EXHIBIT 2.6
________________________________________________________________________________
AGREEMENT AND PLAN OF MERGER
by and among
HORSESHOE GAMING, L.L.C.
HORSESHOE GAMING (MIDWEST), INC.
EMPRESS ACQUISITION ILLINOIS, INC.
EMPRESS ACQUISITION INDIANA, INC.
EMPRESS CASINO JOLIET CORPORATION
EMPRESS CASINO ▇▇▇▇▇▇▇ CORPORATION
and
EMPRESS ENTERTAINMENT, INC.
Dated as of September 2, 1998
________________________________________________________________________________
TABLE OF CONTENTS
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ARTICLE I. THE MERGER ...................................................... 2
Section 1.01. The Merger ................................................. 2
Section 1.02. Closing .................................................... 2
Section 1.03. Effective Time ............................................. 2
Section 1.04. Legal Effect ............................................... 2
Section 1.05. Merger Consideration ....................................... 3
Section 1.06. Adjustment Escrow and Merger Consideration Determination ... 3
Section 1.07. Indemnification Escrows .................................... 5
Section 1.08. Bonus Escrow ............................................... 5
Section 1.09. Deposit .................................................... 5
Section 1.10. Conversion of Shares ....................................... 6
Section 1.11. Exchange of Certificates Representing Shares ............... 6
Section 1.12. Taking of Necessary Action; Further Action ................. 6
Section 1.13. Fair Consideration ......................................... 7
Section 1.14. Certain Matters Relating to the Illinois Surviving
Corporation and the Indiana Surviving Corporation .......... 7
ARTICLE II. REPRESENTATIONS AND WARRANTIES OF THE SELLERS ................... 8
Section 2.01. Organization; Standing; and Qualification .................. 8
Section 2.02. Authority; Power; and No Violation ......................... 8
Section 2.03. Capital Structure of Empress and the Subsidiaries and
Related Matters ............................................ 9
Section 2.04. Consents and Approvals ..................................... 9
Section 2.05. Transactions with Certain Persons .......................... 10
Section 2.06. Financial Statements ....................................... 10
Section 2.07. Accounting Controls ........................................ 10
Section 2.08. Outstanding Debt and Related Matters ....................... 11
Section 2.09. Taxes ...................................................... 11
Section 2.10. Compliance with Laws; No Default or Litigation ............. 13
Section 2.11. Sufficiency of Assets ...................................... 14
Section 2.12. Real Property .............................................. 14
Section 2.13. Personal Property .......................................... 18
Section 2.14. Contracts .................................................. 19
Section 2.15. Suppliers .................................................. 20
Section 2.16. Licenses and Permits ....................................... 20
Section 2.17. Labor Relations; Employees ................................. 21
Section 2.18. Employee Benefit Plans ..................................... 22
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Section 2.19. Environmental Compliance ................................... 26
Section 2.20. Insurance .................................................. 28
Section 2.21. Power of Attorney .......................................... 28
Section 2.22. No Changes ................................................. 28
Section 2.23. Absence of Certain Business Practices ...................... 29
Section 2.24. Minute Book and Stock Record Book .......................... 29
Section 2.25. Brokers' or Finders' Fees .................................. 29
Section 2.26. Intellectual Property ...................................... 29
Section 2.27. Absence of Undisclosed Liabilities ......................... 31
Section 2.28. Claims Against Third Parties ............................... 31
Section 2.29. Bank Accounts .............................................. 31
Section 2.30. Disclosure ................................................. 31
ARTICLE III. REPRESENTATIONS AND WARRANTIES OF THE BUYERS .................... 32
Section 3.01. Organization; Qualification ................................ 32
Section 3.02. Authority; Power; and No Violation ......................... 32
Section 3.03. Consents and Approvals ..................................... 33
Section 3.04. SEC Documents .............................................. 33
Section 3.05. No Brokers ................................................. 33
Section 3.06. No Adverse Facts for Gaming Approvals ...................... 33
Section 3.07. Financing .................................................. 34
ARTICLE IV. PRECLOSING COVENANTS OF THE SELLERS ............................. 34
Section 4.01. Exclusivity ................................................ 34
Section 4.02. Supplements and Updates to Representations and Warranties .. 35
Section 4.03. Maintenance of Status ...................................... 35
Section 4.04. Operation of Business ...................................... 35
Section 4.05. Maintenance of Assets and Properties ....................... 37
Section 4.06. Dividends and Other Payments ............................... 37
Section 4.07. Access; Cooperation ........................................ 37
Section 4.08. Performance of Obligations Under Agreements ................ 37
Section 4.09. Additional Notices ......................................... 38
Section 4.10. Fire or Casualty ........................................... 38
Section 4.11. Governmental Approvals and Consents ........................ 38
Section 4.12. Capital Expenditures ....................................... 38
Section 4.13. Cooperation ................................................ 39
Section 4.14. Severance Plan ............................................. 39
Section 4.15. Annual Reports for Welfare Benefit Plans ................... 39
Section 4.16. Annual Report for Flexible Spending Accounts Plan .......... 39
Section 4.17. 401(k) Profit Sharing Plan Amendment ....................... 39
Section 4.18. Plan Documents ............................................. 40
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Section 4.19. Loan in Default Status ..................................... 40
Section 4.20. Stay-On Bonus Program ...................................... 40
Section 4.21. Title Insurance ............................................ 40
Section 4.22. Surveys .................................................... 40
Section 4.23. Intercompany Balances ...................................... 41
ARTICLE V. PRECLOSING COVENANTS OF THE BUYERS .............................. 41
Section 5.01. Governmental Approvals ..................................... 41
Section 5.02. Cooperation ................................................ 41
Section 5.03. Confidentiality ............................................ 41
Section 5.04. Financing .................................................. 42
Section 5.05. Timing Commitments ......................................... 42
Section 5.06. Necessary Action ........................................... 43
ARTICLE VI. OTHER MATTERS ................................................... 43
Section 6.01. Employee Obligations ....................................... 43
Section 6.02. Employee Stay Bonuses ...................................... 44
Section 6.03. ▇▇▇▇▇▇▇ Payments ........................................... 44
Section 6.04. Actions Relating to Employee Benefit Plans ................. 44
Section 6.05. Stockholder Matters ........................................ 44
ARTICLE VII. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE SELLERS .............. 45
Section 7.01. Deliveries by Empress Illinois and Empress Indiana ......... 45
Section 7.02. Representations and Warranties of Each of the Buyers ....... 45
Section 7.03. Compliance ................................................. 45
Section 7.04. Compliance Certificate ..................................... 45
Section 7.05. Legal Proceedings .......................................... 45
Section 7.06. Consents and Approvals ..................................... 45
Section 7.07. Opinion of the Buyers' Counsel ............................. 45
ARTICLE VIII. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE BUYERS ............... 46
Section 8.01. Deliveries by the Sellers .................................. 46
Section 8.02. Representations and Warranties of the Sellers .............. 46
Section 8.03. Compliance ................................................. 46
Section 8.04. Compliance Certificate ..................................... 46
Section 8.05. Legal Proceedings .......................................... 46
Section 8.06. Consents and Approvals ..................................... 46
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Section 8.07. Opinion .................................................... 46
Section 8.08. No Material Adverse Change ................................. 47
ARTICLE IX. CLOSING ......................................................... 47
Section 9.01. Closing Date ............................................... 47
Section 9.02. Deliveries by the Sellers .................................. 47
Section 9.03. Deliveries of the Buyers ................................... 48
ARTICLE X. TERMINATION ..................................................... 49
Section 10.01. Events of Termination ...................................... 49
Section 10.02. Remedies for Breach; Effect of Termination ................. 50
ARTICLE XI. TAX MATTERS ..................................................... 52
Section 11.01. S Corporation Status ....................................... 52
Section 11.02. Tax Indemnification Agreement .............................. 52
ARTICLE XII. INDEMNIFICATION ................................................. 52
Section 12.01. Indemnification ............................................ 52
Section 12.02. Indemnification by the Buyers .............................. 53
Section 12.03. Notice ..................................................... 54
Section 12.04. Arbitration ................................................ 54
Section 12.05. Defense of Claims .......................................... 55
Section 12.06. Limitations on Indemnification ............................. 56
Section 12.07. Payment of Losses .......................................... 56
Section 12.08. No Limitation for Fraud .................................... 57
Section 12.09. No Environmental Contribution .............................. 57
Section 12.10. Indemnification Exclusive Remedy ........................... 57
ARTICLE XIII. FIRST SUPPLEMENTAL INDEMNIFICATION .............................. 57
Section 13.01. First Supplemental Indemnification ......................... 57
Section 13.02. Satisfaction of First Supplemental Losses .................. 57
Section 13.03. Survival of Indemnification Obligations .................... 58
ARTICLE XIV. SECOND SUPPLEMENTAL INDEMNIFICATION ............................. 58
Section 14.01. Second Supplemental Indemnification ........................ 58
Section 14.02. Satisfaction of Second Supplemental Losses ................. 58
Section 14.03. Survival of Indemnification Obligations .................... 59
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ARTICLE XV. MISCELLANEOUS ................................................... 59
Section 15.01. Survival; Release of General Escrow ........................ 59
Section 15.02. Counterparts ............................................... 60
Section 15.03. Commercially Reasonable Efforts ............................ 60
Section 15.04. Expenses ................................................... 60
Section 15.05. Index and Captions ......................................... 60
Section 15.06. Public Disclosure .......................................... 61
Section 15.07. Notices .................................................... 61
Section 15.08. Entire Agreement ........................................... 62
Section 15.09. Governing Law .............................................. 62
Section 15.10. Waiver of Compliance; Modifications ........................ 62
Section 15.11. Validity of Provisions ..................................... 63
Section 15.12. No Intention to Benefit Third Parties ...................... 63
Section 15.13. Successors and Assigns ..................................... 63
Section 15.14. Construction ............................................... 63
Section 15.15. Time of Essence ............................................ 64
ARTICLE XVI. DEFINITIONS ..................................................... 64
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AGREEMENT AND PLAN OF MERGER
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THIS AGREEMENT AND PLAN OF MERGER (this "Agreement") is made and entered
into this 2nd day of September, 1998 by and among Horseshoe Gaming, L.L.C., a
Delaware limited liability company ("Parent"), Horseshoe Gaming (Midwest), Inc.,
a Delaware corporation ("Horseshoe"), Empress Acquisition Illinois, Inc., a
Delaware corporation ("Empress Illinois"), Empress Acquisition Indiana, Inc., a
Delaware corporation ("Empress Indiana"), Empress Entertainment, Inc., a
Delaware corporation ("Empress"), Empress Casino Joliet Corporation, an Illinois
corporation ("Empress Joliet"), and Empress Casino ▇▇▇▇▇▇▇ Corporation, an
Indiana corporation ("Empress Hammond").
WITNESSETH:
WHEREAS, Empress Illinois, Empress Indiana and Horseshoe are affiliates of
Parent, which is engaged primarily in the business of riverboat casino gaming;
WHEREAS, Empress, Empress ▇▇▇▇▇▇▇ and Empress Joliet ("Sellers") are also
engaged in the business of riverboat casino gaming;
WHEREAS, the Board of Directors of each of Empress Joliet and Empress
Illinois, and Empress ▇▇▇▇▇▇▇ and Empress Indiana have determined that a
business combination between the parties is in the best interests of their
respective companies and stockholders and accordingly have agreed to effect the
mergers provided for herein upon the terms and subject to the conditions set
forth herein and Empress, as the sole shareholder of Empress Joliet and Empress
▇▇▇▇▇▇▇ has determined the mergers to be in the best interests of Empress Joliet
and Empress ▇▇▇▇▇▇▇ and has approved the mergers provided for herein; and
WHEREAS, Article XVI of this Agreement lists certain defined terms used in
this Agreement.
AGREEMENT:
NOW, THEREFORE, in consideration of the foregoing premises and mutual
covenants, representations and warranties contained in this Agreement, and for
the purpose of prescribing the terms and conditions of the Merger, and such
other provisions as are deemed necessary or desirable, the parties hereto do
hereby agree as follows:
I. THE MERGER
1.01 The Merger. Upon the terms and subject to the conditions of this
Agreement, at the Effective Time (as defined in Section 1.03 of this
Agreement), (a) Empress Illinois
shall be merged with and into Empress Joliet in accordance with the
laws of the State of Illinois and the terms of this Agreement (the
"Illinois Merger"), whereupon the separate corporate existence of
Empress Illinois shall cease and Empress Joliet shall be the surviving
corporation of the Illinois Merger (the "Illinois Surviving
Corporation") and (b) Empress Indiana shall be merged with and into
Empress ▇▇▇▇▇▇▇ in accordance with the laws of the State of Indiana
and the terms of this Agreement (the "Indiana Merger"), whereupon the
separate corporate existence of Empress Indiana shall cease, and
Empress ▇▇▇▇▇▇▇ shall be the surviving corporation of the Indiana
Merger (the "Indiana Surviving Corporation"). For purposes of this
Agreement, the Illinois Merger and the Indiana Merger shall be
collectively referred to as the "Merger" and the Illinois Surviving
Corporation and the Indiana Surviving Corporation shall be
collectively referred to as the "Surviving Corporation." At any time
prior to the Closing Date, either the Buyers or the Sellers may
request the consent of the other parties to this Agreement to
restructure the Merger, which consent shall not be unreasonably
withheld.
1.02 Closing. Subject to the terms and conditions of this Agreement, the
closing of the Merger (the "Closing Date") shall take place (a) at the
offices of ▇'▇▇▇▇▇▇ & ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇ on such date as is determined in accordance with
Section 9.01 and upon the satisfaction or waiver of the conditions set
forth in Articles VII and VIII of this Agreement; or (b) at such other
place, time, and/or date as the parties hereto may otherwise agree
(the "Closing Time").
1.03 Effective Time. If all of the conditions to the Merger set forth in
Article I of this Agreement have been fulfilled or waived as provided
herein and this Agreement shall not have been terminated as provided
in Article X hereof, the parties hereto shall cause certificates of
merger (the "Certificates of Merger") to be properly executed and
filed in accordance with the laws of the States of Delaware, Indiana
and Illinois and the terms of this Agreement on or before the Closing
Date. The parties hereto also shall take such further actions as may
be required under the laws of the States of Delaware, Indiana and
Illinois in order to effect the Merger. The Merger shall become
effective at such time as all necessary Certificates of Merger have
been duly filed with the Secretaries of State of Delaware, Indiana and
Illinois (the "Effective Time").
1.04 Legal Effect. From and after the Effective Time, each Surviving
Corporation shall possess all the rights, privileges, powers and
franchises and be subject to all of the restrictions, disabilities and
duties of, in each case, the respective merging corporations, all as
provided under applicable law and subject to the terms and conditions
set forth in this Agreement.
1.05 Merger Consideration. Subject to the terms and conditions set forth in
this Agreement, the aggregate consideration to be received by Empress
upon the consummation of the Mergers shall be an aggregate amount
equal to: (a) Six Hundred Nine Million Dollars
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($609,000,000), plus or minus (as the case may be) (b) Net Working
Capital (or the deficit in Net Working Capital) minus (c) Existing
Debt plus (d) the aggregate amount of the ▇▇▇▇▇▇▇ Payments (the
"Merger Consideration"). For purposes of the Closing, the Buyers and
the Sellers shall make a good-faith estimate of the Merger
Consideration based upon the anticipated amounts of Net Working
Capital and Existing Debt after a review of the most recent
ascertainable combined financial information of the Subsidiaries
available immediately prior to the Closing (the "Estimated Merger
Consideration"). The Estimated Merger Consideration shall be paid at
the Closing as follows:
(a) Four Million Dollars ($4,000,000) will be paid to the Escrow
Agent to be held in trust in accordance with Section 1.06 below (the
"Adjustment Escrow").
(b) The amounts set forth on Schedule 1.07 will be paid to the
Escrow Agent to be held in trust in accordance with Section 1.07 below
(the "Indemnification Escrows").
(c) 50% of the agreed upon amount to fund the Stay-on Bonus Plan
will be paid to the Escrow Agent to be held in trust in accordance
with Section 1.08 below (the "Bonus Escrow"); provided that the amount
paid pursuant to this clause (iii) shall not exceed Six Hundred
Seventy-Six Thousand Dollars ($676,000).
(d) The difference obtained by subtracting the aggregate of the
amounts deposited into escrow or paid as described in (i), (ii), and
(iii) above from the Estimated Merger Consideration will be paid to
Empress at Closing by wire transfer of immediately available funds in
accordance with written wire instructions to be provided by Empress
not later than two (2) business days prior to Closing (the "Closing
Consideration") and such amount shall be held by Empress until the
Stockholders have complied with Section 6.05.
1.06 Adjustment Escrow and Merger Consideration Determination. The funds in
the Adjustment Escrow shall be held by the Escrow Agent in trust
pending the final determination as to the Merger Consideration,
pursuant to an Escrow Agreement to be in a form to be mutually agreed
upon by the Buyers and the Sellers in their reasonable discretion (the
"Adjustment Escrow Agreement"). Empress Joliet and Empress ▇▇▇▇▇▇▇
shall prepare a combined statement of Net Working Capital and Existing
Debt as of the Closing Date (the "Closing Statement") within 30 days
following the Closing Date so as to determine the Merger
Consideration. The Closing Statement shall be prepared in accordance
with GAAP applied in a manner consistent with the accounting
principles applied in the preparation of the historical financial
statements of Empress, based upon Empress' historical accounting
principles and past practices including the use of Empress'
methodology for establishing reserves for accounts receivable, slot
club liability and any other account subject to estimate or judgment.
If, based on the Merger Consideration as finally
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determined by the parties in accordance with this Section 1.06, (a)
the Merger Consideration exceeds the Estimated Merger Consideration,
(i) the Escrow Agent shall disburse the funds held in the Adjustment
Escrow to Empress and (ii) the Buyers shall forthwith pay the
difference of the Merger Consideration over the Estimated Merger
Consideration to Empress together with interest on the amount of such
difference from the Closing Date through the date of payment at a rate
of 8% per annum; or (b) the Merger Consideration is less than the
Estimated Merger Consideration, (i) the Escrow Agent shall forthwith
pay the difference between the Estimated Merger Consideration and the
Merger Consideration to the Buyers in accordance with the terms of the
Adjustment Escrow Agreement, (ii) the Escrow Agent shall disburse the
remaining balance, if any, of the Adjustment Escrow to Empress and
(iii) the deficiency, if any, of (1) the difference between the
Estimated Merger Consideration and the Merger Consideration over (2)
the Adjustment Escrow shall be paid by Empress to Horseshoe together
with interest on the amount of such difference from the Closing Date
through the date of payment at a rate of 8% per annum.
Empress shall have 30 days after receipt of the Closing Date Balance Sheet
from Empress Joliet and Empress ▇▇▇▇▇▇▇ (the "Dispute Period") to dispute any of
the elements of the Closing Date Balance Sheet (a "Dispute"). If Empress does
not give written notice of a Dispute within the Dispute Period to the Buyers (a
"Dispute Notice"), the Closing Statement shall be deemed to have been accepted
and agreed to by Empress in the form in which it was delivered by the Buyers and
shall be final and binding upon the parties hereto. Any Dispute Notice issued by
Empress shall set forth in reasonable detail the elements and amounts with which
it disagrees. During the 15 day period following receipt by the Buyers of such
Dispute Notice, the Buyers and Empress shall attempt to resolve such Dispute and
agree in writing upon the final content of the disputed Closing Statement and
the appropriate Merger Consideration adjustment based thereon.
If the Buyers and Empress are unable to resolve any Dispute within the 15
day period after the Buyers' receipt of a Dispute Notice, the Arbitrating
Accountant shall be engaged as arbitrator hereunder to settle such Dispute as
soon as practicable. In the event the Arbitrating Accountant is unwilling or
unable to arbitrate the dispute, the parties shall select by mutual agreement
another nationally recognized certified public accounting firm who is not
rendering (and during the preceding two (2) year period has not rendered)
services to the Buyers or Empress or any of their respective Affiliates, to
serve as Arbitrating Accountant. In connection with the resolution of any
Dispute, the Arbitrating Accountant shall have access to all documents, records,
work papers, facilities and personnel necessary to perform its function as
arbitrator and shall be authorized by both parties to follow such procedures and
the commercial arbitration rules of the American Arbitration Association which
in the sole exercise of its professional judgment shall be deemed appropriate.
Empress and the Buyers shall have all rights to discovery in connection with the
arbitration pursuant to the federal rules of civil procedure. The Arbitrating
Accountant's award with respect to any Dispute shall be final and binding upon
the parties hereto, and judgment may be entered on the award. The costs and
expenses of the Arbitrating Accountant shall be shared equally among the Buyers
and Empress.
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The Buyers shall maintain the chief financial officer of Empress ▇▇▇▇▇▇▇
and Empress Joliet as an employee of Empress ▇▇▇▇▇▇▇ and Empress Joliet during
the Dispute Period with all rights of access to corporate records and, to the
extent Empress provides the Buyers with a Dispute Notice during the Dispute
Period, until such time as the Dispute raised therein is resolved by the
Arbitrating Accountant, and all funds held in the Adjustment Escrow have been
released in full.
1.07 Indemnification Escrows. At the Closing, the amount set forth on
Schedule 1.07 shall be deposited with the Escrow Agent (the "General
Escrow") pursuant to an escrow agreement to be mutually agreeable to
the Buyers and the Sellers in their reasonable discretion (the
"General Escrow Agreement"). Escrowed Funds in the General Escrow
shall be used to satisfy indemnification claims pursuant to Section
12.01, subject to the terms and conditions of Article XII and on the
terms and subject to the conditions set forth in the General Escrow
Agreement. At the Closing, the amount set forth on Schedule 1.07
shall be deposited with the Escrow Agent pursuant to an escrow
agreement to be mutually agreeable to the Buyers and the Sellers in
their reasonable discretion (the "First Supplemental Escrow
Agreement"). At the Closing, the amount set forth on Schedule 1.07
shall be deposited with the Escrow Agent (the "Second Supplemental
Escrow" and together with the First Supplemental Escrow, the
"Supplemental Escrows") pursuant to an escrow agreement to be mutually
agreeable to the Buyers and the Sellers in their reasonable
discretion. Escrowed Funds in the Supplemental Escrows shall be used
to satisfy Supplemental Indemnity Losses subject to the terms and
conditions set forth in Article XIII and Article XIV and on the terms
and subject to the conditions set forth in the Supplemental Escrow
Agreements.
1.08 Bonus Escrow. At the Closing, the Sellers and Buyers will each deposit
50% of the agreed upon amount, such amount not to exceed $1,352,000 in
the aggregate to fund the Stay-On Bonus Plan with the Escrow Agent
pursuant to an escrow agreement to be mutually agreeable to the Buyers
and the Sellers in their reasonable discretion (the "Bonus Escrow
Agreement"). The Bonus Escrow shall be used to pay the Employee
Bonuses pursuant to Section 6.02.
