EXHIBIT 2.1
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
▇▇▇▇▇▇'▇ OPERATING COMPANY, INC.,
SATCHMO ACQUISITION, INC.
AND
JCC HOLDING COMPANY
DATED AS OF JULY 30, 2002
TABLE OF CONTENTS
ARTICLE 1. THE MERGER.........................................................................................1
Section 1.1 The Merger..................................................................................1
Section 1.2 Effective Time..............................................................................2
Section 1.3 Effect of the Merger........................................................................2
Section 1.4 Certificate of Incorporation; By-laws.......................................................2
Section 1.5 Directors and Officers......................................................................2
ARTICLE 2. CONVERSION OF SECURITIES; EXCHANGE OF CERTIFICATES.................................................2
Section 2.1 Conversion of Securities....................................................................2
Section 2.2 Exchange of Certificates....................................................................3
Section 2.3 Dissenters' Rights..........................................................................4
Section 2.4 Stock Transfer Books........................................................................5
Section 2.5 Stock Options...............................................................................5
ARTICLE 3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY......................................................5
Section 3.1 Organization and Qualification; Subsidiaries................................................6
Section 3.2 Certificate of Incorporation and By-laws; Corporate Books and Records.......................6
Section 3.3 Capitalization..............................................................................6
Section 3.4 Authority; No Conflict; Required Filings and Consents.......................................7
Section 3.5 SEC Filings; Financial Statements...........................................................9
Section 3.6 Absence of Certain Changes or Events.......................................................10
Section 3.7 Taxes......................................................................................10
Section 3.8 Real Property..............................................................................12
Section 3.9 Title to Personal Property; Liens..........................................................15
Section 3.10 Intellectual Property......................................................................15
Section 3.11 Contracts..................................................................................15
Section 3.12 Employee Benefit Plans.....................................................................17
Section 3.13 Labor and Other Employment Matters.........................................................19
Section 3.14 Litigation.................................................................................21
Section 3.15 Environmental Matters......................................................................22
Section 3.16 Insurance..................................................................................22
Section 3.17 Opinion of Financial Advisors..............................................................22
Section 3.18 Vote Required..............................................................................22
Section 3.19 Permits; Compliance with Gaming Laws.......................................................23
i
Section 3.20 Disclosure Documents.......................................................................24
Section 3.21 Brokers....................................................................................24
ARTICLE 4. REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB...........................................24
Section 4.1 Organization and Qualification; Subsidiaries...............................................24
Section 4.2 Authority..................................................................................25
Section 4.3 Ownership of Merger Sub; No Prior Activities...............................................25
Section 4.4 Brokers....................................................................................26
ARTICLE 5. ADDITIONAL AGREEMENTS.............................................................................26
Section 5.1 Conduct of Business by the Company Pending the Effective Time..............................26
Section 5.2 Cooperation................................................................................30
Section 5.3 Proxy Statement and Schedule 13E-3.........................................................30
Section 5.4 Stockholders' Meetings.....................................................................31
Section 5.5 Access to Information; Confidentiality.....................................................31
Section 5.6 No Solicitation of Transactions............................................................32
Section 5.7 Appropriate Action; Consents; Filings......................................................33
Section 5.8 Certain Notices............................................................................34
Section 5.9 Public Announcements.......................................................................34
Section 5.10 Employee Benefit Matters...................................................................34
Section 5.11 Indemnification of Directors and Officers..................................................34
ARTICLE 6. CLOSING CONDITIONS................................................................................36
Section 6.1 Conditions to Obligations of Each Party Under This Agreement...............................36
Section 6.2 Additional Conditions to Obligations of Parent and Merger Sub..............................36
Section 6.3 Additional Conditions to Obligations of the Company........................................37
ARTICLE 7. TERMINATION, AMENDMENT AND WAIVER.................................................................38
Section 7.1 Termination................................................................................38
Section 7.2 Effect of Termination......................................................................39
Section 7.3 Amendment..................................................................................40
Section 7.4 Waiver.....................................................................................40
Section 7.5 Fees and Expenses..........................................................................40
ARTICLE 8. GENERAL PROVISIONS................................................................................41
Section 8.1 Non-Survival of Representations and Warranties.............................................41
Section 8.2 Notices....................................................................................41
Section 8.3 Certain Definitions........................................................................41
ii
Section 8.4 Terms Defined Elsewhere....................................................................45
Section 8.5 Headings...................................................................................47
Section 8.6 Severability...............................................................................48
Section 8.7 Entire Agreement...........................................................................48
Section 8.8 Assignment.................................................................................48
Section 8.9 Parties in Interest........................................................................48
Section 8.10 Mutual Drafting............................................................................48
Section 8.11 Governing Law; Consent to Jurisdiction; Waiver of Trial by Jury............................48
Section 8.12 Counterparts...............................................................................49
Section 8.13 Specific Performance.......................................................................49
Annex A Voting Agreements
Annex B Separation Agreements
Annex C Press Release
iii
AGREEMENT AND PLAN OF MERGER, dated as of July 30, 2002 (this
"Agreement"), by and among ▇▇▇▇▇▇'▇ Operating Company, Inc., a
Delaware
corporation ("Parent"), Satchmo Acquisition, Inc., a
Delaware corporation and a
wholly owned subsidiary of Parent ("Merger Sub"), and
JCC Holding Company, a
Delaware corporation (the "Company").
