the
part of the Company, subject, in the case of the Merger, to receipt of the
Company Stockholder Approval. The Company has duly executed and delivered this
Agreement and, assuming due authorization, execution and delivery of this
Agreement by Parent and Merger Sub, this Agreement constitutes the Company's
legal, valid and binding obligation, enforceable against the Company in
accordance with its terms.
(b) The Board of Directors, at a meeting duly called and held, duly
adopted resolutions (i) approving this Agreement and approving and declaring
advisable the Merger and the other Transactions, (ii) declaring that it is in
the best interests of the Company's stockholders that the Company enter into
this Agreement and consummate the Merger on the terms and subject to the
conditions set forth in this Agreement, (iii) approving this Agreement, the
Merger and the other Transactions for purposes of Nevada Law, (iv) directing
that this Agreement be submitted to a vote at a meeting of the Company's
stockholders, (v) providing the requisite waivers or approvals for Parent and
its affiliates under Article III, Section 7 of the Company Charter, Sections
78.411-78.444 and 78.378-78.3793 of Nevada Law, and any other potentially
applicable anti-takeover or similar statute or regulation with respect to the
Merger, and the other Transactions, the transactions contemplated by the Stock
Purchase Agreement, dated as of December 22, 2005, among Flag Luxury Riv. LLC,
Rivacq LLC, High Desert Gaming LLC, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ and The ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇▇ 2004 Revocable Family Trust (the "▇▇▇▇▇▇▇▇▇ Stock Purchase Agreement")
and (vi) recommending that the holders of the Company Common Stock approve this
Agreement, which resolutions have not been subsequently rescinded, modified or
withdrawn in any way except as permitted by Section 6.02(b). Provided that the
Company Common Stock is traded on the American Stock Exchange or similar
national stock exchange, the holders of Company Common Stock are not entitled to
dissenters rights under Section 92A.380 of Nevada Law, as in effect as of the
date hereof, or any other appraisal rights or similar rights as a result of the
Merger or any of the other Transactions.
(c) The affirmative vote of holders of 60% of the outstanding shares
of Company Common Stock (the "Company Stockholder Approval") is the only vote of
the holders of any class or series of Company Common Stock necessary to approve
this Agreement, the Merger and the other Transactions. No state takeover statute
or similar statute or regulation is applicable to the Merger or any of the other
Transactions.
Section 4.04 No Conflicts; Consents. (a) The execution and delivery
by the Company of this Agreement do not, and the consummation of the Merger and
the other Transactions and compliance with the terms hereof will not, (i)
conflict with or violate any judgment, order or decree ("Judgment") or statute,
law (including common law), ordinance, rule or regulation ("Law") applicable to
the Company or any Company Subsidiary or their respective properties or assets,
(ii) violate or conflict with the articles of incorporation or by-laws or
equivalent organizational documents of the Company or any Company Subsidiary, or
(iii) result in any breach of, or constitute a default (or an event which with
notice or lapse of time or both would become a default) under, or result in any,
or give rise to any rights of termination, cancellation or acceleration of any
obligations or any loss of any material benefit under, or result in the creation
of a Lien on any of the properties or assets (whether owned, leased or managed)
of the Company or any of the Company Subsidiaries pursuant to, any agreement,
note, bond, contract, permit, lease, mortgage, indenture, license, franchise or
other instrument (a "Contract") to which the Company or any of the Company
Subsidiaries is a party or by which the Company or any of the Company
Subsidiaries or any of their respective properties (whether owned, leased or
managed) are bound, except for, in the case of clause (iii) above, (y)
conflicts, violations, breaches or defaults which, individually or in the
aggregate, would not be reasonably likely to have a Company Material Adverse
Effect and (z) the Retirement Account Disbursement.
(b) No consent, approval, qualification, license, permit, order or
authorization ("Consent") of, or registration, declaration or filing with, or
permit from, any domestic or foreign government (whether local, municipal,
state, provincial, federal or otherwise) or any court, administrative agency or
commission or other governmental or regulatory authority or agency or
instrumentality, domestic or foreign (a "Governmental Entity")) is required to
be obtained or made by or with respect to the Company or any Company Subsidiary
in connection with the execution, delivery and performance of this Agreement or
the consummation of the Merger and the other Transactions, other than (i) the
pre-merger notification and report requirements of the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇
Antitrust Improvements Act of 1976, as amended (the "HSR Act"), (ii) the filing
with the United States Securities and Exchange Commission (the "SEC") of (A) a
proxy or information statement relating to the approval of this Agreement by the
Company's stockholders (as amended or supplemented from time to time, the "Proxy
Statement"), and (B) such reports under Sections 13 and 16 of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), as may be required in
connection with this Agreement, the Merger and the other Transactions, (iii) the
filing of the Articles of Merger with the Secretary of State and appropriate
documents with the relevant authorities of the other jurisdictions in which the
Company is qualified to do business, (iv) any filings as may be required under
applicable Gaming Laws, (v) such filings as may be required in connection with
the Taxes described in Section 7.14, and (vi) any filings required under the
rules or regulations of the American Stock Exchange.
Section 4.05 SEC Documents; Undisclosed Liabilities. (a) The Company
has timely filed with the SEC, all reports, schedules, forms, statements and
other documents (including exhibits and all other information incorporated
therein) required to be filed with the SEC by the Company since January 1, 2003
(collectively, the "Company SEC Documents"). No Company Subsidiary is required
to file any form, report, registration statement or prospectus or other document
with the SEC.
(b) As of its respective date, each Company SEC Document complied in
all material respects with the requirements of the Exchange Act or the
Securities Act of 1933, as amended (the "Securities Act"), as the case may be,
and, to the extent not included in the Exchange Act or the Securities Act, the
▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of 2002 (the "▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act"), and the rules and
regulations of the SEC promulgated thereunder applicable to such Company SEC
Document, and did not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they were
made, not misleading. None of the Company Subsidiaries is required to file or
furnish any statements or reports with the SEC pursuant to Sections 13(a) or
15(d) of the Exchange Act. Except to the extent that information contained in
any Filed Company SEC Document has been revised or superseded by a later Filed
Company SEC Document, none of the Company SEC Documents contains any untrue
statement of a material fact or omits to state any material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading.
(c) The consolidated financial statements of the Company included in
the Company SEC Documents comply as to form in all material respects with
applicable accounting requirements and published rules and regulations of the
SEC with respect thereto, have been prepared in accordance with generally
accepted accounting principles ("GAAP") (except, in the case of unaudited
statements, as permitted by Form 10-Q of the SEC) applied on a consistent basis
during the periods involved (except as may be indicated in the notes thereto)
and fairly present in all material respects the financial position of the
Company and the Company Subsidiaries on a consolidated basis as of the dates
thereof and the results of their operations and cash flows for the periods shown
(subject, in the case of unaudited statements, to normal year-end audit
adjustments) The principal executive officer of the Company and the principal
financial officer of the Company have made the certifications required by
Sections 302 and 906 of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act and the rules and regulations of
the SEC promulgated thereunder with respect to the Company's filings pursuant to
the Exchange Act. For purposes of the preceding sentence, "principal executive
officer" and "principal financial officer" have the meanings given to such terms
in the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act.
(d) The Company maintains disclosure controls and procedures
required by Rule 13a-15 or 15d-15 under the Exchange Act. Such disclosure
controls and procedures are effective to ensure that all material information
concerning the Company and the Company Subsidiaries is made known on a timely
basis to the individuals responsible for the preparation of the Company's
filings with the SEC. The Company has disclosed, based on the most recent
evaluation by the chief executive officer and the chief financial officer of the
Company, to the Company's auditors and the audit committee of the Board of
Directors (A) any significant deficiencies and material weaknesses in the design
or operation of internal controls over financial reporting which are reasonably
likely to adversely affect in any material respect the Company's ability to
record, process, summarize and report financial information and (B) any fraud,
whether or not material, that involves management or other employees who have a
significant role in the Company's internal controls over financial reporting.
(e) As of the date hereof, the Company has not identified any
material internal control deficiencies which shall not have rectified prior to
the Closing. To the Knowledge of the Company, there is no reason to believe that
its auditors and its chief executive officer and chief financial officer will
not be able to give the certifications and attestations required pursuant to the
rules and regulations adopted pursuant to Section 404 of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act
when first due.
(f) Except as disclosed in any Filed Company SEC Document, and
except for liabilities and obligations that would not be reasonably likely to
have a Company Material Adverse Effect and were incurred in the ordinary course
of business consistent with past practice since the date of the most recent
balance sheet included in the Company SEC Documents filed prior to the date of
this Agreement, the Company and the Company Subsidiaries have no material
liabilities or obligations of any nature (whether accrued, absolute, contingent
or otherwise).
Section 4.06 Information Supplied. None of the information included
or incorporated by reference in the Proxy Statement will, at the date it is
first mailed to the Company's stockholders or at the time of the Company
Stockholders Meeting, contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they are
made, not misleading, except that no representation or warranty is made by the
Company with respect to statements made based on information supplied by, or on
behalf of, Parent or Merger Sub in writing for inclusion in the Proxy Statement.
All documents that the Company is responsible for filing with the SEC in
connection with the Transactions, including the Proxy Statement, will comply as
to form, in all material respects, with the Exchange Act, and each such document
required to be filed with any Governmental Entity (other than the SEC) will
comply in all material respects with the provisions of applicable Law as to the
information required to be contained therein.
Section 4.07 Absence of Certain Changes or Events. From the date of
the most recent financial statements included in the Filed Company SEC Documents
to the date of this Agreement:
(a) the Company and the Company Subsidiaries have conducted their
respective businesses only in the ordinary course and in a manner consist with
past practice;
(b) there has not been any state of facts, event, change, effect or
development that, individually or in the aggregate, has had or would reasonably
be likely to have a Company Material Adverse Effect; and
(c) none of the Company or any Company Subsidiary has taken any
action that, if taken after the date of this Agreement, would constitute a
breach of any of the covenants set forth in Section 6.01(a), other than the
covenants set forth in Section 6.01(a)(xxiv) and Section 6.01(a)(xxv).
Section 4.08 Taxes. As used in this Agreement:
(a) "Taxes" means all (i) federal, state and local, domestic and
foreign, taxes, assessments, duties or similar charges of any kind whatsoever,
including all corporate franchise, income, sales, use, ad valorem, receipts,
value added, profits, license, withholding, employment, excise, property, net
worth, capital gains, transfer, stamp, documentary, social security, payroll,
environmental, minimum or alternative minimum, occupation, recapture and other
taxes, and including any interest, penalties and additions imposed with respect
to such amounts; (ii) liability for the payment of any amounts of the type
described in clause (i) as a result of being a member of an affiliated,
consolidated, combined, unitary or aggregate group; and (iii) liability for the
payment of any amounts as a result of an express or implied obligation to
indemnify any other person with respect to the payment of any amounts of the
type described in clause (i) or (ii).
"Taxing Authority" means any federal, state or local, domestic or
foreign, governmental body (including any subdivision, agency or commission
thereof), or any quasi-governmental body, in each case, exercising regulatory
authority in respect of Taxes.
"Tax Return" means all returns, declarations of estimated tax
payments, reports, estimates, information returns and statements, including any
related or supporting information with respect to any of the foregoing, filed or
to be filed with any Taxing Authority in connection with the determination,
assessment, collection or administration of any Taxes.
(b) Except as disclosed in Section 4.08(b) of the Company Schedule,
the Company and each Company Subsidiary have timely filed or have caused to be
timely filed on its behalf, taking into account all duly filed extensions of
time, and with respect to Tax Returns the due date for filing of which is after
the date of this Agreement and before the Closing Date, will file timely or
cause to be filed timely, all material Tax Returns and take reasonable efforts
to timely file or cause to be timely filed all other non-material Tax Returns
required to be filed by or on behalf of the Company and each Company Subsidiary
in the manner prescribed by applicable law for each taxable year with respect to
which the relevant statute of limitations remains open. All such Tax Returns
are, and with respect to Tax Returns the due date for filing of which is after
the date of this Agreement and before the Closing Date, will be, true complete
and correct in all material respects. The Company and each Company Subsidiary
have timely paid, and with respect to Taxes required to be paid after the date
of this Agreement and before the Closing Date, will timely pay, all material
Taxes and take reasonable efforts to timely pay all other Taxes due from it with
respect to the taxable periods covered by such Tax Returns and will timely pay
all material Taxes and take reasonable efforts to timely pay all other Taxes for
which the Company and each Company Subsidiary are liable, and the most recent
financial statements contained in the Filed Company SEC Documents reflect an
adequate reserve for all Taxes payable by the Company and each Company
Subsidiary for all taxable periods and portions thereof through the date of such
balance sheet. Neither the Company nor any Company Subsidiary has any liability
for any Taxes of any person other than itself or any other affiliated group of
which the Company is the parent (i) under Treasury Regulation Section 1.1502-6
(or any similar provision of federal, state, local or foreign, law), (ii) as a
transferee or successor or (iii) by contract or otherwise.
(c) The Company has not received any written notice of any audit or
examination of any Company Subsidiary by any Taxing Authority and to the
Knowledge of the Company, no such audit or examination is pending or threatened.
Except as set forth on Section 4.08(c) of the Company Schedule, no written or
unwritten notice of such an audit or examination has been received by the
Company or any Company Subsidiary. Any material deficiency resulting from any
audit or examination relating to Taxes by any Taxing Authority has been timely
paid and there is no deficiency, refund litigation, proposed adjustment or
matter in controversy with respect to any Taxes alleged to be due and owing by
the Company or any Company Subsidiary. Section 4.08(c) of the Company Schedule
sets forth the dates of the most recent audits or examinations, if any, of the
Tax Returns of the Company or any Company Subsidiary by any Taxing Authority in
respect of all taxable periods for which the statute of limitations has not yet
expired.
(d) There is no agreement or other document extending, or having the
effect of extending, the period of assessment or collection of any Taxes and 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 Company Subsidiary.
(e) No material Liens for Taxes exist with respect to any assets or
properties of the Company or any Company Subsidiary, except statutory liens for
Taxes not yet due.
(f) Except for agreements solely between or among the Company and
any Company Subsidiaries, copies of which have been delivered to Parent, neither
the Company nor any Company Subsidiary is a party to or bound by any tax sharing
agreement, tax indemnity obligation or similar agreement, arrangement or
practice with respect to Taxes (including any advance pricing agreement, closing
agreement or other agreement relating to Taxes with any Taxing Authority).
(g) The Company and each Company Subsidiary have complied in all
material respects with all applicable statutes, ordinances, laws, rules and
regulations relating to the payment and withholding of Taxes (including
withholding of Taxes pursuant to Sections 1441, 1442, 3121 and 3402 of the Code,
and comparable provisions of any state, local and foreign laws) and have, within
the time and the manner prescribed by law, withheld from and paid over to the
proper Governmental Entities all amounts required to be so withheld and paid
over under applicable Law.
(h) Neither the Company nor any Company Subsidiary has made (i) an
election under Section 1362 of the Code to be treated as an S corporation for
federal income tax purposes or (ii) a similar election under any comparable
provision of any federal, state, local or foreign tax Law.
(i) Neither the Company nor any Company Subsidiary has constituted
either a "distributing corporation" or a "controlled corporation" (as those
terms are used in Section 355(a)(1)(A) of the Code) in any distribution of stock
qualifying or intended to qualify for tax-free treatment under Section 355 of
the Code within the three-year period ending on the date of this Agreement.
(j) Neither the Company nor any Company Subsidiary is, or has ever
been, a personal holding company (as such term is used in Section 542 of the
Code) or a foreign personal holding company (as such term is used in Section 552
of the Code).
(k) Neither the Company nor any Company Subsidiary is or has been a
party to any "listed transaction" as defined in Treasury Regulation Section
1.6011-4(b)(2).
Section 4.09 Absence of Changes in Benefit Plans. (a) From the date
of the most recent financial statements included in the Filed Company SEC
Documents to the date of this Agreement, neither the Company nor any Company
Subsidiary has terminated, adopted, amended, modified, or agreed or committed to
amend or modify, any collective bargaining agreement or any employment bonus,
pension, profit-sharing, deferred compensation, incentive compensation, stock
ownership, stock purchase, stock appreciation, restricted stock, stock option,
performance, retirement, thrift, savings, stock bonus, paid time off, vacation,
severance, disability, death benefit, hospitalization, medical or other welfare
benefit or other plan, program, arrangement or understanding, maintained,
contributed to or required to be maintained or contributed to by, or with
respect to which any liability exists to, the Company or any Company Subsidiary
or any other person or entity that, together with the Company or any Company
Subsidiary, is treated as a single employer under Section 414(b), (c), (m) or
(o) of the Code (each, a "Commonly Controlled Entity"), in each case providing
benefits or compensation to any current or former employee, officer, director or
independent contractor of the Company, or any Company Subsidiary or any Commonly
Controlled Entity (each, a "Participant") and whether or not subject to United
States law (collectively, "Company Benefit Plans") or has made any change in any
actuarial or other assumption used to calculate funding obligations with respect
to any Company Benefit Plan, or any change in the manner in which contributions
to any Company Benefit Plan are made or the basis on which such contributions
are determined, other than (i) changes required by any collective bargaining
agreement to which the Company or any Company Subsidiary is a party and (ii) the
Company's adoption of the 2005 Option Plans. Between December 31, 2004 and the
date of this Agreement, the Company has not adopted, amended, modified, or
agreed or committed to amend or modify, any Company Benefit Plan so as to
accelerate the vesting of any Options, other than as disclosed in the Filed
Company SEC Documents.