1.09 Deposit. The Buyers are depositing $10,000,000, (plus any interest
earned thereon, the "Deposit"), with the Escrow Agent (the "Deposit
Escrow") pursuant to an escrow agreement to be substantially in the
form of Exhibit A (the "Deposit Escrow Agreement," and together with
the Adjustment Escrow Agreement, the General Escrow Agreement, the
Supplemental Escrow Agreements, and the Bonus Escrow Agreement, the
"Escrow Agreements"). The Deposit, without any right of set-off, shall
be paid to Empress in the event of termination of this Agreement
pursuant to Sections 5.04, 5.05(a), 10.01(a), (b), and (d) and the
Deposit shall be returned to the Buyers upon termination of this
Agreement pursuant to Section 10.01(c), (e), (f) or (h)(ii). In the
event of a termination pursuant to Section 10.01(g), the Buyers and
the
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Sellers shall mutually determine how the Deposit will be disbursed. In
the event of a termination of this Agreement pursuant to Section
10.01(h)(i), the Deposit shall be paid to Empress unless such
termination arises as a result of the Buyers being unable to obtain
the necessary approvals and consents from the Illinois Gaming Board
and the Indiana Gaming Commission, in which case the Deposit shall be
returned to the Buyers. In the event of a Closing, the Deposit shall
be credited against the Merger Consideration and distributed to
Empress in accordance with Section 1.05. If the Deposit is paid to
Empress as a result of a termination of this Agreement pursuant to
Section 5.04, 5.05(a), 10.01(a), (b), (d) or (h)(i), the Deposit shall
be paid as liquidated damages (and not as a penalty) in recognition of
the difficulty to ascertain damages. Receipt of the Deposit shall be
in lieu of all other rights and remedies available to any of the
Sellers and any of their respective Affiliates, stockholders,
representatives and agents, as a result of a breach of this Agreement
by any of the Buyers.
1.10 Conversion of Shares.
(a) At the Effective Time, (i) each share of Common Stock of each of
Empress Illinois and Empress Indiana outstanding at the Effective Time, by
virtue of the Merger and without any action on the part of the holders
thereof, shall be converted into and exchanged for one share of newly
issued Common Stock of the Illinois Surviving Corporation and the Indiana
Surviving Corporation, respectively; and (ii) the shares of voting and non-
voting common stock, par value $0.01 per share, of Empress Joliet and
Empress ▇▇▇▇▇▇▇ (respectively, the "Joliet Shares" and the "▇▇▇▇▇▇▇ Shares"
and collectively, the "Shares") outstanding at the Effective Time, by
virtue of the Merger and without any action on the part of the holders
thereof, shall be converted and exchanged into the right to receive the
Merger Consideration subject to amounts to be deposited into escrow
pursuant to the Escrow Agreements.
(b) As a result of the Merger and without any action on the part of
the holder thereof, at the Effective Time, all Shares shall cease to be
outstanding and shall be canceled and retired and shall cease to exist, and
Empress shall thereafter cease to have any rights with respect to such
Shares, except for the right to receive, without interest, the
consideration set forth in Section 1.05 upon the surrender of certificates
representing the Shares in accordance with the provisions of this Article
I.
(c) Each Share of Empress ▇▇▇▇▇▇▇ and Empress Joliet held as treasury
stock at the Effective Time shall be canceled, and no payment shall be made
with respect thereto.
1.11 Exchange of Certificates Representing Shares. Upon surrender of the
Certificates representing Shares duly endorsed for transfer or
accompanied by validly executed stock powers, Empress shall be
entitled to receive in exchange therefor the Merger Consideration.
Until so surrendered, each Certificate that, at the Effective Time,
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represented Shares will be deemed from and after the Effective Time,
for all corporate purposes, to evidence only the right to receive the
Merger Consideration.
1.12 Taking of Necessary Action; Further Action. Each of the Buyers and
each of the Sellers shall take all such action as may be reasonably
necessary or appropriate in order to effectuate the transactions
contemplated by this Agreement which shall include but not be limited
to the Sellers providing reasonable assistance to the Buyers in the
process of obtaining all necessary gaming board and commission
approvals and consents; provided that such actions do not unreasonably
increase the liability of such party. If, at any time after the
Effective Time, any further action is necessary or desirable to carry
out the purposes of this Agreement and to vest the Surviving
Corporation with full right, title and possession to all assets,
property, rights, privileges, powers and franchises of each of the
Subsidiaries, except as otherwise provided herein, the officers and
directors of the appropriate entity are fully authorized in the name
of their respective corporations or otherwise to take, and will take,
all such lawful and necessary action, so long as such action is
consistent with this Agreement.
1.13 Fair Consideration. The parties acknowledge and agree that the Merger
Consideration represents fair consideration and reasonably equivalent
value for the Shares and the transactions, covenants and agreements
set forth in this Agreement, which consideration was agreed upon as
the result of arm's-length, good faith negotiations between the
parties and their respective representatives.
1.14 Certain Matters Relating to the Illinois Surviving Corporation and
the Indiana Surviving Corporation.
(a) Certificates of Incorporation of the Surviving Corporation. The
Certificate of Incorporation of each of Empress Joliet and Empress ▇▇▇▇▇▇▇
in effect at the Effective Time shall be the Certificate of Incorporation
of each of the Illinois Surviving Corporation and the Indiana Surviving
Corporation, respectively, until amended in accordance with its terms and
pursuant to applicable law.
(b) By-Laws of the Illinois and the Indiana Surviving Corporation.
The By-Laws of each of Empress Joliet and Empress ▇▇▇▇▇▇▇ in effect at the
Effective Time shall be the By-Laws of each of the Illinois Surviving
Corporation and the Indiana Surviving Corporation, respectively, until
amended in accordance with the terms of such By-Laws and pursuant to
applicable law and the Articles of Incorporation of the Illinois Surviving
Corporation and Indiana Surviving Corporation.
(c) Directors of the Illinois Surviving Corporation and the Indiana
Surviving Corporation. The directors of the Illinois Surviving Corporation
and the Indiana Surviving Corporation immediately after the Effective Time
shall be the same as the directors of Empress Illinois and Empress Indiana,
respectively, immediately prior to the Effective Time,
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to hold office until their successors are duly appointed or elected in
accordance with applicable law and the by-laws of the Illinois Surviving
Corporation and the Indiana Surviving Corporation, as applicable.
(d) Officers of the Surviving Corporation. The officers of the
Illinois Surviving Corporation and the Indiana Surviving Corporation
immediately after the Effective Time shall be the same as the officers of
Empress Illinois and Empress Indiana, respectively, immediately prior to
the Effective Time to hold such offices until their successors are duly
appointed or elected in accordance with applicable law and the by-laws of
the Illinois Surviving Corporation and the Indiana Surviving Corporation as
applicable.
II. REPRESENTATIONS AND WARRANTIES OF THE SELLERS
As a material inducement to the Buyers to enter into this Agreement, to
enter into all other agreements and documents to be executed by the Buyers in
connection with this Agreement and to consummate the transactions contemplated
hereby and thereby, except as set forth in the disclosure schedules attached to
this Agreement and referenced herein, Empress represents and warrants to the
Buyers that:
2.01 Organization; Standing; and Qualification. Empress and each Subsidiary
is duly organized, validly existing and in good standing under the
laws of the jurisdiction of its incorporation or organization and has
all requisite power and authority and all governmental licenses,
authorizations, consents and approvals necessary to own, lease and
operate its properties and to carry on its business as it is now being
conducted. Empress and each Subsidiary is duly qualified to transact
business as a foreign corporation and is in good standing in every
jurisdiction in which such qualification is necessary because of the
nature of the properties or assets owned, leased or operated by it or
the nature of the business conducted by it. The jurisdictions in
which Empress and each Subsidiary are qualified to transact business
are set forth on Schedule 2.01 hereto. Except as set forth on
Schedule 2.01, neither Empress nor any Subsidiary has any subsidiaries
or Affiliates and neither Empress nor any Subsidiary owns any capital
stock or other proprietary interest, directly or indirectly, in any
Person or has any agreement to acquire any such capital stock or other
proprietary interest. Complete and correct copies of the Certificate
of Incorporation, Bylaws or other organizational documents of Empress
and each Subsidiary, each as amended to the date hereof, have been or,
prior to the Closing, will be delivered to the Buyers.
2.02 Authority; Power; and No Violation. The execution and delivery of this
Agreement and all documents to be executed in connection herewith by
Empress, Empress Joliet and Empress ▇▇▇▇▇▇▇ have been authorized by
all necessary corporate action on the part of Empress, Empress Joliet
and Empress ▇▇▇▇▇▇▇. Empress, Empress Joliet and Empress ▇▇▇▇▇▇▇ each
have the requisite corporate power and corporate authority to execute
and deliver this Agreement and all documents to be executed in
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connection herewith, and to take any and all other actions required to
be taken, directly or indirectly, by it pursuant to the provisions of
this Agreement and all documents to be executed in connection
herewith. This Agreement constitutes the legal, valid and binding
obligation of Empress, Empress Joliet and Empress ▇▇▇▇▇▇▇ enforceable
against Empress, Empress Joliet and Empress ▇▇▇▇▇▇▇ in accordance with
its terms. Except as set forth on Schedule 2.02, the execution and
delivery of this Agreement, the fulfillment and compliance with the
terms and conditions hereof and the consummation of the transactions
contemplated by this Agreement will not: (a) conflict with, violate,
result in a breach of, constitute a default (or an event which, with
notice or lapse of time or both, would constitute a default) under, or
give rise to any right of termination, cancellation, or acceleration
under any provision of the Certificate of Incorporation or Bylaws of
Empress or any Subsidiary, any Certificate of Merger filed or recorded
prior to the date hereof, or any of the terms, conditions or
provisions of any Contract; (b) violate any Law applicable to Empress
or any Subsidiary or any of their respective properties, assets, or
outstanding shares of capital stock or other securities; or (c)
constitute an event which, with or without notice, lapse of time, or
action by a third party, could result in the creation of any Lien upon
any of the Shares or any of the properties or assets of Empress or
any Subsidiary, or cause the maturity of any liability, obligation, or
debt of Empress or any Subsidiary to be accelerated or increased.
This Agreement and all of the transactions contemplated hereby have
been properly approved by the Board of Directors and stockholders of
Empress, Empress Joliet and Empress ▇▇▇▇▇▇▇.
2.03 Capital Structure of Empress and the Subsidiaries and Related
Matters. Schedule 2.03 sets forth the following information for
Empress and each Subsidiary, if applicable: (a) its name and
jurisdiction of incorporation or organization; (b) the location of its
principal office; (c) a summary of its lines of business; (d) its
authorized capital stock or share capital; (e) the number of issued
and outstanding shares of capital stock or share capital and the
owners thereof; and (f) a list of its officers and directors. Except
as set forth on Schedule 2.03, the Shares constitute all of the issued
and outstanding shares of capital stock of Empress Joliet and Empress
▇▇▇▇▇▇▇, and all of the issued and outstanding shares of capital stock
or member interests of each Subsidiary are owned by Empress or Empress
▇▇▇▇▇▇▇, as applicable, free and clear of all Adverse Claims, Liens
and rights of any other Person. Empress has good and marketable title
to the Shares owned by Empress, free and clear of all Adverse Claims,
Liens and rights of any other Person, except as set forth on Schedule
2.03. There are no classes of capital stock of any Subsidiary
authorized, issued or outstanding other than as set forth on Schedule
2.03. All outstanding shares of capital stock or member interests of
each Subsidiary have been duly authorized and validly issued and are
fully paid and non-assessable. Except as set forth on Schedule 2.03,
no class of shares of capital stock of any Subsidiary is entitled to
preemptive rights. Except as set forth on Schedule 2.03, there are no
outstanding options, warrants or other rights of any kind to acquire
any shares of capital stock of Empress
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or any Subsidiary, nor any outstanding securities convertible into or
exchangeable for, or which otherwise confer on the holder thereof any
right to acquire, any shares of capital stock of Empress or any
Subsidiary, and neither Empress nor any Subsidiary has entered into or
is a party to any contract, commitment, agreement, understanding,
arrangement, or claim of any kind to issue any securities. Except as
set forth on Schedule 2.03, neither Empress nor any Subsidiary is a
party to any contract, commitment, agreement, understanding,
arrangement or claim involving stock appreciation rights or
constituting a phantom stock plan. All outstanding equity securities
of Empress and each Subsidiary were issued in compliance with all
applicable federal, state and other securities laws and regulations.
2.04 Consents and Approvals. Except as set forth on Schedule 2.04, the
execution, delivery and performance of this Agreement by Empress,
Empress Joliet and Empress ▇▇▇▇▇▇▇ and the consummation by Empress,
Empress Joliet and Empress ▇▇▇▇▇▇▇ of the transactions contemplated
hereby will not require any notice to, or consent, authorization, or
approval from any court or governmental authority or any other third
party. Except as set forth in Schedule 2.04, any and all notices,
consents, authorizations, and approvals set forth on Schedule 2.04
have been or, prior to the Closing, will be made and obtained.
2.05 Transactions with Certain Persons. Except as set forth on Schedule
2.05, no Subsidiary is owed any amount from, owes any amount to, has
any contracts with or has any commitments to: (a) Empress or any
stockholder of Empress (individually, a "Stockholder" and,
collectively, the "Stockholders") or any family member of any
Stockholder; (b) any employee of Empress or any Subsidiary other than
in the ordinary course of business; or (c) any other Subsidiary or
Affiliate of Empress or any Subsidiary. Except as set forth in
Schedule 2.05, no officer or director of Empress or any Subsidiary has
any direct or indirect interest in (i) any property or assets of
Empress or any Subsidiary (except as a stockholder), (ii) any
competitor, customer, supplier or agent of Empress or any Subsidiary
or (iii) any Person which is a party to any contract or agreement with
Empress or any Subsidiary.
2.06 Financial Statements. True and complete copies of the audited
financial statements of Empress, and each of Empress ▇▇▇▇▇▇▇ and
Empress Joliet as of and for each of the years ended December 31,
1995, 1996 and 1997 (collectively, the "Annual Financial Statements"),
and the consolidated balance sheets and related statements of income
and cash flows of Empress and each of Empress Joliet and Empress
▇▇▇▇▇▇▇ as of and for the seven (7) months ended July 31, 1998 (the
"Interim Financial Statements") are attached hereto as Schedule
2.06(a) (collectively, the "Financial Statements"). The Financial
Statements are true, correct and complete, and have been prepared from
the books and records of Empress and the Subsidiaries in accordance
with generally accepted accounting principles consistently applied.
The balance sheets included in the Financial Statements fairly present
the consolidated financial condition of Empress, Empress Joliet and
Empress ▇▇▇▇▇▇▇,
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respectively, as of the date thereof, and the related statements of
income and cash flows fairly present the consolidated results of
operations and cash flows of Empress, Empress Joliet and Empress
▇▇▇▇▇▇▇, respectively, for the periods indicated. The Interim
Financial Statements include all adjustments (consisting only of
normal recurring adjustments) necessary for a fair presentation of the
consolidated financial condition, results of operations and cash flows
of each of Empress, Empress Joliet and Empress ▇▇▇▇▇▇▇. The Financial
Statements contain and reflect, in accordance with generally accepted
accounting principles, adequate provisions for all reasonably
anticipated liabilities and adequate reserves for all reasonably
anticipated losses, costs and expenses consistent with past practices,
including reserves for uncollectible Accounts Receivable. Schedule
2.06(b) sets forth certain projected financial information (including
balance sheets and statements of income and cash flows) and capital
expenditure budgets relating to operations of Empress and the
Subsidiaries for 1998 (collectively, the "Budgets"). The Budgets were
prepared in good faith and in the ordinary course.
2.07 Accounting Controls. Each of Empress and each Subsidiary maintains a
system of internal accounting controls sufficient to provide
reasonable assurance that: (a) transactions are executed in
accordance with management's general or specific authorizations, (b)
transactions are recorded as necessary to permit preparation of
financial statements in conformity with generally accepted accounting
principles and to maintain asset accountability, (c) access to assets
is permitted only in accordance with management's general or specific
authorization and (d) the recorded accountability for assets is
compared with the existing assets at reasonable intervals and
appropriate action is taken with respect to any differences.
2.08 Outstanding Debt and Related Matters. Schedule 2.08 sets forth all
outstanding Debt of each of Empress and each of the Subsidiaries.
There exists no default under the provisions of any instrument
evidencing any outstanding Debt or of any agreement relating thereto.
Except as set forth on Schedule 2.08, neither Empress nor any
Subsidiary has guaranteed any obligation of any Person, nor has any
other Person guaranteed any obligation of Empress or any Subsidiary,
including obligations with respect to the outstanding Debt. Except as
set forth on Schedule 2.08, all outstanding Debt can be prepaid at any
time without penalty. All outstanding Debt of Empress and the
Subsidiaries was issued in compliance with all applicable federal,
state or other securities laws and regulations. The offering documents
used in connection with the offer and sale of the Notes (a) complied
as to form in all material respects with the applicable requirements
of all applicable federal, state and other securities laws and
regulations, and (b) did not contain any untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements made therein in light of
the circumstances under which they were made not misleading.
2.09 Taxes. Except as disclosed in Schedule 2.09:
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(a) Empress has qualified as an S corporation within the meaning of
Section 1361 of the Code for each taxable year, beginning with the taxable
year which includes the date of its incorporation. Empress Joliet and
Empress ▇▇▇▇▇▇▇ each qualify, and Empress has properly made an election to
treat each of Empress Joliet and Empress ▇▇▇▇▇▇▇, as a qualified subchapter
S subsidiary within the meaning of Section 1361 of the Code, and each such
election has been effective for the entire time that Empress has owned
shares of Empress Joliet and Empress ▇▇▇▇▇▇▇. Empress and each Subsidiary
have qualified, and Sellers, Empress and each Subsidiary have taken such
actions and filed such elections or returns to elect, to be treated as the
equivalent of an S corporation or qualified subchapter S subsidiary, as the
case may be, in each jurisdiction in which Empress or each Subsidiary, as
the case may be, conducts its business or would otherwise be taxable on its
income, in the case of Empress, for each taxable year beginning with the
taxable year of its incorporation, and for each Subsidiary for the entire
time that Empress has owned any shares of such Subsidiary. Empress,
Empress Joliet and Empress ▇▇▇▇▇▇▇ have not taken or caused or permitted to
be taken any action that would have caused a termination of Empress' S
election for any period or a termination of the qualified subchapter S
subsidiary election with respect to Empress Joliet or Empress ▇▇▇▇▇▇▇ for
any period. Empress Joliet and Empress ▇▇▇▇▇▇▇ will not be liable for the
Tax imposed by Section 1374 of the Code in connection with the Merger of
Empress Joliet and Empress ▇▇▇▇▇▇▇ into Empress Indiana and Empress
Illinois, as applicable, or as a result of a Section 338(h)(10) election.
(b) Empress, Empress Joliet and Empress ▇▇▇▇▇▇▇ have properly and
timely filed its federal and state income Tax Returns as an S corporation
for each of the five successive Taxable years ending on December 31, 1997
(or all Tax years in which such entity has been in existence if less than
five years). Empress and each Subsidiary have or will have filed prior to
or on the Closing Date all Tax Returns, information returns, statements,
reports and forms (including estimated Tax Returns and reports) required to
be filed by it or on its behalf in each jurisdiction in which such filing
is necessary or required for the conduct of its business on or before the
Closing Date with any Taxing Authority (collectively, the "Returns"). As of
the Closing Date and subsequent to Closing, the Returns have been or will
be filed when due in accordance with all applicable laws and, as of the
time of filing, were or will be true, correct and complete in all respects.
Each of Empress and the Subsidiaries have or will have (i) properly and
fully paid to the extent due and payable, (ii) withheld and paid over or
deposited in the case of any Taxes required to be withheld and paid in
connection with amounts paid or owing to any employee, independent
contractor, stockholder, claimant, creditor or other party and (iii)
adequately reserved (in accordance with generally accepted accounting
principles applies on a basis consistent with that of prior years) in the
case of Taxes payable or anticipated to be payable on account of the
operations or omissions of Empress and each of the Subsidiaries for any and
all periods up to and including the Closing Date.
(c) Neither Empress nor any Subsidiary has requested, nor will it
request prior to the Closing Date without advance notice to Horseshoe, an
extension of time within which
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to file or send any Return which has not since been filed or sent. Neither
Empress nor any Subsidiary has, and will not have granted prior to or on
the Closing Date, any extension or waiver of the limitation period
applicable to any Returns to any Taxing Authority. There is no claim,
audit, action, suit, proceeding, or investigation pending or, to the
knowledge of Empress, threatened or asserted against or with respect to
Empress or any Subsidiary in respect of any Tax. Neither Empress nor any
Subsidiary is subject to any penalty by reason of a violation of any order,
rule or regulation of, or with respect to any Return or any other return or
report required to be filed with, any Taxing Authority. Neither Empress nor
any Subsidiary has any pending requests for rulings with any Taxing
Authority. There are no Liens for Taxes upon the assets of Empress or any
Subsidiary except Liens for current Taxes not yet due. No power of attorney
granted by Empress or any of the Subsidiaries with respect to any tax
matter is currently in force. All applicable limitation periods for the
assessment of any Taxes against Empress and the Subsidiaries or against any
corporation or other entity included in a federal, state or local
consolidated or combined income tax return filed by or otherwise including
any of Empress and the Subsidiaries for all taxable periods ending prior to
the taxable period which includes December 31, 1992, have closed or
expired. No issue has been raised by the Internal Revenue Service or other
Taxing Authority in any examination of the Tax Returns of Empress or any
Subsidiary which , by application of the same or similar principles,
reasonably could be expected to result in a proposed deficiency for any
other period not so examined. Empress and the Subsidiaries have provided
Purchaser with true and complete copies of all federal, state and local
income tax returns constituting part of the Tax Returns which relate to the
conduct of the businesses of Empress and the Subsidiaries, as well as any
correspondence and agreements with the Internal Revenue Service or other
Taxing Authority for all periods for which assessments are not barred by
operation of the relevant statute of limitations.
(d) Except for the obligations set forth in this Agreement, neither
Empress nor any Subsidiary is currently under any contractual obligation
(whether oral or written) to indemnify any other Person with respect to
Taxes nor is Empress or any Subsidiary a party to any agreement (whether
oral or written) providing for payments with respect to Taxes. None of
Empress and the Subsidiaries has been a member of an affiliated group
(within the meaning of Section 1504 of the Code) filing a consolidated
federal income Tax Return or has any liability for Taxes under Treasury
Regulation (S) 1.1502-6 or any similar provision of state, local or foreign
law. None of the property owned or used by Empress or any Subsidiary is
subject to a Tax benefit transfer lease executed in accordance with Section
168(f)(8) of the Code. The accruals and reserves for Taxes reflected in the
Interim Financial Statements (other than any reserved for deferred Taxes
established to reflect timing differences between book and Tax income) are
adequate to cover all Taxes accruable through the date of such Interim
Financial Statements (including interest and penalties, if any, thereon).
None of the Stockholders is a foreign person within the meaning of the
Code. None of Empress or any Subsidiary could be liable for the Taxes of
any person as a "transferee" within the meaning of Section 6901(a) of the
Code; (i) any adjustment of Taxes made by any taxing authority that is
required to be reported to any other taxing authority has been so reported
and any additional Taxes with respect thereto have been paid; and (ii) no
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claim has been made by any taxing authority in a jurisdiction where Empress
or any Subsidiary does not file a Tax Return that it is or may be subject
to Tax in that jurisdiction.
2.10 Compliance with Laws; No Default or Litigation. Except as set forth in
Schedule 2.10:
(a) Neither Empress nor any Subsidiary is in default or violation (nor
is there any event which, with notice or lapse of time or both, would
constitute a default or violation) in any respect of (i) any contract,
agreement, lease, consent, order, permit, or other commitment to which it
is a party or to which its properties, assets or business is subject or
bound, or (ii) any Law;
(b) There are no actions, suits, claims, investigations, notices of
violation, or legal arbitration or administrative proceedings in progress,
pending or threatened by or against Empress or any Subsidiary (or any of
their respective properties, assets or businesses) whether at law or in
equity, whether civil or criminal in nature, or whether before or by a
federal, state, local or other governmental department, commission, board,
bureau, agency, or instrumentality, domestic or foreign or any Person, and
no fact or circumstance exists and no event has occurred which could give
rise to any such action, suit, claim, investigation, notice of violation,
or legal arbitration or administrative proceeding;
(c) Neither Empress nor any Subsidiary has been charged with or
received any notice of any violation of any Law relating to Empress or any
Subsidiary, their respective properties, assets or businesses, or the
transactions contemplated by this Agreement;
(d) Neither Empress nor any Subsidiary is subject to any agreement,
contract or decree with any governmental entities arising out of any
current or previously existing violations of any Law applicable to Empress
or any Subsidiary; and
(e) No action, suit, or proceeding has been instituted or, to the
knowledge of Empress, threatened to restrain, prohibit, or otherwise
challenge the legality or validity of the transactions contemplated by this
Agreement.