WHEREAS, a special committee of the Board of Directors of the Company,
duly authorized and constituted and comprised solely of directors of the Company
who are not employees, officers, consultants or directors of the Parent (the
"Special Committee"), at a meeting thereof duly called and held, (i) unanimously
determined that the merger of Merger Sub with and into the Company (the
"Merger") and the other transactions contemplated herein are fair to, and in the
best interests of, the Company and the stockholders of the Company (other than
Parent and any Parent Subsidiary), and has declared the Merger advisable, and
(ii) unanimously recommended that the Board of Directors of the Company (the
"Company Board") approve and adopt the Merger and this Agreement;
WHEREAS, the respective Boards of Directors of the Company (based in
part on the recommendations of the Special Committee), Parent and Merger Sub
have approved and declared advisable the Merger upon the terms and subject to
the conditions of this Agreement and in accordance with each party's respective
Certificate of Incorporation and By-Laws and the General Corporation Law of the
State of
Delaware (the "DGCL");
WHEREAS, Parent has informed the Company that the shares of Company
Common Stock that it and all Subsidiaries of the Parent (the "Parent
Subsidiaries") own are not for sale, and that Parent and Parent Subsidiaries
have no intention of selling, transferring or otherwise disposing of such
Company Common Stock;
WHEREAS, as a condition to and inducement to Parent's and Merger Sub's
willingness to enter into this Agreement, simultaneously with the execution of
this Agreement, certain stockholders of the Company are entering into voting
agreements with Parent (the "Voting Agreements"), each dated as of the date
hereof and in the form attached as Annex A hereto and certain officers of the
Company are entering into separation agreements with the Company and Parent (the
"Separation Agreements"), each dated as of the date hereof and effective as of
the Effective Time and in the form attached as Annex B hereto; and
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth in this
Agreement and intending to be legally bound hereby, the parties hereto agree as
follows:
ARTICLE 1.
THE MERGER
Section 1.1 The Merger. Upon the terms and subject to satisfaction or
waiver of the conditions set forth in this Agreement, and in accordance with the
DGCL, Merger Sub shall be merged with and into the Company. As a result of the
Merger, the separate corporate existence of Merger Sub shall cease and the
Company shall continue as the surviving corporation of the Merger (the
"Surviving Corporation").
Section 1.2 Effective Time. As soon as practicable after the
satisfaction or, if permissible, waiver of the conditions set forth in Article
6, the parties hereto shall cause the Merger to be consummated by filing a
certificate of merger (the "Certificate of Merger") with the Secretary of State
of the State of
Delaware, in such form as required by, and executed in
accordance with the relevant provisions of, the DGCL (the date and time of such
filing, or if another date and time is specified in such filing, such specified
date and time, being the "Effective Time").
Section 1.3 Effect of the Merger. At the Effective Time, the effect of
the Merger shall be as provided in the applicable provisions of the DGCL.
Without limiting the generality of the foregoing, at the Effective Time, except
as otherwise provided herein, all the property, rights, privileges, powers and
franchises of the Company and Merger Sub shall vest in the Surviving
Corporation, and all debts, liabilities and duties of the Company and Merger Sub
shall become the debts, liabilities and duties of the Surviving Corporation.
Section 1.4 Certificate of Incorporation; By-laws. At the Effective
Time, the Certificate of Incorporation and the By-laws of the Surviving
Corporation shall be amended in their entirety to contain the provisions set
forth in the Certificate of Incorporation and the By-laws of Merger Sub, each as
in effect immediately prior to the Effective Time, as the same may be amended in
accordance with Section 5.11.2 hereof and except as may be amended by the
provisions of the Certificate of Merger.
Section 1.5 Directors and Officers. The directors of Merger Sub
immediately prior to the Effective Time shall be the initial directors of the
Surviving Corporation, each to hold office in accordance with the Certificate of
Incorporation and By-laws of the Surviving Corporation. The officers of the
Company immediately prior to the Effective Time shall be the initial officers of
the Surviving Corporation, each to hold office in accordance with the
Certificate of Incorporation and By-laws of the Surviving Corporation.
ARTICLE 2.
CONVERSION OF SECURITIES; EXCHANGE OF CERTIFICATES
Section 2.1 Conversion of Securities. At the Effective Time, by virtue
of the Merger and without any action on the part of Merger Sub, the Company or
the holders of any of the following securities:
Section 2.1.1 Conversion Generally. Each share of common stock,
par value $.01 per share, of the Company ("Company Common Stock") issued and
outstanding immediately prior to the Effective Time (other than any shares of
Company Common Stock to be canceled pursuant to Section 2.1.2 and any shares of
Company Common Stock which are held by stockholders who have not voted in favor
of the Merger or consented thereto in writing and are exercising appraisal
rights pursuant to Section 262 of the DGCL ("Dissenting Stockholders")), shall
be converted, subject to Section 2.2.4, into the right to receive $10.54 in
cash, payable to the holder thereof, without interest (the "Merger
Consideration"). At the Effective Time, all such shares of Company Common Stock
shall no longer be outstanding and shall automatically be canceled and retired
and shall cease to exist, and each certificate previously representing any such
shares shall thereafter represent the right to receive the Merger Consideration
therefor or the
2
right, if any, to receive payment from the Surviving Corporation of the "fair
value" of such shares of Company Common Stock as determined in accordance with
Section 262 of the DGCL. Certificates previously representing shares of Company
Common Stock shall be exchanged for the Merger Consideration upon the surrender
of such certificates in accordance with the provisions of Section 2.2, without
interest.
Section 2.1.2 Cancellation of Certain Shares. Each share of
Company Common Stock held by Parent, Merger Sub, any wholly-owned subsidiary of
Parent or Merger Sub or held, in the treasury of the Company or held by any
wholly-owned subsidiary of the Company, immediately prior to the Effective Time,
shall be canceled and extinguished without any conversion thereof and no payment
shall be made with respect thereto.