(b) As of the date of this Agreement, there is no (i) employment,
deferred compensation, severance, change in control, termination, employee
benefit, loan, indemnification, retention, stock repurchase, stock option,
consulting or similar agreement, commitment or obligation between the Company or
any Company Subsidiary, on the one hand, and any Participant, on the other hand,
(ii) agreement between the Company or any Company Subsidiary, on the one hand,
and any Participant, on the other hand, the benefits of which are contingent, or
the terms of which are materially altered, upon the occurrence of transactions
involving the Company or any Company Subsidiary that are of the nature of the
Transactions or (iii) trust or insurance Contract or other agreement to fund or
otherwise secure payment of any compensation or benefit to be provided to any
Participant (all such agreements under this paragraph (b) collectively, "Company
Benefit Agreements").
Section 4.10 Employee Benefit Plans. (a) As of the date of this
Agreement, Section 4.10(a) of the Company Schedule sets forth a list of all
Company Benefit Plans.
(b) None of the Company Benefit Plans are characterized as a
"multiemployer plan," as defined in Section 4001(a)(3) of Employee Retirement
Income Security Act of 1974, as amended ("ERISA").
(c) As of the date of this Agreement, Section 4.10(c) of the Company
Schedule sets forth a complete list of each Company Benefit Plan that is
characterized as a "single employer plan" (as defined in Section 4001(a)(15) of
ERISA) that is subject to Title IV of ERISA. None of the Company, any Company
Subsidiary or any Commonly Controlled Entity has any outstanding liability under
Section 4062 of ERISA to the Pension Benefit Guaranty Corporation or to a
trustee appointed under Section 4042 of ERISA. None of the Company, any Company
Subsidiary or any Commonly Controlled Entity has engaged in any transaction
described in Section 4069 of ERISA. Neither the Company nor any Company
Subsidiary is required to provide medical benefits to employees, former
employees or retirees after their termination of employment, other than pursuant
to the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended.
(d) Each Company Benefit Plan that is intended to qualify under
Section 401 of the Code, and each trust maintained pursuant thereto, has
received a determination letter from the IRS or can reasonably rely on a
determination letter from the IRS to the vendor for such Company Benefit Plan
(or to a Representative of such vendor) that such Company Benefit Plan is exempt
from federal income taxation under Section 501 of the Code and, to the Knowledge
of the Company, nothing has occurred with respect to the operation of any such
Company Benefit Plan that would cause the loss of such qualification or
exemption or the imposition of any material liability, penalty or tax under
ERISA or the Code.
(e) In all material respects, all contributions (including all
employer contributions and employee salary reduction contributions) required to
have been made under any of the Company Benefit Plans to any funds or trusts
established thereunder or in connection therewith have been made by the due date
thereof or if not made by such due date, such contributions have been made and
the accounts of the affected participants have been credited with any earnings
determined by the Company to be due to them as a result of such delay.
(f) To the Knowledge of the Company, there has been no material
violation of ERISA or the Code with respect to the filing of applicable reports,
documents and notices regarding the Company Benefit Plans with the Secretary of
Labor or the Secretary of the Treasury or the furnishing of required reports,
documents or notices to the participants or beneficiaries of the Company Benefit
Plans.
(g) To the Knowledge of the Company, none of the Company, the
Subsidiaries, the officers of the Company or of any of the Company Subsidiaries
or the Company Benefits Plans which are subject to ERISA, any trusts created
thereunder or any trustee or administrator thereof, has engaged in a "prohibited
transaction" (as defined in Section 406 of ERISA or Section 4975 of the Code) or
any other breach of fiduciary responsibility that could subject the Company, any
of the Company Subsidiaries or any officer of the Company or of any of the
Company Subsidiaries to any material tax or penalty on prohibited transactions
imposed by Section 4975 of the Code or to any material liability under Section
502(i) or (1) of ERISA.
(h) Neither the Company nor any of the Company Subsidiaries is a
party to any contract, agreement or other arrangement which has resulted, or
could reasonably be expected to result, in the payment of amounts that are
nondeductible by reason of Section 162(m) or Section 280G of the Code.
(i) True, correct and complete copies of the following documents,
with respect to each of the Company Benefit Plans, have been delivered or made
available to Parent by the Company: (i) all Company Benefit Plans and related
trust documents, and amendments thereto; (ii) the most recent Forms 5500 and
(iii) summary plan descriptions.
(j) There are no actions, claims or lawsuits which, to the Knowledge
of the Company, have been asserted, instituted or threatened, against the
Company Benefit Plans, the assets of any of the trusts under such plans or the
plan sponsor or the plan administrator, or against any fiduciary of the Company
Benefit Plans with respect to the operation of such plans (other than routine
benefit claims).
(k) In all material respects, (i) all Company Benefit Plans subject
to ERISA or the Code have been maintained and administered in accordance with
their terms and with all applicable provisions of ERISA and the Code (including
rules and regulations thereunder), respectively, and other applicable Laws, (ii)
all employees of the Company or the Company Subsidiaries required to be included
as participants by the terms of such plans have been so included, and, to the
Knowledge of the Company (iii) there has been no misclassification of Company
employees as independent contractors.
Section 4.11 Litigation. Section 4.11 of the Company Schedule sets
forth, as of the date of this Agreement, a complete and accurate list of (i) all
suits, claims, actions, investigations or proceedings pending (and in respect of
which the Company has been served with notice), or, to the Knowledge of the
Company, pending (but in respect of which the Company has not been served with
notice) or threatened against or affecting the Company or the Company
Subsidiaries or any of their respective assets and (ii) Judgments, injunctions
and rulings of any Governmental Entity or arbitrator outstanding against, or in
effect with respect to, the Company, the Company Subsidiaries or their
respective assets. There is no suit, claim, action, investigation or proceeding
pending or, to the Knowledge of the Company, threatened against the Company or
any Company Subsidiary that, individually or in the aggregate, has had or would
reasonably be likely to have a Company Material Adverse Effect, nor is there any
Judgment outstanding against the Company or any Company Subsidiary that has had
or would reasonably be likely to have a Company Material Adverse Effect.
Section 4.12 Compliance with Applicable Laws. The Company and the
Company Subsidiaries are in compliance in all material respects with all
applicable Laws and Judgments. To the Knowledge of the Company, there has been
no proposed change in any Laws (other than Laws of general applicability) that
would materially and adversely affect the Transactions or would be reasonably
likely to have a Company Material Adverse Effect. Except as set forth on Section
4.12 of the Company Schedule, neither the Company nor any Company Subsidiary,
nor any director, officer, agent or other person acting on behalf of the Company
or any Company Subsidiary has (i) used any funds for any unlawful contribution,
gift, entertainment or other unlawful expense relating to political activity;
(ii) made any unlawful payment to any foreign or domestic government official or
employee from funds of the Company or any Company Subsidiary; or (iii) violated
any provision of the Foreign Corrupt Practices Act of 1977, as amended. The
Company and the Company Subsidiaries have in effect all permits, licenses,
variances, exemptions, authorizations, operating certificates, franchises,
orders and approvals of all Governmental Entities (collectively, "Permits")
necessary for them to own, lease or operate their properties and assets as now
owned, leased or operated (as the case may be) and to conduct their businesses
as now conducted, except for such Permits the absence of which would not
reasonably be likely to have a Company Material Adverse Effect. There has
occurred no violation of, default (with or without notice or lapse of time or
both) under, or event giving to others any right of termination, amendment or
cancellation of, with or without notice or lapse of time or both, any such
Permit, except for any such violation, default or event which would not
reasonably be likely to have a Company Material Adverse Effect. There is no
event which, to the Knowledge of the Company, would reasonably be likely to
result in the revocation, cancellation, non-renewal or adverse modification of
any such Permit, except for any such event that would not reasonably be likely
to have a Company Material Adverse Effect. Notwithstanding the foregoing, this
Section 4.12 does not apply to Taxes (which are the subject of Section 4.08),
ERISA (which is the subject of Section 4.10), labor Laws (which are the subject
of Section 4.17) or Environmental Laws (which are the subject of Section 4.13).
Section 4.13 Environmental Matters. (a) (i) Except as set forth on
Section 4.13(a) of the Company Schedule, the Company and the Company
Subsidiaries are in compliance in all respects with all Environmental Laws and
neither the Company nor any Company Subsidiary has received any (A)
communication that alleges that the Company or any Company Subsidiary is in
violation of, or has any liability under, any Environmental Law or (B) notice
regarding any requirement that is proposed for adoption or implementation under
any Environmental Law that would be material to the operations of the Company or
any Company Subsidiary;
(ii) The Company and the Company Subsidiaries have obtained and are
in compliance in all material respects with all permits, licenses and
governmental authorizations pursuant to Environmental Laws (collectively
"Environmental Permits") necessary or advisable for their operations as
currently conducted, including all real property and assets owned, leased
or operated by the Company or any Company Subsidiary, all such
Environmental Permits are valid and in good standing, and neither the
Company nor any Company Subsidiary has been advised by any Governmental
Entity of any actual or potential change in the status, terms or
conditions of any Environmental Permit;
(iii) Except as set forth on Section 4.13(a) of the Company
Schedule, there are no Environmental Claims pending or, to the Knowledge
of the Company, threatened against the Company, any Company Subsidiary or
any of their respective predecessors or related to any real property
currently or previously owned, leased or operated by the Company or any
Company Subsidiary;
(iv) Except as set forth on Section 4.13(a) of the Company Schedule,
there has been no Release or presence of any Hazardous Materials that
would reasonably be likely to form the basis of any Environmental Claim
against the Company or any Company Subsidiary or against any person whose
liabilities for such Environmental Claims the Company or any Company
Subsidiary has, or may have, retained or assumed, either contractually or
by operation of Law or which are reasonably likely to interfere with the
use of the property or assets owned, leased or operated by the Company or
any Company Subsidiary;
(v) Except as set forth on Section 4.13(a) of the Company Schedule,
no underground or above-ground storage tanks or treatment, storage or
disposal facilities containing Hazardous Materials are now or, to the
Knowledge of the Company, have ever been located at any property or
facility currently or formerly owned, operated or leased by the Company,
any Company Subsidiary or any of their respective predecessors;
(vi) The Company has not retained or assumed, either contractually
or by operation of Law, any liabilities or obligations that would
reasonably be likely to form the basis of any Environmental Claim against
the Company or any Company Subsidiary and, to the Knowledge of the
Company, no Environmental Claims are pending against any person whose
liabilities for such Environmental Claims the Company or any Company
Subsidiary has retained or assumed, either contractually or by operation
of Law;
(vii) Neither the Company, the Company Subsidiaries nor, to the
Knowledge of the Company, any of their respective predecessors has
disposed of, transported, or arranged for the disposal or transportation
of, any Hazardous Material at or to any location or facility that resulted
in any Environmental Claim or, to the Knowledge of the Company, the threat
of any Environmental Claim;
(viii) No property or facility currently or formerly owned, operated
or leased by the Company, any Company Subsidiary or their respective
predecessors is subject to any current or, to the Knowledge of the
Company, threatened deed restriction, use restriction, institutional or
engineering control or lien pursuant to any Environmental Law;
(ix) The Company does not expect that expenditures not otherwise
reflected in the most recent financial statements included in the Filed
Company SEC Documents will be necessary for the Company to operate in full
compliance, in all material respects, with Environmental Laws currently in
effect, proposed or reasonably anticipated; and
(x) The Company has provided Parent with true and complete copies of
all (A) Environmental Permits; (B) notices, demands, claims or filings of
actions received by the Company or any Company Subsidiary relating to the
operations or property owned, leased or operated by the Company or any
Company Subsidiary, pursuant to any Environmental Law; and (C) reports,
data, or other documentation in the possession of the Company or any
Company Subsidiary related to all investigations, audits, or assessments
of environmental conditions at such property or compliance by the Company,
or Company Subsidiaries, with any Environmental Law.
(b) Definitions. As used in this Agreement:
(i) "Environmental Claim" means any and all administrative,
regulatory or judicial actions, suits, orders, demands, directives,
claims, liens, investigations, proceedings or written or oral notices of
noncompliance or violation by or from any person alleging liability of
whatever kind or nature (including liability or responsibility for the
costs of enforcement proceedings, investigations, cleanup, governmental or
private party response, removal or remediation, natural resources damages,
property damages, personal injuries, medical monitoring, penalties,
contribution, indemnification and injunctive relief) arising out of, based
on or resulting from (A) the presence, management, migration or Release
of, or exposure to, any Hazardous Materials at any location whether or not
owned, operated or leased by the Company, any Company Subsidiary or any of
their respective predecessors; or (B) the failure to comply with any
Environmental Law or Environmental Permit.
(ii) "Environmental Laws" means all applicable federal, state, local
and foreign Laws, Judgments, legally binding agreements or Environmental
Permits issued, promulgated or entered into by or with any Governmental
Entity, relating to pollution, natural resources or protection of
endangered or threatened species, human health or the environment
(including ambient air, surface water, groundwater, land surface or
subsurface strata), including the Federal Water Pollution Control Act (33
U.S.C. ss.1251 et seq.), Resource Conservation and Recovery Act (42 U.S.C.
ss.6901 et seq.), Safe Drinking Water Act (42 U.S.C. ss.3000(f) et seq.),
Toxic Substances Control Act (15 U.S.C. ss.2601 et seq.), Clean Air Act
(42 U.S.C. ss.7401 et seq.) and Comprehensive Environmental Response,
Compensation and Liability Act (42 U.S.C. ss.9601 et seq.).
(iii) "Hazardous Materials" means (A) any fuel, petroleum, or
petroleum products, radioactive materials or wastes, asbestos in any form,
urea formaldehyde foam insulation, lead based paint, lead in drinking
water, radon and polychlorinated biphenyls; and (B) any other chemical,
material, force, substance or waste that in relevant form or concentration
is prohibited, limited or regulated under any Environmental Law.
(iv) "Release" means any actual or threatened release, spill,
emission, leaking, dumping, injection, pouring, deposit, disposal,
discharge, dispersal, leaching or migration into or through the
environment (including ambient air, surface water, groundwater, land
surface or subsurface strata) or within any building, structure, facility
or fixture.
Section 4.14 Material Contracts. (a) Except (x) as set forth in the
Filed Company SEC Documents or in Section 4.14(a) of the Company Schedule, (y)
for renewal or extension of any Material Contracts between the date of this
Agreement and the Closing Date on substantially the same terms as were in effect
immediately prior to such renewal or extension and (z) for this Agreement and
the other Contracts to be entered into among the parties hereto pursuant to the
terms of this Agreement, neither the Company nor any Company Subsidiary is a
party to or bound by any:
(i) Contract, relating to or evidencing indebtedness for borrowed
money of the Company or any Company Subsidiary in excess of an aggregate
of $250,000;
(ii) non-competition agreement or other Contract or obligation which
purports to limit in any respect the manner in which, or the localities in
which, the business of the Company or the Company Subsidiaries may be
conducted;
(iii) voting or other agreement governing how any shares of Company
Common Stock shall be voted;
(iv) written employment Contract;
(v) Contract with any affiliate, current or former officer or
director of the Company (other than Contracts covered by clause (iv) of
this paragraph (a));
(vi) Contract under which (A) any person, including the Company or a
Company Subsidiary, has directly or indirectly guaranteed indebtedness,
liabilities or obligations of the Company or a Company Subsidiary in
excess of $250,000, (B) the Company or a Company Subsidiary has directly
or indirectly guaranteed indebtedness, liabilities or obligations of any
person, including the Company or another Company Subsidiary, in excess of
$250,000 (in each case other than endorsements for the purpose of
collection in the ordinary course of business) or (C) granted any pledge,
mortgage or other security interest in any property or assets of the
Company or any Company Subsidiary in excess of $250,000;
(vii) Contract under which the Company or a Company Subsidiary has,
directly or indirectly, made any advance, loan, extension of credit or
capital contribution to, or other investment in, any person (other than
the Company or a Company Subsidiary and other than extensions of trade
credit in the ordinary course of business) in excess of $250,000;
(viii) Contract providing for indemnification of any person in
excess of $250,000 with respect to material liabilities relating to any
current or former business of the Company, any Company Subsidiaries or any
of their respective predecessors;
(ix) Contract with any stockholders of the Company (other than
Contracts covered by clauses (iv) or (v) of this paragraph (a);
(x) Contract which would prohibit or materially delay the
consummation of the Merger or any other Transactions;
(xi) Contract in respect of any joint venture, partnership, business
alliance or similar arrangement between the Company or any of the Company
Subsidiaries and any third party, but excluding confidentiality
agreements;
(xii) Contract granting the other party to such Contract or a third
party "most favored nation" status that, following the Merger, would apply
to Parent or any of its subsidiaries; or
(xiii) Contract which (A) has aggregate consideration due from or
payable to the Company or any of the Company Subsidiaries in excess of
$250,000 and is not terminable by the Company or any of the Company
Subsidiaries at any time without payment or penalty, or (B) is otherwise
material to the business of the Company and the Company Subsidiaries,
taken as a whole, as of the date hereof.