2.11 Sufficiency of Assets. The Subsidiaries own all right, title and
interest, or a valid leasehold interest in all property of any type
used or useful in the operation of their respective businesses.
Empress does not own or lease any property of any type used or useful
in the operation of the Subsidiaries' businesses.
2.12 Real Property.
(a) Schedule 2.12 (a) sets forth an accurate, complete and correct
list of all real property owned or under a contract to purchase by Empress
and each Subsidiary (the "Real Property") and all real property leased,
subleased or licensed to and/or operated by Empress or any Subsidiary
(collectively the "Leased Real Property"). The Real Property and the
Leased Real Property are referred to herein collectively as the "Empress
Real Property."
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(b) To their knowledge, each Subsidiary has good and marketable fee
simple title to the Real Property owned by it or can acquire good and
marketable fee simple title to the Real Property it has contracted to
purchase free and clear of any and all Liens, encumbrances, restrictions,
leases, options to purchase, options to lease, conditions, covenants,
assessments, defects, claims or exceptions, and none of the Real Property
is subject to any lease or any grant to any Person of a right to the use,
occupancy or enjoyment of the Real Property or any portion thereof, except
those matters set forth in Schedule 2.12(b). To the knowledge of Empress,
all Empress Real Property is in good operating condition and repair
(reasonable wear and tear excepted), is suitable for the purposes for which
it is presently being used and, to the knowledge of Empress and the
Subsidiaries, is adequate to meet all present and reasonably anticipated
future requirements of the business, as currently conducted or as proposed
to be conducted, of Empress and the Subsidiaries.
(c) Except as set forth on Schedule 2.12(c), neither Empress nor any
Subsidiary has been charged with or received any notice of any violation of
any rule, regulation, ordinance, law, order, decree, or requirement
relating to Empress or any Subsidiary, its respective properties, assets or
business, or the transactions contemplated by this Agreement. Each of the
Leased Real Property leases and subleases (and leases underlying such
subleases) contains no terms other than the terms contained in the copies
heretofore delivered to the Buyer.
(d) Except for those matters set forth in Schedule 2.12(d), to the
knowledge of Empress and the Subsidiaries, the Real Property is free and
clear of any and all liens, encumbrances, restrictions, leases, options to
purchase, options to lease, conditions, covenants, assessments, defects,
claims or exceptions, and none of the Real Property is subject to any lease
or any grant to any Person of a right to the use, occupancy or enjoyment of
the Real Property or any portion thereof.
(e) Each Subsidiary has a valid leasehold, subleasehold or license
interest in the Leased Real Property leased or operated by it, free and
clear of any and all liens, encumbrances, restrictions, leases, options to
purchase, options to lease, conditions, covenants, assessments, defects,
claims or exceptions and none of the Leased Real Property is subject to any
lease or any grant to any Person of a right to the use, occupancy or
enjoyment of the Leased Real Property or any portion thereof, except as set
forth in the Lease Documents (defined below) and those matters set forth
in Schedule 2.12 (e).
(f) Except as disclosed in Schedule 2.12(f), there is no action,
proceeding or litigation pending, or, to the knowledge of Empress and the
Subsidiaries, threatened (i) to take all or any portion of the Empress Real
Property, or any interest therein, by eminent domain; (ii) to modify the
zoning of, or other governmental rules or restrictions applicable to, the
Empress Real Property or the use or development thereof; (iii) for any
street widening or changes in highway or traffic lanes or patterns in the
immediate vicinity of the Empress
-16-
Real Property; or (iv) otherwise relating to the Empress Real Property or
the interests of Empress and each of the Subsidiaries therein, or which
otherwise would interfere with the use, ownership, improvement, development
and/or operation of the Empress Real Property. There are no violations of
any Law affecting the Empress Real Property. There are no mechanics' or tax
liens affecting the Empress Real Property, and all services or materials
which have been furnished to the Empress Real Property have been fully paid
or provided for. All service contracts, warranties and guaranties covering
any portion of the Empress Real Property are and shall be at the Closing in
full force and effect in accordance with their terms. To the knowledge of
Empress and the Subsidiaries, there are no assessments affecting the
Empress Real Property and no assessments are contemplated. There are no tax
abatements or exemptions affecting the Empress Real Property. All public
utilities required for the operation of the Empress Real Property either
enter the Empress Real Property through adjoining public streets, or if
they pass through adjoining private land do so in accordance with valid
public easements or private easements which will inure to the benefit of
the Buyers after the Closing. To the knowledge of Empress and the
Subsidiaries, there are no defects in the design or construction of the
buildings located on the Empress Real Property or Leased Real Property.
(g) Schedule 2.12 (g) lists all the leases and other agreements
affecting the use or occupancy of the Leased Real Property now in effect
(including, without limitation, subleases, licenses, concessions, tenancies
and other occupancy agreements covering or encumbering all or any portion
of the Leased Real Property), together with any guarantees, supplements,
amendments, modifications, extensions and renewals of the same, and all
additional remainders, reversions, and other rights and estates appurtenant
thereto (collectively, the "Lease Documents"); except as set forth on
Schedule 2.12 (g), (i) neither Empress nor any Subsidiary is in breach of
or in default under any of the Lease Documents; (ii) no party to any of the
Lease Documents has given the other notice of or made a claim with respect
to any breach or default under any of the Lease Documents; and (iii) and no
events have occurred which with or without notice or lapse of time or both
would constitute a breach or default under any of the Lease Documents. All
of the Lease Documents are in full force and effect and constitute legal,
valid and binding obligations of Empress, the Subsidiary and, to the
knowledge of Empress and the Subsidiaries, the other party in each case,
enforceable in accordance with their terms. Except as set forth on Schedule
2.12 (g), no consent of any landlord, licensor or grantor of the Leased
Real Property is required in connection with the transactions contemplated
by this Agreement and following the Closing, the Buyers will continue to be
entitled to the full benefits and use of the Leased Real Property.
(h) Except as disclosed in Schedule 2.12 (h), (i) no land or property
constituting the Empress Real Property is in violation of any applicable
Laws and (ii) to the knowledge of Empress and the Subsidiaries, there are
no violations of applicable laws, regulations or restrictions respecting
land adjoining the Empress Real Property that could adversely impact
Empress or its Subsidiaries, (iii) to the knowledge of Empress and the
Subsidiaries, there are no use restrictions, exceptions, limitations, deed
covenants, reservations, prohibitions or the
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like on the Empress Real Property which could interfere with or impair, now
or in the future, the conduct of the business of Empress and its
Subsidiaries as the same is now being conducted and (iv) to the knowledge
of Empress and the Subsidiaries, there are no defects in the physical
condition of the Empress Real Property or the improvements located on the
Empress Real Property.
(i) Except as disclosed in Schedule 2.12 (i), to the knowledge of
Empress and the Subsidiaries, no portion of the Empress Real Property or
the roads immediately adjacent to the Empress Real Property: (i) based on
title reports and surveys, is situated in a "Special Flood Hazard Area," as
set forth on a Federal Emergency Management Agency Flood Insurance Rate Map
or Flood Hazard Boundary Map; (ii) was the former site of any public or
private landfill, dump site, retention basis or settling pond; (iii) was
the former site of any oil or gas drilling operations; (iv) was the former
site of any experimentation, processing, refining, reprocessing, recovery
or manufacturing operation for any petrochemicals; or (v) was the former
site of any wetlands subject to regulation by the Army Corps of Engineers.
(j) The parcels constituting the Empress Real Property are assessed
separately from all other adjacent property for purposes of real property
Taxes.
(k) The Empress Real Property is connected to and serviced by adequate
water, sewage disposal, storm drainage, telephone, gas and electricity
facilities and all material systems (heating, air conditioning, electrical,
plumbing and the like) for the operation of the Empress Real Property are
operable and in good condition (ordinary wear and tear excepted).
(l) There are no contracts or other obligations outstanding for the
sale, exchange, lease or transfer of any of the Empress Real Property, or
any portion of it, or the businesses operated by Empress or any of the
Subsidiaries thereon, except as disclosed on Schedule 2.12(l).
(m) Except as disclosed in Schedule 2.12(m), the Empress Real Property
has access between all points of entry of the improvements and dedicated
public streets either directly or via easements, licenses or other written
agreements such that Empress and the Subsidiaries may conduct their
business and its visitors, employees, patrons and vendors may enter and
leave at appropriate locations without material interference or
interruption from others.
(n) The improvements owned, leased, subleased, licensed or occupied by
or to Empress and its Subsidiaries do not encroach on other property and
the improvements of others do not encroach onto the Empress Real Property,
except as disclosed on surveys of the Empress Real Property to be provided,
at Seller's expense, by the Sellers to the Buyers prior to the Closing,
provided that such surveys do not disclose any encroachments which could
have a material adverse effect.
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(o) Except as disclosed in Schedule 2.12(o), a certificate of
occupancy exists for each building located on the Empress Real Property, a
true, correct and complete copy of which has been delivered to the Buyer,
and such certificate has not been amended and Empress, at its sole expense,
has delivered or, prior to Closing, will deliver to the Buyer as-built ALTA
surveys of each parcel of land comprising the Empress Real Property as
presently exists, and, to the knowledge of Empress and the Subsidiaries,
all certificates of occupancy are valid and in full force and effect.
(p) To the knowledge of Empress and the Subsidiaries, there are no
defaults by the landlords under any of the Leased Real Property and such
landlords have performed all of their obligations thereunder. Empress and
the Subsidiaries have not waived any material obligation of any such
landlord or any right under any of the Leased Real Property. There is no
pending or, to the knowledge of Empress and the Subsidiaries, threatened
actions or proceedings which could affect the Leased Real Property.
(q) With respect to the Lease ("Lease") described in Schedule 2.12(b)
between Empress Joliet (f/k/a Empress River Casino Corporation), as
landlord, and Inter-Track Partners, ("Tenant"), a complete, true and
accurate copy of said Lease has been delivered to Buyer; Empress Joliet is
the current landlord of said Lease; said Lease is valid and in full force
and effect as to Empress Joliet and represents the entire agreement between
the Landlord and Tenant with respect to the Leased Premises described
therein and such Lease has not been modified, changed, altered, signed,
supplemented or amended in any respect; the Lease has no outstanding
options or rights of first refusal, in each case, to purchase the Leased
Premises or any part thereof or all or any part of the real property of
which the Leased Premises are a part and no one except for the Tenant
occupies the Leased Premises; Tenant has paid all rent due under the Lease
and, to the knowledge of Empress and the Subsidiaries, no event has
occurred and no condition exists which, with the giving of notice or lapse
of time or both, would have constituted a default under the Lease by such
Tenant.
(r) Except as disclosed in Schedule 2.12(r), the Annexation Agreement
("Annexation Agreement") dated November 25, 1991, between the City of
Joliet ("City") and Empress Joliet (f/k/a Des Plaines River Entertainment
Corporation) is in full force and effect; all obligations to be observed or
performed under the Annexation Agreement by Empress Joliet have been
observed and performed by Empress Joliet that all of the Empress Real
Property located in the City of Joliet ("Subject Property") has been
annexed by the City pursuant to said Annexation Agreement; that all of the
utilities to be installed and constructed by Empress Joliet under the
Annexation Agreement have been installed and constructed and such utilities
have been dedicated to and accepted by the City; that the City has adopted
an ordinance classifying all of the Subject Property as B-3 General
Business and that such B-3 classification has not been amended or modified
since the date of the Annexation Agreement; that all improvements located
on the Subject Property comply with
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the applicable zoning classification; that Empress Joliet has constructed
Empress Drive over and across the Subject Property to gain ingress and
egress from the Subject Property to a publicly dedicated street or highway
all as contemplated under the terms and conditions of the Annexation
Agreement.
(s) Except as disclosed in Schedule 2.12(s), the overpass and street
from Indianapolis Boulevard to the Empress Real Property in Hammond,
commonly known as Empress Drive, is a publicly dedicated roadway.
2.13 Personal Property.
(a) Schedule 2.13 lists or otherwise describes, in all material
respects: (i) all equipment, machinery, furniture, fixtures and
improvements, tools, tooling, spare parts, boats, vessels, maritime
equipment and vehicles owned or leased by Empress or any Subsidiary
(including all leases of such property) or held for or used in the business
of Empress or any Subsidiary, (ii) all licenses received from manufacturers
and sellers of any of such items and (iii) any related claim, credit and
right or recovery with respect thereto (the "Personal Property"). Schedule
2.13 identifies which Personal Property is subject to a lease. True and
complete copies of all such leases have been delivered to the Buyers, and
each of such leases is in full force and effect and constitutes a legal,
valid and binding obligation of the parties thereto, in each case
enforceable in accordance with its terms. Except as set forth in Schedule
2.13, no consent of any lessor of the Personal Property is required in
connection with the transactions contemplated by this Agreement.
(b) The use, installation, maintenance and storage of the Personal
Property is in conformance with all applicable Laws.
(c) All of the Personal Property is free from material defects, fit
for use in the business of the Subsidiaries and has been installed and, to
the knowledge of Empress and the Subsidiaries, constructed in compliance
with all applicable Laws and has been approved where necessary by all of
the requisite Persons.
2.14 Contracts.
(a) Schedule 2.14 lists all written and oral contracts, agreements,
arrangements, commitments and leases, including all amendments thereto
(other than those listed on Schedules 2.05, 2.11, 2.12 and 2.13), to which
Empress or any Subsidiary is a party or by which any of their respective
properties, assets or businesses are bound or subject to, which meet any of
the descriptions set forth below (the "Contracts"):
(i) All agreements, arrangements or commitments relating to
loans, lines of credit, security agreements, mortgages, guaranties,
indemnifications or other payment obligations;
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(ii) All agreements, contracts, and commitments containing any
covenant limiting the right of Empress or any Subsidiary to engage in
any line of business or compete with any Person in any geographical
area;
(iii) All leases with respect to any real or personal property
used in or necessary to the operation of the business of Empress or
any Subsidiary, including but not limited to all leases for office
space, tools, furniture, machinery, vehicles or equipment;
(iv) All employment agreements, contracts, policies, and
commitments with or between Empress or any Subsidiary and any of their
respective employees, directors, or officers, or family members of any
of them, or entities under their control or the control of family
members of any of them, including those relating to severance and
payment of commissions;
(v) All agreements entered into by any Stockholder directly or
indirectly relating to the Shares;
(vi) All joint venture or partnership agreements of any kind; and
(vii) All contracts, agreements, arrangements or commitments of
any kind or nature (1) entered into outside the ordinary course of
business of Empress or any Subsidiary or (2) involving the receipt or
payment by Empress or any Subsidiary of an amount in excess of
$100,000.
(b) All of the Contracts are valid and binding obligations of the
parties thereto, in each case enforceable in accordance with their
respective terms, are in full force and effect and, except as otherwise
specified in Schedule 2.14, will continue in full force and effect without
the consent of any other party so that, after the Closing, Empress or any
Subsidiary, as applicable, will continue to be entitled to the full
benefits thereof. Except as set forth in Schedule 2.14, none of the
Contracts contains any provision that is triggered by a change in control
of Empress or any Subsidiary or by any of the transactions contemplated by
this Agreement. Except as listed on Schedule 2.14, none of the Contracts
listed pursuant to paragraph (a)(i) of this Section 2.14 contains a
provision imposing a penalty if any of the amounts due thereunder are
prepaid. Copies of the Contracts in written form have been delivered to
the Buyers.
2.15 Suppliers. No supplier, vendor or subcontractor of Empress or any
Subsidiary has notified Empress or any Subsidiary that it intends to
terminate or change its relationship with Empress or any Subsidiary.
2.16 Licenses and Permits.
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(a) Each of Empress and each Subsidiary possesses all the Permits (as
defined below) and other authorizations necessary to conduct its business
as now conducted, including, without limitation, all Permits required under
the Illinois Gambling Act (the "Illinois License") and the Indiana
Riverboat Act (the "Indiana License"). Except as set forth on Schedule
2.16, all of such Permits are registered in the name of Empress or a
Subsidiary, as applicable. Except as set forth on Schedule 2.16, all such
Permits are in full force and effect and will continue in full force and
effect without the consent of any other party so that, after the Closing,
Empress or the Subsidiary, as applicable, will be entitled to the full
benefits of such Permits. There are no violations of any of the Permits.
There are no challenges, appeals or other proceedings pending or threatened
that could result in the revocation, termination, modification or
nonrenewal of any of the Permits. Except as set forth on Schedule 2.16,
all of the Permits will remain in full force and effect without the need to
reapply for, or make any modification to, any such Permit or to obtain the
consent of any other Person in the event that any of the Stockholders cease
to be employed by Empress Joliet or Empress ▇▇▇▇▇▇▇. Empress and each
Subsidiary has fulfilled all conditions under all of the Permits and, in
the case of Permits relating to construction, dredging or drainage work,
has completed all such work in accordance with the terms of such Permits
and all applicable Laws.
(b) Empress and each Subsidiary has obtained and currently maintains
in full force and effect all U.S. Coast Guard approvals (including all
authorizations under the Merchant Marine Act of 1920 and the Shipping Act
of 1916 and Certificates of Inspection issued by the U.S. Coast Guard),
U.S. Army Corps of Engineers permits, Indiana and Illinois Department of
Natural Resources permits, Indiana Department of Environmental Management
and Illinois Environmental Protection Agency permits and certifications,
and all other material rights, authorizations, certificates,
certifications, licenses, consents, approvals and permits necessary to
construct the existing or planned improvements and to operate and dock the
riverboats located in Joliet, Illinois and Hammond, Indiana. Each of such
riverboats are being operated in compliance with their respective U.S.
Coast Guard marine document, all applicable stability letters and all
applicable Permits.
(c) Empress, each of the Subsidiaries, and all employees of any of
them holding licenses under the Illinois Gambling Act or the Indiana
Riverboat Act are in compliance with all applicable gaming Laws.
(d) The term "Permits" means any Federal, state, local or foreign
statute, ordinance, rule, regulation, permit, consent, registration,
finding of suitability, approval, license, judgment, order, decree,
injunction or other authorization, necessary to erect or use any of the
improvements, operate any of the vessels or conduct any business as
currently being conducted, including the current casino and gaming
activities and operations of Empress or any Subsidiary, including, without
limitation, the Illinois Gambling Act, the Indiana Riverboat Act, and the
rules and regulations promulgated thereunder, the City of Hammond, Indiana
Ordinances, the City of Joliet, Illinois Ordinances, the Lake County,
Indiana codes, ordinances and
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resolutions and the Will County codes, ordinances and resolutions and any
applicable state gaming law and any federal or state laws relating to
gaming or currency transactions.
2.17 Labor Relations; Employees. As of the date of the Interim Financial
Statements, Empress and its Subsidiaries employed a total of
approximately 3,200 employees. Except as set forth in Schedule 2.17:
(a) Each of Empress and each Subsidiary has paid in full or accrued to
all of its employees all wages, salaries, commissions, bonuses, fringe
benefit payments (including vacation pay), and all other direct and
indirect compensation of any kind for all services performed by each of
them;
(b) There is no unfair labor practice, safety, health, discrimination,
wage or other claim, charge, complaint, or suit pending or threatened
against or involving Empress or any Subsidiary before the National Labor
Relations Board, Occupational Safety and Health Administration, Equal
Employment Opportunity Commission, Department of Labor, or any other
federal, state, or local agency;
(c) There is no labor dispute, strike, work stoppage, interference
with production, or slowdown in progress threatened against, or involving
Empress or any Subsidiary;
(d) There is no labor organization, group, association or union
efforts to obtain the authorization of employees to become represented by
any such labor organization, group, association or union nor are there any
claims to represent the employees of Empress or any Subsidiary;
(e) There is no question of representation under the National Labor
Relations Act, as amended, or any state equivalent thereof, pending with
respect to the employees of Empress or any Subsidiary, nor is there any
custom or practice recognizing any labor organization, group, association
or union as the representative of any employees;
(f) There is no grievance or arbitration pending or threatened which
might have an adverse effect on Empress or any Subsidiary or on the conduct
of their respective businesses;
(g) There exists no collective bargaining agreement to which Empress
or any Subsidiary is a party, and there is no collective bargaining
agreement currently being negotiated, subject to negotiation, or
renegotiation by Empress or any Subsidiary;
(h) There is no dispute, claim, or proceeding pending with or
threatened by the Immigration and Naturalization Service with respect to
Empress or any Subsidiary;
(i) There is no policy, custom, practice or contract between Empress
or any Subsidiary and any employee that would entitle any such employee to
a severance benefit or
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payment of any kind upon termination (either voluntary or involuntary) of
the employment of such employee;
(j) Every employee of Empress or any Subsidiary is currently employed
"at will" and may be terminated at any time for any lawful reason or no
reason, without notice; and
(k) There are no releases of liability or severance agreements
obtained or entered into by Empress or any Subsidiary and any current or
former employee.
2.18 Employee Benefit Plans.
(a) Schedule 2.18(a), attached hereto and made a part hereof, contains
a list of each "employee welfare benefit plan" (as defined in Section 3 of
the Employee Retirement Income Security Act of 1974, as amended ("ERISA")):
(i) which is (or had within the three-year period before the Closing Date
been) maintained or administered by Empress or any Subsidiary or any
Affiliate, (ii) to which Empress or any Subsidiary or any Affiliate
contributes or is (or had within the three-year period before the Closing
Date been) legally obligated to contribute, or (iii) under which Empress
or any Subsidiary or any Affiliate has (or had within the three-year period
before the Closing Date) any liability, with respect to its current or
former employees or independent contractors (collectively the "Welfare
Benefit Plans" and individually a "Welfare Benefit Plan"). Solely for
purposes of this Section 2.18, "Affiliate" means any person which together
with Empress or any Subsidiary would be treated as a single employer under
Section 414 of the Internal Revenue Code of 1986, as amended ("Code").
Schedule 2.18(a) also sets forth the names of each such Affiliate.
(b) Schedule 2.18(b) contains a list of each "employee pension benefit
plan" (as defined in ERISA Section 3): (i) which is (or had within the
three-year period before the Closing Date been) maintained or administered
by Empress or any Subsidiary or any Affiliate, (ii) to which Empress or any
Subsidiary or any Affiliate contributes or is (or had within the three-year
period before the Closing Date been) legally obligated to contribute, or
(iii) under which Empress or any Subsidiary or any Affiliate has (or had
within the three-year period before the Closing Date) any liability with
respect to its current or former employees or independent contractors
(collectively the "Pension Benefit Plans" and individually a "Pension
Benefit Plan").
(c) Schedule 2.18(c) also contains a list of each employee benefit
plan, program, arrangement, agreement, policy or commitment, whether
insured or uninsured, funded or unfunded, that is not a Welfare Benefit
Plan or Pension Benefit Plan, relating to deferred compensation, bonus or
compensation in addition to regular pay or wages, stock options, employee
stock purchases, severance, unemployment, flexible benefits, disability,
vacation, sickness, leave of absence, fringe benefits, employee awards,
educational assistance or reimbursement, equity participation (including
but not limited to stock appreciation and phantom stock), restricted stock,
employee discounts, excess benefits, rabbi, secular or vesting trust, child
or dependent care, long-term and nursing home care, and profit sharing:
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(i) which is maintained or administered by Empress or any Affiliate; (ii)
to which Empress or any Subsidiary or any Affiliate contributes, or is
legally obligated to contribute, or (iii) under which Empress or any
Subsidiary or any Affiliate has any liability, with respect to its current
or former employees or independent contractors (collectively, the "Employee
Plans" and individually an "Employee Plan"). Solely for purposes of this
Section 2.18, the Employee Plans, Welfare Benefit Plans and Pension Benefit
Plans are collectively referred to as "Employee Benefit Plans" and
individually referred to as an "Employee Benefit Plan."