Section 2.1.3 Merger Sub. Each share of common stock, par value
$.001 per share, of Merger Sub issued and outstanding immediately prior to the
Effective Time shall be converted into and be exchanged for one newly and
validly issued, fully paid and nonassessable share of common stock of the
Surviving Corporation.
Section 2.1.4 Change in Shares. If between the date of this
Agreement and the Effective Time the outstanding shares of Company Common Stock
shall have been changed into a different number of shares or a different class,
by reason of any stock dividend, subdivision, reclassification,
recapitalization, split, combination or exchange of shares, the Merger
Consideration shall be correspondingly adjusted to reflect such stock dividend,
subdivision, reclassification, recapitalization, split, combination or exchange
of shares.
Section 2.2 Exchange of Certificates.
Section 2.2.1 Paying Agent. As of or as soon as reasonably
practicable after the Effective Time, Parent shall enter into an agreement with
such bank or trust company designated by Parent and reasonably satisfactory to
the Company (the "Paying Agent"), and shall deposit, or cause to be deposited,
with the Paying Agent for the benefit of the holders of shares of Company Common
Stock, for exchange in accordance with this Article 2, through the Paying Agent,
cash in U.S. dollars in an amount sufficient to pay the Merger Consideration as
provided herein (such cash being hereinafter referred to as the "Payment Fund")
payable pursuant to Section 2.1 in exchange for outstanding shares of Company
Common Stock. The Paying Agent shall, pursuant to irrevocable instructions,
deliver the Merger Consideration contemplated to be paid pursuant to Section 2.1
out of the Payment Fund. The Payment Fund shall not be used for any other
purpose.
Section 2.2.2 Exchange Procedures. Promptly after the Effective
Time, Parent shall instruct the Paying Agent to mail to each holder of record of
a certificate or certificates which immediately prior to the Effective Time
represented outstanding shares of Company Common Stock (the "Certificates") (A)
a letter of transmittal (which shall specify that delivery shall be effected,
and risk of loss and title to the Certificates shall pass, only upon proper
delivery of the Certificates to the Paying Agent and shall be in customary form)
and (B) instructions for use in effecting the surrender of the Certificates in
exchange for the Merger Consideration. Upon surrender of a Certificate for
cancellation to the Paying Agent together with such letter of transmittal,
properly completed and duly executed, and such other documents
3
as may be required pursuant to such instructions, the holder of such
Certificate, shall be entitled to receive in exchange therefor the Merger
Consideration which such holder has the right to receive in respect of the
shares of Company Common Stock formerly represented by such Certificate and the
Certificate so surrendered shall forthwith be canceled. No interest will be paid
or accrued on any Merger Consideration payable to holders of Certificates. In
the event of a transfer of ownership of shares of Company Common Stock which is
not registered in the transfer records of the Company, the Merger Consideration
may be issued to a transferee if the Certificate representing such shares of
Company Common Stock is presented to the Paying Agent, accompanied by all
documents required to evidence and effect such transfer and by evidence that any
applicable stock transfer Taxes have been paid. Until surrendered as
contemplated by this Section 2.2, each Certificate shall be deemed at any time
after the Effective Time to represent only the right to receive upon such
surrender the Merger Consideration.
Section 2.2.3 Further Rights in Company Common Stock. All Merger
Consideration paid in accordance with the terms hereof shall be deemed to have
been issued in full satisfaction of all rights pertaining to such shares of
Company Common Stock.
Section 2.2.4 Termination of Payment Fund. Any portion of the
Payment Fund which remains undistributed to the holders of Company Common Stock
for nine months after the Effective Time shall be delivered to Parent upon
demand, and any holders of Company Common Stock who have not theretofore
complied with this Article 2 shall thereafter look only to Parent for the Merger
Consideration, without any interest thereon.
Section 2.2.5 No Liability. Neither Parent nor the Company shall
be liable to any holder of shares of Company Common Stock for any cash from the
Payment Fund delivered to a public official pursuant to any abandoned property,
escheat or similar Law.
Section 2.2.6 Lost Certificates. If any Certificate shall have
been lost, stolen or destroyed, upon the making of an affidavit of that fact by
the person claiming such Certificate to be lost, stolen or destroyed and, if
required by Parent, the posting by such person of a bond, in such reasonable
amount as Parent may direct, as indemnity against any claim that may be made
against it with respect to such Certificate, the Paying Agent will issue in
exchange for such lost, stolen or destroyed Certificate the Merger Consideration
without any interest thereon.
Section 2.2.7 Withholding. Parent or the Paying Agent shall be
entitled to deduct and withhold from the consideration otherwise payable
pursuant to this Agreement to any holder of Company Common Stock such amounts as
Parent or the Paying Agent are required to deduct and withhold under the Code,
or any provision of state, local or foreign tax Law, with respect to the making
of such payment. To the extent that amounts are so withheld by Parent or the
Paying Agent, such withheld amounts shall be treated for all purposes of this
Agreement as having been paid to the holder of Company Common Stock in respect
of whom such deduction and withholding was made by Parent or the Paying Agent.
Section 2.3 Dissenters' Rights. Notwithstanding anything in this
Agreement to the contrary, if any Dissenting Stockholder shall demand to be paid
the "fair value" of such holder's shares of Company Common Stock, as provided in
Section 262 of the DGCL, such shares shall not be converted into or exchangeable
for the right to receive the Merger
4
Consideration except as provided in this Section 2.3, and the Company shall give
Parent notice thereof and Parent shall have the right to participate in all
negotiations and proceedings with respect to any such demands. Neither the
Company nor the Surviving Corporation shall, except with the prior written
consent of Parent, voluntarily make any payment with respect to, or settle or
offer to settle, any such demand for payment. If any Dissenting Stockholder
shall fail to perfect or shall have effectively withdrawn or lost the right to
dissent, the shares of Company Common Stock held by such Dissenting Stockholder
shall thereupon be treated as though such shares had been converted into the
Merger Consideration pursuant to Section 2.1.