The foregoing Contracts to which the Company or any Company
Subsidiary is a party or is bound and those Contracts filed (as exhibits or
otherwise) in the Filed Company SEC Documents are collectively referred to
herein as "Company Material Contracts."
(b) Each Company Material Contract is valid and binding on the
Company (or, to the extent a Company Subsidiary is a party, on such Company
Subsidiary) and is in full force and effect (except that this representation and
warranty shall not apply as of the Closing Date to any Material Contract which,
by its terms, has expired prior to the Closing Date). The Company and each
Company Subsidiary have performed all material obligations required to be
performed by them to date under each Company Material Contract and are not (with
or without notice or lapse of time or both) in breach or default in any material
respect thereunder, and to the Knowledge of the Company, no other party is (with
or without notice or lapse of time (or both)) in breach or default in any
material respect thereunder. The Company has, or has caused to be, delivered to
Parent or Merger Sub true and complete copies of the Company Material Contracts
requested by either of them (including all amendments and waivers). Each Company
Material Contract will not cease to be legal, valid, binding, enforceable and in
full force and effect on terms identical to those currently in effect as a
result of the consummation of the Transactions, nor will the consummation of the
Transactions constitute a breach or default under such Company Material Contract
or otherwise give the contracting party a right to terminate such Company
Material Contract. The Company has neither been given nor received notice of any
violation or default under (nor, to the Knowledge of the Company, does there
exist any condition which with the passage of time or the giving of notice or
both would result in such a violation or default under) any Company Material
Contract.
(c) Except as disclosed in the Filed Company SEC Documents or as
expressly provided for in this Agreement, neither the Company nor any Company
Subsidiary is a party to any oral or written (i) employment or consulting
agreement that cannot be terminated on 60 days' or less notice, (ii) agreement
with any officer or other key employee of the Company or any Company Subsidiary,
the benefits of which are contingent or vest, or the terms of which are
materially altered, upon the occurrence of a transaction involving the Company
or any Company Subsidiary of the nature of any of the Transactions, (iii)
agreement with respect to any officer or other key employee of the Company or
any Company Subsidiary providing any term of employment or compensation
guarantee or (iv) stock or stock purchase plan, any of the benefits of which
will be increased, or the vesting of the benefits of which will be accelerated,
by the occurrence of any of the Transactions, or the value of any of the
benefits of which will be calculated on the basis of any of the Transactions.
Section 4.15 Properties. The real property owned by the Company or
any Company Subsidiary as of the date of this Agreement and all buildings,
structures and other improvements and fixtures located on or under such real
property (collectively, the "Company Owned Properties") are listed or described
in Section 4.15(a) of the Company Schedule. Each of the Company Owned Properties
is owned in fee simple by the Company or a Company Subsidiary, as indicated in
Section 4.15(a) of the Company Schedule, and the Company or a Company Subsidiary
has good and marketable title thereto. The real property leased by the Company
or any Company Subsidiary as of the date of this Agreement (collectively, the
"Company Leased Properties"; together with the Company Owned Properties,
collectively, the "Company Properties"), if any, and each lease to which the
Company or any Company Subsidiary is a party, are also described in Section
4.15(a) of the Company Schedule. The Company Properties constitute all of the
real property currently used (or necessary for the current operations of) the
Company.
(a) As of the date of this Agreement, the Company Properties are
free and clear of any Liens, title defects, contractual restrictions, covenants
or reservations of interests in title (collectively, "Property Restrictions")
except for Permitted Liens. None of the Permitted Liens has or would reasonably
be likely to have, individually or in the aggregate, a Company Material Adverse
Effect. For purposes of this Agreement, "Permitted Liens" means (x) Liens for
Taxes not yet due and payable and (y) the recorded easements and restrictive
declarations listed in Section 4.15(b) of the Company Schedule.
(b) Except as set forth in Section 4.15(c) of the Company Schedule,
the Company Properties comply with, and are being used in accordance with, all
applicable laws, including zoning and land use regulations and statutes. The
Company Properties are adequate to permit their use in the manner they are
currently used by the Company and the Company Subsidiaries, except as would not
reasonably be likely to have, individually or in the aggregate, a Company
Material Adverse Effect.
(c) The Company and each of the Company Subsidiaries have good and
marketable title to all the material personal and non-real properties and assets
reflected in their books and records as being owned by them (including those
reflected in the consolidated balance sheet of the Company and the Company
Subsidiaries as of December 31, 2005, except as since sold or otherwise disposed
of in the usual, regular and ordinary course of business), free and clear of all
Liens, except Permitted Liens.
(d) The Company has provided Purchaser with copies of the existing
title insurance policies that were issued in respect of the Company Owned
Property. The Company has delivered to Parent copies of such surveys of the
Company Properties as are in the Company's possession.
(e) To the Knowledge of the Company: (i) there is no certificate,
permit or license from any Governmental Entity having jurisdiction over any of
the Company Properties or any agreement, easement or other right which is
necessary to permit the lawful use and operation of the buildings and
improvements on any of the Company Properties (including for the use and
operation of each of the Company Properties as currently being used) or which is
necessary to permit the lawful use or operation of all driveways, roads and
other means of egress and ingress to and from any of the Company Properties that
has not been obtained and is not in full force and effect, nor is there any
pending written threat of modification or cancellation of any of same, which
would reasonably be likely, individually or in the aggregate, to have a Company
Material Adverse Effect; and all such licenses, permits, orders or approvals for
the conduct of the Company's and the Company's Subsidiaries' business and the
ownership, occupancy and operation of the Company Properties have been obtained,
are fully paid for and are transferable to Parent and will in no way be affected
by, or terminate or lapse by reason of, the transactions contemplated by this
Agreement; (ii) there is no written notice of any violation, that is uncured and
not waived, of any Law, Judgment or other requirement affecting any of the
Company Properties which has or would reasonably be likely to have, individually
or in the aggregate, a Company Material Adverse Effect; (iii) there are no
structural defects relating to any Company Properties which have or would
reasonably be likely to have, individually or in the aggregate, a Company
Material Adverse Effect; (iv) there are no Company Properties whose building
systems are not in working order to an extent that has or would reasonably be
likely to have, individually or in the aggregate, a Company Material Adverse
Effect; (v) there is no physical damage to any Company Properties to an extent
that has or would reasonably be likely to have, individually or in the
aggregate, a Company Material Adverse Effect; (vi) there is no current material
renovation or uninsured restoration underway to any Company Properties; and
(vii) there are no restrictions imposed by any Governmental Entity or Third
Party that would materially limit or impair the ability of the Company to
renovate, demolish, develop or build on any Company Property.
(f) Neither the Company nor any of the Company Subsidiaries has
received any written notice to the effect that (i) any condemnation or rezoning
proceedings are pending or threatened with respect to any of the Company
Properties, or (ii) any Laws, including any zoning regulation or ordinance,
building or similar law, code, ordinance, order or regulation, have been
violated by any Company Property. To the Knowledge of the Company, no such
proceeding has been threatened or commenced.
(g) Except as set forth in Section 4.15(h) of the Company Schedule,
all work required to be performed, payments required to be made and actions
required to be taken prior to the date hereof pursuant to any agreement entered
into by the Company or any Company Subsidiary with a Governmental Entity in
connection with a site approval, zoning reclassification or other similar action
relating to any Company Properties (e.g., local improvement district, road
improvement district, environmental mitigation) have been performed, paid or
taken, as the case may be, other than those where, individually or in the
aggregate, the failure does not have and would not reasonably be likely to have
a Company Material Adverse Effect.
(h) Section 4.15(i) of the Company Schedule sets forth a correct and
complete list of each real property lease pursuant to which the Company or any
of the Company Subsidiaries is a lessee or lessor (individually, "Lease" and
collectively, "Leases"). Each Lease is in full force and effect and is valid,
binding and enforceable in accordance with its terms against (i) the Company or
any of the Company Subsidiaries and (ii) to the Knowledge of the Company, the
other parties thereto, except as would not reasonably be likely to have,
individually or in the aggregate, a Company Material Adverse Effect. Except as
listed in Section 4.15(i) of the Company Schedule or which would not reasonably
be likely to have, individually or in the aggregate, a Company Material Adverse
Effect, the Company and the Company Subsidiaries have performed all obligations
required to be performed by them to date under each of the Leases and neither
the Company nor any of the Company Subsidiaries nor, to the Knowledge of the
Company, any other party is in default under any Lease (and to the Knowledge of
the Company, no event has occurred which, with due notice or lapse of time or
both, would constitute such a default). No option has been exercised under any
of such Leases, except as described in Section 4.15(i) of the Company Schedule.
The Company has made available to Parent a correct and complete copy of each
Lease and all amendments thereto. No Lease under which the Company or any
Company Subsidiary is the tenant (x) restricts the assignment by the tenant of
its interest in the Lease by operation of law or otherwise or (y) would give the
landlord thereunder the right to terminate the Lease as a result of this
Agreement or any of the transactions contemplated hereby, in each case except as
described in Section 4.15(i) of the Company Schedule.
(i) To the Knowledge of the Company, there are no pending real
property tax protests or related litigation related to any of the Company
Properties except as identified on Section 4.15(j) of the Company Schedule. To
the Knowledge of the Company, there are no pending assessments against the
Company Properties except as identified on Section 4.15(j) of the Company
Schedule. As of the date of this Agreement, the Company Properties have not been
subject to a preferential or special assessment, abatement or categorization for
tax purposes.
(j) Neither the Company nor any of the Company Subsidiaries has
granted any unexpired option agreements or rights of first refusal or offer with
respect to the purchase or lease of any of the Company Properties or any portion
thereof or any other unexpired rights in favor of any Third Party to purchase or
otherwise acquire any of the Company Properties or any portion thereof or
entered into any contract for sale, ground lease, option, right of first refusal
or offer or letter of intent to sell or ground lease any of the Company
Properties or any portion thereof.
(k) Section 4.15(l) of the Company Schedule sets forth a correct and
complete list of all of the contracts, documents or other agreements which are
currently in effect whereby the Company or any of the Company Subsidiaries is
entitled to receive site work or other reimbursements from any Third Party,
pursuant to which the Company or any of the Company Subsidiaries is currently
entitled to receive at least $250,000 (the "Reimbursement Agreements").
(l) Neither the Company nor any of the Company Subsidiaries is a
party to any agreement relating to the management of any of the Company
Properties by a party other than the Company or any wholly owned Company
Subsidiaries (a "Third Party"). Section 4.15(m) of the Company Schedule sets
forth a list of all management, leasing or other agreements for the provision of
services to the Company Properties.
(m) Neither the Company nor any of the Company Subsidiaries is a
party to any agreement pursuant to which the Company or any of the Company
Subsidiaries manages any real properties for any Third Party.
(n) Neither the Company nor any of the Company Subsidiaries has any
plans, proposals, understandings or similar arrangements to develop, purchase,
license, lease or otherwise acquire or manage any real property or asset that is
not included in the Company Properties as of the date hereof.
Section 4.16 Intellectual Property.
(a) "Intellectual Property" means all of the following: (i) all
trademarks, service marks, trade dress, logos, slogans, trade names, corporate
names, packaging designs, Internet domain names and Internet Web sites, together
with all translations, adaptations, derivations, and combinations thereof and
including all goodwill associated therewith, and all applications, registrations
and renewals in connection therewith, (ii) all inventions (whether patentable or
unpatentable and whether or not reduced to practice), know-how, research and
development, business methods, processes, technology and all improvements
thereto, and all patents, patent registrations, patent applications, and patent
disclosures, together with all reissues, divisionals, continuations,
continuations-in-part, revisions, extensions and reexaminations thereof, (iii)
all copyrightable works, all copyrights and all applications, registrations, and
renewals in connection therewith, (iv) all mask works and all applications,
registrations and renewals in connection therewith, (v) all trade secrets and
confidential business information (including ideas, research and development,
know-how, formulas, compositions, manufacturing and production processes and
techniques, technical data, designs, drawings, specifications, customer and
supplier lists, pricing and cost information, and business and marketing plans
and proposals), (vi) all computer software (including related documentation) and
all code associated with any Internet Web sites or Internet Web pages, (vii) all
advertising and promotional materials, (viii) all other proprietary or moral
rights and (ix) all copies and tangible embodiments of such proprietary rights
(in whatever form or medium) and any derivatives or combinations thereof.
(b) The Company and the Company Subsidiaries (i) own, or are validly
licensed or otherwise have the right to use, all Intellectual Property used or
held for use in the business of the Company or any Company Subsidiary as
presently conducted and as contemplated to be conducted ("Company Intellectual
Property") and (ii) are the sole and exclusive owners or licensees of, with all
right, tile and interest in and to (free and clear of any Liens), all Company
Intellectual Property and have sole and exclusive rights (and, other than as
provided in Third Party Licenses, are not contractually obligated to pay any
compensation to any Third Party in respect thereof) to the use thereof or the
material covered thereby. Neither the Company nor the Company Subsidiaries have
entered into any agreements, consents or licenses which materially restrict the
use by the Company or the Company Subsidiaries of the Company Intellectual
Property.
(c) The Company and the Company Subsidiaries are in compliance in
all material respects with all licenses, agreements and covenants relating to
use of any Intellectual Property owned by any Third Party (the "Third Party
Licenses"), and the Company has not received any notice of breach or any dispute
with respect to Third Party Licenses or the Intellectual Property licensed
thereunder.
(d) To the Knowledge of the Company, there is no unauthorized use,
disclosure, infringement or misappropriation of any Company Intellectual
Property or trade secret material to the Company or the Company Subsidiaries,
except as would not, individually or in the aggregate, reasonably be expected to
have a Company Material Adverse Effect. To the Knowledge of the Company, the
business of the Company and the Company Subsidiaries as currently conducted or
contemplated by them, including the use of the Company Intellectual Property,
does not and would not infringe or conflict with any Intellectual Property of
any Third Party that, individually or in the aggregate, has had or would
reasonably be likely to have a Company Material Adverse Effect. To the Knowledge
of the Company, there is no unresolved written claim of invalidity or
conflicting ownership rights with respect to the Company Intellectual Property
made by a Third Party. Neither the Company nor any Company Subsidiaries have
brought or contemplated bringing any action, suit or proceeding for infringement
of the Company Intellectual Property or breach of any license or agreement
involving the Company Intellectual Property against any Third Party. Neither the
Company nor any Company Subsidiaries have been sued in any lawsuit, action or
proceeding which involves a claim of infringement of any Intellectual Property
or other proprietary right of any Third Party nor, to the Knowledge of the
Company, has any such claim or any such lawsuit been threatened.
(e) Section 4.16(e) of the Company Schedule sets forth a complete
list of all material (i) Company Intellectual Property owned by the Company, all
of which is owned by the Company free and clean of any Liens, (ii) licenses of
Company Intellectual Property to Company Subsidiaries or Third Parties and (iii)
Third Party Licenses used by the Company or Company Subsidiaries.
(f) The Company has taken all reasonable appropriate steps to
protect and preserve the confidentiality of Company Intellectual Property that
is confidential, including trade secrets, know-how, inventions and source code.
Section 4.17 Labor Matters. Since January 1, 2003, neither the
Company nor any Company Subsidiary has encountered any labor union organizing
activity, or had any actual or threatened employee strikes, work stoppages,
slowdowns or lockouts. Neither the Company nor any Company Subsidiary has
engaged in any unfair labor practice and, to the Knowledge of the Company, there
are no material unfair labor practice complaints against the Company or any
Company Subsidiary pending before any Governmental Entity. The Company and each
Company Subsidiary are in compliance in all material respects with all
applicable Laws relating to employment and employment practices, occupational
safety and health standards, and terms and conditions of employment and wages
and hours. Neither the Company nor any Company Subsidiary is a party to any
outstanding charges or proceedings with the Equal Employment Opportunity
Commission nor, to the Knowledge of the Company, are there any pending
grievances or claims against the Company or any Company Subsidiary alleging age,
gender or disability discrimination.
Section 4.18 Brokers; Fees and Expenses. No broker, investment
banker, financial advisor or other person, other than ▇▇▇▇▇▇▇▇▇ & Company, Inc.,
the fees and expenses of which will be paid by the Company, is entitled to any
broker's, finder's, financial advisor's or similar fee or commission in
connection with this Agreement, the Merger or the other Transactions based upon
arrangements made by or on behalf of the Company. The Company has furnished to
Parent a true and complete copy of all agreements between the Company and
▇▇▇▇▇▇▇▇▇ & Company, Inc. relating to this Agreement, the Merger and the other
Transactions.