(d) Neither Empress nor any Subsidiary nor any Affiliate has ever
maintained or contributed to any Pension Benefit Plan, that is a defined
benefit plan (as defined in ERISA Section 3(35)) or a multiemployer plan
(as defined in ERISA Section 3(37)).
(e) There is no action, lawsuit, claim for benefits (except in the
ordinary course of administration), proceeding, investigation, audit or
arbitration pending, as of the date of this Agreement and as of the Closing
Date, involving any Employee Benefit Plan.
(f) There are no liabilities of Empress or any Subsidiary or any
Affiliate, contingent or otherwise, accrued or unaccrued, asserted or
unasserted, with respect to any Employee Benefit Plan, including, but not
limited to, liabilities with respect to the Administrative Services
Agreement between Empress or any Subsidiary or any Affiliate and
Anthem/Blue Cross Blue Shield, in effect on the date hereof.
(g) There is no action, lawsuit, claim for benefits, proceeding,
investigation, audit or arbitration pending, as of the date of this
Agreement and as of the Closing Date, involving any Employee Benefit Plan
(except in the ordinary course of administration).
(h) With respect to each Employee Benefit Plan, Schedule 2.18(h) sets
forth the amount of any contribution made or expense incurred with respect
to the most recent fiscal year ended prior to the date of this Agreement,
and the amount of any contribution made, or expense incurred with respect
to the period between the close of the most recent fiscal year and the date
hereof, and the amount of any contribution or expense payable in accordance
with the contribution formula set forth in any Employee Benefit Plan,
authorized by the governing body or duly authorized officer of Empress or
any Subsidiary or any Affiliate, or for which Empress or any Subsidiary or
any Affiliate, is otherwise liable with respect to the period between the
close of the most recent plan year for any such plan and the Closing Date.
(i) Each Pension Benefit Plan has at all times qualified under Section
401(a) or 403(a) of the Code and been Tax exempt under Section 501(a) of
the Code, and a favorable determination as to the qualification under the
Code of each of the Pension Benefit Plans and each amendment thereto has
been made by the Internal Revenue Service.
(j) Each Welfare Benefit Plan and each Pension Benefit Plan has been
operated and administered at all times in compliance with the requirements
of ERISA and the Code, and any other applicable law, rule or regulation and
all reports and disclosures required by
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any government agency with respect to each Welfare Benefit Plan and each
Pension Benefit Plan have been timely filed with each appropriate
governmental agency and distributed to all required persons in an
appropriate and timely manner and in compliance with all applicable laws,
rules and regulations. No "reportable event" (as defined in ERISA Section
4043) and no event (as defined in ERISA Section 4041, 4042, 4062 or 4063)
has occurred in connection with any Pension Benefit Plan, except as duly
disclosed on a timely filed Form 5500.
(k) No plan fiduciary of any Welfare Benefit Plan or any Pension
Benefit Plan has engaged in, or authorized, any transaction in violation of
ERISA Section 406(a) or (b) or any "prohibited transaction" (as defined in
Code Section 4975(c)(1)). Nothing done or omitted to be done, and no
transaction or holding of any asset, in connection with any Employee
Benefit Plan has or will result in any penalty or Tax under ERISA Section
502(i) or Code Section 4975 to Empress or any Affiliate, or any director,
officer or employee of Empress or any Affiliate.
(l) No Pension Benefit Plan has ever acquired or held any "employer
security" or "employer real property" (each as defined in Section 407(d) of
ERISA).
(m) As separately identified on Schedule 2.18, true and complete
copies of: (i) each Employee Benefit Plans listed on Schedules 2.18(a), (b)
and (c) (including any amendments or modifications), and all related trust
agreements, custodial agreements, agency agreements, insurance or annuity
contracts, and any other funding instruments), including any amendments or
modifications to such agreements or instruments; (ii) the most recent
summary plan description for each Welfare Benefit Plan and each Pension
Benefit Plan (and any subsequent summary of material modifications) and any
other written description of such plans or written interpretations of such
plans whether or not distributed to participants or beneficiaries; (iii)
the most recent determination letter issued by the Internal Revenue Service
with respect to each Pension Benefit Plan and each private letter ruling or
determination letter issued by the Internal Revenue Service relating to any
Employee Benefit Plan; (iv) the Annual Reports on the Form 5500 Series
(and each related summary annual report) required to be filed with any
governmental agency for each Employee Benefit Plan for the three (3) most
recent plan years (together with any actuarial, accounting, fiduciary or
trustee reports for such plan years); (v) documentation or reports
reflecting any tests showing compliance with Code Sections 401(a)(26),
401(k), 401(m), 404, 410, and 415, as applicable, with respect to each
Pension Benefit Plan; (vi) minutes of the governing body of Empress and any
Subsidiary, and each Affiliate and each plan administrator or
administrative committee relating to each Employee Benefit Plan; (vii)
filings with, or reports to, the PBGC with respect to each Pension Benefit
Plan; (viii) each advisory opinion, private exemption or other letter from
the U. S. Department of Labor or PBGC relating to any Employee Benefit
Plan; and (ix) all information relating to the termination, merger or
curtailment of any Employee Benefit Plan of Empress and any Subsidiary
occurring in any of the five (5) calendar years preceding the date of this
Agreement, have heretofore been delivered to the Buyers.
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(n) All trust agreements, custodial agreements, investment management
agreements, insurance or annuity contracts (or any other funding
instruments) and any other agreement relating to any Employee Benefit Plan
are legally valid and binding and in full force and effect.
(o) Neither Empress nor any Subsidiary nor any Affiliate has any
leased employees within the meaning of Code Section 414(n).
(p) Neither Empress nor any Subsidiary nor any Affiliate has any
employees within the meaning of the regulations under Code Section 414(o).
(q) None of the employees of Empress or any Subsidiary or any
Affiliate is a member of, nor is any Employee Benefit Plan maintained in
connection with, any voluntary employees' beneficiary association within
the meaning of Code Section 501(c)(9).
(r) Neither Empress nor any Subsidiary nor any Affiliate has any
obligation to provide any medical or health benefits to any former
employees or retired employees, except to the extent required by Title X of
the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended
(hereinafter referred to as "COBRA").
(s) Each of Empress and each Subsidiary and each Affiliate have
complied with the requirements of COBRA and the rules and regulations
thereunder. Schedule 2.18(s) contains a list of: (i) all persons who have
elected or who are eligible to elect COBRA continuation coverage under any
of the Welfare Benefit Plan, (ii) the dates of each qualifying event and
COBRA continuation coverage periods for each such person; and (iii) the
claims experience of each such person for the preceding twelve months plus
pending claims for benefits which as of the date of such Schedule have not
yet been paid and a prognosis with respect to each such person who has had
a significant claim in the preceding twelve months.
(t) Neither Empress nor any Subsidiary nor any Affiliate has claimed a
deduction under Code Section 419(a)(2) for any Taxable year in excess of
any welfare benefit funds qualified cost for the Taxable year as determined
under Code Section 419(c), and neither Empress nor any Subsidiary nor any
Affiliate has made any additions to any qualified asset account in excess
of the account limit as determined under Code Section 419A(c). No
disqualified benefit has been provided prior to the Closing Date which
would cause the imposition of any Tax on Empress or any Subsidiary or any
Affiliate under Code Section 4976.
(u) There is no contract, agreement, plan, promise or arrangement
covering any current or former employee of Empress or any Subsidiary or any
Affiliate that, individually or collectively, could give rise to the
payment of any amount that would not be deductible pursuant to Code Section
162(a)(1), 162(I)(2) or 280G.
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(v) No condition, fact, or circumstance exists, or will exist at
Closing, which would prevent Empress or any Subsidiary or any Affiliate
from amending or terminating any Employee Benefit Plan with respect to any
current, former or retired employee or independent contractor of Empress or
any Subsidiary or any Affiliate except under the terms of a collective
bargaining agreement identified in Schedule 2.17.
2.19 Environmental Compliance. Except as set forth in Schedule 2.19:
(a) Each of Empress and each Subsidiary has at all times complied
with all applicable Environmental Requirements in the use of the Real
Property, the Leased Real Property and operations of the business. Further,
to the knowledge of Empress, no previous owner or operator of any Real
Property and the Leased Real Property violated any Environmental
Requirement.
(b) Each of Empress and each Subsidiary has never generated,
manufactured, refined, used, transported, treated, stored, handled,
disposed, transferred, produced, or processed any Hazardous Material at,
to, or on any Real Property or the Leased Real Property and to the
knowledge of Empress and any Subsidiary no Hazardous Material has ever been
incorporated into any Real Property or the Leased Real Property.
(c) There are no existing or potential Environmental Claims relating
to any Real Property, the Leased Real Property or operations of the
business and there is no alleged, actual, or potential responsibility for
any disposal, release, or threatened release at any location of any
Hazardous Material generated at or transported from any Real Property or
the Leased Real Property by or on behalf of Empress or any Subsidiary.
(d) No underground storage tank or other underground storage
receptacle (or associated equipment or piping) for Hazardous Materials is
currently located at or on any Real Property or the Leased Real Property.
(e) There have been no releases by Empress or any Subsidiary (i.e.,
any past or present releasing, spilling, leaking, pumping, pouring,
emitting, emptying, discharging, injecting, escaping, leaching, disposing,
or dumping) of Hazardous Materials at, on, to, or from any Real Property or
Leased Real Property. Further, to the knowledge of Empress and any
Subsidiary no previous owner or operator has released (i.e., any past or
present releasing, spilling, leaking, pumping, pouring, emitting, emptying,
discharging, injecting, escaping, leaching, disposing, or dumping)
Hazardous Materials at, on, to, or from any Real Property or Leased Real
Property.
(f) No aboveground storage tank or other aboveground storage
receptacle (or associated equipment or piping) for Hazardous Materials is
currently located at or on any Real Property or the Leased Real Property.
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(g) There are no polychlorinated biphenyls or friable asbestos
located or contained at, on, or in any Real Property or Leased Real
Property.
(h) Empress has not received any notice issued pursuant to the
citizen's suit provision of any Environmental Requirement relating to any
Real Property, Leased Real Property or operations of the business.
(i) Empress has not received any request for information, notice,
demand, letter, administrative inquiry, formal or informal complaint, or
claim with respect to any Environmental Condition or violation of any
Environmental Requirement relating to any Real Property, Leased Real
Property or operations of the business.
(j) There have been no environmental investigations, site assessments
or audits, or soil or groundwater sampling conducted at any Real Property
or Leased Real Property by Empress, any Subsidiary or any other Person.
(k) Waste disposal has been and is in compliance with all
Environmental Requirements.
(l) All construction of any kind undertaken on any real property
other than the Real Property involving or related to the business of
Empress or any Subsidiary, including but not limited to overpasses,
roadways, walkways, railroad crossings, parking lots, streets, aprons, and
highways, has been in compliance with all Environmental Requirements.
2.20 Insurance.
(a) Each of Empress and each Subsidiary are insured by insurers
(unaffiliated with Empress) with respect to all of its properties and
assets used in its business, including with respect to all Real Property
owned by Empress or any Subsidiary, or their respective employees and
businesses. Schedule 2.20 sets forth:
(i) A list of all policies of title, liability, theft, fidelity,
life, fire, product liability, workmen's compensation, health, and
other forms of insurance held by Empress or any Subsidiary and
specifies the insurer, amount of coverage, premiums, deductibles, type
of insurance and policy number; and
(ii) A list of all pending claims under such policies.
(b) The policies listed in Schedule 2.20 are in full force and
effect, and all premiums due and payable with respect to such policies are
currently paid. The insurance coverage provided by the policies listed in
Schedule 2.20 satisfies all contractual and statutory requirements
applicable to Empress or any Subsidiary. Empress has delivered to the
Buyers copies of all insurance policies listed on Schedule 2.20.
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2.21 Power of Attorney. Schedule 2.21 contains a list of the names of all
Persons holding general or special written powers of attorney from, or
having authority to incur indebtedness on behalf of, Empress or any
Subsidiary and a summary of the terms thereof.
2.22 No Changes. Except as set forth on Schedule 2.22, since the date of
the Annual Financial Statements, neither Empress nor any Subsidiary
has, directly or indirectly, (a) incurred any liability or obligation
of any nature (whether accrued, absolute, contingent or otherwise)
except in the ordinary course of business and in a manner consistent
with past practices; (b) incurred any indebtedness for borrowed money
or entered into any commitment to borrow money or guarantee,
assumption, endorsement of, or other assumption of any liability; (c)
sold, transferred or otherwise disposed of any assets except as
permitted by this Agreement or in the ordinary course of business; (d)
declared or paid any dividend or made any distribution of any kind on
any shares of its capital stock; (e) made any bonus or profit sharing
distribution of any kind; (f) conducted its business or entered into
any transaction except in the ordinary course of business and in a
manner consistent with past practices; (g) made any illegal payments
to any Person; (h) made any changes to its Articles of Incorporation
or Bylaws or other organizational documents; (i) entered into any
employment contract; (j) entered into any material contract to
purchase any Real Property; or (k) entered into any contract,
agreement or arrangement of any kind not cancellable or terminable
upon not more than 60 days notice without premium or penalty of any
kind.
2.23 Absence of Certain Business Practices. None of Empress, any
Subsidiary, or any Person acting on behalf of any of them, has given
or agreed to give, directly or indirectly, any gift or similar benefit
to any customer, supplier, governmental employee, or other Person who
is or may be in a position to help or hinder the business of Empress
or any Subsidiary (or assist Empress or any Subsidiary in connection
with any actual or proposed transaction relating to their respective
businesses), which might subject Empress or any Subsidiary to any
damage or penalty in any civil, criminal, or governmental litigation
or proceeding or which, if not continued in the future, may effect the
business of Empress or any Subsidiary.
2.24 Minute Book and Stock Record Book. The minute books of Empress and
each Subsidiary contain complete and accurate records of all official
meetings and other official corporate actions of its stockholders or
members and board of directors or managers, including committees of
the board of directors. The stock record book of Empress and each
Subsidiary contains a complete and accurate record of the current
ownership of all outstanding shares of capital stock of Empress and
each Subsidiary. All other books and records of Empress and each
Subsidiary are complete and accurate in all material respects.
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2.25 Brokers' or Finders' Fees. Except as set forth on Schedule 2.25, no
agent, broker, investment banker or other person or firm acting on
behalf of Empress, and/or any of their respective directors, executive
officers or other representatives, or under the authority of any of
them, is or will be entitled to any broker's or finder's fee or any
other commission or similar fee, directly or indirectly, from any of
the parties hereto in connection with any of the transactions
contemplated hereby.
2.26 Intellectual Property.
(a) The patents and inventions, trademarks and service marks, trade
names and styles, logos and designs, trade secrets, technical information,
engineering procedures, designs, know-how and processes (whether
confidential or otherwise), software, copyrights and other intellectual
property (including applications for any of the aforesaid), in each case
used or reasonably necessary to permit satisfactory operation of the
business of Empress ▇▇▇▇▇▇▇ and Empress Joliet as presently constituted are
collectively referred to hereinafter as the "Intellectual Property."
(b) Schedule 2.26 identifies any and all Intellectual Property,
including, without limitation, all patents, registered and material
unregistered trademarks, registered copyrights, trade names and service
marks, and any applications therefor, included owned by any Subsidiary.
Schedule 2.26 also identifies each license and other agreement that: (i)
relates to the granting by Empress ▇▇▇▇▇▇▇ and Empress Joliet of any
rights, including without limitation rights of use and ownership, in any of
the Intellectual Property, other than standard software license agreements
of Empress ▇▇▇▇▇▇▇ or Empress Joliet (the forms of which have been provided
to the Buyers), and (ii) requires the payment to Empress ▇▇▇▇▇▇▇ or Empress
Joliet of at least $15,000 in the aggregate. Each of the Subsidiaries owns
all right, title and interest in and to, or otherwise licenses pursuant to
valid and enforceable license agreements, any and all Intellectual Property
used in the business of such Subsidiary as presently conducted.
(c) Other than as disclosed on Schedule 2.26, no person has a right
to receive a royalty, or has claimed a right to receive a royalty, with
respect to any of the Intellectual Property. Other than as disclosed on
Schedule 2.26, there are no claims or proceedings pending, or, to the
knowledge of Empress or any Subsidiary, threatened, against Empress or any
Subsidiary asserting that its use of any of the Intellectual Property
infringes upon the rights of any other person. To the knowledge of Empress
and each Subsidiary, there is no basis for any claim that the use any
Subsidiary of any of the Intellectual Property infringes upon the rights of
any other person.
(d) All patents, trademarks, trade names, service marks and
copyrights listed on Schedule 2.26 are valid and in full force and effect.
Other than as disclosed on Schedule 2.26, the rights of each Subsidiary in
and to the Intellectual Property is, and at Closing will be, transferable
as contemplated by this Agreement.
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(e) (i) Each of Empress ▇▇▇▇▇▇▇ and Empress Joliet has conducted an
initial review of whether its systems, processes, products, equipment and
services are "Year 2000 Ready." Interim results of such review are set
forth on Schedule 2.26. "Year 2000 Ready" means that the systems,
processes, products, equipment and services of Empress Joliet and Empress
▇▇▇▇▇▇▇ (including any software embedded in any products) ("Services"),
will correctly identify, recognize and process four-digit year dates, and
the Services will: (1) continue to function properly with regard to dates
before, during and after the transition to year 2000 including, but not
limited to, the ability to roll dates from December 31, 1999 to January 1,
2000 and beyond with no errors or system interruptions; (2) accurately
perform calculations and comparisons on dates that span centuries; (3)
accept and properly process dates that could span more than 100 years
(e.g., calculating a person's age from their birth date and the current
date); (4) properly sort and sequence dates that span centuries; (5)
understand that the year 2000 starts on a Saturday; (6) recognize that
February 29, 2000 is a valid date and that the Year 2000 has 366 days; (7)
prohibit use of date fields for any purpose other than to store valid
dates; (8) preclude the use of 12/31/99 or any other valid date to indicate
something other than a date (e.g., 12/31/99 in a date field means "do not
ever cancel"); and (9) comply with and conform to the specifications of
American National Standard ANSI X3.30-1985, Representation for Calendar
Date and Ordinal Date for Information Interchange.
(ii) Each of Empress ▇▇▇▇▇▇▇ and Empress Joliet have conducted an
audit of their respective critical contractors and suppliers regarding
their Year 2000 Readiness. To the best knowledge of Empress ▇▇▇▇▇▇▇
and Empress Joliet, the Year 2000 Readiness of such critical
contractors and suppliers is as set forth on Schedule 2.26.
(iii) Each of Empress and each Subsidiary has made no express or
implied warranties regarding the Year 2000 Readiness of themselves, or
any of their Services, except as set forth on Schedule 2.26.
2.27 Absence of Undisclosed Liabilities. Except (a) as disclosed in the
Financial Statements, (b) for trade and accrued liabilities incurred
in the ordinary course of business and in a manner consistent with
past practices, (c) for liabilities under or permitted by this
Agreement and (d) except as set forth on Schedule 2.27, no Subsidiary
has any indebtedness, liability or obligation of any kind, whether
accrued, contingent or otherwise (whether or not required by GAAP to
be reflected in the Financial Statements), and whether due or to
become due, which is not shown or provided for in the Interim
Financial Statements.
2.28 Claims Against Third Parties. Schedule 2.28 contains a list and brief
description of outstanding claims and causes of action of Empress or
any Subsidiary against third parties related to the conduct of the
business of Empress or any Subsidiary (the "Claims").
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2.29 Bank Accounts. Schedule 2.29 contains a list of all bank accounts,
escrow deposit accounts, money market accounts, brokerage accounts and
similar accounts and safe deposit boxes of Empress and each
Subsidiary, including all accounts or other locations at which Empress
or any Subsidiary holds cash, cash equivalents or securities, with an
identification of the name of the bank or brokerage firm, account
number and the signatories thereto.
2.30 Disclosure. Neither this Agreement, nor the Exhibits and Schedules
attached hereto nor any other document to be provided to the Buyers in
connection with the transactions contemplated by this Agreement
contains or will contain any untrue statement of a material fact or
omits or will omit to state a material fact necessary to make the
statements contained herein and therein not misleading.
III. REPRESENTATIONS AND WARRANTIES OF THE BUYERS
As a material inducement to the Sellers to enter into this Agreement and to
consummate the transactions contemplated by this Agreement, each of the Buyers
jointly and severally represent and warrant to Empress that:
3.01 Organization; Qualification. Each of the Buyers is a corporation or
limited liability company duly organized and validly existing under
the laws of the state of its incorporation or organization. Each of
the Buyers has all requisite power and authority and all governmental
licenses, authorizations, consents and approvals necessary to own,
lease and operate their respective properties and to carry on their
respective businesses as now being conducted. Each of the Buyers is
duly qualified as a foreign entity and is in good standing to do
business in every jurisdiction in which such qualification is
necessary because of the nature of the properties owned, leased or
operated by it or the nature of the business conducted by it, except
in such jurisdictions in which the failure to so qualify would not
have a Material Adverse Effect.
3.02 Authority; Power; and No Violation. The execution and delivery of this
Agreement and all documents to be executed in connection herewith by
each of the Buyers have been authorized by all necessary action on the
part of each of the Buyers. Each of the Buyers has the requisite
power and authority to execute and deliver this Agreement and all
documents to be executed in connection herewith, and to take any and
all other actions required to be taken by it pursuant to the
provisions of this Agreement and all documents to be executed in
connection herewith. This Agreement constitutes the legal, valid and
binding obligation of the Buyers enforceable against each of them in
accordance with its terms. Except as set forth on Schedule 3.02, the
execution and delivery of this Agreement and the fulfillment or
compliance with the terms hereof, including the financing contemplated
by Section 5.04, will not (a) conflict with, violate, result in a
breach of, constitute a default (or an event which, with notice or
lapse of time or both, would constitute a default) under, or give rise
to
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any right of termination, cancellation, or acceleration under any
provision of the organizational documents of any of the Buyers or any
of the terms, conditions or provisions of any note, lien, bond
mortgage, indenture, license, lease, contract, commitment, agreement,
understanding, arrangement, restriction, or other instrument or
obligation to which any of the Buyers is a party or by which any of
the Buyers or any of their respective properties or assets may be
bound; (b) violate any Law applicable to any of the Buyers or any of
their respective properties, assets, or outstanding shares or other
securities; or (c) constitute an event which, with or without notice,
lapse of time, or action by a third party, could result in the
creation of any Lien upon any of the assets or properties of any of
the Buyers or cause the maturity of any liability, obligation, or debt
of any of the Buyers to be accelerated or increased.
3.03 Consents and Approvals. Except as set forth on Schedule 3.03, the
execution, delivery, and performance of this Agreement by the Buyers
and the consummation by the Buyers of the transactions contemplated
hereby, including the financing contemplated by Section 5.04, will not
require any notice to, or consent, authorization or approval from any
court or governmental authority or any other third party. Except as
set forth in Schedule 3.03, any and all notices, consents,
authorizations and approvals set forth in Schedule 3.03 have been or
prior to the Closing will be made and obtained.