Section 2.4 Stock Transfer Books. At the Effective Time, the stock
transfer books of the Company shall be closed and thereafter, there shall be no
further registration of transfers of shares of Company Common Stock theretofore
outstanding on the records of the Company. From and after the Effective Time,
the holders of certificates representing shares of Company Common Stock
outstanding immediately prior to the Effective Time shall cease to have any
rights with respect to such shares of Company Common Stock except as otherwise
provided herein or by Law. On or after the Effective Time, any Certificates
presented to the Paying Agent or Parent for any reason shall be converted into
the Merger Consideration.
Section 2.5 Stock Options. Prior to the Effective Time, the Company
Board (or, if appropriate, any committee thereof) shall adopt appropriate
resolutions and take all other actions necessary and appropriate to provide
that, immediately prior to the Effective Time, each unexpired and unexercised
option or similar rights to purchase shares of Company Common Stock (the
"Company Options"), under any stock option plan of the Company or any other
plan, agreement or arrangement including the Company Stock Option Plans, whether
or not then exercisable or vested, shall be cancelled and, in exchange therefor,
each former holder of any such cancelled Company Option shall be entitled to
receive, in consideration of the cancellation of such Company Option and in
settlement therefor, a payment in cash (subject to any applicable withholding or
other Taxes required by applicable Law to be withheld) of an amount equal to the
product of (A) the total number of shares of Company Common Stock previously
subject to such Company Option and (B) the excess, if any, of the Merger
Consideration over the exercise price per share of Company Common Stock
previously subject to such Company Option (such amounts payable hereunder being
referred to as the "Option Payment"). The Option Payment shall be paid, subject
to the terms and conditions of this Agreement, as soon as practicable following
the Effective Time. From and after the Effective Time, any such cancelled
Company Option shall no longer be exercisable by the former holder thereof, but
shall only entitle such holder to the payment of the Option Payment, and the
Company will use its reasonable best efforts to obtain all necessary consents to
ensure that former holders of Company Options will have no rights other than the
right to receive the Option Payment. After the Effective Time all Company Stock
Option Plans shall be terminated. Following the date hereof, no further Company
Options shall be granted.
ARTICLE 3.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as set forth in the Disclosure Schedule delivered by the
Company to Parent prior to the execution of this Agreement (the "Company
Disclosure Schedule"), which
5
identifies exceptions by specific subsection references, or as disclosed in
Company SEC Reports, the Company hereby represents and warrants to Parent as
follows:
Section 3.1 Organization and Qualification; Subsidiaries. The Company
is a corporation duly organized, validly existing and in good standing under the
laws of the State of
Delaware. Each Subsidiary of the Company (each a "Company
Subsidiary" and collectively, the "Company Subsidiaries") has been duly
organized, and is validly existing and in good standing, under the laws of the
jurisdiction of its incorporation or organization, as the case may. Each of the
Company and each Company Subsidiary has the requisite power and authority and
all necessary governmental approvals to own, lease and operate its properties
and to carry on its business as it is now being conducted other than such
governmental approvals, the lack of which, individually or in the aggregate,
would not reasonably be expected to have a Company Material Adverse Effect. Each
of the Company and each Company Subsidiary is duly qualified or licensed to do
business, and is in good standing, in each jurisdiction where the character of
the properties owned, leased or operated by it or the nature of its business
makes such qualification, licensing or good standing necessary, except for such
failures to be so qualified, licensed or in good standing that would not,
individually or in the aggregate, reasonably be expected to have a Company
Material Adverse Effect. Section 3.1 of the Company Disclosure Schedule sets
forth a true and complete list of all of the Company Subsidiaries. Except as set
forth in Section 3.1 of the Company Disclosure Schedule, none of the Company or
any Company Subsidiary holds an Equity Interest in any other person.
Section 3.2 Certificate of Incorporation and By-laws; Corporate Books
and Records. The copies of the Company's Second Amended and Restated Certificate
of Incorporation (the "Company Certificate") and Third Amended and Restated
By-laws (the "Company By-laws") that are listed as exhibits to the Company's
Form 10-K/A for the year ended December 31, 2000 are complete and correct copies
thereof as in effect on the date hereof. Complete and correct copies of the
organizational documents of each Company Subsidiary as in effect on the date
hereof have been previously provided to Parent. The Company is not in violation
of any of the provisions of the Company Certificate or the Company By-laws and
none of the Company Subsidiaries is in violation of any of the provisions of its
respective organizational documents. True and complete copies of all minute
books of the Company (including the Special Committee, which minutes were
redacted as necessary in the opinion of counsel to the Special Committee) and
Company Subsidiaries, from March 29, 2001, have been made available by the
Company to Parent.