Section 4.19 Insurance. Section 4.19 of the Company Schedule
contains a list of all material policies of fire, liability, workmen's
compensation and other forms of insurance owned or held by or covering the
Company or any Company Subsidiary or all or any portion of their property and
assets. The Company and the Company Subsidiaries have obtained and maintain
adequate property, casualty and other insurance related to their assets and
operations, and the Company and the Company Subsidiaries have and maintain in
full force and effect public liability insurance, insurance against claims for
personal injury, death or property damage occurring in connection with any of
the activities of the Company and each Subsidiary or any properties owned,
occupied or controlled by the Company and each Subsidiary, in such amounts as
reasonably deemed necessary by the Company and as are customary in the industry.
As of the date of this Agreement, each material insurance policy of the Company
or any Company Subsidiary is in full force and effect, no notice of termination,
cancellation or reservation of rights has been received with respect to any such
policy, there is no default with respect to any provision contained in any such
policy, and there has not been any failure to give any notice or present any
claim under any such policy in a timely fashion or in the manner or detail
required by any such policy.
Section 4.20 WARN Act. Within the past 12 months: (i) neither the
Company nor any of the Company Subsidiaries has effectuated a "plant closing" or
a "mass layoff" (as such terms are defined in the Worker Adjustment and
Retraining Notification Act (the "WARN Act")); (ii) the Company has not been
affected by any transaction or engaged in layoffs or employment terminations
sufficient in number to trigger application of any similar state, local or
foreign Law; and (iii) none of the Company's or the Company Subsidiaries'
employees has suffered an "employment loss" (as defined in the WARN Act) during
the 90-day period prior to the date of this Agreement.
Section 4.21 Bank Accounts. Section 4.21 of the Company Schedule
sets forth a complete list of the names and locations of each bank or other
financial institution at which the Company or any Company Subsidiary has an
account (giving the account numbers) and the names of all persons authorized to
draw thereon or have access thereto.
Section 4.22 Opinion of Financial Advisor. Prior to or concurrently
with the parties' execution of this Agreement, ▇▇▇▇▇▇▇▇▇ & Company, Inc. has
issued to the Board of Directors a written opinion, dated as of the date of this
Agreement, to the effect that, subject to the assumptions and limitations set
forth therein, the Merger Consideration to be received by the holders of Company
Common Stock pursuant to the Merger is fair to such holders, other than ▇▇▇▇▇▇▇
▇. ▇▇▇▇▇▇▇▇▇, Parent and their respective affiliates, from a financial point of
view. A true and correct copy of such opinion will be delivered to Merger Sub,
solely for information purposes, within one business day following the parties'
execution of this Agreement. The Company has been authorized by ▇▇▇▇▇▇▇▇▇ &
Company, Inc. to permit the inclusion of such opinion in its entirety in the
Proxy Statement.
Section 4.23 Compliance with Gaming Laws. Neither the Company, the
Company Subsidiaries nor any of their respective directors, officers, key
employees or persons performing management functions similar to officers have
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 $50,000 or
more. To the Knowledge of the Company, there are no facts, which if known to the
Gaming Authorities would be reasonably likely to result in the revocation,
limitation or suspension of a material license, finding of suitability,
registration, permit or approval under the Gaming Laws.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
Parent and Merger Sub jointly and severally represent and warrant to
the Company that:
Section 5.01 Organization, Standing and Power. Parent is a
corporation duly organized, existing and in good standing under the laws of the
State of Delaware and has full corporate power and authority to conduct its
business as presently conducted. Merger Sub is a corporation duly organized,
validly existing and in good standing under the laws of the State of Nevada and
has full corporate power and authority to conduct its businesses as presently
conducted.
Section 5.02 Authority; Execution and Delivery; Enforceability. Each
of Parent and Merger Sub has all requisite corporate power and authority to
execute and deliver this Agreement and to consummate the Transactions. The
execution and delivery of this Agreement by each of Parent and Merger Sub and
the consummation by them of the Transactions have been duly authorized by all
necessary corporate action on the part of Parent and Merger Sub. Each of Parent
and Merger Sub has duly executed and delivered this Agreement, and, assuming due
authorization, execution and delivery of this Agreement by the Company, this
Agreement constitutes Parent's and Merger Sub's legal, valid and binding
obligation, enforceable against each of them in accordance with its terms,
except to the extent that enforceability may be limited by bankruptcy,
insolvency, reorganization, fraudulent conveyance, fraudulent transfer,
moratorium or other Laws relating to or affecting creditors' rights generally
and by general principles of equity.
Section 5.03 No Conflicts; Consents. (a) The execution and delivery
of this Agreement by Parent and Merger Sub do not, and the performance of this
Agreement by Parent and Merger Sub will not, (i) conflict with or violate any
Law or Judgment applicable to Parent or Merger Sub or their respective
properties or assets, (ii) violate or conflict with the articles of
incorporation, by-laws or other organizational documents of either Parent or
Merger Sub or (iii) result in any breach of, or constitute a default (or an
event which with notice or lapse of time or both would become a default) under,
or result in any, or give rise to any rights of termination, cancellation or
acceleration of any obligations or any loss of any material benefit under, or
result in the creation of a Lien on any of the property or assets of Parent or
Merger Sub pursuant to, any Contract to which Parent or Merger Sub is a party or
by which Parent or Merger Sub or any of their respective properties are bound,
except for, in the case of clause (iii) above, conflicts, violations, breaches
or defaults which, individually or in the aggregate, would not be reasonably
likely to (x) impair, in any material respect, the ability of either Parent or
Merger Sub to perform its respective obligations under this Agreement or (y)
prevent or materially delay the consummation of any of the Transactions.
(b) Except for (i) applicable requirements, if any, of the Exchange
Act, (ii) the pre-merger notification and report requirements of the HSR Act,
(iii) the filing of the Articles of Merger with the Secretary of State and (iv)
compliance with, and such filings as may be required under, applicable Gaming
Laws, neither Parent nor Merger Sub is required to submit any notice, report or
other filing with any Governmental Entity in connection with the execution,
delivery or performance of this Agreement or the consummation of the
Transactions. No waiver, consent, approval or authorization of any Governmental
Entity is required to be obtained or made by Parent or Merger Sub in connection
with their execution, delivery or performance of this Agreement.
Section 5.04 Adequate Funds. Parent will have sufficient cash or
valid and binding funding commitments to (i) satisfy the Indenture Obligation
through an acquisition of Senior Notes as contemplated in Section 7.16(c) or
through Note Funding and (ii) pay the Merger Consideration and the sums payable
under Section 2.04(a).
Section 5.05 Gaming Approvals. As of the date hereof, to the
Knowledge of the Controlling Parties, there are no facts or circumstances with
respect to the Controlling Parties that would prevent or materially delay the
receipt of any required consents, approvals, licenses, waivers, orders, decrees,
determinations of suitability or other authorizations under the Gaming Laws to
consummate the Merger and the other Transactions or give rise to a breach of
Section 7.17 by Parent or Merger Sub.
Section 5.06 Litigation. To the Knowledge of the Controlling
Parties, there are no claims, actions, suits, proceedings or investigations
pending or threatened against or involving Parent or Merger Sub or any
properties or rights of Parent or Merger Sub nor is there any Judgment
outstanding against Parent or Merger Sub which, individually or in the
aggregate, is reasonably likely to be materially adverse to the ability of
Parent or Merger Sub to consummate any of the Transactions or to perform their
respective obligations under this Agreement.
Section 5.07 Brokers. No broker, investment banker, financial
advisor or other person, other than Bear, ▇▇▇▇▇▇▇ & Co. Inc., the fees and
expenses of which will be paid by Parent, is entitled to any brokerage,
finder's, financial advisor's or similar fee or commission in connection with
this Agreement, the Merger or the other Transactions based upon arrangements
made by or on behalf of Parent or Merger Sub.
Section 5.08 Information Supplied. None of the information supplied
by Parent or Merger Sub or their respective Representatives for inclusion in the
Proxy Statement to be filed with the SEC will, on the date the Proxy Statement
is first mailed to the Company's stockholders or at the time of the Company
Stockholders Meeting, contain any untrue statement of a material fact or omit to
state any material fact necessary in order to make the statements therein, in
light of the circumstances under which they are made, not false or misleading.
If at any time prior to the date of the Company Stockholders Meeting, any event
with respect to Parent or Merger Sub, or with respect to information supplied by
Parent or Merger Sub or their respective Representatives for inclusion in the
Proxy Statement, occurs which is required to be described in an amendment of, or
supplement to, the Proxy Statement, such event shall promptly be so described by
Parent or Merger Sub and provided to the Company. All documents that Parent or
Merger Sub is responsible for filing with the SEC in connection with the
Transactions will comply as to form, in all material respects, with the
provisions of the Exchange Act, and each such document required to be filed with
any Governmental Entity (other than the SEC) will comply in all material
respects with the provisions of applicable Law as to the information required to
be contained therein. Notwithstanding the foregoing, each of Parent and Merger
Sub makes no representation or warranty with respect to the information supplied
or to be supplied by the Company or any affiliate thereof (other than Parent or
Merger Sub to the extent Parent or Merger Sub is deemed an affiliate of the
Company) for inclusion or incorporation by reference in the Proxy Statement.
Section 5.09 Ownership of Parent and Merger Sub. The Schedule 13D
filed with the SEC on December 28, 2005 by Flag Luxury Riv, LLC and certain
other persons, as amended by Amendment No. 1 filed with the SEC on March 3,
2006, Amendment No. 2 filed with the SEC on March 23, 2006 and the draft
Amendment No. 3 provided to the Company on the date hereof, sets forth the names
of all "beneficial owners" of securities of Parent and Merger Sub, as such term
is defined in Rule 13d-3 under the Exchange Act.
Section 5.10 Stock Ownership Status. As of the date hereof, Parent
and its affiliates are not, individually or collectively, (i) a "Substantial
Stockholder", as defined in Article III, Section 7 of the Company Charter, (ii)
an "interested stockholder" of the Company, as defined in Section 78.423 of
Nevada Law, or (iii) holders of a "controlling interest" in the Company, as
defined in Section 78.3785 of Nevada Law.
ARTICLE VI
COVENANTS RELATING TO CONDUCT OF BUSINESS
Section 6.01 Conduct of Business. (a) Except for matters set forth
in Section 6.01(a) of the Company Schedule or otherwise expressly permitted by
this Agreement, from the date of this Agreement to the Effective Time, the
Company shall, and shall cause each Company Subsidiary to, conduct its business
in the regular and ordinary course in substantially the same manner as
previously conducted, to pay its debts, file its Tax Returns and pay its Taxes,
in each case when due, to continue to make maintenance capital expenditures in
the ordinary course of business consistent with past practice, to market and
promote its business in the ordinary course of business consistent with past
practices and make commercially reasonable efforts to preserve its current
business organization, assets and technology, keep available the services of its
current officers and employees and keep its relationships with customers,
suppliers, licensors, licensees, distributors and others having business
dealings with them. In addition, and without limiting the generality of the
foregoing, except for matters set forth in Section 6.01(a) of the Company
Schedule or otherwise expressly permitted by this Agreement, from the date of
this Agreement to the Effective Time, the Company shall not, and shall not
permit any Company Subsidiary to, do any of the following without the prior
written consent of Parent:
(i) amend its articles of incorporation or by-laws or similar
organizational documents or change the number of directors constituting
its entire board of directors (except for any such change caused by
resignation or retirement of a director);
(ii) (A) declare, set aside or pay any dividend or other
distribution payable in cash, stock or property with respect to its
capital stock or other equity interests, except that a wholly-owned
Company Subsidiary may declare and pay a dividend or make advances to its
parent or the Company, or (B) redeem, purchase or otherwise acquire,
directly or indirectly, any of its capital stock or other securities;
(iii) issue, sell, pledge, dispose of or encumber any (A) additional
shares of its capital stock or other equity interests other than the
issuance of shares of Company Common Stock upon the exercise, in
accordance with the applicable Option Plans, of Options outstanding on the
date hereof or Directors' Options (collectively, the "Option Shares"), (B)
securities convertible into or exchangeable for, or options, warrants,
calls, commitments or rights of any kind to acquire, any shares of its
capital stock or other equity interests, other than the issuance of Option
Shares and the granting of the Directors' Options, or (C) of its other
securities;
(iv) split, combine or reclassify any of its outstanding capital
stock or other equity interests;
(v) acquire or agree to acquire (A) by merging or consolidating
with, or by purchasing a substantial portion of the assets of, or by any
other manner, any business or any corporation, partnership, joint venture,
association or other business organization or division thereof or (B) any
assets, including real estate, except (x) purchases of inventory,
equipment and supplies in the ordinary course of business consistent with
past practice and (y) other purchases in the ordinary course of business
consistent with past practice in an amount not involving more than
$500,000 in the aggregate;
(vi) authorize or make capital expenditures in 2006 which exceed the
total amount of capital expenditures authorized in the 2006 Company annual
budget, a copy of which the Company has furnished to Parent;
(vii) except in the ordinary course of business, amend, terminate or
renew any Company Material Contract or waive, release or assign any
material rights or claims thereunder;
(viii) transfer, lease (without Parent's consent, which shall not be
withheld unreasonably), license, sell, mortgage, pledge, dispose of, or
encumber or subject to any Lien, other than any Permitted Liens, any
property or assets other than in the ordinary course of business and
consistent with past practice;
(ix) except as set forth in Section 6.01(a)(ix) of the Company
Schedule or as approved by Parent, which approval shall not be
unreasonably withheld if in the ordinary course of the Company's business
and consistent with the Company's past practice: (A) enter into any
employment or severance agreement with any officer, director or key
employee of the Company or any Company Subsidiary; (B) except in
accordance with the existing policies of the Company, grant any severance
or termination pay to any officer, director or key employee of the Company
or any Company Subsidiary; or (C) hire or agree to hire any new or
additional key employees or officers;
(x) except (A) as set forth in Section 6.01(a)(x) of the Company
Schedule, (B) as approved by Parent, which approval shall not be
unreasonably withheld if in the ordinary course of the Company's business
and consistent with the Company's past practice, (C) as required to comply
with applicable Law, (D) with respect to the termination of the ESOP or
the Company's contributions to its profit-sharing plan in lieu of
contributions to the ESOP beginning in 2006, (E) for the granting of the
Directors' Options, (F) for the Retirement Account Disbursement, or (G) as
otherwise provided for in this Agreement: (i) adopt, enter into,
terminate, amend or increase the amount or accelerate the payment or
vesting of any benefit or award or amount payable under any Company
Benefit Plan, Company Benefit Agreement or other arrangement for the
current or future benefit or welfare of any director, officer or current
or former employee, (ii) increase the compensation or fringe benefits of,
or pay any bonus to, any director, officer or, other than in the ordinary
course of business consistent with past practice, employee, (iii) pay any
benefit not provided for under any Company Benefit Plan, (iv) grant any
awards under any bonus, incentive, performance or other compensation plan
or arrangement or Company Benefit Plan or Company Benefit Agreement
(including the grant of stock options, stock appreciation rights,
stock-based or stock-related awards, performance units or restricted
stock, or the removal of existing restrictions in any Company Benefit
Plans or agreements or awards made thereunder) or (v) pledge assets or
take any other action to secure the payment of compensation or benefits
under any employee plan, employment Contract or arrangement, Company
Benefit Plan or Company Benefit Agreement;
(xi) (A) incur or assume any long-term debt; (B) except in the
ordinary course of business in amounts consistent with past practice or
pursuant to the Company's revolving credit arrangement with Foothill
Capital Corporation (the "Foothill Credit Facility") as the lender, incur
or assume any short-term indebtedness; (C) incur or modify any material
indebtedness or other liability; (D) assume, guarantee, endorse or
otherwise become liable or responsible for the obligations of any other
Person, except in the ordinary course of business and consistent with past
practice; or (E) make any loans, advances or capital contributions to, or
investments in, any other Person (other than to wholly-owned Company
Subsidiaries or customary loans or advances to employees in accordance
with past practice);
(xii) change any accounting method, including any accounting method
with respect to Taxes, used by it unless required by GAAP;
(xiii) make or revoke any Tax election, settle or compromise any Tax
liability in excess of $100,000, amend any Tax Return or enter into or
modify any closing agreement or other agreement relating to Taxes;
(xiv) (A) settle or compromise any claim, litigation or other legal
proceeding, other than in the ordinary course of business consistent with
past practice in an amount involving more than $500,000 in the aggregate
or (B) pay, discharge or satisfy any other claims, liabilities or
obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge or satisfaction of any such
other claims, liabilities or obligations (i) in the ordinary course of
business and consistent with past practice or (ii) reflected or reserved
against in, or contemplated by, the consolidated financial statements (or
the notes thereto) of the Company;
(xv) except in the ordinary course of business consistent with past
practice, waive the benefits of, or agree to modify in any manner, any
confidentiality, standstill or similar agreement to which the Company or
any Company Subsidiary is a party;
(xvi) permit any insurance policy naming the Company or any Company
Subsidiary as a beneficiary or a loss payable payee to be canceled or
terminated without notice to Parent, except in the ordinary course of
business and consistent with past practice or in connection with replacing
such policy with a policy providing comparable coverage;
(xvii) enter into or modify any commitment with any person with
respect to potential gaming activities in any jurisdiction;
(xviii) revalue any assets of the Company, except as required by
GAAP;
(xix) enter into any new material line of business or enter into any
contract that restrains, limits or impedes the Company's or any of the
Company Subsidiaries' ability to compete with or conduct any business or
line of business;
(xx) enter into any contract to allocate, share or otherwise
indemnify for Taxes;
(xxi) acquire, make (or commit to make) an investment in, or make a
capital contribution to, any person other than an existing, wholly-owned
Company Subsidiary;
(xxii) close or shut down its business except for such closures or
shutdowns which are (A) required by action, writ, injunction, judgment or
decree or other requirements of applicable Law or (B) due to acts of God
or other force majeure events;
(xxiii) delete, damage, erase, sell, transfer or otherwise disclose
to any third party any of its customer databases, customer lists,
historical records of customers and any other customer information
collected and used by the Company or any Company Subsidiaries;
(xxiv) make any bookings with respect to (A) conference business
(involving room, food and beverage bookings) or (B) group business
(involving room, food and beverage bookings) that more than 20% below the
corresponding rates set forth in Section 6.01(a)(xxiv) of the Company
Schedule without first notifying Parent in writing of the proposed rates
and other material terms of such bookings and obtaining Parent's approval
thereof, which approval shall not be withheld unreasonably and shall be
deemed granted unless Parent notifies the Company to the contrary within
24 hours after Parent's receipt of the Company's notification of such
rates and other material terms;
(xxv) enter into any new Contract, or renew or materially amend any
existing Contract, with any wholesaler or substantially similar source of
hotel room bookings that provides for room rates more than 20% below the
corresponding rates set forth in Section 6.01(a)(xxv) of the Company
Schedule without first notifying Parent in writing of the proposed
material terms of such Contract or renewal or amendment of such Contract
(as the case may be) and obtaining Parent's approval thereof, which
approval shall not be withheld unreasonably and shall be deemed granted
unless Parent notifies the Company to the contrary within 24 hours after
Parent's receipt of the Company's written notification of such material
terms; or
(xxvi) enter into a Contract, commitment or arrangement to do any of
the foregoing.