3.04 SEC Documents. Parent has filed all of the documents required to be
filed by Parent with the Securities and Exchange Commission ("SEC")
since January 1, 1997 (collectively, the "Horseshoe Reports"). As of
their respective dates, the Horseshoe Reports (a) complied as to form
in all material respects with the applicable requirements of the
Securities Act of 1933, as amended (the "Securities Act") or the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), as
the case may be, and the rules and regulations thereunder; and (b) did
not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements made therein, in the light of the circumstances under which
they were made, not misleading. Parent has timely filed with the SEC
all reports required to be filed under Sections 13, 14 and 15(d) of
the Exchange Act since January 1, 1997. Each of the consolidated
balance sheets of Parent included in or incorporated by reference into
the Horseshoe Reports (including the related notes and schedules)
fairly present in all material respects the consolidated statements of
income, retained earnings or cash flows, as the case may be, of Parent
for the periods set forth therein (subject, in the case of unaudited
statements, to normal year-end audit adjustments which would not be
material in amount or effect). The financial statements of Parent,
including the notes thereto, included in or incorporated by reference
into the Horseshoe Reports comply as to form in all material respects
with applicable accounting requirements and with the published rules
and regulations of the SEC with respect thereto, and have been
prepared in accordance with GAAP consistently applied (except as may
be indicated in the notes
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thereto). Since December 31, 1997, there has been no material change
in Parent's accounting methods or principles, except as described in
the notes to such Parent financial statements.
3.05 No Brokers. None of the Buyers or any of their Affiliates has entered
into any contract, arrangement or understanding with any person or
firm which may result in the obligation of the Buyers or the Sellers
to pay any finder's fee, brokerage or agent's commissions or other
like payments in connection with the negotiations leading to this
Agreement or the consummation of the transactions contemplated hereby.
3.06 No Adverse Facts for Gaming Approvals. To the knowledge of the Buyers,
there are no facts relating to the Buyers, their respective
shareholders, officers, directors or their employees required to
obtain Level I occupational gaming licenses ("Level One Employees")
that would prevent the Buyers, their shareholders, officers, directors
or Level One Employees from obtaining from the Illinois Gaming Board
and the Indiana Gaming Commission gaming licenses or the approvals
necessary for the Buyers to consummate the Illinois Merger and the
Indiana Merger.
3.07 Financing. The Buyers have provided to the Sellers a copy of a
commitment letter received by the Buyers which is attached hereto as
Exhibit B. The Buyers acknowledge that the obligations of the Buyers
to consummate the transactions contemplated by this Agreement are not
contingent on the Buyers obtaining financing of any kind.
IV. PRECLOSING COVENANTS OF THE SELLERS
Empress covenants and agrees that between the date of this Agreement and
the earlier of the Closing or the termination of this Agreement in accordance
with the terms hereof, Empress shall comply with and Empress shall cause each
Subsidiary to comply with, the following provisions:
4.01 Exclusivity. Neither Empress nor any Subsidiary nor any of their
respective officers, directors, stockholders, representatives, or
other agents shall, directly or indirectly: (a) solicit, initiate or
encourage submission of any inquiry, proposal or offer from any
potential investor or acquirer relating to any transaction involving
any debt or equity securities of Empress or any Subsidiary (currently
outstanding or to be issued) or any sale or transfer of any of the
assets of Empress or any Subsidiary other than in the ordinary course
of business; (b) enter into, participate in or continue any
discussions or negotiations (except with the Buyers) regarding, or
furnish any information to or cooperate with any Person (other than
the Buyers) with respect to, any transaction involving any debt or
equity securities of Empress or any Subsidiary (currently outstanding
or to be issued) or any sale or transfer of any assets of Empress or
any Subsidiary, other than in the ordinary course of business; or (c)
enter into any agreement (except with the Buyers) relating in any
manner to any transaction involving any debt or equity securities of
Empress or any Subsidiary (currently
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outstanding or to be issued) or any sale or transfer of any assets of
Empress or any Subsidiary, other than in the ordinary course of
business. If Empress or any Subsidiary receives, or any officer,
director, stockholder, representative or agent receives and notifies
Empress or such Subsidiary of, directly or indirectly, an offer or
proposal to enter into any transaction involving any debt or equity
securities of Empress or any Subsidiary (currently outstanding or to
be issued) or any sale or transfer of any assets of Empress or any
Subsidiary, other than in the ordinary course of business, Empress
shall notify Buyers by the close of business on the following business
day. Empress or each Subsidiary, as the case may be, shall, and shall
cause its officers, directors, stockholders, agents and
representatives to immediately cease and cause to be terminated any
existing activities, discussions or negotiations with any Person
conducted heretofore with respect to any of the matters referred to in
this Section 4.01. Notwithstanding any other provision in this Section
4.01, Empress shall be able to (1) effect the exchange offer in
connection with its 8 1/8% Senior Subordinated Notes; (2) make draws
on its existing credit facility with ▇▇▇▇▇ Fargo; (3) use its Current
Assets for any purpose whatsoever (other than a purpose which,
directly or indirectly, materially interferes with or is materially
detrimental to the operation of the business of the Subsidiaries) or
incur any Debt through any subsidiary other than the Subsidiaries, as
long as the Subsidiaries shall not be liable for the repayment of such
Debt in any manner whatsoever and the incurrence of such Debt shall
not directly or indirectly materially interfere with or be materially
detrimental to the businesses of the Subsidiaries; (4) allow transfers
of shares of capital stock of Empress among existing stockholders or
their family members; and (5) sell, transfer or otherwise dispose of
any asset of Empress or any of the Subsidiaries, other than stock in
the Subsidiaries and other than assets of the Subsidiaries not sold in
the ordinary course of business, and so long as any such transaction,
directly or indirectly, does not materially interfere with or is not
materially detrimental to the businesses of the Subsidiaries. If any
incurrence or proposed incurrence of Debt permitted by clause (3) of
the immediately preceding sentence or any transfer or proposed
transfer of shares permitted by clause (4) of such sentence causes a
delay in obtaining the necessary regulatory approvals and permits in
connection with the transactions contemplated by this Agreement, the
dates set forth in Section 10.01(h) each shall be extended by a period
of time equal to the length of such delay.
4.02 Supplements and Updates to Representations and Warranties. Empress
shall deliver to the Buyers on a monthly basis written notice of
supplemental information updating the information set forth in the
representations and warranties set forth in Article II of this
Agreement so that such representations and warranties as supplemented
by such information will be true and correct as of the Closing Date as
if then made; provided that no supplemental information added to or
deleted from the representations and warranties of the Sellers and the
updated disclosure schedules after the date hereof shall impair the
Buyers' rights to assert or recover damages for a breach of the
Sellers' representations and warranties made on the date hereof, and
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any damages accruing to the Buyers shall be paid as provided in
Article XII. Prior to the Effective Time, the Sellers shall advise
the Buyers of any facts which would constitute a breach of a
representation or warranty as of the date made or a default in a
covenant contained herein.
4.03 Maintenance of Status. Each of Empress and each Subsidiary will be
maintained at all times as an entity validly existing and in good
standing under the laws of the state of its organization, and in good
standing as a foreign entity in all jurisdictions in which it is
qualified to do business on the date of this Agreement.
4.04 Operation of Business. Each of Empress and each Subsidiary shall
operate its business only in the ordinary course in a manner
consistent with past practices, and shall use commercially reasonable
efforts to (a) keep available the services of its present officers and
employees, (b) continue and preserve good relationships with
suppliers, customers, lenders and others having business dealings with
it, and (c) maintain in full force and effect all Permits. Neither
Empress nor any Subsidiary shall, without the prior written consent of
the Buyers, which consent may not be unreasonably withheld or delayed,
(i) grant, confer or award any option, warrant, conversion right or
other right not existing on the date hereof to acquire any shares of
its capital stock, other than any of the foregoing that (1) are not
materially detrimental to the operation of the businesses of the
Subsidiaries and (2) will not cause a delay in the Buyers receipt of
gaming regulatory approvals and permits; (ii) increase any
compensation or enter into or amend any employment agreement with any
of its present or future officers, directors or employees, except for
normal increases in compensation or bonuses paid consistent with past
practices and extensions of contracts on substantially similar terms
for up to six (6) months (with normal increases consistent with past
practices) in each case in the ordinary course of business; (iii)
grant any severance or termination package to any employee or
consultant, except to the extent consistent with past practices and as
otherwise permitted by this Agreement; (iv) adopt any new Plan or
amend any existing Plan in any material respect outside the ordinary
course of business, except as contemplated by the terms of this
Agreement; (v) enter into any agreement or transaction, or agree to
enter into any agreement or transaction, outside the ordinary course
of business, including without limitation any transaction involving a
merger, consolidation, joint venture, complete liquidation or
dissolution, reorganization, recapitalization, or restructuring or a
purchase, sale, lease or other disposition of a material portion of
its assets or capital stock, other than (1) the disposition of the
Aircraft; or (2) Empress' use of its Current Assets for any purpose
whatsoever (other than a purpose which, directly or indirectly,
materially interferes with or is materially detrimental to the
operation of the business of the Subsidiaries) or the incurrence or
increase of any Debt by Empress through any subsidiary (other than the
Subsidiaries), as long as the Subsidiaries shall not be liable for the
repayment of such Debt in any manner whatsoever and the incurrence of
such Debt does not directly or indirectly materially interfere with
and is not materially detrimental to the operation of the businesses
of the Subsidiaries; and (3) Empress'
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sale, transfer or other disposition of any asset of Empress, other
than stock in the Subsidiaries or assets of the Subsidiaries not in
the ordinary course of business; (vi) incur any Debt or guarantee any
Debt or issue or sell any debt or equity securities or warrants or
rights to acquire any debt securities of others other than (1)
pursuant to the current bank line of credit of Empress or any
Subsidiary in the ordinary course of business and in a manner
consistent with past practices or (2) Debt incurred by Empress through
any subsidiary other than the Subsidiaries, as long as the
Subsidiaries shall not be liable for the repayment of such Debt in any
manner whatsoever and the incurrence of such Debt shall not directly
or indirectly materially interfere with or be materially detrimental
to the operation of the businesses of the Subsidiaries; (vii) make any
loans, advances or capital contributions to, or investments in, any
Person other than the Subsidiaries, provided that Empress shall be
able to loan, advance, contribute or invest Current Assets in any
Person, so long as such loan, advance, capital contribution or
investment does not directly or indirectly materially interfere with
or be materially detrimental to the operation of the businesses of the
Subsidiaries; (viii) alter in any material respect the manner of
keeping its books, accounts or records, or change in any material
respect the accounting practices therein reflected; (ix) grant or make
any mortgage or pledge of the assets or stock of the Subsidiaries or
subject the Subsidiaries or any of their material properties or assets
to any Lien of any kind, except (A) Liens for Taxes not currently due
or (B) Liens which arise in the ordinary course of business in
connection with permitted capital expenditures and which encumber only
the property for which the capital expenditure is made; (x) fail to
comply or continue to comply with all applicable Laws; (xi) amend or
modify in any manner its Certificate of Incorporation, Bylaws or other
organizational documents; (xii) make any discretionary payments in
partial or full satisfaction of any of the hotel and commercial
portions of the Hammond Commitments; (xiii) change in any manner the
process by which any reserves are determined except as required or
necessary to comply with GAAP; (xiv) enter into any collective
bargaining agreement; or (xv) enter into any contract, agreement,
commitment or other arrangement extending beyond one year or involving
consideration in excess of $100,000 in the aggregate, unless such
contract, agreement, commitment or other arrangement may be terminated
by the Buyers upon a change of control of the Subsidiaries, and except
as permitted by Section 4.12. If the incurrence or increase of any
Debt permitted by clause (v)(2) or (vi)(2) of the immediately
preceding sentence causes a delay in obtaining the necessary
regulatory approvals and permits in connection with the transactions
contemplated by this Agreement, the dates set forth in Section
10.01(h) each shall be extended by a period of time equal to the
length of such delay. Not less than once per month until the Closing,
the management of Empress shall meet with the management of the Buyers
to review the operations of Empress and each Subsidiary. Empress shall
also consult with the Buyers and their respective representatives
regularly regarding the ongoing management and operation of the
business of Empress and the Subsidiaries.
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4.05 Maintenance of Assets and Properties. Each of Empress and each
Subsidiary shall maintain all of its properties and assets in their
present order and condition (including routine or necessary
maintenance), subject to normal wear and tear and normal
obsolescence and loss by casualty and the requirements of its
business, and will maintain insurance upon all of its properties,
assets and operations of the kind and in the amounts existing as of
the date of this Agreement. Except for assets sold or disposed of in
the ordinary course of business or as a result of a casualty, except
as otherwise permitted herein, neither Empress nor any Subsidiary
shall sell, transfer or otherwise dispose of any asset (other than
Current Assets) without the prior written consent of the Buyers.
4.06 Dividends and Other Payments. Except for cash dividends, the effect of
which do not reduce the operating cash of the Subsidiaries below that
amount which is consistent with past and good business practices, or
as described in the following sentence, neither Empress nor any
Subsidiary shall declare or pay any dividends or make any other
distributions on its outstanding stock to any stockholders or purchase
or redeem any of its stock, or otherwise acquire any of its stock.
Notwithstanding the foregoing sentence, prior to the Closing, Empress
Joliet may distribute or cause to be distributed as a dividend to
Empress the ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇-▇ aircraft owned by Empress Joliet,
provided that all liabilities, obligations, contracts or commitments
of any kind relating to such aircraft shall also be distributed to and
assumed by Empress.
4.07 Access; Cooperation. Empress shall grant to the Buyers and their
accountants, attorneys and other authorized representatives, upon
reasonable notice and during normal business hours, access to its
offices and to any of the Real Property or Leased Real Property in
order to inspect, investigate and audit its records and business
operations and to consult with its officers, key employees, attorneys,
accountants, representatives and agents so long as such actions do not
materially interfere with the business of Empress or any Subsidiary.
Empress shall cooperate with the Buyers and their officers, directors,
employees, attorneys, accountants and other agents and do such other
acts and things in good faith as may be necessary to timely effectuate
the purposes of this Agreement.
4.08 Performance of Obligations Under Agreements. Each of Empress and each
Subsidiary shall timely perform in all respects all of the obligations
and covenants set forth in the Contracts and all other binding
commitments and agreements to which it is a party, except to the
extent such Contracts, commitments and agreements are terminated or
amended in the ordinary course of business or are not performed in the
good faith reasonable judgment of Empress and which nonperformance
does not have a Material Adverse Effect on the Subsidiaries and will
not adversely affect the Buyers' ability to obtain the necessary
gaming permits or approvals.
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4.09 Additional Notices. Each of Empress and each Subsidiary shall give
all notices to governmental authorities and other material third
parties required to be given by it under any Contract, Permit or other
law, regulation, agreement, or other instrument in connection with the
transactions contemplated by this Agreement, provided that Empress and
each Subsidiary shall consult with the Buyers in this process.
4.10 Fire or Casualty. In the event that prior to the Closing any material
asset or property of Empress or any Subsidiary should be damaged or
destroyed as a result of fire, casualty or other occurrence, no
settlement shall be made with any insurance company and no decision
with regard to restoration or rebuilding of any properties shall be
made, except in accordance with commercially reasonable business
practices.
4.11 Governmental Approvals and Consents. Promptly after execution of this
Agreement, Empress and any Subsidiary shall file all applications and
reports which are required to be filed by them with any governmental
agency or authority in connection with the transactions contemplated
by this Agreement; provided that concurrently with Buyers' HSR filing
in accordance with Section 5.05(c), Empress shall file all reports,
applications, notices and other documents required to be filed by
Empress under the HSR Act. Empress and each Subsidiary shall also
promptly provide all information that any governmental agency may
require in connection with any such application, report, notice or
other document. The Sellers shall use all commercially reasonable
efforts to obtain all consents and approvals of any kind from any
Person in connection with the transactions contemplated hereby,
including, without limitation, all consents and approvals required
from the City of Hammond, Indiana or any political subdivision thereof
("▇▇▇▇▇▇▇"). No later than ten days after the date of this Agreement,
the Sellers shall make a written request to Hammond in accordance with
the Project Agreement between Empress ▇▇▇▇▇▇▇ and the City of ▇▇▇▇▇▇▇
dated June 21, 1996 (the "Hammond Project Agreement") for a waiver by
the City of the requirement that Empress ▇▇▇▇▇▇▇ provide 120-day prior
written notice with respect to assignment of the Hammond Project
Agreement and the related leases.
4.12 Capital Expenditures. Empress shall and shall cause each of the
Subsidiaries to complete all capital expenditure projects contemplated
in the Budget on Schedule 2.06(b) and to the extent such projects have
not been completed as of the Closing Date, the costs to complete such
projects shall be deemed a Current Liability for purposes of the
Closing Statement. Notwithstanding any other provision of this
Agreement, Empress or the Subsidiaries may spend more on capital
expenditures than the amounts provided for in Schedule 2.06(b),
provided that with respect to all such expenditures over $25,000
Empress or the Subsidiaries, as applicable, shall consult with the
Buyers regarding the details related to such expenditures, prior to
making such expenditures. If Empress or any of the Subsidiaries
enters into any contract, agreement, commitment or other arrangement
requiring capital expenditures of amounts in excess of those amounts
specifically identified on Schedule 2.06(b) and which extends beyond
the Closing Date, the aggregate of all such amounts to be
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spent after the Closing Date shall be deemed a Current Liability for
purposes of determining the Merger Consideration.
4.13 Cooperation. Each of Empress and each Subsidiary shall generally
cooperate with the Buyers and their officers, directors, employees,
attorneys, accountants and other agents and, generally, do such other
acts and things in good faith as may be reasonable to timely
effectuate the purposes of this Agreement and the consummation of the
transactions contemplated hereby in accordance with the provisions of
this Agreement. Any meetings with any governmental agencies or
officials by Empress or any Subsidiary or any of their representatives
primarily with respect to the transactions contemplated hereby shall
be in the presence of a representative of the Buyers; all written
communications between Empress or any Subsidiary or any of their
representatives and any governmental agencies or officials primarily
with respect to the transactions contemplated hereby shall be promptly
delivered to the Buyers; and a written summary of any telephonic
communications between Empress or any Subsidiary or any of their
representatives and any governmental agencies or officials primarily
with respect to the transactions contemplated hereby shall be promptly
delivered to the Buyers.
4.14 Severance Plan. Empress and each Subsidiary shall adopt a written plan
document in compliance with the requirements of ERISA and the Code, if
applicable, with respect to any severance plan, program, policy or
arrangement maintained and administered by Empress or any Subsidiary
("Severance Plan"). Empress and each Subsidiary shall take such
actions as may be necessary to bring the Severance Plan into
compliance with any other applicable law, rule or regulation,
including any required reporting and disclosure requirements of ERISA.
4.15 Annual Reports for Welfare Benefit Plans. Empress and each Subsidiary
shall file and/or amend a separate Annual Report on the Form 5500
Series for each plan year required to be filed with the Internal
Revenue Service pursuant to ERISA Section 103 and/or Code Section
6039D for each Welfare Benefit Plan maintained or administered by
Empress or any Subsidiary and shall prepare and distribute each
related summary annual report as required by ERISA Section 104.
Empress shall file the corrected Annual Reports on the Form 5500
Series for any period preceding the date of this Agreement, to bring
such filings into compliance with ERISA and the Code in accordance
with any applicable law, rule or regulations.
4.16 Annual Report for Flexible Spending Accounts Plan. Empress shall, in
accordance with the applicable requirements of any applicable Law,
file, correct, or cause to be filed or corrected, for each plan year
the Annual Report on the Form 5500 Series with respect to the flexible
spending accounts plan (including any plan or plans under Code Section
125) which Empress or any Subsidiary is (or within the past five years
had been) maintaining or administering.
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4.17 401(k) Profit Sharing Plan Amendment. Empress shall adopt an amendment
to the Empress River Casino Corporation 401(k) Profit Sharing Plan
(the "Profit Sharing Plan") which expressly provides that employees of
Empress or any Subsidiary who are the members of the collective
bargaining units represented by the Hotel Employees and Restaurant
Employees International Union, AFL-CIO, Local 1 and the International
Union of Operating Engineers, Local Union No. 150 shall be eligible to
participate in the Profit Sharing Plan and shall take such action as
may be necessary to obtain a closing agreement from the Internal
Revenue Service authorizing such retroactive amendment and determining
that such amendment and prior omissions do not adversely affect the
tax-exempt qualified status of such plan under applicable provision of
the Code.
4.18 Plan Documents. Empress and each Subsidiary shall take such action as
may be necessary to bring each Employee Benefit Plan into compliance
with the applicable requirements of ERISA, the Code and any other
applicable Law relating to the adoption of a written plan document,
including updated summary plan descriptions for each Employee Benefit
Plan.
4.19 Loan in Default Status. Empress shall take such action as may be
necessary to bring each Employee Benefit Plan into compliance with the
filing and reporting requirements under the Code and any other
applicable law, rule or regulation with respect to any employee loan
under the 401(k) Profit Sharing Plan that is in default or has ever
been in default under such plan.
4.20 Stay-On Bonus Program. Empress and each Subsidiary with the prior
approval of the Buyers, which approval shall not be unreasonably
withheld or delayed, shall adopt a written stay-on bonus plan for
managers, directors and other key employees of the Subsidiaries
("Stay-On Bonus Plan"). Empress and each Subsidiary shall take such
actions as may be necessary to bring the Stay-On Bonus Plan into
compliance with all applicable Law.
4.21 Title Insurance. On or before Closing, Empress shall obtain from
Chicago Title Insurance Company (the "Title Company"), title insurance
commitments for ALTA owner's title insurance polices (Policy form
1992) covering each of the Joliet Real Property and ▇▇▇▇▇▇▇ Real
Property, (the "Title Commitments"), with title endorsements
including, without limitation, Zoning 3.1, Access, Contiguity, Single
Tax Parcel, Subdivision, Owner's Comprehensive, Survey and with an
extended coverage endorsement over the all general title exceptions,
("Required Title Policy Endorsements") and showing all matters
affecting title to each parcel of the Empress Real Property, but
subject only to the title exceptions enumerated in Schedule 2.12
hereof (the "Permitted Exceptions") and binding the Title Company to
issue at Closing an Owner's Policy of Title Insurance, inclusive of
the Required Title Policy Endorsements, in the aggregate amount of
$26,000,000, to be allocated among the properties constituting the
Empress Real Property by the Buyers in their sole
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discretion. Such Title Policies shall include any easements
benefitting the Empress Real Property as insured parcels.
4.22 Surveys. On or before Closing and to the extent Empress has not
already provided a survey or surveys described herein, Empress shall
obtain and deliver to Buyer prior to Closing a satisfactory staked
survey for the Joliet Real Property and ▇▇▇▇▇▇▇ Real Property,
prepared and certified to Empress, Buyer and the Title Company in
accordance with Minimum Standard Detail Requirements for ALTA/ACSM
Land Title Surveys meeting the 1992 requirements of a Class A Survey
(each a "Survey" and collectively, the "Surveys"). The Surveys shall
be certified as of a current date by a registered engineer or surveyor
reasonably satisfactory to Buyer, and show the exact location of all
improvements, parking lots, building setback lines of record,
easements, rights-of-way and encroachments affecting the Empress Real
Property, and other matters apparent thereon, the relation of the
Empress Real Property to all adjacent public thoroughfares and all
utilities as they service the Empress Real Property from their
respective main lines. The surveyor must certify that the real estate
depicted on the Survey does not lie in an "area of special flood
hazard" for purposes of the National Flood Insurance Program. In any
event, the Survey shall be sufficient to cause the Title Company to
delete the standard survey exceptions from the Title Policy and enable
the Title Company to issue a 3.1 Zoning Endorsement for the Empress
Real Property described in the Title Policy.
4.23 Intercompany Balances. All intercompany accounts receivable and
payable and any other intercompany balances among the Sellers shall be
eliminated prior to the Closing.
V. PRECLOSING COVENANTS OF THE BUYERS
5.01 Governmental Approvals. Promptly after execution of this Agreement,
the Buyers shall file all applications and reports which are required
to be filed by the Buyers with any governmental agency or authority in
connection with the transactions contemplated by this Agreement
including the financing contemplated in Section 5.04; provided that
the Buyers shall file all reports and notices required to be filed by
the Buyers under the HSR Act in accordance with Section 5.05 of this
Agreement. The Buyers shall also promptly provide all information that
any governmental agency may reasonably request in connection with any
such application or report.