Section 3.3 Capitalization. The authorized capital stock of the
Company consists of 40,000,000 shares of Company Common Stock. (A) 12,383,025
shares of Company Common Stock (other than treasury shares) are issued and
outstanding, all of which were validly issued and fully paid, nonassessable and
free of preemptive rights, (B) 5,025 shares of Company Common Stock are held in
the treasury of the Company or by the Company Subsidiaries, and (C) 832,548
shares of Company Common Stock are issuable (and such number was reserved for
issuance) upon exercise of outstanding Company Options. Except for the Company
Options to purchase not more than 832,548 shares of Company Common Stock
described in Section 3.3 of the Company Disclosure Schedule, there are no
options, warrants or other rights, agreements, arrangements or commitments of
any character to which the Company or any Company Subsidiary is a party or by
which the Company or any Company Subsidiary is bound relating to
6
the issued or unissued capital stock or other Equity Interests of the Company or
any Company Subsidiary, or securities convertible into or exchangeable for such
capital stock or other Equity Interests, or obligating the Company or any
Company Subsidiary to issue or sell any shares of its capital stock or other
Equity Interests, or securities convertible into or exchangeable for such
capital stock of, or other Equity Interests in, the Company or any Company
Subsidiary. Since December 31, 2001, the Company has not issued any shares of
its capital stock, or securities convertible into or exchangeable for such
capital stock or other Equity Interests, including Company Options, other than
as set forth in Section 3.3 of the Company Disclosure Schedule. Section 3.3 of
the Company Disclosure Schedule sets forth a true and complete list of the
prices at which outstanding Company Options may be exercised under the
applicable Company Stock Option Plan, the number of Company Options outstanding
at each such price and the vesting schedule of the Company Options for each
option-holder of the Company. There are no outstanding contractual obligations
of the Company or any Company Subsidiary (A) restricting the transfer of, (B)
affecting the voting rights of, (C) requiring the repurchase, redemption or
disposition of, or containing any right of first refusal with respect to, (D)
requiring the registration for sale of, or (E) granting any preemptive,
participation or antidilutive right with respect to, any shares of Company
Common Stock or any capital stock of, or other Equity Interests in, the Company
or any Company Subsidiary. Each outstanding share of capital stock of each
Company Subsidiary is duly authorized, validly issued, fully paid, nonassessable
and free of preemptive or other similar rights and is owned, beneficially and of
record, by the Company or another Company Subsidiary free and clear of all
security interests, liens, claims, pledges, options, rights of first refusal,
agreements, limitations on the Company's or such other Company Subsidiary's
voting rights, charges and other encumbrances of any nature whatsoever.
Section 3.4 Authority; No Conflict; Required Filings and Consents.
Section 3.4.1 The Company has all necessary corporate power and
authority to execute and deliver this Agreement and each Ancillary Agreement to
which it is a party, to perform its obligations hereunder and thereunder and to
consummate the transactions that are contemplated by this Agreement and each
Ancillary Agreement to be consummated by the Company. The execution and delivery
of this Agreement and each Ancillary Agreement to which it is a party by the
Company and the consummation of the transactions contemplated hereby and thereby
have been duly and validly authorized by all necessary corporate action and no
other corporate proceedings on the part of the Company and no stockholder votes
are necessary to authorize this Agreement or any Ancillary Agreement or to
consummate the transactions contemplated hereby or thereby other than, with
respect to the Merger, as provided in Section 3.18. The Special Committee, at a
meeting thereof duly called and held, (i) unanimously determined that the Merger
and the other transactions contemplated herein are fair to, and in the best
interests of, the Company and the stockholders of the Company (other than Parent
and any Parent Subsidiary), and has declared the Merger advisable, and (ii)
unanimously recommended that the Company Board approve and adopt the Merger and
this Agreement. In accordance with the Company Certificate and the Company
By-Laws, the Company Board has approved this Agreement and each Ancillary
Agreement to which it is a party, declared advisable the transactions
contemplated hereby and thereby and has directed that the Merger, this Agreement
and each Ancillary Agreement to which it is a party and the transactions
contemplated hereby and thereby be submitted to the Company's stockholders for
approval at a meeting of such stockholders. This Agreement and each Ancillary
Agreement to
7
which it is a party have been duly authorized and validly executed and delivered
by the Company and constitute a legal valid and binding obligation of the
Company, enforceable against the Company in accordance with their respective
terms except to the extent that the enforceability thereof may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other similar
laws generally affecting creditors' rights and by equitable principles
(regardless of whether enforcement is sought in equity or at law).
Section 3.4.2 The execution and delivery of this Agreement and
each Ancillary Agreement to which it is a party by the Company does not, and the
performance of this Agreement and each Ancillary Agreement to which it is a
party by the Company will not, (A) (assuming the stockholder approval set forth
in Section 3.18 is obtained) conflict with or violate any provision of the
Company Certificate or Company By-laws or any equivalent organizational
documents of any Company Subsidiary (including but not limited to approvals by
members of the Company Board as described in Article III, Section 2 of the
Company By-laws), (B) assuming that all consents, approvals, authorizations and
permits described in Section 3.4.3 have been obtained and all filings and
notifications described in Section 3.4.3 have been made, conflict with or
violate any Law applicable to the Company or any Company Subsidiary or by which
any property or asset of the Company or any Company Subsidiary is bound or
affected or (C) require any consent or approval under, result in any breach of
or any loss of any benefit under, or constitute a change of control or default
(or an event which with notice or lapse of time or both would become a default)
under, or give to others any right of termination, vesting, amendment,
acceleration or cancellation of, or result in the creation of a lien or other
encumbrance on any property or asset of the Company or any Company Subsidiary
pursuant to, any note, bond, mortgage, indenture, contract, agreement, lease,
license, Company Permit or other instrument or obligation, other than, in the
case of each of clauses (B) and (C), any such items that individually or in the
aggregate, would not be reasonably expected to have a Material Adverse Effect.
Section 3.4.3 The execution and delivery of this Agreement and
each Ancillary Agreement to which it is a party by the Company does not, and the
performance of this Agreement and each Ancillary Agreement to which it is a
party by the Company will not, require any consent, approval, authorization or
permit of, or filing with or notification to, any Governmental Entity or any
other person, except (A) under the Exchange Act, Securities Act, any applicable
Blue Sky Law, the rules and regulations of the Exchange, applicable Company
Gaming Laws and the filing and recordation of the Certificate of Merger as
required by the DGCL and (B) where failure to obtain such consents, approvals,
authorizations or permits, or to make such filings or notifications to a person
other than a Governmental Entity, would not, individually or in the aggregate,
reasonably be expected to (1) prevent or unreasonably delay consummation of the
Merger, (2) otherwise prevent or delay performance by the Company of any of its
material obligations under this Agreement or any Ancillary Agreement to which it
is a party, or (3) have a Company Material Adverse Effect.