(b) Advice of Changes; Filings. The Company shall confer with Parent
on a regular and frequent basis to report on operational matters and other
matters requested by Parent and promptly advise Parent orally and in writing of
any change or event that is reasonably likely to have a Company Material Adverse
Effect. The Company shall promptly provide Parent and Merger Sub with copies of
all filings made by the Company, and Parent and Merger Sub shall promptly
provide the Company with copies of all filings made by either of them, with any
Governmental Entity in connection with this Agreement and the Transactions,
other than the portions of such filings that include confidential information
not directly related to the Transactions.
(c) Other Actions. The Company, Parent and Merger Sub shall not, and
shall not permit any of their respective Subsidiaries to, take or omit to take
any action that would, or that would reasonably be expected to, result in (i)
any representations and warranties of such party set forth in this Agreement
that are qualified as to materially becoming untrue, (ii) any such
representations and warranties that are not so qualified becoming untrue in any
material respect or (iii) any condition to the Merger set forth in Article VIII
not being satisfied.
Section 6.02 No Solicitation. (a) The Company shall not, nor shall
it authorize or permit any Company Subsidiary or any Representative of the
Company or of any Company Subsidiary to, directly or indirectly, (i) solicit,
initiate or encourage, or take any other action intended to facilitate
(including by way of furnishing information), the submission to the Company of
any Takeover Proposal, (ii) enter into any agreement with respect to any
Takeover Proposal (other than a confidentiality agreement as referenced below in
this paragraph (a)), or (iii) enter into, continue or otherwise participate in
any discussions or negotiations regarding, or furnish to any person any
information with respect to, or take any other action intended to facilitate any
inquiries or the making of any proposal that constitutes, or would reasonably be
likely to lead to, any Takeover Proposal to which the Company or any Company
Subsidiary is a party. Notwithstanding the foregoing, prior to obtaining the
Company Stockholder Approval, the Board of Directors may take any or all of the
following actions in response to a Superior Proposal that was unsolicited and
that did not result from a breach of this Section 6.02(a), provided that the
Company complies with Section 6.02(b), (c) and (d) and the Board of Directors
determines in good faith (after consultation with outside counsel) that such
Takeover Proposal is or would be reasonably likely to result in, a Superior
Proposal and that such actions are required in order for the Board of Directors
to fulfill its fiduciary duties: (A) furnish information with respect to the
Company to the person making such Superior Proposal and such person's
Representatives pursuant to a customary confidentiality agreement; provided that
if such confidentiality agreement contains provisions that are less restrictive
than the comparable provisions in, or omits restrictive provisions contained in,
the Confidentiality Agreements, then the Confidentiality Agreements shall be
deemed amended to contain only such less restrictive provisions or to omit such
restrictive provisions, as the case may be, and that the Company shall also
provide to Parent any information not previously provided to Parent that is
provided to such other person, and (B) participate in discussions or
negotiations with the person making such Superior Proposal and its
Representatives regarding such Superior Proposal. In such event, the Company
shall, (x) within 24 hours of actual receipt of such Superior Proposal by the
Company or any Company Subsidiary or any Representative of the Company or of any
Company Subsidiary, and not less than 48 hours prior to furnishing any such
information or participating in any such discussions, inform Parent of the
material terms and conditions of such Superior Proposal, (y) promptly inform
Parent of the substance of any discussions with such person or such person's
Representatives relating to such Superior Proposal and (z) promptly keep Parent
fully informed of the status, including any change to the details, of any such
Superior Proposal.
(b) Except as set forth in this Section 6.02(b), neither the Board
of Directors nor any Board Committee shall withdraw or modify, or publicly
propose to withdraw or modify, in a manner adverse to Parent or Merger Sub, the
approval or recommendation by the Board of Directors or any Board Committee of
this Agreement or the Transactions; provided, however, that prior to the Company
Stockholder Approval, the Board of Directors or a Board Committee may withdraw
or modify its approval of the Transactions, approve or recommend a Superior
Proposal, or enter into an agreement with respect to a Superior Proposal, in
each case if (i) the Company has received a Superior Proposal which is pending
at the time the Company determines to take such action, (ii) the Board of
Directors has determined in good faith (after consultation with outside counsel)
that such action is required in order for the Board to fulfill its fiduciary
duties, (iii) at least three business days have passed following Parent's
receipt of written notice from the Company advising Parent that the Board of
Directors has received such Superior Proposal which it intends to accept,
specifying the material terms and conditions of such Superior Proposal, and
taking into account any new offer that Parent makes to the Company within this
three business day period, the Board of Directors maintains its determination
described in clause (ii) of this paragraph (b), and (iv) the Company pays the
Topping Fee if and when required under Section 9.02.
(c) In addition to the obligations of the Company set forth in
paragraphs (a) and (b) of this Section 6.02, the Company shall promptly (and in
no event later than 48 hours after actual receipt by the Company or any Company
Subsidiary or any Representative of the Company or of any Company Subsidiary)
advise Parent orally and in writing of the Company's receipt of any Takeover
Proposal and the terms and conditions of such Takeover Proposal (including any
subsequent amendment or other modification to such terms and conditions).
(d) Nothing in this Section 6.02 shall prohibit the Company from (i)
taking and disclosing to its stockholders a position contemplated by Rule 14d-9,
Rule 14e-2(a) or Item 1012(a) of Regulation M-A under the Exchange Act or (ii)
making any disclosure to the Company's security holders if in the good faith
judgment of the Board of Directors, after consultation with outside counsel,
disclosure would be required under applicable Law or would be required in order
for the Board of Directors to fulfill its fiduciary duties.
(e) For purposes of this Agreement:
"Superior Proposal" means any bona fide written offer not solicited
by or on behalf of the Company made by a third party to consummate a tender
offer, exchange offer, merger, recapitalization, reclassification, business
combination, consolidation or similar transaction which would result in such
third party (or in the case of a direct merger between such third party and the
Company, stockholders of such third party) owning, directly or indirectly, 100%
of the value and voting power of the Company Common Stock then outstanding (or
of the surviving entity in a merger) or all or substantially all of the assets
of the Company, which the Board of Directors determines in its good faith
judgment (after consultation with a financial advisor of nationally recognized
reputation) is (i) more favorable to the Company's stockholders than the Merger
from a financial point of view (taking into account the person making the offer,
all the terms and conditions of such offer, this Agreement and any new offer
made by Parent), and (ii) reasonably capable of being completed, taking into
account the person making the offer and all legal, financial, regulatory and
other aspects of the proposal, within a reasonable time.
"Takeover Proposal" means any inquiry, proposal or offer from any
person relating to, or that would reasonably be likely to lead to, any direct or
indirect acquisition or purchase, in one transaction or a series of related
transactions, of 30% or more of the assets of the Company and the Company
Subsidiaries, taken as a whole, or more than 30% or more of the voting power of
the outstanding shares of Company Common Stock or any class or series of equity
or voting securities of the Company or any Company Subsidiary, any tender offer
or exchange offer that if consummated would result in any person beneficially
owning more than 30% of the voting power of the outstanding shares of Company
Common Stock or any class or series of equity or voting securities of the
Company or any Company Subsidiary, or any merger, consolidation, business
combination, recapitalization, reclassification, share exchange, liquidation,
dissolution or similar transaction or series of related transactions involving
the Company or any Company Subsidiary, other than the Transactions.
ARTICLE VII
ADDITIONAL AGREEMENTS
Section 7.01 Proxy Statement. As promptly as practicable after the
date of this Agreement, the Company shall prepare the preliminary Proxy
Statement and, after consultation with and review by Merger Sub, file the
preliminary Proxy Statement with the SEC. The Company shall make all reasonable
efforts to (i) obtain and furnish the information required to be included by the
SEC in the Proxy Statement and, after consultation with and review by Merger
Sub, to respond promptly to any comments made by the SEC with respect to the
Proxy Statement; and (ii) promptly upon the earlier of (A) receiving
notification that the SEC is not reviewing the preliminary Proxy Statement or
(B) the conclusion of any SEC review of the preliminary Proxy Statement, cause a
definitive Proxy Statement to be mailed to the Company's stockholders and, if
necessary, after the definitive Proxy Statement has been so mailed, promptly
circulate amended or supplemental proxy materials and, if required in connection
therewith, resolicit proxies; provided, however, that no such amended or
supplemental proxy materials will be mailed by the Company without consultation
and review by Parent or Merger Sub. The Company will promptly notify Parent and
Merger Sub of the receipt of comments of the SEC and of any request from the SEC
for amendments or supplements to the preliminary Proxy Statement or definitive
Proxy Statement or for additional information, and will promptly supply Parent
and Merger Sub with copies of all written correspondence between the Company or
Company Representatives, on the one hand, and the SEC or members of its staff,
on the other hand, with respect to the preliminary Proxy Statement, the
definitive Proxy Statement, the Merger or any of the other Transactions. Parent
and Merger Sub will cooperate with the Company in connection with the
preparation of the Proxy Statement, including furnishing to the Company any and
all information regarding Parent and Merger Sub and their respective affiliates
as may be required to be disclosed therein. The Proxy Statement shall contain
the recommendation of the Board of Directors that the Company's stockholders
approve this Agreement and the Transactions, provided that the Board of
Directors or Board Committee may withdraw, modify or change its recommendation
of this Agreement and the Transactions if it does so in accordance with Section
6.02(b).
Section 7.02 Meeting of Stockholders of the Company. As promptly as
practicable after the date of this Agreement, the Company shall take all action
necessary in accordance with Nevada Law and the Company Charter and Company
By-Laws to convene and hold a meeting of its stockholders (the "Company
Stockholders Meeting") for the purpose of seeking the Company Stockholder
Approval (unless the Board of Directors or Board Committee has withdrawn or
modified its approval or recommendation of this Agreement or the Transactions in
accordance with Section 6.02(b)). The stockholder vote required for approval of
the Merger will not be greater than that set forth in the Company Charter. The
Board of Directors shall not withdraw, rescind or modify its waiver of the
provisions of Section 7 of the Company Charter as they would apply to Parent,
Parent's affiliates and the Transactions (unless the Board of Directors or Board
Committee has withdrawn or modified its approval or recommendation of this
Agreement or the Transactions in accordance with Section 6.02(b)). Subject to
the provisions of Section 6.02(b), the Company shall make all reasonable efforts
to solicit from stockholders of the Company proxies in favor of the Merger and
shall take all other action necessary or, in the reasonable opinion of Merger
Sub, advisable to secure any vote of stockholders required by Nevada Law to
effect the Merger.
Section 7.03 Compliance with Law. Each of the Company, Parent and
Merger Sub will comply in all material respects with all applicable Laws in
connection with its execution, delivery and performance of this Agreement and
the Transactions.
Section 7.04 Notification of Certain Matters. (a) The Company shall
deliver prompt notice (a "Development Notice") to Parent of (i) the occurrence
or non-occurrence of any event whose occurrence or non-occurrence would be
reasonably likely to cause any representation or warranty of the Company
contained in this Agreement to be untrue or inaccurate in any material respect
(a "Development") and (ii) any failure of the Company, or any of its
Representatives, to comply with or satisfy any covenant, condition or agreement
to be complied with or satisfied by it hereunder.
(b) If the Company delivers to Parent a Development Notice with
respect to a Development that renders untrue in any material respect any
representation or warranty of the Company in Sections 4.04, 4.05, 4.07 through
4.17, or 4.19 through 4.21, then only if Parent or Merger Sub has the right to
terminate this Agreement and abandon the transactions contemplated hereby
pursuant to Section 9.01(d)(v) by reason thereof and Parent does not exercise
that right by giving written notice to the Company within 30 days after Parent's
receipt of such Development Notification, such Development Notification will be
deemed to have amended the Company Schedule, to have qualified the
representations and warranties contained in Sections 4.04, 4.05, 4.07 through
4.17, or 4.19 through 4.21 (as applicable), and to have cured any
misrepresentation or breach of representation or warranty that otherwise might
have existed hereunder by reason of such Development. Except as specifically
provided in this Section 7.04(b), the Company's delivery of a Development Notice
shall not limit or otherwise affect the remedies available to Parent or Merger
Sub under this Agreement, including Parent's right to receive the Termination
Fee, if so provided under Section 9.02(b), or Parent's right to receive the
Topping Fee, if so provided under Section 9.02(c).
(c) Parent shall deliver prompt notice to the Company of (i) the
occurrence or non-occurrence of any event whose occurrence or non-occurrence
would be reasonably likely to cause any representation or warranty of Parent or
Merger Sub contained in this Agreement to be untrue or inaccurate in any
material respect and (ii) any failure of Parent or Merger Sub, or any of their
respective Representatives, to comply with or satisfy any covenant, condition or
agreement to be complied with or satisfied by it hereunder; provided, however,
that Parent's delivery of any notice pursuant to this Section 7.04(c) shall not
limit or otherwise affect the remedies available to the Company under this
Agreement.
Section 7.05 Access to Information. (a) From the date hereof to the
Effective Time, the Company shall, and shall cause the Company Subsidiaries to,
and their respective officers, directors, employees, auditors and agents to,
afford the officers, employees and agents of Parent and Merger Sub reasonable
access at all reasonable times to its officers, employees, agents, properties,
offices and other facilities and to all books and records, and shall promptly
furnish Parent and Merger Sub with (i) all financial, operating and other data
and information as Parent or Merger Sub, through its officers, employees or
agents, may reasonably request and (ii) a copy of each report, schedule and
other document filed or received by the Company or any Company Subsidiaries
during such period pursuant to applicable securities laws or stock exchange
rules. All information exchanged pursuant to this Section 7.05 shall be subject
to the Confidentiality Agreements.
(b) Parent, Merger Sub and their respective authorized
representatives (including its designated engineers or consultants) may at any
time during the Company's normal business hours, upon reasonable advance notice,
enter into and upon all or any portion of the Company Properties in order to
investigate and assess, as Parent or Merger Sub deems necessary and appropriate
in its reasonable discretion, the environmental condition of such properties or
the business conducted thereat. The Company shall, and shall cause the Company
Subsidiaries to, cooperate with Parent, Merger Sub and their respective
authorized representatives in conducting such investigation, shall allow Parent,
Merger Sub and their respective authorized representatives full access during
normal business hours, upon reasonable advance notice, to the Company
Properties, together with full permission to conduct such investigation, and
shall provide Parent, Merger Sub and their respective authorized representatives
all plans, soil or surface or ground water tests or reports, any environmental
investigation results, reports or assessments previously or contemporaneously
conducted or prepared by or on behalf of, or in the possession of or reasonably
available to the Company or any Company Subsidiary or any of their engineers,
consultants or agents and all other information relating to environmental
matters in respect of their properties and business.
Section 7.06 Public Announcements. So long as this Agreement is in
effect, Parent and the Company shall consult with each other before issuing any
press release or otherwise making any public statements with respect to this
Agreement or the Transactions and shall not issue, or permit their affiliates to
issue, any such press release or make any such public statement before such
consultation, except as may be required by Law or any applicable stock exchange
rules.