5.02 Cooperation. The Buyers shall generally cooperate with the Sellers and
their officers, directors, employees, attorneys, accountants and other
agents and, generally, do such other acts and things in good faith as
may be necessary to timely effectuate the purposes of this Agreement
and the consummation of the transactions contemplated herein in
accordance with the provisions of this Agreement.
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5.03 Confidentiality. The parties hereby acknowledge that Empress and
Parent previously executed a confidentiality agreement
("Confidentiality Agreement") dated as of August 14, 1998 and each of
the Buyers hereby adopts such Confidentiality Agreement and agrees to
be bound by the terms and conditions thereof, which shall remain in
full force and effect. Any information supplied to the Buyers after
the date of execution of this Agreement shall remain subject to the
provisions of the Confidentiality Agreement.
5.04 Financing. The Buyers shall promptly take all actions reasonably
necessary to obtain the funds required to finance the transaction
contemplated hereby, shall periodically report to Empress on the
status thereof and shall provide Empress with all written
communications between the financing sources and representatives of
the Buyers. If ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ ("DLJ") notifies a
representative of the Buyers that it terminated its commitment as a
result of a failure of the conditions set forth therein or otherwise
or that it is no longer willing to finance the transaction
contemplated herein on terms and conditions that the Buyers believe
will satisfy the requirements of the appropriate governmental agencies
applicable to the Buyers or that will comply with the provisions of
Empress' 8 1/8% Senior Subordinated Notes, the Buyers shall so notify
Empress and unless the Buyers provide Empress with a commitment from
another financing source reasonably comparable to DLJ's commitment, or
if such commitment was not satisfactory for the requirements of any
regulatory agency, reasonably satisfactory for such requirements,
within thirty (30) days after DLJ's notice to the Buyers, this
Agreement shall terminate and Empress shall be entitled to retain the
Deposit.
5.05 Timing Commitments.
(a) Promptly after the execution of this Agreement, Buyers,
accompanied by a representative of Empress, shall personally meet with the
Administrator of the Illinois Gaming Board and the Executive Director of
the Indiana Gaming Commission to notify them of the existence of this
Agreement and shall promptly thereafter file all necessary applications for
Buyers and all "key persons" in order to obtain the necessary approvals
from such agencies in order to consummate the transactions contemplated
hereby. All filings in Illinois shall be made in sufficient time to place
the request for approval of the transactions contemplated hereby on the
agenda of the October meeting of the Illinois Gaming Board. In light of the
consents that are required to consummate the transaction, prior to
requesting the Indiana Gaming Commission to take action to approve the
transactions contemplated hereby, the Buyers shall proceed promptly with
diligence to obtain all necessary consents as promptly as possible and to
make all filings in Indiana to place the request for approval on the agenda
in Indiana as soon as possible. To the extent either the Illinois Gaming
Board or the Indiana Gaming Commission, acting through its agents, requires
different or additional financing commitments for financing of the
transaction contemplated hereby than is currently reflected in the
commitment letters from DLJ, the Buyers shall obtain such commitments
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reasonably promptly, but no later than the date required by the requesting
agency or its agents, and if they fail to do so and such failure continues
for thirty (30) days after the date required by such requesting agency,
this Agreement shall terminate and Empress shall be entitled to retain the
Deposit.
(b) Promptly after the execution of this Agreement, the Buyers shall
request a personal meeting with the Mayor of ▇▇▇▇▇▇▇ accompanied by a
representative of Empress, to inform him of the existence of this Agreement
and to seek the necessary approvals and consents required under the
existing agreements between the Sellers and Hammond, Indiana or its related
agencies or other entities and thereafter shall promptly file with the
appropriate entities all necessary governmental documentation to obtain
such approvals and consents.
(c) Within thirty (30) business days after the later of the meeting
with the Administrator of the Illinois Gaming Board or the meeting with the
Executive Director of the Indiana Gaming Commission described in (a) above,
the Buyers shall file concurrently with the filing by Empress all reports
and notices required to be filed by the Buyers under the HSR Act and shall
also promptly provide all information that any other governmental agency
may require in connection with the transactions contemplated hereby.
(d) Any meetings with any Illinois or Indiana governmental agencies or
officials by any representative of the Buyers shall be in the presence of a
representative of Empress and all written communications between the Buyers
and any Illinois or Indiana governmental agency or officials shall be
promptly delivered to Empress and a written summary of any telephonic
communications shall be promptly delivered to Empress.
(e) The Buyers agree to take all actions necessary or desirable and in
good faith to obtain regulatory approvals of the Merger and applicable
licensure.
5.06 Necessary Action. The Buyers shall take all actions reasonably
necessary or desirable, including, without limitation, providing
assistance, information and materials to the extent available without
unreasonable effort or expense in order for Empress' Registration
Statement on Form S-4 relating to the exchange of unregistered 8-1/8%
Notes for registered 8-1/8% Notes to be declared effective by the
Securities and Exchange Commission prior to October 1, 1998. Buyers
shall take all actions necessary or desirable to become, following the
Closing, the primary obligor under Empress' $150 million 8-1/8% Notes
pursuant to Article XIII of the Indenture dated as of June 18, 1998.
VI. OTHER MATTERS
6.01 Employee Obligations. As a result of the consummation of the
transactions contemplated by this Agreement, Empress will become
obligated to make certain payments to certain key employees (the "Key
Employees") as set forth on Schedule 6.01 (the "Employee
Obligations"). Payment of the Employee Obligations
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shall be made as soon as practicable after the Closing by wire
transfer to the accounts of the Key Employees based on wire
instructions to be delivered to the Sellers prior to the Closing. All
severance payments of any kind to be paid to the Key Employees or any
other employee of any Subsidiary as a result of the termination of
such Key Employee or other employee after the Closing shall be and
remain the sole obligation of the Subsidiaries. Nothing in this
Agreement shall prevent, prohibit or limit either Surviving
Corporation's right after the Closing to cause the termination of any
at-will employee of any Subsidiary. Upon the Closing and the payment
by Empress of any applicable Change of Control bonuses to such Key
Employees, Empress shall cause the Long Term Incentive Bonus Agreement
dated June 12, 1997 between Empress Joliet and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ to be
terminated without liability to any of the Buyers or Subsidiaries.
6.02 Employee Stay Bonuses. On the six month anniversary of the Closing
Date, Buyers shall pay to each of the persons listed on Schedule 6.02
who remain employed by Buyers as of such date the amounts set forth
opposite such employees' name on Schedule 6.02 from the Bonus Escrow
in accordance with the terms of the Bonus Escrow Agreement; provided,
however, that if Buyers terminate the employment of any of the persons
listed on Schedule 6.02 prior to the six month anniversary of the
Closing Date for any reason other than cause, the applicable amount
set forth on Schedule 6.02 shall be paid to such terminated employee
from the Bonus Escrow on such termination date. The remaining balance
of the Bonus Escrow, if any, shall be equally distributed to Empress
and Buyers in accordance with the terms of the Bonus Escrow Agreement
on the date that is six months after the Closing Date.
6.03 Hammond Payments. Schedule 2.28 sets forth all of the remaining
commitments of Sellers to the City of Hammond, Indiana or other
governmental or quasi-governmental agencies thereof (collectively, the
"Hammond Commitments"). All amounts paid by Empress or any Subsidiary
from the date of this Agreement to the Closing in fulfillment of any
portion of the ▇▇▇▇▇▇▇ Commitments (collectively, the "▇▇▇▇▇▇▇
Payments") and, to the extent necessary, approved by the Buyers in
accordance with Section 4.04 (xii) shall be included in the Merger
Consideration as provided in Section 1.05(d).
6.04 Actions Relating to Employee Benefit Plans. The Buyers shall continue
all employee benefit plans of the Subsidiaries, or, alternatively,
provide a similar level of benefits for the employees of the
Subsidiaries, for a period of one year following the Closing.
6.05 Stockholder Matters. After the Closing, Empress hereby agrees not to
declare or otherwise pay any dividend or distribution to its
Stockholders with respect to any portion of the Merger Consideration
unless and until holders of at least 100% of the outstanding stock of
Empress have entered into the following agreements: (a) a Stockholder
Indemnification Agreement, in a form to be reasonably satisfactory to
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the Buyers and the Stockholders in their reasonable discretion,
pursuant to which the Stockholders will agree, severally based on the
pro rata interest of the Stockholders in the Merger Consideration, to
indemnify and hold harmless the Buyers and their Affiliates from and
against any liability or obligation arising in connection with any
lawsuit by any Stockholder against the Buyers, their Affiliates or
another Stockholder related to this Agreement or the transactions
contemplated hereby, except if such lawsuit is made in accordance with
the provisions of this Agreement to enforce Empress' rights under this
Agreement; and (b) the Tax Indemnification Agreement.
VII. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE SELLERS
The obligations of Empress under this Agreement are subject to the
fulfillment, prior to or at the Closing, of the following conditions:
7.01 Deliveries by Empress Illinois and Empress Indiana. Empress Illinois
and Empress Indiana shall have delivered to Empress the documents and
items specified in Section 9.03 of the Agreement.
7.02 Representations and Warranties of Each of the Buyers. Each of the
representations and warranties of each of the Buyers contained in this
Agreement shall be true and correct in all material respects as of the
Closing Date with the same force and effect as though made at and as
of the Closing Date.
7.03 Compliance. Each of the Buyers shall have performed, complied with and
fulfilled all of the covenants, agreements, obligations and conditions
required by this Agreement to be performed, complied with or fulfilled
by them at or prior to the Closing, except to the extent that any
failure to do so will not have a Material Adverse Effect on the
ability of any of the Buyers to consummate the transactions
contemplated herein.
7.04 Compliance Certificate. The Buyers shall have delivered to Empress a
certificate, dated as of the Closing Date, as to the fulfillment of
the conditions specified in Sections 7.02 and 7.03 hereof, in a form
reasonably acceptable to Empress.
7.05 Legal Proceedings. None of the Sellers or the Buyers shall be
subject to any injunction, preliminary restraining order or other
similar decree of a court of competent jurisdiction preventing or
restraining the consummation of the transactions contemplated by this
Agreement.
7.06 Consents and Approvals. All governmental and third party consents and
approvals necessary to permit the consummation of the transactions
contemplated by this Agreement shall have been received, shall be in
full force and effect and shall not have been revoked as of the
Closing Date, including satisfaction of all filing, waiting and other
requirements under the HSR Act and receipt of all necessary approvals
to
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consummate the transaction from the Illinois Gaming Board and the
Indiana Gaming Commission.
7.07 Opinion of the Buyers' Counsel. The Sellers shall have received a
written opinion of the Buyers' Counsel, dated the Closing Date, in a
form to be mutually agreed upon prior to the Closing.
VIII. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE BUYERS
The obligations of the Buyers under this Agreement are subject to the
fulfillment, prior to or at the Closing, of the following conditions:
8.01 Deliveries by the Sellers. The Sellers shall have made delivery to the
Buyers of the documents and items specified in Section 9.02 of this
Agreement.
8.02 Representations and Warranties of the Sellers. Each of the
representations and warranties made by the Sellers contained in this
Agreement, as modified by information disclosed pursuant to Section
4.02, shall be true and correct in all material respects as of the
Closing Date as if made on such date.
8.03 Compliance. Each of the Sellers shall have performed, complied with
and fulfilled all of the covenants, agreements, obligations and
conditions required by this Agreement to be performed, complied with
or fulfilled by them at or prior to Closing, except to the extent that
any failure to do so will not have a Material Adverse Effect on the
Subsidiaries or on the Sellers' or the Buyers' ability to consummate
the transactions contemplated hereby.
8.04 Compliance Certificate. The Sellers shall have delivered to the Buyers
a certificate, dated as of the Closing Date, as to the fulfillment of
the conditions specified in Sections 8.02 and 8.03 hereof, in a form
reasonably acceptable to the Buyers.
8.05 Legal Proceedings. None of the Sellers or the Buyers shall be subject
to any injunction, preliminary restraining order or other similar
decree of a court of competent jurisdiction preventing or restraining
the consummation of the transactions contemplated by this Agreement.
8.06 Consents and Approvals. All governmental and third party consents,
agreements and approvals necessary to permit the consummation of the
transactions contemplated by this Agreement and the operation of the
businesses of the Subsidiaries following the Closing in the ordinary
course shall have been received, shall be in full force and effect and
shall not have been revoked as of the Closing Date, including
satisfaction of all filing, waiting and other requirements of the HSR
Act, receipt of all necessary approvals to consummate the transactions
from the Illinois Gaming Board and the
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Indiana Gaming Commission and any necessary agreement from the City of
Hammond, Indiana.
8.07 Opinion. The Buyers shall have received the opinion of the Sellers'
Counsel in a form to be mutually agreed upon prior to the Closing.
8.08 No Material Adverse Change. No material adverse change shall have
occurred in the business, prospects, properties, assets, operations or
financial condition of Empress and the Subsidiaries taken as a whole
since the date of the Interim Financial Statements; provided that any
legislative changes (other than changes directly relating to the
Buyers' ability to obtain the necessary Illinois and Indiana gaming
licenses) shall not constitute a failure of this Section 8.08.
IX. CLOSING
9.01 Closing Date. The closing of the transactions contemplated by this
Agreement shall take place on the forty-fifth (45/th/) day (or the
next succeeding business day if such day is not a business day) after
the date upon which the Buyers receive the last of approval from the
Indiana Gaming Commission and approval from the Illinois Gaming Board,
in each case, for the transactions contemplated by this Agreement (the
"Gaming Approval Date"); provided, however, that at any time prior
thereto the Buyers may give the Sellers written notice that the Buyers
are prepared to close, and the Closing shall occur within three (3)
business days after the receipt of such notice by the Sellers.
9.02 Deliveries by the Sellers. At the Closing, the Sellers shall deliver
to the Buyers the following duly executed documents and other items in
a form reasonably satisfactory to the Buyers:
(a) A compliance certificate executed by a duly authorized officer of
each of Empress and each Subsidiary, as specified in Section 8.04;
(b) A written opinion of Sellers' Counsel in accordance with Section
8.07;
(c) The Escrow Agreements;
(d) Certificates of Good Standing of Empress and each Subsidiary,
issued by the Secretary of State of the jurisdiction of incorporation,
dated within five (5) days of the Closing Date;
(e) Certified copies of the Articles of Incorporation, with all
amendments of Empress and each Subsidiary, issued by the Secretary of State
of the jurisdiction of incorporation, dated within five (5) days of the
Closing Date;
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(f) Copies of the Bylaws of Empress and each Subsidiary as in effect
on the Closing Date, certified by the Secretary of each company;
(g) The certificates representing the Shares, duly endorsed in blank
or accompanied by stock powers duly executed in blank with appropriate
transfer stamps, if any, and any other documents that are necessary to
transfer title to the Shares from Empress to the Buyers, free and clear of
all Adverse Claims, Liens and rights of any other Person;
(h) A receipt executed by Empress acknowledging receipt of the
Estimated Merger Consideration, less the Deposit;
(i) Updated title insurance policies with respect to all of the
Empress Real Property, with all standard exceptions thereto deleted which
policies shall be at the expense of the Sellers;
(j) The as-built surveys required by Section 2.12, which surveys shall
be at the expense of the Sellers; and
(k) Evidence of all consents and approvals required to be obtained by
the Sellers pursuant to Section 4.11.
9.03 Deliveries of the Buyers. At the Closing, the Buyers shall deliver to
Empress the following duly executed documents and other items in form
reasonably satisfactory to the Sellers:
(a) A compliance certificate executed by a duly authorized officer of
each Buyer as specified in Section 7.04;
(b) A written opinion of Buyers' Counsel in accordance with Section
7.07;
(c) The Escrow Agreements;
(d) The Estimated Merger Consideration, as specified in Section 1.05;
(e) Certificates of Good Standing of each Buyer, issued by the
Secretary of State of the jurisdiction of incorporation, dated within five
(5) days of the Closing Date;
(f) Certified copies of the Articles of Incorporation, with all
amendments, of each Buyer, issued by the Secretary of State of the
jurisdiction of incorporation, dated within five (5) days of the Closing
Date;
(g) Copies of the Bylaws of each Buyer as in effect on the Closing
Date, certified by the secretary of each Company; and
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(h) Evidence of all consents and approvals required to be obtained by
the Buyers, including but not limited to gaming approvals.
X. TERMINATION
10.01 Events of Termination. This Agreement may, by notice given in the
manner hereinafter provided, be terminated and abandoned at any time
prior to the completion of the Closing; provided, however, that any
right to terminate, other than pursuant to subparagraphs (g) or (h),
must be exercised within thirty (30) days after the terminating party
receives written notice of the event giving rise to such right of
termination:
(a) By Empress if there has been a material default or material breach
by any of the Buyers with respect to the representations and warranties of
the Buyers in this Agreement or the due and timely performance of any of
the covenants and agreements of the Buyers contained in this Agreement
which default or breach has a material adverse effect on the Sellers or a
material adverse effect on the Sellers' or Buyers' ability to consummate
the transactions contemplated hereby, and such default, or breach shall not
have been cured within ten (10) days after receipt by the Buyers of written
notice specifying particularly such default or breach; or
(b) By the Buyers, (i) if there has been a material default or
material breach by any of the Sellers with respect to the Sellers'
representations and warranties in this Agreement or the due and timely
performance of any of the covenants and agreements of the Sellers contained
in this Agreement, and such default or breach shall not have been cured
within ten (10) days after receipt by the Sellers of written notice
specifying particularly such default or breach, or (ii) if any information
is provided to supplement, update or amend a disclosure schedule pursuant
to Section 4.02, to the extent that failure to provide such supplement,
update, or amendment otherwise would have caused any representation or
warranty of the Sellers to be false in any material respect as of the date
of this Agreement or the Closing Date; or
(c) By the Buyers, if there has been a default or breach by any of the
Sellers with respect to Sellers' representations and warranties in this
Agreement or the due and timely performance of any of the covenants and
agreements of the Sellers contained in this Agreement where such default,
breach or failure to perform had a material adverse effect on the business,
prospects, properties, assets, operations or financial condition of the
Subsidiaries, taken as a whole, or a material adverse effect on the
Sellers' or Buyers' ability to consummate the transactions contemplated
hereby.
(d) By the Buyers if, in the judgment of the Buyers, a material
adverse change has occurred since the date of this Agreement in the
financial or capital markets or in financial, economic or industry
conditions generally; or
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(e) By the Buyers if a material adverse change has occurred since the
date of this Agreement in the business, prospects, properties, assets,
operations, or financial condition of the Subsidiaries, taken as a whole,
including as a result of any subsequent occurrence reported pursuant to
Section 4.02, provided that any legislative or regulatory changes (other
than changes directly relating to the Buyers' ability to obtain the
necessary Illinois and Indiana gaming licenses) shall not constitute a
basis for the Buyers to terminate this Agreement pursuant to this Section
10.01(e); or
(f) By the Buyers if combined EBITDA for Empress ▇▇▇▇▇▇▇ and Empress
Joliet fails to equal or exceed (i) $96,500,000 for calendar year 1998, and
(ii) $96,500,000 in the aggregate for any consecutive prior twelve calendar
months ending after January 1, 1999 and prior to the Closing; or
(g) By mutual agreement of the Buyers and the Sellers; or
(h) By either the Buyers or the Sellers, if (i) the Closing has not
occurred on or prior to May 31, 1999; provided, however, (1) that the right
to terminate this Agreement under this Section 10.01(h)(i) will not be
available to any party whose failure to timely fulfill any obligation under
this Agreement has been the cause of, or resulted in, the failure of the
Closing to occur on or before such date, and (2) the May 31, 1999 date
shall be extended to June 30, 1999 if prior to or on May 31, 1999 the
Buyers obtain approval for the transactions contemplated by this Agreement
from both the Illinois Gaming Board and the Indiana Gaming Commission; or
(ii) a court of competent jurisdiction or a governmental, regulatory or
administrative agency or commission shall have issued an order, decree or
ruling or taken any other action restraining, enjoining or otherwise
prohibiting the transactions contemplated by this Agreement.
This Agreement may not be terminated after the Closing.
10.02 Remedies for Breach; Effect of Termination.
(a) Except for a breach of Section 4.01, in the event of a wilful
breach of, or default under, this Agreement by any of the Sellers which
causes a material adverse effect on the business, properties, assets,
operations, financial condition, or prospects of the Subsidiaries, taken as
a whole, or on the ability of the Buyers or the Sellers to consummate the
transactions contemplated by this Agreement, the Buyers' remedies shall be
limited to (i) termination of the Agreement pursuant to Section 10.01(c)
and recovering damages against the Sellers, provided that the monetary
damages for all such breaches and defaults and any other breach shall be
limited to $10,000,000, in the aggregate; or (ii) closing the transactions
contemplated by this Agreement and seeking indemnification for any
Indemnity Loss suffered by the Buyers pursuant to and subject to the
limitations contained in Section 12.01; or (iii) seeking specific
performance of the transactions contemplated by this Agreement and seeking
indemnification for any Indemnity Loss suffered by the Buyers pursuant to
and subject to the limitations contained in Section 12.01.
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(b) Except for a breach of Section 4.01, in the event of a wilful
breach of this Agreement by any of the Sellers which does not cause a
material adverse effect on the business, properties, assets, operations,
financial condition, or prospects of the Subsidiaries, taken as a whole, or
on the ability of the Buyers or the Sellers to consummate the transactions
contemplated by this Agreement, the Buyers' remedies shall be limited to
(i) terminating this Agreement pursuant to Section 10.01(b) and recovering
damages against the Sellers, provided that the monetary damages for all
such breaches and any other breach shall be limited to $10,000,000 in the
aggregate; or (ii) closing the transactions contemplated by this Agreement
and seeking indemnification for any Indemnity Loss suffered by the Buyers
pursuant to and subject to the limitations contained in Section 12.01; or
(iii) seeking specific performance of the transactions contemplated by this
Agreement and seeking indemnification for any Indemnity Loss suffered by
the Buyers pursuant to the and subject to the limitations contained in
Section 12.01.
(c) If a breach of Section 4.01 occurs and the Sellers fail to close
the Merger on the terms and conditions set forth herein, the Buyers'
remedies shall be limited to (i) seeking specific performance of the
transactions contemplated by this Agreement and seeking indemnification for
any Indemnity Loss suffered by the Buyers pursuant to and subject to the
limitations contained in Section 12.01, or (ii) as an alternative to the
remedy provided in clause (i) above or if the Buyers are unsuccessful in
seeking specific performance, as liquidated damages, recovering damages in
an amount equal to the difference between the aggregate value received by
Empress, any of its Subsidiaries and the Stockholders and their respective
Affiliates in connection with an acquisition transaction completed as a
direct or indirect result of such breach and the value to be received by
Empress in connection with the transactions contemplated by this Agreement;
(d) In the event of a non-wilful breach of this Agreement by any of
the Sellers, the Buyers' remedies shall be limited to (i) termination of
the Agreement in accordance with the provisions of Section 10.01 provided
that Buyers shall have no other legal remedy in such event or (ii) closing
the transactions contemplated by this Agreement and seeking indemnification
for any Indemnity Losses suffered by the Buyers pursuant to and subject to
the limitations contained in Section 12.01.
(e) Whether or not any breach or default by the Buyers with respect
to the provisions of this Agreement is wilful or otherwise, the sole and
exclusive remedy of the Sellers against the Buyers shall be to recover the
Deposit pursuant to the provisions of Section 1.09 as liquidated damages
and in no event shall the Buyers or any of their respective directors,
officers, members, managers, representatives, agents or Affiliates be
liable to any of the Sellers, or any of their respective directors,
officers, stockholders, representatives, agents or Affiliates, in any
respect for any amount except for the Deposit, which shall be disbursed in
accordance with Section 1.09.