Section 3.4.4 Neither Section 203 of the DGCL, nor any other
state takeover statute or similar statute or regulation is applicable to or
purports to be applicable to the Merger or any other transaction contemplated by
this Agreement or any Ancillary Agreement.
8
Section 3.4.5 The Special Committee has been duly formed and
authorized by the Company Board in accordance with the Company By-laws and the
DGCL to, among other things, negotiate the Merger and this Agreement on behalf
of the Company. The Special Committee is comprised solely of members of the
Company Board who are not employees, officers, consultants or directors of
Parent. The Special Committee has at a meeting thereof, duly called and held,
(i) unanimously determined that the Merger and the other transactions
contemplated by this Agreement are fair to, and in the best interests of, the
Company and the stockholders of the Company (other than Parent and any Parent
Subsidiary), and has declared the Merger advisable, and (ii) unanimously
recommended to the Company Board to approve and adopt the Merger and this
Agreement.
Section 3.5 SEC Filings; Financial Statements.
Section 3.5.1 The Company has timely filed all registration
statements, prospectuses, forms, reports, definitive proxy statements, schedules
and documents required to be filed by it under the Securities Act or the
Exchange Act, as the case may be, since March 29, 2001 (collectively, the
"Company SEC Filings"). Each Company SEC Filing (A) as of its date, complied in
all material respects with the requirements of the Securities Act or the
Exchange Act, as the case may be, and (B) did not, at the time it was filed,
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the statements made
therein, in the light of the circumstances under which they were made, not
misleading. No Company Subsidiary is subject to the periodic reporting
requirements of the Exchange Act.
Section 3.5.2 Assuming the accuracy and completeness of financial
information provided to the Company by the Management Company pursuant to the
terms of the Management Agreement, each of the consolidated financial statements
(including, in each case, any notes thereto) contained in the Company SEC
Filings was prepared in accordance with GAAP applied (except as may be indicated
in the notes thereto and, in the case of unaudited quarterly financial
statements, as permitted by Form 10-Q under the Exchange Act) on a consistent
basis throughout the periods indicated, and each presented fairly the
consolidated financial position, results of operations and cash flows of the
Company and the consolidated Company Subsidiaries as of the respective dates
thereof and for the respective periods indicated therein. The books and records
of the Company and each Company Subsidiary have been, and are being, maintained
in accordance with applicable legal and accounting requirements.
Section 3.5.3 Except as and to the extent set forth on the
consolidated balance sheet of the Company and the consolidated Company
Subsidiaries as of December 31, 2001 included in the Company Form 10-K for the
year ended December 31, 2001, including the notes thereto, or on the interim
financial statements of the Company and the consolidated Company Subsidiaries
dated as of May 31, 2002 (which is attached to Section 3.5.3 of the Company
Disclosure Schedule), none of the Company or any consolidated Company Subsidiary
has any liabilities or obligations of any nature (whether accrued, absolute,
contingent or otherwise) that would be required to be reflected on a balance
sheet or in notes thereto prepared in accordance with GAAP or any other
agreement to make expenditures or create a liability or obligation of Company,
except for liabilities or obligations incurred (i) in the ordinary course of
9
business since December 31, 2001 and which do not exceed, in the aggregate,
$100,000, or (ii) by the Management Company (acting as an agent of the Company).
Section 3.5.4 The Company has previously provided to Parent a
complete and correct copy of any amendment or modification which has not yet
been filed with the SEC to any agreement, document or other instrument which
previously had been filed by the Company with the SEC pursuant to the Securities
Act or the Exchange Act.
Section 3.6 Absence of Certain Changes or Events. Assuming the
accuracy and completeness of information provided to the Company by the
Management Company, since December 31, 2001, the Company and each Company
Subsidiary has conducted its businesses in the ordinary course consistent with
past practice and, since such date, there has not been (A) any Company Material
Adverse Effect or an event or development that would, individually or in the
aggregate, reasonably be expected to have a Company Material Adverse Effect, (B)
any event or development that would, individually or in the aggregate,
reasonably be expected to prevent or delay the performance of this Agreement or
any Ancillary Agreement by the Company, or (C) except as described in Section
3.6 of the Company Disclosure Schedule, to the knowledge of the Company any
action taken by the Company or any Company Subsidiary during the period from
January 1, 2002 through the date of this Agreement that, if taken during the
period from the date of this Agreement through the Effective Time, would
constitute a breach of Section 5.1.
Section 3.7 Taxes.
Section 3.7.1 Each of the Company and each Company Subsidiary
(and any affiliated group (within the meaning of Section 1504 of the Code) of
which the Company or any Company Subsidiary is now or has been a member) has
timely filed with the appropriate taxing authorities all federal, state and
local income Tax Returns and all other material Tax Returns required to be filed
through the date hereof and will timely file any such Tax Returns required to be
filed on or prior to the Effective Time. Such Tax Returns and other information
filed are (and, to the extent they will be filed prior to the Effective Time,
will be) complete and accurate in all material respects (excluding any such tax
information prepared or compiled and submitted to the Company by the Management
Company pursuant to the Management Agreement which is not complete or accurate
in any material respect). None of the Company, any Company Subsidiary, nor any
affiliated group (within the meaning of Section 1504 of the Code) of which the
Company or any Company Subsidiary is now or was a member, has pending any
request for an extension of time within which to file federal, state or local
income Tax Returns, except for the Company's federal and state Tax Returns for
the taxable year ended December 31, 2001. The Company has provided to Parent
complete and accurate copies of Company's federal and state income Tax Returns
for the taxable years ended December 31, 1998, December 31, 1999 and December
31, 2000.