Section 7.07 Cooperation. On the terms and subject to the conditions
hereof, each of the parties hereto shall make all reasonable efforts to obtain
in a timely manner all necessary waivers, consents (including any consents
relating to Company Material Contracts) and approvals and to effect all
necessary registrations and filings, and to use all reasonable efforts to take,
or cause to be taken, all other actions and to do, or cause to be done, all
other things necessary, proper or advisable to consummate and make effective as
promptly as practicable the Transactions, including (i) cooperating in
responding to inquiries from, and making presentations to, Governmental Entities
and regulatory authorities, (ii) defending against, and responding to, any
action, suit, proceeding or investigation, whether judicial or administrative,
challenging or relating to this Agreement or the Transactions, including seeking
to have any stay or temporary restraining order entered by any court or other
Governmental Entity vacated or reversed, and (iii) executing and delivering any
additional instruments necessary to consummate the Transactions to be performed
or consummated by such party in accordance with the terms of this Agreement and
to fully carry out the purposes of this Agreement. Without limiting the
foregoing, each of Parent and the Company shall file as soon as practicable a
Notification and Report Form under the HSR Act with the United States Federal
Trade Commission and the Antitrust Division of the United States Department of
Justice and Merger Sub shall make such filings and apply for such approvals and
consents as are required under the Gaming Laws. In connection with and without
limiting the foregoing, the Company and the Board of Directors shall (x) take
all reasonable action necessary to ensure that no state takeover statute or
similar statute or regulation is or becomes applicable to the Transactions or
this Agreement and (y) if any state takeover statute or similar statute or
regulation becomes applicable to the Transactions or this Agreement, take all
reasonable action necessary to ensure that the Transactions may be consummated
as promptly as practicable on the terms contemplated by this Agreement and
otherwise to minimize the effect of such statute or regulation on the
Transactions; provided that neither Parent nor Merger Sub will be required by
this Section 7.07 to (i) take any action, including entering into any consent
decree, hold separate orders or other arrangements, that (A) requires the
divestiture of any assets of any of Parent, Merger Sub, the Company or any of
their respective subsidiaries, or (B) limit Parent's freedom of action with
respect to, or its ability to retain, the Company and the Company Subsidiaries
or any portion thereof or any of Parent's or its affiliates' other assets or
businesses, or (ii) commence litigation or other proceeding against, or appeal
any decision of, any Governmental Entity.
Section 7.08 Agreement to Defend and Indemnify. (a) From and after
the Effective Time, the Surviving Corporation shall honor all rights to
indemnification, advancement of costs and expenses and exculpation from
liabilities in favor of the officers and directors of the Company and each of
the Company Subsidiaries (collectively, the "Indemnified Parties"), whether
pursuant to their respective articles of incorporation or by laws (or comparable
organizational documents), the indemnification agreements set forth in Section
7.08(a) of the Company Schedule or otherwise. For a period of six years after
the Effective Time, the Surviving Corporation (or any successor entity owned or
controlled by Parent) shall not take any action to amend, modify or repeal any
provision of the articles of incorporation or by-laws (or comparable
organizational documents) of the Surviving Corporation, the Company or any of
the Company Subsidiaries in any way that would impair, eliminate, restrict or
limit the Indemnified Parties' rights to indemnification, advancement of costs
and expenses and exculpation from liabilities.
(b) At or prior to the Closing Date, Parent or Merger Sub shall
purchase and fully pay for a directors' and officers' liability insurance policy
having a six-year term commencing on the Effective Date (the "Tail Policy"),
covering acts and omissions occurring prior to the Effective Time (the "Tail
Coverage") with respect to those persons who are currently covered by the
Company's current directors' and officers' liability insurance policy (the
"Current D&O Policy"). With respect to the scope and amount of coverage, the
Tail Policy shall be not less favorable to such directors and officers than the
Current D&O Policy; provided, however, that the aggregate cost of the Tail
Policy shall not exceed 250% of the last annual premium paid for the Current D&O
Policy prior to the date of this Agreement (the "Current Premium") multiplied by
six (the "Maximum Premium"). If coverage under the Tail Policy terminates during
such six-year term, the Surviving Corporation shall obtain as much Tail Coverage
for such directors and officers as can be obtained for the remainder of the
six-year term for an annualized cost not in excess of the Excess Premium. The
Company represents and warrants that the Current Premium is $464,214.
(c) (i) If Merger Sub requests the Company to obtain the
resignations of any officers of the Company or of any Company Subsidiary as of
the Effective Time (as provided in Section 7.12), then as a condition precedent
thereto, by not later than the Effective Time, Parent or Merger Sub shall pay
such officers' severance pay, salary continuation entitlements and other
compensation and entitlements due under any existing Contracts or plan for the
benefit of such officers, as if such officers had been terminated without cause
immediately after the Effective Time.
(ii) In the event that any officers of the Company or of any Company
Subsidiary resign subsequent to the Closing as a result of the
consummation of the Transactions, such officers' severance pay, salary
continuation rights or any compensation or payments due under any existing
agreement or plan for the benefit of the officers as of the date of this
Agreement shall be due and paid by the Surviving Corporation.
(d) If the Surviving Corporation or any of its successors or assigns
(i) consolidates or merges with any other person and is not the continuing or
surviving entity in such consolidation or merger or (ii) transfers all or
substantially all of its properties and assets to any person, then and in each
such case, proper provision shall be made so that the successors and assigns of
the Surviving Corporation assume the obligations set forth in this Section 7.08.
(e) This Section 7.08 is intended to be for the benefit of, and to
grant third party rights to, the Indemnified Parties and officers and directors
of the Company or any Company Subsidiary, and each of the Indemnified Parties
and officers and directors of the Company or any Company Subsidiary shall be
entitled to enforce the covenants contained herein.
Section 7.09 Employee Benefits. (a) Following the Effective Time,
all persons who were employed by the Company or any Company Subsidiaries
("Company Employees") who are eligible to participate in the Company Benefit
Plans shall (i) continue to participate in such plans (other than the Company's
Employee Stock Ownership Plan (the "ESOP") (and equity-based plans) or (ii)
participate in such benefit plans maintained by Parent or its Subsidiaries
("Parent Benefit Plans") as are made available to similarly situated employees
and are substantially consistent with the Company Benefit Plans for the calendar
year in which the Closing takes place. Company Employees who participate in
Parent Benefit Plans shall be given credit for service with the Company or any
Company Subsidiary, for purposes of eligibility and vesting, to the extent such
service was recognized for such purposes under the Company Benefit Plans in
which such Company Employees participated.
(b) The Company shall take all actions necessary to ensure that the
ESOP is terminated not later than the Effective Time. The Company shall provide
Parent with such information as it reasonably requests to demonstrate that such
actions have been taken.
(c) For at least 91 days after the Effective Time, the Surviving
Corporation shall not, directly or indirectly, take any actions prohibited by,
or fail to take actions required by, the WARN Act that would be reasonably
likely to subject any persons who were Representatives of the Company or any
Company Subsidiary prior to the Closing to any liability, penalties, awards or
other adverse consequences pursuant to the WARN Act. This paragraph (c) is
intended to be for the benefit of, and to grant third-party rights to,
Representatives of the Company or any Company Subsidiary. Each of such
Representatives shall be entitled to enforce the covenants contained in this
paragraph (c).
Section 7.10 SEC Reports. From the date of this Agreement until the
earlier of the termination of this Agreement or the Effective Time, the Company
shall file on a timely basis all Company SEC Documents required to be filed by
it with the SEC under the Exchange Act or the Securities Act, which Company SEC
Documents shall comply in all material respects with the requirements of the
Exchange Act or the Securities Act, as applicable.
Section 7.11 Delisting. Each party hereto agrees to cooperate with
the other parties in taking, or causing to be taken, all actions necessary to
(i) delist the Company Common Stock from the American Stock Exchange and (ii)
terminate the registration of the Company Common Stock under the Exchange Act
(if so requested by Parent); provided, that such delisting or termination shall
not be effective until after the Effective Time.
Section 7.12 Resignations. Effective as of the Effective Time, the
Company shall obtain the resignations of each director of the Company and, if so
requested by Merger Sub, but subject to Parent's or Merger Sub's payment
obligations under Section 7.08(c)(i), of any officer of the Company and any
director or officer of any Company Subsidiary.
Section 7.13 Communications to Employees. Merger Sub and the Company
will cooperate with each other with respect to, and endeavor in good faith to
agree in advance upon the method and content of, all written or oral
communications or disclosures to employees of the Company or any of the Company
Subsidiaries with respect to the Merger or the other Transactions.
Section 7.14 Transfer Taxes; HSR Fees. (a) All stock transfer, real
estate transfer, documentary, stamp, recording and other similar Taxes
(including interest, penalties and additions to any such Taxes) incurred in
connection with the Transactions ("Transfer Taxes") shall be paid by either
Merger Sub or the Surviving Corporation, and the Company shall cooperate with
Merger Sub and Parent in preparing, executing and filing any Tax Returns with
respect to Transfer Taxes.
(b) The filing fees for the pre-merger notifications under the HSR
Act shall be borne one-half by Parent and one-half by the Company.
Section 7.15 Cooperation with Financing. In order to assist with
obtaining any financing contemplated by Parent in connection with the
consummation of the Transactions, the Company shall, and shall cause the Company
Subsidiaries to, provide such assistance and cooperation as Parent and its
affiliates may reasonably request, including making all reasonable efforts to
provide access to the independent accountants of the Company and the Company
Subsidiaries to prepare financial statements for the financing; provided,
however, that (i) Parent shall be solely responsible for all costs and expenses
incurred by the Company or the Company Subsidiaries in regard to such
assistance, cooperation and efforts of the Company and the Company Subsidiaries
and (ii) no director, officer or employee of the Company or of any Company
Subsidiaries shall be required to execute any Contracts, applications,
regulatory filings or other documents.
Section 7.16 Satisfaction of the Indenture Obligation. (a) The
parties hereto acknowledge that the provisions of the Indenture described in
Section 7.16 of the Company Schedule (the "Indenture Provisions") would likely
preclude consummation of the Merger on any date reasonably contemplated by the
parties under this Agreement unless, among other things, (i) prior to such
consummation, the Indenture Provisions are appropriately amended or waived or
(ii) the Company's 11% Senior Secured Notes (the "Senior Notes") are redeemed in
accordance with Article 3 of the Indenture (such actions, the "Indenture
Obligation"). Not later than May 16, 2006, Parent and Merger Sub shall notify
the Company in writing of the means by which Parent or Merger Sub have elected
to satisfy the Indenture Obligation in accordance with this Section 7.16.
(b) If Parent and Merger Sub elect to satisfy the Indenture
Obligation pursuant to this paragraph (b), then by not later than the Note
Acquisition Deadline (but after Parent and Merger make their initial filings
with the Gaming Authorities pursuant to Section 7.17(a)) Parent or Merger Sub
shall (i) acquire not less than a majority in principal amount of the
outstanding Senior Notes and (ii) grant the irrevocable consent of the holders
of the Senior Notes (the "Noteholders") that is required to amend or waive the
Indenture Provisions to allow for consummation of the Merger and the other
Transactions on the terms set forth in this Agreement (the "Noteholder Consent")
in their capacity as the Noteholders without conducting a solicitation of the
noteholders (and with no obligation on the part of the Company or any Company
Subsidiary to agree to amend or waive any provisions of the Indenture other than
the Indenture Provisions). The Noteholder Consent shall be conditioned solely
upon the consummation of the Merger and shall terminate immediately upon the
termination of this Agreement. Parent's and Merger Sub's actions pursuant to
this paragraph (b) shall be in accordance with applicable Law, the Indenture and
all other provisions of this Agreement. Notwithstanding anything to the contrary
in this Agreement, Parent and Merger Sub shall be solely responsible for all
costs and expenses incurred in connection with satisfying the Indenture
Obligation pursuant to this paragraph (b). For purposes of this Agreement, the
"Note Acquisition Deadline" is the eleven-month anniversary of the date of this
Agreement unless the Outside Date has been extended pursuant to Section
9.01(b)(i), in which case the "Note Acquisition Deadline" will be the earlier of
(x) the 30th day prior to the Outside Date, as so extended, or (y) the 30th day
prior to the Closing Date. If Parent and Merger Sub elect to satisfy the
Indenture Obligation in accordance with this paragraph (b), then the Company
shall proceed expeditiously with all other actions necessary or appropriate to
effect an amendment or waiver of the Indenture to allow the Merger to be
consummated on the terms set forth in this Agreement (which amendment or waiver
shall be conditioned upon consummation of the Merger).
(c) If Parent and Merger Sub notify the Company of their election to
satisfy the Indenture Obligation pursuant to this paragraph (c), then Parent or
Merger Sub shall, on the Closing Date, deposit the funds necessary to redeem the
Senior Notes (the "Note Funding") with the Trustee pursuant to Section 3.05 of
the Indenture in order to redeem the Senior Notes in accordance with Section
3.07(c) of the Indenture. If Parent and Merger Sub elect to satisfy the
Indenture Obligation in accordance with this paragraph (c), then the Company
shall proceed with all actions necessary or appropriate to redeem all of the
Senior Notes pursuant to Article 3 of the Indenture as soon as practicable after
the Closing, including taking all actions necessary or appropriate in order to
obtain the release of any and all collateral securing the Company's obligations
under the Senior Notes.
Section 7.17 Regulatory and Other Approvals and Notifications. (a)
Without limiting the generality of Section 7.07 and in furtherance of the
purposes thereof, (i) as soon as practicable after the date of this Agreement,
Parent and Merger Sub shall file or cause to be filed all applications, notices
or similar documents with all Gaming Authorities that are necessary or
appropriate to consummate the Transactions and (ii) Parent and Merger Sub shall
promptly and appropriately respond, or shall cause a prompt and appropriate
response to be made, to any and all inquiries or informational requests from
Gaming Authorities in connection with their review or consideration of the
Regulatory Filings of Parent, Merger Sub or any of Parent's Applicants.
(b) Without limiting the generality of paragraph (a) of this Section
7.17, Parent and Merger Sub shall cause each of the Controlling Parties as well
as Opco (and any other Parent's Applicants) to (i) not later than 45 days
following the date hereof, file with the applicable Gaming Authorities
applications for such approvals under the Gaming Laws as are necessary to
consummate the Merger and the other Transactions (the "Gaming Approvals"), (ii)
not later than 90 days following the date hereof, prepare in draft form and
provide to Nevada counsel for Parent and Merger Sub a response to the
anticipated information request from the Gaming Authorities, (iii) on or around
each of the six-month anniversary of the date hereof, the nine-month anniversary
of the date hereof and, in the event the Outside Date is extended pursuant to
Section 9.01(b)(i), the one-year anniversary of the date hereof, deliver to the
Company a certificate (each, a "Progress Certificate") executed by the Nevada
law firm of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, or other Nevada gaming counsel reasonably
acceptable to the Company (taking into account, among other things, the extent
of such other counsel's involvement in, or knowledge of, the Gaming Approval
process), stating that to the knowledge of such firm, Parent, Merger Sub, the
Controlling Parties, Opco and all other Parents' Applicants have taken the
actions required to be taken to date under Sections 7.07 and 7.17 and that such
firm has no knowledge of the existence of any fact or circumstance that would be
reasonably likely to prevent the issuance of the Gaming Approvals by the Outside
Date (as may be extended under Section 9.01(b)(i)) and (iv) withdraw the
application to the Gaming Authorities of any of the Controlling Parties if it
appears reasonably likely that the application of such Controlling Party will
not be approved or will delay the issuance of the Gaming Approvals, and
following such withdrawal, proceed with the applications of the remaining
Controlling Parties, Opco and other Parent's Applicants.
(c) Until the Closing Date, to the extent permitted by applicable
Law, Parent and Merger Sub shall provide reasonably descriptive written
notifications to the Company within five days after they become aware of any of
the following events (with the names of Parent's Applicants stated in such
notifications to the extent the notifications pertain to them):
(i) Parent, Merger Sub or any of Parent's Applicants makes any
filing or submits any application, notice or similar document or request
(or any amendment or supplement to any of the foregoing) necessary or
appropriate for any Regulatory Action to be obtained, taken, made or given
(any of the foregoing, a "Regulatory Filing");
(ii) Parent, Merger Sub or any of Parent's Applicants withdraws any
Regulatory Filing;
(iii) Any Regulatory Action is obtained, taken, made or given;
(iv) Any Governmental Entity notifies Parent, Merger Sub or any of
Parent's Applicants that its Regulatory Filing has been placed on an
agenda or scheduled for hearing or consideration (which notification from
Parent or Merger Sub to the Company shall also specify the date of such
hearing or consideration), delayed or removed from such agenda or
schedule; or
(v) Any Governmental Entity issues a decision not to take, make or
give any Regulatory Action or withdraws, revokes, cancels, nullifies or
materially modifies any Regulatory Action that was previously taken, made
or given.