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(f) Notwithstanding any other provision of this Agreement, in the
event Sellers are obligated to close under this Agreement but fail to close
in breach of such obligation, or if Sellers breach any other obligation
pursuant to this Agreement, and as set forth in Sections 10.02 (a) through
(d) above, the Buyers (in addition to any other remedies specified herein)
shall be entitled to specific performance of the transactions contemplated
by this Agreement. Sellers acknowledge that Buyers may not have an adequate
remedy at law in the event of such breach and will not assert that monetary
damages are an adequate remedy. Sellers acknowledge that Buyers have in
certain instances limited their right to damages by reason of the
foregoing.
(g) In the event this Agreement is terminated pursuant to Section
10.01, all obligations of the parties shall terminate without any liability
of a party to any other party except as otherwise set forth in this Section
10.02; provided, however, that the obligations of the parties set forth in
Sections 5.03, 15.04 and 15.06 of this Agreement shall indefinitely survive
the termination of this Agreement.
XI. TAX MATTERS
11.01 S Corporation Status. Except as may be required by the transactions
contemplated by this Agreement, Empress shall maintain the status of
Empress as a subchapter S corporation for Tax purposes through the
Closing and shall maintain the status of each Subsidiary as a
qualified subchapter S subsidiary for Tax purposes through the
Closing.
11.02 Tax Indemnification Agreement Additional agreements regarding Taxes
are set forth in the tax indemnification agreement to be entered into
by and among Horseshoe, Empress and the Subsidiaries (the "Tax
Indemnification Agreement").
XII. INDEMNIFICATION
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12.01 Indemnification. Each of the Buyers and their respective successors,
stockholders, officers, directors, Affiliates, representatives and
agents (collectively, the "Horseshoe Indemnitees") shall be
indemnified from the General Escrow and held harmless out of the
General Escrow against, in accordance with the terms of the
Indemnification Escrow Agreement and Supplemental Escrow Agreements,
any and all damages (including punitive damages), losses,
obligations, demands, liabilities, claims, administrative or other
fines, encumbrances, penalties, costs, and expenses, including
reasonable attorneys' fees (and costs and reasonable attorneys' fees
in respect of any suit to enforce this provision) (each an "Indemnity
Loss"), arising from or related to (a) any breach of any
representation or warranty by the Sellers contained in Article II of
this Agreement (but for a breach of Sections 2.11, 2.12 and 2.13 as
it relates to the physical condition of any of the properties
described therein only to the extent that the Indemnity Loss exceeds
$250,000, and then only for such excess) to the extent such breach
has not been cured as of the Closing Date; provided, however, that
the Buyers shall not be entitled to any recovery pursuant to this
Section 12.01 to the extent that any Buyer had actual knowledge as of
the Closing Date, after due inquiry of its attorneys, of such facts
which resulted in such breach, did not disclose such breach to the
Sellers within a reasonable period of time after the discovery
thereof but prior to Closing and the liability is not a liability
which would have fallen within the definition of Current Liabilities
if originally disclosed; (b) any breach or failure by any of the
Sellers to perform or fulfill any covenant, agreement or obligation
of the Sellers contained in this Agreement or any related agreement,
instrument, document, exhibit, schedule or certificate furnished or
required to be furnished by the Sellers pursuant to this Agreement or
in connection with the transactions contemplated hereby; provided,
however, that the Sellers shall not be obligated to pay for any
liabilities resulting from such breach (except liabilities set forth
on the Closing Statement in accordance with Section 1.06 hereof) if
such liabilities arose out of obligations incurred in the ordinary
course of business to the extent (i) the benefit thereof accrues to
the Buyers or their Affiliates, (ii) such liabilities do not arise
from a transaction with an Affiliates of the Sellers, (iii) such
liabilities were incurred in an arms-length transaction, and (iv)
such liabilities do not exceed $50,000 in the aggregate; (c) any of
the matters described in Articles XIII or XIV for which the amounts
deposited in the Supplemental Escrows were insufficient to satisfy
the First Supplemental Losses or the Second Supplemental Losses, as
applicable; (d) any supplement, update or amendment to the
representations and warranties of the Sellers provided pursuant to
Section 4.02 to the extent that failure to provide the information
disclosed in such supplement, update or amendment otherwise would
have caused any representation or warranty of the Sellers to be false
in any respect as of the date of this Agreement or the Closing Date,
provided that the information in such supplement, update or amendment
did not give rise to a Current Liability existing at the Closing Date
and related to any period prior to the Closing; (e) any fees or other
costs of investment bankers or third parties representing any of the
Sellers in connection with the transactions contemplated hereby; (f)
any fact or circumstance existing at, or any event occurring prior
to, the Closing and involving any
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employment-related claims, demands or charges of any kind, including
but not limited to those for or related to breach of contract,
tortious interference with contract, implied contract, wrongful
discharge, sexual or other harassment, discrimination, equal
employment opportunity laws, unfair labor practice charges,
violations of 42 USC (S) 2000e et seq. or 42 USC (S) 1981, the
National Labor Relations Act, or any collective bargaining agreement
or employment agreement; and (g) any and all actions, suits,
investigations, proceedings, demands, assessments, penalties,
settlements, compromises, audits and judgments arising out of any of
the foregoing.
12.02 Indemnification by the Buyers. The Buyers shall jointly and severally
indemnify and hold harmless Empress and its successors, stockholders,
officers, directors, Affiliates, representatives, and agents
(collectively, the "Empress Indemnitees") from and against any and
all Indemnity Losses resulting from or relating to (a) any breach of
any representation or warranty, or any breach or failure of any of
the Buyers to perform or fulfill any covenant, agreement or
obligation of any of the Buyers contained in this Agreement or any
related agreement, instrument, document, exhibit, schedule or
certificate furnished or required to be furnished by any of the
Buyers pursuant to this Agreement or in connection with the
transactions contemplated by this Agreement and (b) any and all
suits, actions, investigations, proceedings, demands, assessments,
audits, and judgments arising out of any of the foregoing.
12.03 Notice. If an indemnified party (the "Claimant") believes that it has
suffered or incurred any Indemnity Loss, it shall so notify the
Indemnifying Party promptly in writing describing such loss or
expense, the amount thereof, if known, and the method of computation
of such loss or expense, all with reasonable particularity (the
"Indemnification Notice"). If any action at law, suit in equity, or
administrative action is instituted by or against a third party with
respect to which the Claimant intends to claim any liability or
expense as an Indemnity Loss under this Article XII, it shall
promptly notify the Indemnifying Party in writing of such action or
suit describing such loss or expenses, the amount thereof, if known,
and the method of computation of such loss or expense, all with
reasonable particularity (the "Litigation Notice") in lieu of an
Indemnification Notice. After delivering the Indemnification Notice
or the Litigation Notice, as the case may be, the Claimant shall
provide to the Indemnifying Party such information as is reasonably
requested by the Indemnifying Party, including all documents filed
with any court or governmental agency, to assist the Indemnifying
Party in determining whether the Claimant shall be indemnified
against such Indemnity Loss.
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12.04 Arbitration
(a) Subject to the limitations on indemnification contained in this
Article XII, if the Indemnifying Party does not agree that the Claimant is
entitled to full reimbursement for the amount specified in the
Indemnification Notice or the Litigation Notice, the Indemnifying Party
shall notify the Claimant (the "Disagreement Notice") within 20 days of its
receipt of the Indemnification Notice or Litigation Notice, as the case may
be. Failure to deliver a Disagreement Notice in a timely manner shall be
considered an express acknowledgment by the Indemnifying Party of the
Claimant's right to indemnification with respect to the Indemnity Loss set
forth in the Indemnification Notice or the Litigation Notice, as the case
may be in accordance with the terms of this Article XII. At any time after
delivery of the Disagreement Notice, either the Claimant or the
Indemnifying Party may notify the other that the determination as to
whether and in what amount the Claimant is entitled to indemnification from
the Indemnifying Party shall be made by an arbitration tribunal (the
"Arbitration Notice"). The arbitration tribunal shall consist of three
arbitrators, one to be selected by the Claimant, one to be selected by the
Indemnifying Party, and the third arbitrator to be selected by the other
two arbitrators. The arbitrators shall each be reasonably experienced in
conducting arbitration proceedings and all arbitrators shall be selected
within 15 days of the delivery of the Arbitration Notice. If either party
fails to appoint an arbitrator within the specified time period, the
arbitration hearing shall be conducted by the arbitrator appointed by the
party hereto which selected an arbitrator within the required time period.
An arbitration hearing shall then be held within 30 days of the selection
of the third arbitrator, or the failure of one party to select an
arbitrator, in Chicago, Illinois and the arbitration tribunal shall render
its determination as to whether and in what amount the Claimant is entitled
to indemnification within 30 days of such hearing. All procedures with
respect to the arbitration proceeding provided for in this Section 12.04(a)
shall be in accordance with the rules of the American Arbitration
Association, except as otherwise specifically set forth in this Agreement.
(b) All costs and expenses incurred in conducting the arbitration
proceeding provided for in Section 12.04(a), including attorneys' fees,
shall be borne exclusively by the losing party as determined by the
arbitration tribunal; provided, however, that the arbitration tribunal may
determine that more than one party is a losing party in which event the
arbitrational tribunal shall allocate the costs and expenses of the
arbitration among such losing parties as they determine to be just and
fair.
(c) The parties hereby irrevocably consent to be bound by the
decision of the arbitration tribunal with respect to indemnification
determinations.
12.05 Defense of Claims. The Indemnifying Party shall have 30 business days
after receipt of the Litigation Notice to notify the Claimant that it
acknowledges its obligation to indemnify and hold harmless the
Claimant with respect to the Indemnity Loss set forth in the
Litigation Notice and that it elects to conduct and control any legal
or administrative action or suit with respect to an indemnifiable
claim (the "Election
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Notice"). If the Indemnifying Party fails to give a Disagreement
Notice or does not give the foregoing Election Notice, the Claimant
shall have the right to defend, contest, settle, or compromise such
action or suit in the exercise of its exclusive discretion. If the
Indemnifying Party gives the foregoing Election Notice, the
Indemnifying Party shall have the right to undertake, conduct, and
control, through counsel of its own choosing and at its sole expense,
the conduct and settlement of such action or suit, and the Claimant
shall cooperate with the Indemnifying Party in connection therewith;
provided, however, that (a) the Indemnifying Party shall not thereby
consent to the imposition of any injunction against the Claimant, or
pay or settle any action or suit that affects the Claimant, any
Seller or any Buyer, without the written consent of the Claimant
which consent shall not be unreasonably withheld; (b) the
Indemnifying Party shall permit the Claimant to participate in such
conduct or settlement through counsel chosen by the Claimant, but the
fees and expenses of such counsel shall be borne by the Claimant
except as provided in clause (c) below; (c) upon a final
determination of such action or suit, the Claimant, to the extent
required under and in accordance with this Article XII, shall be paid
for the full amount of any Indemnity Loss incurred by the Claimant
except for fees and expenses of counsel that the Claimant incurred
after the assumption of the conduct and control of such action or
suit by the Indemnifying Party in good faith; and (d) the Claimant
shall have the right to pay or settle any such action or suit,
provided that in such event the Claimant shall waive any right to
indemnity therefor by the Indemnifying Party and no amount in respect
thereof shall be claimed as an Indemnity Loss under this Article XII.
12.06 Limitations on Indemnification.
(a) the Horseshoe Indemnitees shall not be entitled to recover under
Section 12.01 unless a claim has been asserted by written notice,
specifying the details of the alleged misrepresentation or breach of
warranty, or failure to fulfill any covenant, agreement or obligation
delivered to Empress on or prior to the second anniversary of the Closing
Date; and
(b) the Horseshoe Indemnitees shall not be entitled to recover under
Section 12.01: (i) to the extent the aggregate claims for Indemnity Losses
of the Horseshoe Indemnitees exceed the amount of the General Escrow,
except as otherwise provided in Section 12.08; or (ii) to the extent the
subject matter of the claim is covered by insurance (including title
insurance) and such insurance is collected by the Horseshoe Indemnitees or
(iii) to the extent that the matter in question, taken together with all
similar matters, does not exceed the amount of any reserves with respect to
such matters which are reflected in the Interim Financial Statements; and
(iv) to the extent the matter in question was taken into account in the
computation of the Merger Consideration pursuant to Article I.
(c) On December 31, 2001, the Buyers shall prepare a schedule
aggregating (i) the actual tax benefits recognized by Horseshoe or
Horseshoe's stockholders by reason of any
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expense, payment, or other item giving rise to an indemnification payment;
(ii) the Buyers shall pay to Empress the aggregate amount of such tax
benefit. The determination of such after-tax amount shall be computed and
reviewed by Horseshoe's independent public accountants, and Horseshoe shall
provide the detail of such computation to Empress. If Empress disputes such
computation, the dispute shall be resolved by the Arbitrating Accountant.
In determining the actual tax benefits recognized by Horseshoe or
Horseshoe's stockholders due to an indemnification payment, the calculation
of income of Horseshoe and Horseshoe's stockholders shall exclude
intercompany payments and expenses to the extent that such payments or
expenses were not the result of arms length transactions at reasonably fair
value. Any tax benefit recognized by Horseshoe or Horseshoe's stockholders
after December 31, 2001 and prior to December 31, 2004 related to an
expense, payment or other items giving rise to an indemnification payment
hereunder for which amounts remained in the General Escrow beyond the date
which is two years after the Closing Date, shall be paid to Empress.
12.07 Payment of Losses. The Claimant shall be paid in cash the amount to
which the Claimant may become entitled by reason of the provisions of
this Article XII, within 15 days after such amount is determined
either by mutual agreement of the parties or pursuant to the
arbitration proceeding described in Section 12.04 of this Agreement
or on the date on which both such amount and Claimant's obligation to
pay such amount have been determined by a final judgment of a court
or administrative body having jurisdiction over such proceeding;
provided that (except as otherwise provided herein) any claim being
made pursuant to Section 12.01 shall be paid solely from the escrowed
funds in the General Escrow on the terms and conditions of the
General Escrow Agreement and, except as provided in Section 12.08 or
pursuant to any other agreement entered into in connection with this
Agreement and to which such Empress Indemnitee is a party, none of
the Empress Indemnitees shall be personally liable to the Horseshoe
Indemnitee for any Indemnity Loss.
12.08 No Limitation for Fraud. Notwithstanding any provision in this
Agreement to the contrary, there shall be no limitation on the
aggregate amount for which a Claimant may be indemnified pursuant to
this Article XII in the event of fraud by the Indemnifying Party in
connection with the matter for which indemnification is sought.
12.09 No Environmental Contribution. The Buyers shall not be able to seek
contribution from any of the Sellers in connection with any violation
of any Environmental Requirements and hereby waive all statutory
rights against the Sellers under the Environmental Requirements,
provided that this shall not limit in any manner the right of the
Buyers or the Horseshoe Indemnitees to seek and obtain
indemnification pursuant to the other provisions of this Agreement.
12.10 Indemnification Exclusive Remedy. Except as otherwise provided in
Section 10.02, or 12.08 indemnification pursuant to the provisions of
this Article XII shall be the
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exclusive remedy of the parties for any misrepresentation or breach
of any warranty or covenant contained herein or in any closing
document executed and delivered pursuant to the provisions hereof.
Except as otherwise provided in Section 10.02 or 12.08, the only
legal action which may be asserted by any party with respect to any
matter which is the subject of this Article XII shall be a contract
action to enforce, or to recover damages for the breach of, this
Article XII. Without limiting the generality of the preceding
sentence, except as otherwise provided in Section 10.02 or 12.08, no
legal action sounding in tort, statute or strict liability may be
maintained by any party.
XIII. FIRST SUPPLEMENTAL INDEMNIFICATION
13.01 First Supplemental Indemnification. In accordance with Section 13.02
below, and in addition to the indemnification provided for in Article
XII and Article XIV hereof, the Horseshoe Indemnitees shall be
indemnified and held harmless from and against any Indemnity Loss
that may be incurred or suffered by or asserted against the Horseshoe
Indemnitees, arising out of or related to, directly or indirectly the
matter set forth on Schedule 13.01 (the "Pending Tax Matter") (the
"First Supplemental Losses").
13.02 Satisfaction of First Supplemental Losses. Except as otherwise
expressly provided in this Article XIII, any and all First
Supplemental Losses for which the Horseshoe Indemnitees may be
indemnified under this Article XIII shall be paid or satisfied first
by distribution to the Horseshoe Indemnitees of cash held in the
First Supplemental Escrow in accordance with the First Supplemental
Escrow Agreement, and then by any funds remaining in the General
Escrow. The Horseshoe Indemnitees shall have no recourse against the
Empress Indemnities, and none of the Empress Indemnities shall have
any liability to the Claimant with respect to the indemnification
provided for in Section 13.01 above in excess of such cash as on
deposit in the First Supplemental Escrow or the General Escrow (as
described in the next sentence). Indemnification pursuant to this
Article XIII shall be the exclusive remedy of the Horseshoe
Indemnitees for the incurrence of a First Supplemental Loss;
provided, however, that to the extent the First Supplemental Losses
exceed the amount held in the First Supplemental Escrow, a Horseshoe
Indemnitee shall be entitled to recover such excess amount of the
First Supplemental Losses from any funds remaining in the General
Escrow.
13.03 Survival of Indemnification Obligations. Notwithstanding the
provisions of Section 13.01, the indemnification obligations set
forth in this Article XIII with respect to First Supplemental Losses
shall survive until the statute of limitations with respect to the
Pending Tax Matter has expired or such issue has been finally and
completely resolved with the State of Indiana, and upon such date,
the amounts remaining in the First Supplemental Escrow after payment
of the First Supplemental Losses shall be
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distributed in accordance with the terms of the First Supplemental
Escrow Agreement. To the extent the Pending Tax Matter has been
finally and completely resolved prior to the Closing Date, this
Article XIII shall be of no further force and effect and no funds
shall be deposited into the First Supplemental Escrow at Closing and
the funds that were originally to be deposited into such escrow shall
be paid to Empress at Closing.
XIV. SECOND SUPPLEMENTAL INDEMNIFICATION
14.01 Second Supplemental Indemnification. In accordance with Section 14.02
below, and in addition to the indemnification provided for in Article
XII and Article XIII hereof, the Horseshoe Indemnitees shall be
indemnified and held harmless from and against any Indemnity Loss
that may be incurred or suffered by or asserted against the Horseshoe
Indemnitees, arising out of or related to, directly or indirectly,
the matter set forth in Schedule 14.01 (the "Pending Matter") (the
"Second Supplemental Losses").
14.02 Satisfaction of Second Supplemental losses. Except as otherwise
expressly provided in this Article XIV, any and all Second
Supplemental Losses for which the Horseshoe Indemnitees may be
indemnified under this Article XIV shall be paid or satisfied first
by distribution to the Horseshoe Indemnitees of cash held in the
Second Supplemental Escrow in accordance with the Second Supplemental
Escrow Agreement and then by any funds remaining in the General
Escrow. Except in the case of fraud by the Sellers in connection with
the Pending Matter, the Horseshoe Indemnitees shall have no recourse
against the Empress Indemnitees, and none of the Empress Indemnitees
shall have liability to the Horseshoe Indemnitees with respect to the
indemnification provided for in Section 14.01 above, in excess of the
cash amounts on deposit in the Second Supplemental Escrow or the
General Escrow. Indemnification pursuant to this Article XIV shall be
the exclusive remedy of the Horseshoe Indemnitees for the incurrence
of a Second Supplemental Loss except in the case of fraud by the
Sellers in connection with the Pending Matter; provided, however,
that to the extent the Second Supplemental Losses exceed the amount
held in the Second Supplemental Escrow, a Horseshoe Indemnitee shall
be entitled to recover such excess from any funds remaining in the
General Escrow.
14.03 Survival of Indemnification Obligations. Notwithstanding the
provisions of Section 14.01, the indemnification obligations set
forth in this Article XIV with respect to Second Supplemental Losses
shall survive until the last to occur of the following (a) the
Pending Matter has been settled; or (b) an order of a court of
competent jurisdiction has been entered with respect to the Pending
Matter and either no appeal can be taken from such order or the time
for such an appeal has run upon which all remaining funds held in the
Second Supplemental Escrow shall be disbursed in accordance with the
terms of the Second Supplemental Escrow Agreement. To the extent that
the Pending Matter has been resolved as provided in Section 14.03(a)
or
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(b) prior to the Closing Date, this Article XIV shall be of no
further force and effect and no funds shall be deposited into the
Second Supplemental Escrow at Closing and the funds that were
originally to be deposited into such escrow shall be paid to Empress
at Closing.
XV. MISCELLANEOUS
15.01 Survival; Release of General Escrow. All representations, warranties,
covenants and agreements of the Sellers contained in this Agreement
shall survive the execution, delivery, and performance hereof,
notwithstanding any investigation conducted at any time with respect
thereto for a period of two years after the Closing; provided,
however that all claims relating to Indemnification Notices and
Litigation Notices delivered by a Horseshoe Indemnitee prior to the
second year anniversary of the Closing shall remain outstanding until
resolved in accordance with the terms of this Agreement; provided
further, that the representations and warranties contained in Section
2.09 shall survive for a period ending on the sixtieth (60/th/) day
after the applicable statute of limitations (after giving effect to
any extensions thereof) has expired and until the resolution of all
Indemnification Notices and Litigation Notices with respect thereto
received by the Sellers prior to the expiration of the applicable
statute of limitations. The representations of each of the Buyers
shall survive the execution, delivery and performance hereof,
notwithstanding any investigation conducted at any time with respect
thereto for a period of two years after the Closing; provided,
however that all claims relating to Indemnification Notices and
Litigation Notices delivered by an Empress Indemnitee prior to the
second year anniversary of the Closing shall remain outstanding until
resolved in accordance with the terms of this Agreement. The funds
remaining in the General Escrow shall be released in accordance with
the terms of the General Escrow Agreement upon the second year
anniversary of the Closing unless (i) any matters to which
Indemnification Notices and Litigation Notices received by Empress
prior to the expiration of the two-year period have not been resolved
by such expiration date, in which case the Buyers shall determine at
their reasonable discretion the amount of the funds then remaining in
the General Escrow that shall be retained in the General Escrow until
such matters are finally resolved but all other funds shall be
disbursed, or (ii) the Pending Matter has not yet been resolved, in
which case the Buyers and Empress will use their commercially
reasonable efforts to mutually determine an adequate amount to
continue to hold in the General Escrow in light of the facts and
circumstances as they exist at such time with respect to the Pending
Matter. To the extent that Empress disagrees with the amount
determined by the Buyers under clause (i) of the immediately
preceding sentence or Buyers and Empress cannot agree on an adequate
amount to be held pursuant to clause (ii) of such sentence, the
dispute shall be submitted to the Arbitrating Accountant, who shall
resolve the dispute in accordance with the dispute resolution
mechanism set forth in Section 1.06.
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15.02 Counterparts. This Agreement may be executed simultaneously in two or
more counterparts, each of which shall be deemed an original, but all
of which together shall constitute one and the same instrument.
15.03 Commercially Reasonable Efforts. Subject to the terms and conditions
of this Agreement, each party shall use all commercially reasonable
efforts to take, or cause to be taken, all actions and to do, or
cause to be done, all things necessary or desirable under applicable
laws and regulations to consummate the transactions contemplated by
this Agreement. The parties each agree to execute and deliver such
other documents, certificates, agreements and other writings and to
take such other actions as may be necessary or desirable in order to
consummate or implement expeditiously the transactions contemplated
by this Agreement, and from time to time, upon the request of any
other party to this Agreement and without further consideration, to
execute, acknowledge and deliver in proper form any further
instruments, and take such other action as such other party may
reasonably require, in order to effectively carry out the intent of
this Agreement so long as the performance of such obligations does
not increase either party's liabilities.