Section 3.7.2 All Taxes in respect of periods beginning before
the Effective Time have been paid or will be timely paid, or an adequate reserve
has been or will be established therefor in accordance with GAAP by each of
Company and its Company Subsidiaries.
10
Section 3.7.3 Except as disclosed on Section 3.7.3 of the Company
Disclosure Schedule, no federal, state, local or foreign audits or other
administrative proceedings or court proceedings are presently pending with
regard to any Taxes or Tax Returns of any of the Company or any Company
Subsidiary. Neither the Company nor any Company Subsidiary has received a
written notice of any such pending audits or proceedings. The Company has no
knowledge of any outstanding waivers extending the statutory period of
limitation relating to the payment of Taxes due from the Company or any Company
Subsidiary. The Company has no knowledge of any issue that has been raised by
any tax authority in any audit of the Company or any Company Subsidiary that if
raised with respect to any other period not so audited could be expected to
result in a proposed deficiency that would reasonably be expected to have a
Company Material Adverse Effect for any period not so audited.
Section 3.7.4 Neither the Internal Revenue Service ("IRS") nor
any other taxing authority (whether domestic or foreign) has asserted, or to the
Company's knowledge, is threatening to assert, against the Company or any
Company Subsidiary any deficiency or claim for Taxes in excess of the reserves
established therefore.
Section 3.7.5 There are no liens for Taxes upon any property or
assets of the Company or any Company Subsidiary thereof, except for liens for
Taxes not yet due and payable and liens for Taxes that are being contested in
good faith by appropriate proceedings as set forth in Section 3.7.5 of Company
Disclosure Schedule and as to which adequate reserves have been established in
accordance with GAAP.
Section 3.7.6 Neither the Company nor any Company Subsidiary is
or has been a member of an affiliated group of corporations filing a
consolidated federal income Tax Return (or a group of corporations filing a
consolidated, combined or unitary income Tax Return under comparable provisions
of state, local or foreign tax Law) for any taxable period beginning on or after
the taxable period ending December 31, 1998, other than a group the common
parent of which is or was the Company or any Company Subsidiary.
Section 3.7.7 Neither the Company nor any Company Subsidiary has
any obligation under any Tax sharing agreement or similar arrangement with any
other person or entity with respect to Taxes of such other person.
Section 3.7.8 Neither the Company nor any Company Subsidiary has,
with regard to any assets or property held or acquired by any of them, filed a
consent to the application of Section 341(f) of the Code, or agreed to have
Section 341(f)(2) of the Code apply to any disposition of a subsection (f) asset
(as such term is defined in Section 341(f)(4) of the Code) owned by the Company
or any Company Subsidiary.
Section 3.7.9 To the Company's knowledge, no member of the
Company affiliated group (as defined in Section 1504 of the Code) has recognized
any gain in connection with any intercompany transaction that has been deferred
for federal, state, local or foreign income tax purposes, except for such gains
as have been taken into account on Tax Returns filed prior to the date hereof in
accordance with Treasury Regulation Section 1.1502-13 or comparable provisions
of state, local or foreign Tax laws.
11
Section 3.7.10 The Company has not been a "United States real
property holding corporation" within the meaning of Section 897(c)(2) of the
Code during the applicable period specified in Section 897(c)(1)(A)(ii) of the
Code.
Section 3.7.11 The Company and the Company Subsidiaries have
taken no action that is inconsistent with, or which will prevent or inhibit, an
election by the Company pursuant to Section 382(l)(5)(H) of the Code and
Treasury Regulation Section 1.382-9(i) (and any similar provisions of state or
local law) with respect to any "ownership change" (as described in Section
382(g) of the Code) of the Company or any Company Subsidiary, and the Company
and the Company Subsidiaries have not made any election pursuant to Section
108(b)(5) of the Code.
Section 3.7.12 "Taxes" shall mean any and all taxes, charges,
fees, levies, duties, liabilities, impositions or other assessments, including,
without limitation, income, gross receipts, profits, gaming, excise, real or
personal property, environmental, recapture, sales, use, value-added,
withholding, social security, retirement, employment, unemployment, occupation,
service, license, net worth, payroll, franchise, gains, stamp, transfer and
recording taxes, fees and charges, except those which the Management Company is
responsible for withholding, collecting or paying to a taxing authority that are
imposed by the IRS or any other taxing authority (whether domestic or foreign
including, without limitation, any state, county, local or foreign government or
any subdivision or taxing agency thereof (including a United States
possession)), whether computed on a separate, consolidated, unitary, combined or
any other basis; and such term shall include any interest whether paid or
received, fines, penalties or additional amounts attributable to, or imposed
upon, or with respect to, any such taxes, charges, fees, levies, duties,
liabilities, impositions or other assessments. For purposes of this Agreement,
"Taxes" also includes any obligations under any agreements or arrangements with
any other person or entity with respect to Taxes of such other person or entity
(including pursuant to Treasury Regulation Section 1.1502-6 or comparable
provisions of state, local or foreign tax law) and including any liability for
Taxes of any predecessor entity. "Tax Return" shall mean any report, return,
document, declaration or other information or filing required to be supplied to
any taxing authority or jurisdiction (foreign or domestic) with respect to
Taxes, including attachments thereto and amendments thereof, and including,
without limitation, information returns, any documents with respect to or
accompanying payments of estimated Taxes, or with respect to or accompanying
requests for the extension of time in which to file any such report, return,
document, declaration or other information and excluding those Tax Returns that
are filed by the Management Company (acting as agent of the Company).