(d) Parent and Merger Sub shall periodically, but in no event less
frequently than monthly, report to the Company regarding the status of their and
Parent's Applicants' Regulatory Filings and gaming licensing and report to the
Company within three business days after Parent, Merger Sub or any of Parent's
Applicants' has been directly or indirectly advised that any of the Gaming
Authorities has a concern or issue with respect to any of such persons'
Regulatory Filings or licensing proceedings, which concern or issue has a
reasonable likelihood of becoming an area of concern at the gaming licensing
hearings or in the gaming licensing deliberations.
ARTICLE VIII
CONDITIONS PRECEDENT
Section 8.01 Conditions to Each Party's Obligation to Effect the
Merger. The respective obligations of each party to effect the Merger are
subject to the satisfaction or waiver on or prior to the Closing Date of the
following conditions:
(a) Stockholder Approval. The Company Stockholder Approval shall
have been obtained.
(b) HSR Act. All filings to be made under the HSR Act with respect
to the Merger and the other Transactions shall have been made and all applicable
waiting periods (and extensions thereof) shall have expired or otherwise been
terminated.
(c) No Injunctions or Restraints. No temporary restraining order,
preliminary or permanent injunction or other order issued by any court of
competent jurisdiction or other legal restraint or prohibition preventing the
consummation of the Merger shall be in effect; provided, however, that before a
party asserts a failure of this condition, such party shall have made all
reasonable efforts to prevent the entry of any such injunction or other order
and to appeal as promptly as possible any such injunction or other order that
has been entered.
Section 8.02 Conditions to Obligations of Parent and Merger Sub. The
obligations of Parent and Merger Sub to effect the Merger are further subject to
the satisfaction or waiver of the following conditions on or prior to the
Closing Date (unless a later date is provided for in paragraph (b) of this
Section):
(a) Representations and Warranties. (i) The representations and
warranties of the Company in this Agreement that are qualified as to materiality
or Company Material Adverse Effect shall be true and correct without regard to
such materiality or Company Material Adverse Effect qualification, except where
such failure to be true and correct, individually or in the aggregate, would not
be reasonably likely to have a Company Material Adverse Effect, and those
representations and warranties not so qualified shall be true and correct in all
material respects as of the date of this Agreement and as of the Closing Date,
except that (A) the truth and correctness of representations and warranties that
by their terms speak as of another specified date or dates will be determined as
of such dates(s) and (B) the representations and warranties set forth in
Sections 4.01, 4.02 and 4.03 shall be true and correct as written in all
respects as of the date of the Agreement and as of the Closing Date (excluding
representations and warranties in Section 4.02(a) that are made as of a date or
dates earlier than the date of this Agreement, which shall be true and correct
in all respects as of such earlier date(s)).
(ii) Parent shall have received a certificate signed on behalf of
the Company by the chief executive officer and the chief financial officer
(collectively, the "Officers") of the Company attesting to the matters set
forth in clause (i) of this Section 8.02(a).
(b) Performance of Obligations of the Company. (i) The Company shall
have performed in all material respects all obligations required to be performed
by it under this Agreement at or prior to the Closing Date (excluding
cancellation of the Options, termination of the ESOP and satisfaction of the
Company's obligations under Section 7.16(c) in the event of Note Funding), and
Parent shall have received a certificate signed on behalf of the Company by the
Officers of the Company to such effect.
(ii) As of the Effective Time, all Options shall have been canceled
and the ESOP shall have been terminated. As of the Effective Time, Parent
shall have received a certificate signed on behalf of the Company by the
Officers of the Company attesting to the matters set forth above in this
clause (ii).
(c) No Litigation. There shall not be pending or threatened any
suit, action or proceeding by any Governmental Entity or by any other person
having a reasonable likelihood of success (i) challenging the acquisition by
Surviving Corporation of any Company Common Stock, seeking to restrain or
prohibit the consummation of the Merger or any other Transaction or seeking to
obtain from the Company or Surviving Corporation any damages that are material
in relation to the Company, (ii) seeking to prohibit or limit the ownership or
operation by the Company or Parent and its Subsidiaries of any material portion
of the business or assets of the Company, or Parent and its Subsidiaries, taken
as a whole, or to compel the Company or Parent and its Subsidiaries to dispose
of or hold separate any material portion of the business or assets of the
Company, or Parent and its Subsidiaries, taken as a whole, as a result of the
Merger or any other Transaction, (iii) seeking to prohibit Parent or any of its
Subsidiaries from effectively controlling in any material respect the business
or operations of the Company or (iv) imposing material limitations on the
ability of Parent to acquire or hold, or exercise full rights of ownership of,
any shares of capital stock of the Surviving Corporation, including the right to
vote such shares on all matters properly presented to the stockholders of the
Surviving Corporation.
(d) Material Adverse Effect. Since the date of this Agreement, there
shall not have been any state of facts, change, development, effect, event,
condition or occurrence that, individually or in the aggregate, constitutes or
has had a Company Material Adverse Effect.
(e) Consents, Approvals and Authorizations. All consents, approvals,
orders or authorizations from, and all declarations, filings and registrations
with, any Governmental Entity, including the Gaming Approvals, required to
consummate the Merger and the other Transactions shall have been obtained or
made without the imposition of any material conditions, including any
requirement with respect to the licensing of any person other than the Parent's
Applicants.
(g) Properties. In respect of the Company Properties, the Company
shall obtain and provide to Parent the following matters:
(i) An estoppel certificate from each lessee under a Major Lease (as
hereinafter defined) and, in addition, from tenants under leases
representing (determined by reference to the amount of space leased by
such tenants at the Company Owned Properties) seventy percent (70%) of the
space leased to tenants at the Company Owned Properties, certifying (i)
that the Lease in question constitutes the entire agreement between the
parties thereto and is in full force and effect in accordance with its
terms and has not been modified (except for the modifications set forth
therein), (ii) the date(s) to which payments and other charges thereunder
have been paid, (iii) whether any work required to be performed at the
demised premises has been performed, (iv) whether any party to the Lease
owes any monies to any other party under the Lease, (v) whether the tenant
(in the case of any Lease where the Company is the lessor) has any
purchase option or right of first refusal in respect of the property or
the demised premises, and (vi) there is no default thereunder on the part
of any party thereto. The form of such estoppel certificate has been
submitted, and agreed to, by the Company. For purposes hereof, the term
"Major Lease" shall mean the tenants leasing space operating under the
following names: the MSNV / ABC Store, the SpringField Food Court and YBM
Unlimited.
(ii) Satisfactions of any mortgage lien on or affecting (and
terminations of any assignment of leases and rents relating to) any of the
Company Owned Properties, and related UCC-3 statements.
(iii) Such owner's policies of title insurance as shall be required
by Parent, in an amount not less than the value of each of the Company
Properties, insuring that the title to the Company Owned Properties is
good and marketable, free and clear of all encumbrances subject only to
the Permitted Liens and to other standard exceptions to an owner's policy
of title insurance. Each such title policy shall contain a non-imputation
endorsement and such other endorsements as shall be requested by Parent
(including zoning, contiguity, access, encroachment and comprehensive
endorsements). At or prior to the Closing, the Company shall provide for
the delivery of such executed and acknowledged affidavits and/or
indemnification agreements, as the title company shall reasonably require.
The Company shall be responsible for paying the full amount of the title
policies (and any endorsements) delivered as required herein.
(iv) There shall be delivered to Parent (at the Company's cost) a
survey by a registered land surveyor of each parcel of the Company
Properties, certified to Parent and Merger Sub, the title insurance
company issuing the title insurance policies and to any other person or
entity which Parent shall reasonably request, in a manner acceptable to
Parent, which survey shall be dated, updated or recertified not more than
45 days prior to the Closing, and shall be in compliance with the minimum
detail requirements and other standards reasonably specified by Parent.
(h) Foothill Credit Facility. The Foothill Credit Facility shall
have been terminated and there shall be no further amount payable thereunder.
Section 8.03 Conditions to Obligation of the Company. The
obligations of the Company to effect the Merger are further subject to the
following conditions:
(a) Representations and Warranties. (i) The representations and
warranties of Parent and Merger Sub in this Agreement that are qualified as to
materiality shall be true and correct, and the representations and warranties of
Parent and Merger Sub in this Agreement not qualified by materiality shall be
true and correct in all material respects, as of the date of this Agreement,
except that (A) the accuracy of representations and warranties that by their
terms speak as of another specified date or dates will be determined as of such
date(s) and (B) the representations and warranties set forth in Sections 5.02
and 5.04 shall be true and correct as written in all respects.
(ii) The representations and warranties of Parent and Merger Sub in
this Agreement taken as a whole, other than those that by their terms
speak as of a date or dates earlier than the Closing Date, shall be true
and correct in all material respects as of the Closing Date with the same
effect as though made on and as of the Closing Date, except (A) where the
failure to be true and correct as of the Closing Date would not impair, in
any material respect, the ability of Parent or Merger Sub to perform its
respective obligations under this Agreement or prevent or materially delay
the consummation of any of the Transactions and (B) that the
representations and warranties set forth in Sections 5.02, 5.04 and 5.05
shall be true and correct in all respects as of the Closing Date with the
same effect as though made on and as of the Closing Date.
(iii) The Company shall have received a certificate signed on behalf
of Parent by the Officers of Parent attesting to the matters set forth in
clauses (i) and (ii) of this Section 8.03(a).
(b) Performance of Obligations of Parent and Merger Sub. Parent and
Merger Sub shall have performed in all material respects all obligations
required to be performed by them under this Agreement at or prior to the Closing
Date (including satisfaction of the Indenture Obligation), and the Company shall
have received a certificate signed on behalf of Parent by the Officers of Parent
to such effect.
ARTICLE IX
TERMINATION, AMENDMENT AND WAIVER
Section 9.01 Termination. This Agreement may be terminated and the
Merger may be abandoned at any time prior to the Effective Time, whether before
or after approval of matters presented in connection with the Merger by the
stockholders of the Company:
(a) by mutual written consent of Parent, Merger Sub and the Company;
(b) by either Parent, Merger Sub or the Company if:
(i) the Closing does not take place on or before the later of (A)
the date falling twelve (12) months following the date of this Agreement
and (B) the date falling eight (8) months following the date of the
Company Stockholder Vote (such later date being the "Outside Date");
provided that if as of the Outside Date, any hearing with respect to any
necessary approval under applicable Gaming Laws has been scheduled for a
date after the Outside Date, or any such hearing is then pending, the
Company has received the Progress Certificates in accordance with Section
7.17(b)(iii), all conditions precedent to the Closing set forth in Article
VIII have been satisfied or waived by the party or parties entitled to the
benefits thereof, except for the condition regarding the Gaming Approvals
specified in Section 8.02(f) and the conditions specified in Section
8.02(b)(ii), and Parent and Merger Sub are still awaiting and have a
reasonable expectation of obtaining such Gaming Approvals, then Parent and
Merger Sub by delivering an Extension Notice and a Financing Commitment to
the Company and by promptly depositing, by wire transfer of immediately
available funds, with the Escrow Agent the additional amount of Three
Million Dollars ($3,000,000) to be included in the Deposit and the Escrow
in accordance with the Deposit Escrow Agreement, or the Company by
delivering an Extension Notice to Parent and Merger Sub, may extend the
"Outside Date" by an additional three (3) months; provided, further, that
the right to terminate this Agreement pursuant to this Section 9.01(b)(i)
shall not be available to any party whose breach of this Agreement has
been a principal reason the Closing has not taken place by the Outside
Date;
(ii) any Governmental Entity issues an order, decree or ruling or
takes any other action permanently enjoining, restraining or otherwise
prohibiting the Merger and such order, decree, ruling or other action
shall have become final and nonappealable; or
(iii) the Company Stockholder Approval shall not have been obtained
at the Company Stockholders Meeting duly convened therefor or at any
reconvening thereof;
(c) by the Company if the Company has approved a Superior Proposal
in accordance with Section 6.02(b), provided, the Company has complied with all
provisions thereof; or
(d) by the Company if Parent or Merger Sub breaches or fails to
perform in any material respect of any of its representations, warranties or
covenants contained in this Agreement, which breach or failure to perform (A)
would give rise to the failure of a condition set forth in Section 8.03 and (B)
cannot be or has not been cured within 30 days after the giving of written
notice to Parent of such breach;
(e) by Parent or Merger Sub if:
(i) the Board of Directors has withdrawn, or modified or changed in
a manner adverse to Parent or Merger Sub, its approval or recommendation
of this Agreement or the Merger, or has approved a Takeover Proposal, or
if the Company has entered into an agreement to effect a Takeover
Proposal;
(ii) a tender or exchange offer relating to securities of the
Company has been commenced and the Board of Directors does not recommend
that the Company's stockholders reject such tender or exchange offer
within ten business days after the commencement thereof;
(iii) the Board of Directors has waived Sections 78.411-78.444 or
78.378-78.3793 of Nevada Law with respect to any Person other than Parent,
Merger Sub or their affiliates or any group of which any them is a member;
(iv) the Company breaches Section 6.02(a); or
(v) the Company breaches or fails to perform in any material respect
any of its representations, warranties or covenants in this Agreement,
which breach or failure to perform (A) would give rise to the failure of a
condition set forth in Section 8.02(a) or 8.02(b) and (B) cannot be or has
not been cured within 30 days after the giving of written notice to the
Company of such breach.
Section 9.02 Effect of Termination. (a) In the event of termination
of this Agreement by either the Company, Merger Sub or Parent pursuant to
Section 9.01, this Agreement shall forthwith become void and have no effect,
without any liability or obligation on the part of Parent, Merger Sub or the
Company other than under the provisions of this Article IX, which provisions
shall survive such termination; provided that no such termination results from a
willful breach by a party of any of its representations, warranties or covenants
in this Agreement.
(b) If Parent or Merger Sub terminates this Agreement pursuant to
Section 9.01(e)(v), then in such case (and only in such case) the Company shall
pay, or cause to be paid to Parent, at the time of termination a fee (the
"Termination Fee") equal to the amounts incurred on or after February 1, 2005 by
Parent or Merger Sub as actual out-of-pocket expenses in connection with the
negotiation, preparation, execution, delivery and attempted performance of this
Agreement and the Transactions contemplated hereby, but subject to the maximum
entitlement specified below in this paragraph (b); provided, however, that the
Termination Fee shall not be payable to Parent if the breach of a representation
or warranty of the Company hereunder that gave rise to Parent's and Merger Sub's
right to terminate this Agreement pursuant to Section 9.01(e)(v) resulted from
an event, fact or circumstance that occurred after the date of this Agreement
and did not constitute a willful breach of this Agreement by the Company. The
Termination Fee shall include all reasonable, documented out-of-pocket costs,
fees and expenses incurred by Parent or Merger Sub on or after February 1, 2005
in connection with their due diligence review, negotiation and documentation of
this Agreement and the Transactions, including reimbursement of all filing fees
paid in connection with filings under the HSR Act or under Gaming Laws and all
fees and expenses paid to Parent's or Merger Sub's lawyers, accountants and
other professional or financial advisers; provided, however, that the
Termination Fee shall not include expenses (i) relating to (A) the negotiation,
preparation, execution, delivery and attempted performance of the ▇▇▇▇▇▇▇▇▇
Stock Purchase Agreement or (B) any investigation or inquiry by any Governmental
Entity (other than Gaming Authorities) or (ii) incurred prior to the date of
this Agreement in an aggregate amount exceeding One Million Dollars
($1,000,000). If Parent has become entitled to the Termination Fee pursuant to
this paragraph (b), it shall be paid by wire transfer to an account designated
in writing by Parent to the Company not later than three business days after the
delivery by Parent to the Company of a written request for payment of the
Termination Fee and reasonably detailed and accurate supporting documentation
for such request, except to the extent, if any, that the Company disputes the
requested amount. If the Company disputes the requested amount of the
Termination Fee, it shall so advise Parent in writing and in reasonable detail
within three business days after the Company's receipt of the request and
related supporting documentation. Any undisputed amount shall be timely paid by
the Company to Parent and the balance of the amount requested by Parent shall be
paid by the Company to the Escrow Agent to be held in escrow pending resolution
of the dispute, and the parties shall make all good faith reasonable efforts to
resolve such dispute as expeditiously as practicable. Under no circumstances
shall the Termination Fee exceed Two Million Dollars ($2,000,000).
(c) (i) If this Agreement is terminated by the Company pursuant to
Section 9.01(c) or by Parent or Merger Sub pursuant to clause (i), (ii), (iii)
or (iv) of Section 9.01(e), then upon such termination the Company shall pay or
cause to be paid to Parent a fee (the "Topping Fee") equal to 3.75% of the
Merger Consideration multiplied by the number of outstanding shares of Company
Common Stock and the Deposit shall be returned to Parent as provided in Section
9.02(e)(i).