15.04 Expenses. Whether or not the Closing occurs, each of the parties
hereto shall pay their own expenses incurred in connection with the
transactions provided for in this Agreement, including, but not
limited to, the fees and expenses of their respective counsel,
investment bankers, accountants and other advisors; provided, that
the Buyers shall be liable for all (a) expenses relating to
regulatory investigations performed by the Illinois Gaming Board or
the Indiana Gaming Commission in connection with the transactions
contemplated hereby and the Buyers shall reimburse Empress for any
expenses billed by the Illinois Gaming Board or the Indiana Gaming
Commission to Empress or any of the Subsidiaries in connection with
any such matter, and (b) except for those expenses identified in (a),
the expenses of the Sellers incurred in connection with the
transactions contemplated hereby shall be paid by Empress.
15.05 Index and Captions. The index and the captions of the Articles and
Sections of this Agreement are solely for convenient reference and
shall not be deemed to affect the meaning or interpretation of this
Agreement.
15.06 Public Disclosure. Prior to the Closing, none of the Sellers or
the Buyers nor any of their respective representatives shall make any
public release of information regarding the matters contemplated
herein, except (a) the Buyers and the Sellers may each continue
communications with employees, customers, suppliers, lenders and
shareholders and other particular groups as may be legally required
or necessary or appropriate and not inconsistent with the best
interests of the other party or the prompt consummation of this
Agreement, (b) as required by law and (c) upon the mutual written
agreement of the parties hereto. The Sellers agree that pending the
Closing each of them will treat all nonpublic information concerning
the Buyers and
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their shareholders and affiliates furnished or to be furnished by or
on behalf of any of them (collectively, the "Information") in
accordance with any reasonable confidentiality obligations to be
imposed by the Buyers or in accordance with the terms of any existing
confidentiality agreement between any of the Buyers or their
shareholders and Affiliates and any of the Sellers. The information
will be used solely for the purposes of evaluating the Acquisition
and will be kept confidential by each of the Sellers and their
shareholders, officers, employees, representatives, agents and
advisors provided that (i) any of such Information may be disclosed
to any of the Sellers' officers, directors, employees,
representatives, agents and advisors who need to know such
Information for purposes of evaluating the transactions contemplated
by this Agreement; (ii) any disclosure of the Information may be made
to which the Buyer consents in writing, and (iii) any Information may
be disclosed if so required by law. If the transactions contemplated
by this Agreement are not consummated, the Sellers will return to the
Buyers all material containing or reflecting the Information and will
not retain any copies, extracts or other reproductions thereof.
15.07 Notices. All notices, requests, demands and other communications
hereunder shall be in writing and shall be deemed to have been duly
given and received (a) upon delivery, if personally delivered; (b) on
the fifth day after being deposited with the U.S. Postal Service, if
sent by certified or registered mail, return receipt requested; (c)
on the next day after being deposited with a reliable overnight
delivery service; or (d) upon receipt of an answer back, if
transmitted by facsimile, postage prepaid in all cases other than
facsimile, addressed to the other party at the following addresses,
or facsimile numbers in the case of a facsimile:
If to any of the Sellers: Empress Entertainment, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Copies to: ▇'▇▇▇▇▇▇ & ▇▇▇▇▇▇
▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
If to any of the Buyers: c/o Horseshoe Gaming (Midwest), Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
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Copies to: Ice ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇, Esq.
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
▇▇▇▇▇▇▇ Berlin Shereff ▇▇▇▇▇▇▇▇, LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Esq.
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Any party may change its address for purposes of this Section 14.07 by giving
the other parties written notice of the new address in the manner set forth
above.
15.08 Entire Agreement. This Agreement and the agreements expressly
contemplated herein, including the Exhibits and Schedules referred to
herein which form a part of this Agreement, contain the entire
understanding of the parties with respect to the transactions
provided for in this Agreement and supersedes all prior agreements
and understandings, written or oral, between the parties with respect
to the transactions contemplated by this Agreement.
15.09 Governing Law. This Agreement and all transactions contemplated
hereby shall be governed, construed and enforced in accordance with
the laws of the State of Delaware, notwithstanding any state's choice
of law rules to the contrary. Each of the Sellers and the Buyers
hereby agrees and covenants to be subject to the jurisdiction of the
federal and state courts of the State of Delaware in any suit, action
or proceeding arising out of this Agreement or the transactions
contemplated hereby.
15.10 Waiver of Compliance; Modifications. The party for whose benefit a
warranty, representation, covenant or condition is intended may in
writing waive any inaccuracies in the warranties and representations
contained in this Agreement or waive compliance with any of the
covenants or conditions contained herein and so waive performance of
any of the obligations of the other party hereto, and any defaults
hereunder; provided, however, that such waiver shall not affect or
impair the waiving party's rights with respect to any other warranty,
representation or covenant or any default hereunder. No supplement,
modification or amendment of this Agreement shall be binding unless
it is in writing and executed by all of the parties hereto.
15.11 Validity of Provisions. Should any part of this Agreement be declared
by any court of competent jurisdiction to be invalid, such decision
shall not affect the validity of the remaining portions of this
Agreement, which shall continue in full force and effect as if this
Agreement had been executed with the invalid portion thereof
eliminated
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therefrom, it being the intent of the parties that they would have
executed the remaining portions of this Agreement without including
any such part or portion which may be declared invalid.
15.12 No Intention to Benefit Third Parties. The provisions of this
Agreement are not intended to, and shall not, benefit any Person
other than the parties to this Agreement, and the provisions hereof
are not intended to, and shall not create any third party beneficiary
right in any Person.
15.13 Successors and Assigns. No party to this Agreement may assign any of
its rights or obligations under this Agreement without the prior
written consent of all other parties, which consent shall not be
unreasonably withheld.
15.14 Construction.
(a) As used herein, "knowledge of Empress", "knowledge of a
Subsidiary" and words of similar import shall mean the actual knowledge of
▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇., ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇▇▇▇, as
well as the knowledge any of such Persons could be reasonably presumed to
possess if such Person had performed a reasonable investigation with
respect to the matter to be confirmed.
(b) As used herein, "knowledge of the Buyers" or words of similar
import shall mean the actual knowledge of ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇ and
▇▇▇▇▇ ▇▇▇▇▇▇, as well as the knowledge any of such Persons could be
reasonably presumed to possess if such Person had performed a reasonable
investigation with respect to the matter to be confirmed.
(c) The words "hereof", "herein", "hereto", "hereunder" and
"hereinafter" 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.
(d) The parties have participated jointly in the negotiation and
drafting of this Agreement, and, in the event of an ambiguity or a question
of intent or a need for interpretation arises, this Agreement shall be
construed as if drafted jointly by the parties and no presumption or burden
of proof shall arise favoring or disfavoring any party by virtue of the
authorship of any of the provisions of this Agreement.
(e) Any reference to any federal, state, local, or foreign statute or
law shall be deemed also to refer to all rules and regulations promulgated
thereunder, unless the context requires otherwise.
(f) The word "including" means "including, without limitation."
(g) Words of any gender used in this Agreement shall be held and
construed to include any other gender; words in the singular shall be held
to include the plural; and words
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in the plural shall be held to include the singular; unless and only to the
extent the context indicates otherwise.
15.15 Time of Essence. Time is of the essence under this Agreement.
XVI. DEFINITIONS
For purposes of this Agreement, the following terms shall have the
following meanings (such meanings applicable to both the singular and plural
forms of the terms defined):
"Adjustment Escrow" has the meaning set forth in Section 1.05 hereof.
"Adjustment Escrow Agreement" has the meaning set forth in Section 1.06
hereof.
"Adverse Claim" has the meaning set forth in (S) 8-302 of the Indiana
Uniform Commercial Code.
"Affiliate" means, with respect to any Person, any other Person which,
directly or indirectly, is in control of, is controlled by or is under common
control with such Person.
"Agreement" means this Merger Agreement.
"Annual Financial Statements" has the meaning set forth in Section 2.06
hereof.
"Arbitrating Accountant" shall mean Deloitte & Touche, L.L.P.
"Arbitration Notice" has the meaning set forth in Section 12.04 hereof.
"Bonus Escrow" has the meaning set forth in Section 1.08 hereof.
"Buyers" means Parent, Horseshoe, Empress Illinois and Empress Indiana.
"Buyers' Counsel" means Ice ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇.
"Certificate" has the meaning set forth in Section 1.11 hereof.
"Certificates of Merger" has the meaning set forth in Section 1.03 hereof.
"Chicago Area" means the Chicago Metropolitan Statistical Area.
"Claimant" has the meaning set forth in Section 12.03 hereof.
"Claims" has the meaning set forth in Section 2.28 hereof.
"Closing" has the meaning set forth in Article IX hereof.
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"Closing Date" has the meaning set forth in Section 9.01 hereof.
"Closing Date Balance Sheet" has the meaning set forth in Section 1.06
hereof.
"Closing Statement" has the meaning set forth in Section 1.06 hereof.
"COBRA" has the meaning set forth in Section 2.18 hereof.
"Code" means the Internal Revenue Code of 1986, as amended, and the rules
and regulations thereunder.
"Confidentiality Agreement" has the meaning as set forth in Section 5.03
hereof.
"Contracts" has the meaning set forth in Section 2.14 hereof.
"Current Assets" means with respect to the combined financial information
of the Subsidiaries, the aggregate of the following assets to the extent that
such assets are classified as current under GAAP and are acquired by the Buyers
pursuant to the terms of this Agreement: (a) cash plus cash equivalents, except
for cash or cash equivalents held in connection with the defeasance of any Debt;
(b) marketable securities, except for any such securities held in connection
with the defeasance of any Debt; (c) accounts receivable generated in the
ordinary course of business of the Subsidiaries, less a reasonable reserve for
doubtful accounts; (d) inventories held for use in the ordinary course of
business; (e) prepaid expenses; and (f) all other assets of any kind classified
as current under GAAP; provided that Current Assets shall include any amounts
held on deposit to secure the obligations of the Sellers with respect to the
Pending Matter or the Pending Tax Matter.
"Current Liabilities" means with respect to the combined financial
information of the Subsidiaries, the aggregate of the following liabilities
(without duplication) which are assumed by the Buyers in accordance with the
terms of this Agreement: (a) all accounts payable; (b) all accrued liabilities
of any kind shown on a balance sheet prepared in accordance with GAAP, including
but not limited to contingent obligations, accrued vacation pay, accrued
employee bonuses, liabilities for outstanding gaming chips and accrued payroll
and related liabilities; (c) any amounts determined in accordance with Section
4.12 or Schedule 2.06(b); and (d) all other liabilities of any kind classified
as current under GAAP, excluding (i) the current portion of outstanding Debt and
interest payable or accrued with respect to Debt; (ii) the ▇▇▇▇▇▇▇ Commitments;
(iii) the outstanding 10 3/4% Senior Notes due 2002 of Empress; and (iv) the
payments referenced in Sections 6.01 and 6.02 to the extent paid or payable by
Empress.
"Debt" means with respect to the combined financial information of the
Subsidiaries, the aggregate of (a) any obligation for borrowed money (and any
notes payable and drafts accepted representing extensions of credit whether or
not representing obligations for borrowed money) or any obligation under any
operating or capital lease, and (b) interest payable or accrued with respect to
any obligation identified in (a) which, in each case, is assumed by the Buyers
in accordance with
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the terms of this Agreement. "Debt" shall include the 8 1/8% Senior Subordinated
Notes due 2006 of Empress but shall not include: (a) prepayment penalties or
premiums on Debt and costs and expenses incurred in connection therewith,
including with respect to the 10 3/4% Senior Notes due 2002; or (b) any
commitments or obligations outstanding pursuant to the ▇▇▇▇▇▇▇ Commitments.
"Deposit" has the meaning set forth in Section 1.09 hereof.
"Deposit Escrow Agreement" has the meaning set forth in Section 1.09
hereof.
"Disagreement Notice" has the meaning set forth in Section 12.04 hereof.
"Dispute" has the meaning set forth in Section 1.06 hereof.
"Dispute Notice" has the meaning set forth in Section 1.06 hereof.
"Dispute Period" has the meaning set forth in Section 1.06 hereof.
"EBITDA" means earnings before interest income, interest expense on
indebtedness, taxes, depreciation and amortization, such amounts to be
calculated in accordance with GAAP, adjusted to exclude all costs and expenses
incurred in connection with the transactions contemplated hereby.
"Effective Time" has the meaning set forth in Section 1.03 hereof.
"Election Notice" has the meaning set forth in Section 12.05 hereof.
"Employee Obligations" has the meaning set forth in Section 6.01 hereof.
"Employee Plans" has the meaning set forth in Section 2.18 hereof.
"Employees" has the meaning set forth in Section 2.17 hereof.
"Empress" means Empress Entertainment, Inc., a Delaware corporation.
"Empress Hammond" means Empress Casino Hammond Corporation, an Indiana
corporation.
"Empress Illinois" means Empress Acquisition Illinois, Inc., a Delaware
corporation.
"Empress Indiana" means Empress Acquisition Indiana, Inc., a Delaware
corporation.
"Empress Joliet" means Empress Acquisition Joliet, Inc., an Illinois
corporation.
"Empress Real Property" has the meaning set forth in Section 2.12 hereof.
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"Environmental Claims" means all accusations, allegations, investigations,
warnings, notice letters, notices of violations, liens, orders, claims, demands,
suits, or administrative or judicial actions for any injunctive relief, fines,
penalties, or any damage, including without limitation personal injury, property
damage (including any depreciation of property values), lost use of property,
natural resource damages, or environmental response costs arising out of
Environmental Conditions or under Environmental Requirements.
"Environmental Conditions" means the state of the environment, including
natural resources (e.g., flora and fauna), soil, surface water, ground water,
any present or potential drinking water supply, subsurface strata, or ambient
air, relating to or arising out of the use, handling, storage, treatment,
recycling, generation, transportation, spilling, leaking, pumping, pouring,
injecting, emptying, discharging, emitting, escaping, leaching, dumping,
disposal, release, or threatened release of Hazardous Materials, whether or not
discovered which could or does result in Environmental Claims. With respect to
Environmental Claims by third parties, Environmental Conditions also include the
exposure of persons to Hazardous Materials at the work place or the exposure of
persons or property to Hazardous Materials migrating or otherwise emanating
from, to, or located at, under, or on the Real Property or the Leased Real
Property.
"Environmental Requirements" means all past, present and future laws,
rules, regulations, ordinances, codes, policies, guidance documents, approvals,
plans, authorizations, licenses, permits issued by all government agencies,
departments, commissions, boards, bureaus, or instrumentalities of the United
States, all states and political subdivisions thereof, and any foreign body, and
all judicial, administrative, and regulatory decrees, judgments, and orders
relating to human health, pollution, or protection of the environment (including
ambient air, surface water, ground water, land surface, or surface strata),
including (i) laws relating to emissions, discharges, releases, or threatened
releases of Hazardous Materials, and (ii) laws relating to the identification,
generation, manufacture, processing, distribution, use, treatment, storage,
disposal, recovery, transport, or other handling of Hazardous Materials.
Environmental Requirements shall include, without limitation, the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended
("CERCLA"), the Superfund Amendments and Reauthorization Act of 1986 ("▇▇▇▇"),
the Toxic Substances Control Act, as amended, the Hazardous Materials
Transportation Act, as amended, the Resource Conservation and Recovery Act, as
amended ("RCRA"), the Clean Water Act, as amended, the Safe Drinking Water Act,
as amended, the Clean Air Act, as amended, the Atomic Energy Act of 1954, as
amended, the Occupational Safety and Health Act, as amended, and all other
analogous laws or regulations promulgated or issued by any federal, state,
foreign, or other governmental authority or body.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and the rules and regulations thereunder.
"Escrow Agent" means Chicago Title Insurance Company.
"Escrow Agreements" has the meaning set forth in Section 1.09 hereof.
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"Escrowed Funds" has the meaning set forth in Section 1.07 hereof.
"Estimated Merger Consideration" has the meaning set forth in Section 1.05
hereof.
"Existing Debt" means all Debt of the Subsidiaries on a consolidated basis
as of the Closing Date, except the Debt related to the 10 3/4% Senior Notes of
Empress.
"Financial Statements" has the meaning set forth in Section 2.06 of this
Agreement.
"First Supplemental Escrow" has the meaning set forth in Section 1.07 of
this Agreement.
"First Supplemental Escrow Agreement" has the meaning set forth in Section
1.07 of this Agreement.
"First Supplemental Losses" has the meaning set forth in Section 13.01 of
this Agreement.
"GAAP" shall mean United States generally accepted accounting principles
and practices in effect from time to time as consistently applied.
"Gaming Approval Date" has the meaning set forth in Section 9.01 hereof.
"General Escrow" has the meaning set forth in Section 1.07 hereof.
"General Escrow Agreement" has the meaning set forth in Section 1.07
hereof.
"HSR Act" means the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976,
as amended, and the rules and regulations thereunder.
"▇▇▇▇▇▇▇ Commitments" has the meaning set forth in Section 6.03 hereof.
"▇▇▇▇▇▇▇ Payments" has the meaning set forth in Section 6.03 hereof.
"Hazardous Materials" means (i) any substance that has been, is, or becomes
defined as a "hazardous substance," "hazardous waste," "hazardous material,"
pollutant, or contaminant under any Environmental Requirements, including, but
not limited to, CERCLA, ▇▇▇▇, RCRA, and any other analogous federal, state,
local, or foreign law; (ii) petroleum (including crude oil and any fraction
thereof); and (iii) any natural or synthetic gas (whether in liquid or gaseous
state).
"Horseshoe" means Horseshoe Gaming (Midwest), Inc.
"Horseshoe Indemnities" has the meaning set forth in Section 12.01 hereof.
"Illinois Gambling Act" means 230 ILCS 10/1 et. seq.
"Illinois License" has the meaning set forth in Section 2.16 hereof.
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"Illinois Merger" has the meaning set forth in Section 1.01 hereof.
"Illinois Surviving Corporation" has the meaning set forth in Section 1.01
hereof.
"Indemnification Escrows" has the meaning set forth in Section 1.05 hereof.
"Indemnification Notice" has the meaning set forth in Section 12.03 hereof.
"Indemnifying Party" has the meaning set forth in Section 12.03 hereof.
"Indemnity Loss" has the meaning set forth in Section 12.01 hereof.
"Indiana License" has the meaning set forth in Section 2.16 hereof.
"Indiana Merger" has the meaning set forth in Section 1.01 hereof.
"Indiana Riverboat Act" means I.C. 4-33-1-1 et. seq.
"Indiana Surviving Corporation" has the meaning set forth in Section 1.01
hereof.
"Intellectual Property" has the meaning set forth in Section 2.26 hereof.
"Interim Financial Statements" has the meaning set forth in Section 2.06
hereof.
"Key Employees" has the meaning set forth in Section 6.01 hereof.
"Law" or "Laws" shall mean any law, statute, ordinance, rule, regulation,
writ, injunction, restriction, order, judgment or decree of any federal, state,
local or foreign court or any federal, state, local, foreign or other
governmental department, commission, board, bureau, agency or instrumentality,
and any other executive or legislative proclamation.
"Lease Documents" has the meaning set forth in Section 2.12 hereof.
"Leased Real Property" has the meaning set forth in Section 2.12 hereof.
"Lien" means any mortgage, deed of trust, lien, pledge, charge, claim,
option, right of first refusal or call, encumbrance, easement, encroachment,
right of a third party, security interest or other interest or restriction of
any kind or character.
"Litigation Notice" has the meaning set forth in Section 12.03 hereof.
"Material Adverse Effect" means a material adverse effect on the prospects,
assets, properties, results of operations, cash flows or financial condition of
the Subsidiaries, taken as a whole.
"Merger" has the meaning set forth in Section 1.01 hereof.
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"Merger Consideration" has the meaning set forth in Section 1.05 hereof.
"Net Working Capital" means, as of the Closing Date, the combined Current
Assets of the Subsidiaries less the combined Current Liabilities of the
Subsidiaries.
"Notes" means Empress' 8-1/8% Senior Subordinated Notes due 2006 and
10-3/4% Senior Notes due 2002.
"Pending Tax Matter" has the meaning set forth in Section 13.01 hereof.
"Pending Matter" has the meaning set forth in Section 14.01 hereof.
"Pension Benefit Plan" has the meaning set forth in Section 2.18 hereof.
"Permits" has the meaning set forth in Section 2.16 hereof.
"Person" means an individual, a corporation, a partnership, a limited
liability company, a joint venture, an association, a trust or any other entity
or organization including a government or political subdivision or an agency or
instrumentality thereof.
"Personal Property" has the meaning set forth in Section 2.13 hereof.
"Preamble" means that portion of this Agreement preceding Article I.
"Merger Consideration" has the meaning set forth in Section 1.05.
"Real Property" has the meaning set forth in Section 2.12 hereof.
"Returns" has the meaning set forth in Section 2.09 hereof.
"Second Supplemental Escrow" has the meaning set forth in Section 14.02
hereof.
"Second Supplemental Escrow Agreement" has the meaning set forth in Section
14.02 hereof.
"Second Supplemental Losses" has the meaning set forth in Section 14.01
hereof.
"Section 338(h)(10) Election" has the meaning set forth in Section 2.09
hereof.
"Sellers" means Empress, Empress ▇▇▇▇▇▇▇ and Empress Joliet.
"Sellers' Counsel" means ▇'▇▇▇▇▇▇ & ▇▇▇▇▇▇.
"Services" has the meaning set forth in Section 2.26 hereof.
"Shares" has the meaning set forth in Section 1.10.
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"Stockholders" means the stockholders of Empress.
"Subsidiaries" means Empress ▇▇▇▇▇▇▇, Empress Joliet and ▇▇▇▇▇▇▇
Residential, L.L.C., an Indiana limited liability company.
"Subsidiary" means any of the Subsidiaries.
"Surviving Corporation" has the meaning set forth in Section 1.01 hereof.
"Tax" means and includes any United States federal, state, local or foreign
income, net income, alternative or add-on minimum, gross income, gross receipts,
sales, use, ad valorem, franchise, profits, license, withholding on amounts paid
by Stockholders or Empress or a Subsidiary, payroll, employment, excise,
severance, stamp, occupation, premium, property, environmental or windfall
profit, custom, duty, or any other Tax obligation of Stockholders or Empress or
a Subsidiary of any kind whatsoever arising from its or their operations and
activities, together with any interest or penalty relating thereto, imposed by
any Taxing Authority.
"Tax Indemnification Agreement" has the meaning set forth in Section 11.02
hereof.
"Taxing Authority" means any domestic or foreign governmental authority
having responsibility for the imposition of any Tax.
"Welfare Benefit Plan" has the meaning set forth in Section 2.18 hereof.
"Year 2000 Ready" has the meaning set forth in Section 2.26 hereof.
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IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the
date first written above.
"PARENT"
HORSESHOE GAMING, L.L.C.
a Delaware limited liability company
By:
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Printed:
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Its:
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"HORSESHOE"
HORSESHOE GAMING (MIDWEST), INC.
a Delaware corporation
By:
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Printed:
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Its:
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"EMPRESS ILLINOIS"
EMPRESS ACQUISITION ILLINOIS, INC.
an Illinois corporation
By:
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Printed:
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Its:
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"EMPRESS INDIANA"
EMPRESS ACQUISITION INDIANA, INC.
an Indiana corporation
By:
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Printed:
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Its:
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"EMPRESS"
EMPRESS ENTERTAINMENT, INC.
a Delaware corporation
By:
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Printed:
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Its:
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"EMPRESS JOLIET"
EMPRESS CASINO JOLIET CORPORATION
an Illinois corporation
By:
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Printed:
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Its:
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"EMPRESS ▇▇▇▇▇▇▇"
EMPRESS CASINO ▇▇▇▇▇▇▇ CORPORATION
an Indiana corporation
By:
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Printed:
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Its:
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