(ii) If (A) Parent or the Company terminates this Agreement (1)
pursuant to Section 9.01(b)(i) and at the time of such termination the
Company Stockholder Approval has not been obtained or (2) pursuant to
Section 9.01(b)(iii) and (B) prior to the time of such termination, (1)
there shall have been a public announcement of an offer or proposal for,
or a public announcement of such intention with respect to, a transaction
that would constitute a Takeover Proposal involving the Company (and such
offer, proposal or announcement has not been withdrawn prior to such
termination) and (2) within twelve months of termination of this
Agreement, the Company or any Company Subsidiary enters into a definitive
agreement with any third party making an offer or proposal with respect to
the consummation of a Takeover Proposal or any Takeover Proposal with
respect to the Company or any Company Subsidiary is consummated, then the
Company shall pay or cause to be paid to Parent, not later than one
Business Day after the earlier of the date such agreement is entered into
or such Takeover Proposal is consummated, the Topping Fee.
(d) The Termination Fee shall not be payable more than once, nor
shall it be payable under any circumstances other than those specified in
Section 9.02(b). The Topping Fee shall not be payable more than once, nor shall
it be payable under any circumstances other than those specified in Section
9.02(c). In the event of termination of this Agreement pursuant to Section
9.01(e)(iv), the Termination Fee shall not be payable. The aggregate of all
payments by the Company under Section 9.02 shall not exceed 3.75% of the Merger
Consideration multiplied by the number of outstanding shares of Company Common
Stock.
(e) Deposit; Liquidated Damages.
(i) In the event that this Agreement is terminated (x) pursuant to
Section 9.01(d) or (y) pursuant to Section 9.01(b)(i) as a result of the
failure of Parent or Merger Sub to have obtained the proceeds of any
financing required to consummate the Merger and the other Transactions or
to have obtained the Gaming Approvals and at the time of such termination,
(A) the other conditions set forth in Sections 8.01 and 8.02, including
the Company Stockholder Approval but excluding the conditions in paragraph
(b)(ii) of Section 8.02, have been satisfied or waived by the party or
parties entitled to the benefits thereof and (B) Parent and Merger Sub do
not have the right to terminate this Agreement pursuant to Section
9.01(e)(iv) or (v), then the Deposit Amount shall be paid to the Company
by the Escrow Agent. In the event that this Agreement is terminated for
any reason and the Deposit Amount, or any part thereof, is not payable to
the Company pursuant to the immediately preceding sentence, then the
Deposit Amount shall be returned to Parent.
(ii) The parties hereto agree that the provisions of paragraphs (c)
and (d) of this Section 9.02 are an integral part of the Transactions, the
damages resulting from a termination of this Agreement are uncertain and
incapable of accurate calculation and the amounts payable pursuant to
paragraphs (c) and (d) of this Section 9.02 are reasonable forecasts of
the actual damages which may be incurred by the parties under such
circumstances. The amounts payable pursuant to paragraphs (c) and (d) of
this Section 9.02 constitute liquidated damages and not a penalty and
shall be the sole and exclusive remedy in the event of termination of this
Agreement on any basis specified in paragraphs (c) and (d) of this Section
9.02 (it being agreed and understood that nothing in this Section 9.02 is
intended to limit (A) the Company's remedies in the event of a willful
breach by Parent or Merger Sub or (B) Parent's or Merger Sub's remedies in
the event of a willful breach by the Company).
Section 9.03 Amendment. This Agreement may be amended by the parties
at any time, whether before or after the Company Stockholder Approval has been
obtained; provided, that after the Company Stockholder Approval, no amendment
that by Law requires further approval by stockholders of the Company shall be
made without such further approval by such stockholders. This Agreement may not
be amended except by an instrument in writing signed on behalf of each of the
parties.
Section 9.04 Extension; Waiver. At any time prior to the Effective
Time, the parties may (i) extend the time for the performance of any of the
obligations or other acts of the other parties, (ii) waive any inaccuracies in
the representations and warranties contained in this Agreement or in any
document delivered pursuant to this Agreement or (iii) waive compliance with any
of the agreements or conditions contained in this Agreement. Any agreement on
the part of a party to any such extension or waiver shall be valid only if set
forth in an instrument in writing signed on behalf of such party. The failure or
delay by any party to this Agreement to assert any of its rights under this
Agreement or otherwise shall not constitute a waiver of such rights nor shall
any single or partial exercise by any party to this Agreement of any of its
rights under this Agreement preclude any other or further exercise of such
rights or any other rights under this Agreement.
ARTICLE X
GENERAL PROVISIONS
Section 10.01 No Survival of Representations and Warranties. None of
the representations and warranties in this Agreement or in any instrument
delivered pursuant to this Agreement shall survive the Effective Time. This
Section 10.01 shall not limit any covenant or agreement of the parties which by
its terms contemplates performance after the Effective Time.
Section 10.02 Notices. All notices, requests, claims, demands and
other communications under this Agreement shall be in writing and shall be
deemed given (i) upon personal delivery, (ii) one business day after being sent
via a nationally recognized overnight courier service if overnight courier
service is utilized or (iii) upon receipt of electronic or other confirmation of
transmission if sent via facsimile, in each case at the addresses or fax numbers
(or at such other address or fax number for a party as shall be specified by
like notice) set forth below:
(a) if to Parent, Merger Sub or the Surviving Corporation, to
Riv Acquisition Holdings Inc.
c/o Metroflag Management LLC
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇
Fax Number: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Cadwalader, ▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Fax Number: (▇▇▇) ▇▇▇-▇▇▇▇
(b) if to the Company, to
Riviera Holdings Corporation
▇▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Fax Number: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇ & Silver, Ltd.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Fax Number: (▇▇▇) ▇▇▇-▇▇▇▇
Section 10.03 Definitions. For purposes of this Agreement, the term:
(a) "affiliate" of any person means another person that directly or
indirectly, through one or more intermediaries, controls, is controlled by, or
is under common control with, such first person.
(b) "Board Committee" means a committee of the Board of Directors.
(c) "business day" shall mean any day except a Saturday, Sunday or
any other day on which commercial banks are required or authorized to close in
New York, New York or Las Vegas, Nevada.
(d) "Colorado Gaming Authorities" means any or all of the Colorado
Commission, the Colorado Division of Gaming, the Colorado Liquor Enforcement
Division, the County of ▇▇▇▇▇▇ and the Municipality of Black Hawk.
(e) "Company Material Adverse Effect" means any state of facts,
change, development, effect, event, condition or occurrence that could
reasonably be likely to be materially adverse to (i) the business, assets
(including intangible assets), liabilities (contingent or otherwise), condition
(financial or otherwise), or results of operations of the Company and the
Company Subsidiaries, taken as a whole, (ii) the ability of the Company to
perform its obligations under this Agreement or (iii) the ability of the Company
to consummate the Merger or the other Transactions to be performed or
consummated by the Company, other than any state of facts, event, change,
effect, development, condition or occurrence relating to the economy in general.
Notwithstanding the preceding sentence, neither the Retirement Account
Disbursement nor any other Severance Compensation obligations with respect to
Covered Employees shall be considered (nor shall any of the excluded factors
specified in the preceding clause (iii) of this paragraph (e) be considered) in
determining whether there has been a Company Material Adverse Effect.
(f) "Confidentiality Agreements" means, collectively, the
Confidentiality Agreements, dated as of June 3, 2005 between the Company and
each of Starwood Capital Group Global, L.L.C., Flag Luxury Properties, LLC and
▇▇▇▇▇▇ Street Capital.
(g) "Controlling Parties" means ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, and ▇▇▇▇▇ Torino.
(h) "Covered Employees" means employees who are covered by
employment Contracts or salary continuation Contracts with the Company or any
Company Subsidiary, the terms of which extend beyond the Effective Time.
(i) "Directors' Option Plan" means the Company's 2005 Non-Qualified
Stock Option Plan for Non-Employee Directors.
(j) "Directors' Options" means the Options to be granted in 2006 and
2007 under the terms of the Directors' Option Plan, pursuant to which the
Directors' Option Shares would be issuable upon the exercise of such Options.
(k) "$" means U.S. dollars or other legal currency of the United
States of America.
(l) "Escrow Fees" means the fees and any other amounts payable to
the Escrow Agent under the Deposit Escrow Agreement.
(m) "Extension Notice" means a written notice requesting an
extension of the Outside Date pursuant to Section 9.01(b)(i).
(n) "Financing Commitment" means written commitments from reputable
financial institutions to provide all funds necessary to consummate all of the
Transactions.
(o) "Gaming Authorities" means any or all of the Nevada Gaming
Authorities, Colorado Gaming Authorities and any other licensing or regulatory
authority or Governmental Entity whose consent, approval, license, waiver,
order, decree, determination of suitability or other authorization is necessary
or appropriate under the Gaming Laws for the consummation of the Merger and the
other Transactions contemplated hereby.
(p) "Gaming Laws" means, with respect to any person, any federal,
state or local statute, law, ordinance, rule, regulation, permit, consent,
approval, license, judgment, order, decree, injunction or other authorization
governing or relating to the current or contemplated casino and gaming
activities and operations of such person and its subsidiaries, including the
rules and regulations of the Nevada Gaming Authorities or the Colorado Gaming
Authorities.
(q) "Indenture" means that certain Indenture, dated as of June 26,
2002, among the Company, the guarantors named therein and The Bank of New York,
as trustee.
(r) "Knowledge of the Company" means the actual, current knowledge
of ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇ (but only for the purpose of the
representations and warranties set forth in Sections 4.13 and 4.15) and ▇▇▇▇▇
▇▇▇▇▇ (but only for the purpose of the representations and warranties of the
Company set forth in Section 4.16) as of the Company's original execution of
this Agreement (without regard to subsequent amendments).
(s) "Knowledge of the Controlling Parties" means the actual, current
knowledge of the Controlling Parties.
(t) "Nevada Gaming Authorities" means any or all of the Nevada State
Gaming Control Board, the Nevada Gaming Commission, the ▇▇▇▇▇ County Liquor and
Gaming Licensing Board and the City of Las Vegas.
(u) "Opco" means a corporation or other legal entity to be formed by
Parent or the Company following the Closing for the purpose of leasing the
assets of the Company and operating the business of the Company.
(v) "Parent's Applicants" means the persons who are required to make
any filing or submit any application, notice, request, or similar document (or
any amendment or supplement to any of the foregoing) that is necessary or
appropriate for any Regulatory Action to be obtained, taken, made or given.
(w) "person" means any individual, firm, corporation, partnership,
company, limited liability company, trust, joint venture, association,
Governmental Entity or other entity.
(x) "Regulatory Action" means any consent, approval or action of, or
the making of any filing with, or the submission of any notice or request to,
any Gaming Authorities, Governmental Entity or any other person required for
Parent and Merger Sub to consummate the Merger and the other Transactions.
(y) "Representatives" of a person means such person's officers,
directors, managers (if such person is a limited liability company) investment
bankers, attorneys, auditors or other advisors or representatives.
(z) "Retirement Account Disbursement" means the disbursement by the
Company to its chief executive officer of the funds in the retirement account
that the Company maintains for him.
(aa) "Severance Compensation" means any severance pay or similar
compensation to which any Covered Employees become entitled under their
respective employment or salary continuation Contracts due to termination of
their employment at or after the Effective Time (other than termination by
Surviving Corporation or by a Subsidiary of Surviving Corporation for cause, as
prescribed by the terms of the applicable Contract)
(bb) "Subsidiary" of a person or entity means any corporation or
other legal entity of which such person or entity (either alone or through or
together with any other Subsidiary) (i) owns, directly or indirectly, more than
50% of the stock or other equity interests the holders of which are generally
entitled to vote for the election of the board of directors or other governing
body of such corporation or other legal entity, or (ii) in the case of a
partnership, serves as a general partner, or (iii) in the case of a limited
liability company, serves as managing member or owns a majority of the equity
interests, or (iv) otherwise has the ability to elect a majority of the
directors, trustees, managing members or other members of the governing body
thereof.
(cc) "2005 Option Plans" means collectively the Directors' Option
Plan and the Company's 2005 Incentive Stock Option Plan.
Section 10.04 Interpretation. Whenever a reference is made in this
Agreement to an Article, Section or Exhibit, such reference shall be to an
Article or Section of, or Exhibit to, this Agreement unless otherwise indicated.
The table of contents and headings 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 followed by the words "without limitation."
The words "hereof," "herein" and "hereunder" and words of similar import when
used in this Agreement shall refer to this Agreement as a whole and not to any
particular provision of this Agreement. The term "or" is not exclusive. The word
"extent" in the phrase "to the extent" shall mean the degree to which a subject
or other thing extends, and such phrase shall not mean simply "if." The
definitions in this Agreement are applicable to the singular as well as the
plural forms of such terms. Any agreement or instrument defined or referred to
herein or in any agreement or instrument that is referred to herein means such
agreement or instrument as from time to time amended, modified or supplemented
(other than the Filed Company SEC Documents). References to a person are also to
references to such person's permitted successors and assigns.
Section 10.05 Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule or Law
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the Transactions is not affected in any manner materially adverse
to any party. Upon such determination that any term or other provision is
invalid, illegal or incapable of being enforced, the parties hereto shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in an acceptable manner to the end
that the Transactions are fulfilled to the extent possible.
Section 10.06 Counterparts. This Agreement may be executed in one or
more counterparts (including by facsimile), all of which shall be considered one
and the same agreement and shall become effective when one or more counterparts
have been signed by each of the parties and delivered to the other parties.
Section 10.07 Entire Agreement; Third-Party Beneficiaries. The
Transaction Agreements, taken together with the Company Schedule, (i) constitute
the entire agreement, and supersede all prior agreements and understandings,
both written and oral, among the parties hereto with respect to the Transactions
and (ii) except for the provisions of Section 7.08 are not intended to confer on
any person other than the parties hereto any rights or remedies.
Section 10.08 Governing Law. This Agreement shall be governed by,
and construed in accordance with, the laws of the State of Delaware without
regard to conflicts of law principles. All suits, claims, actions or proceedings
arising out of or relating to this Agreement shall be heard and determined
exclusively in the Delaware Court of Chancery sitting in the State of Delaware.
Consistent with the preceding sentence, the parties hereto hereby (a) submit to
the exclusive jurisdiction of the Delaware Court of Chancery for the purpose of
any suit, claim, action or proceeding arising out of or relating to this
Agreement brought by any party hereto and (b) irrevocably waive, and agree not
to assert by way of motion, defense, or otherwise, in any such suit, claim,
action or proceeding, any claim that it is not subject personally to the
jurisdiction of the above-named courts, that its property is exempt or immune
from attachment or execution, that such suit, claim, action or proceeding is
brought in an inconvenient forum, that the venue of such suit, claim, action or
proceeding is improper, or that this Agreement or the transactions contemplated
hereby may not be enforced in or by any of the above-named courts.
Section 10.09 Assignment. Neither this Agreement nor any of the
rights, interests or obligations under this Agreement shall be assigned, in
whole or in part, by operation of Law or otherwise by any of the parties hereto
without the prior written consent of the other parties, except that Merger Sub
may assign, in its sole discretion, any of or all its rights, interests and
obligations under this Agreement to Parent or to any Subsidiary of Parent, but
no such assignment shall relieve Merger Sub of any of its obligations under this
Agreement. Any purported assignment without such consent shall be void. Subject
to the preceding sentences of this Section, this Agreement shall be binding
upon, inure to the benefit of, and be enforceable by, the parties hereto and
their respective successors and assigns.
Section 10.10 Enforcement. The parties hereto agree that irreparable
damage would occur in the event that any provisions of this Agreement were not
performed in accordance with their specific terms or were otherwise breached. It
is accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions of this Agreement in any federal court located in the
State of Delaware or in any Delaware state court, this being in addition to any
other remedy to which they are entitled at Law or in equity. In addition, each
of the parties hereto (i) consents to the personal jurisdiction of any federal
court located in the State of Delaware or any Delaware state court in the event
of any action, suit or proceeding to enforce or resolve disputes under this
Agreement, (ii) agrees that it will not attempt to deny or defeat such personal
jurisdiction by motion or other request for leave from any such court and (iii)
agrees that it will not bring any action relating to this Agreement or any
Transaction in any court other than any federal court located in the State of
Delaware or any Delaware state court.
Section 10.11 Consents. If the consent of a party is required under
this Agreement, such consent shall be deemed given if such party has not
responded in writing to the contrary within ten business days of such party's
receipt of a written request for such consent.
Section 10.12 WAIVER OF JURY TRIAL. WITH RESPECT TO ANY CLAIM,
ACTION, SUIT OR PROCEEDING THAT MAY BE BROUGHT AGAINST ANY OF THE PARTIES
HERETO, EACH OF THE PARTIES HERETO IRREVOCABLY WAIVES AND RELEASES TO THE OTHERS
ITS RIGHT TO A TRIAL BY JURY, AND AGREES THAT IT WILL NOT SEEK A TRIAL BY JURY
IN ANY SUCH CLAIM, ACTION, SUIT OR PROCEEDING.
IN WITNESS WHEREOF, Parent, Merger Sub and the Company have duly
executed this Agreement as of the date first written above.
RIV ACQUISITION HOLDINGS INC., a RIVIERA HOLDINGS CORPORATION,
Delaware corporation a Nevada corporation
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
------------------------------------ -----------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇ Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: President Title: Chairman, President & CEO
RIV ACQUISITION INC., a Nevada
corporation
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇
Title: President