Section 3.8 Real Property.
Section 3.8.1 Section 3.8.1 of the Company Disclosure Schedule
identifies all real property owned by the Company and each Company Subsidiary
(the "Company Owned Property") and all real property leased or operated by the
Company and each Company Subsidiary (the "Company Leased Property"). The Company
Owned Property and the Company Leased Property is referred to herein
collectively as the "Company Real Property."
Section 3.8.2 The Company and each Company Subsidiary have good
and marketable fee simple title to the Company Owned Property, and a valid
leasehold interest in
12
the Company Leased Property, free and clear of any and all liens, encumbrances,
restrictions, leases, options to purchase, options to lease, covenants,
assessments, defects, claims or exceptions, except for (A) the exceptions
described in the Lease Documents, (B) the exceptions described in the Company
SEC Filings or (C) such other liens or exceptions that do not and would not,
individually or in the aggregate, materially interfere with the use of the
Company Real Property as currently used (collectively, the "Permitted
Exceptions"). The Company is the named insured under valid owner's extended
coverage owner's policies of title insurance with respect to all Company Owned
Property or extended leasehold policies of title insurance with respect to all
Company Leased Property, in each case issued by a national title insurance
company for the full value of such Company Real Property and subject only to the
preprinted exceptions of such policy(ies) and the Permitted Exceptions
(collectively, the "Title Policies"). The Company Disclosure Schedule identifies
the Company Real Property for which the Company or the Management Company
possesses final "as-built" ALTA survey(s), in each case completed in accordance
with the Minimum Standard Detail requirements for ALTA/ACSM Land Title Surveys
as jointly established and adopted by ALTA and ACSM in 1999 (collectively, the
"Surveys").
Section 3.8.3 Item 2 and Note 9 to Item 8 of the Company's Annual
Report on Form 10-K for the year ended December 31, 2001, together constitute a
complete and accurate description of the Company Leased Property. True and
correct copies of the documents under which the Company Leased Property is
leased or operated (the "Lease Documents") have been filed or incorporated by
reference as Exhibits 10.01, 10.02, 10.03, 10.09, 10.10 and 10.10 to the
Company's Annual Report on Form 10-K for the year ended December 31, 2001. The
Lease Documents are unmodified and in full force and effect, and there are no
other agreements, written or oral, between the Company or any Company Subsidiary
in the Company Leased Property or otherwise relating to the use and occupancy of
the Company Owned Property or the Company Leased Property. None of the Company,
the Company Subsidiaries or, to the Company's knowledge, any other party, is in
default under the Lease Documents, and, to the Company's knowledge, no defaults
(whether or not subsequently cured) by the Company, the Company Subsidiaries or
any other party have been alleged thereunder. To the Company's knowledge: (A)
each landlord named in any of the Lease Documents is not in default thereunder,
and (B) no defaults (whether or not subsequently cured) by such landlord have
been alleged thereunder.
Section 3.8.4 (A) to the Company's knowledge, no Company Real
Property is in violation of any applicable Laws, regulations or restrictions;
and (B) to the Company's knowledge, there are no material defects in the
physical condition of the Company Real Property or the improvements located on
the Company Real Property, except to the extent that any such violation or
defect would not be reasonably expected to have a Company Material Adverse
Effect.
Section 3.8.5 Neither the Company nor any Company Subsidiary has
received written notice of, or has any knowledge of, any action, proceeding or
litigation pending (and, to the Company's knowledge, overtly contemplated or
threatened) (A) to take all or any portion of the Company Real Property, or any
interest therein, by eminent domain; (B) to modify the zoning of, or other
governmental rules or restrictions applicable to, the Company Real Property or
the use or development thereof; (C) otherwise relating to the Company Real
Property
13
or the interests of the Company and its Subsidiaries therein, which would be
reasonably be expected to have a Material Adverse Effect on the ability of the
Company to use, own, improve, develop and/or operate the Company Real Property.
Section 3.8.6 To the Company's knowledge, no portion of the
Company Real Property or the roads immediately adjacent to and currently
utilized to access the Company Real Property: (A) was the former site of any
public or private landfill, dump site, retention basin or settling pond; (B) was
the former site of any oil or gas drilling operations; or (C) was the former
site of any experimentation, processing, refining, reprocessing, recovery or
manufacturing operation for any petrochemicals.
Section 3.8.7 The parcels constituting the Company Real Property
are assessed separately from all other adjacent property not constituting the
Company Real Property for purposes of real property taxes to the Company's, the
property leased to the Company and applicable Company Subsidiary pursuant to
each applicable Lease Document and each of the parcels of the Company Real
Property complies with all applicable subdivision, land parcelization and local
governmental taxation or separate assessment requirements, without reliance on
property not constituting Company Real Property.
Section 3.8.8 To the Company's knowledge, the Company Real
Property is connected to and serviced by adequate water, sewage disposal, gas
and electricity facilities and all material systems (including, without
limitation, heating, air conditioning, electrical, plumbing and fire/life safety
systems) for the basic operation of the Company Real Property are operable and
in good condition (ordinary wear and tear excepted), except to the extent that
the lack of any such system or the failure of the property to be in good
condition would not reasonably be expected to have a Company Material Adverse
Effect.
Section 3.8.9 There are no commitments to or agreements with any
governmental authority or agency (federal, state or local) affecting the use or
ownership of the Company Real Property which are not described in the Company
SEC Filings.
Section 3.8.10 There are no contracts or other obligations
outstanding for the sale, exchange, encumbrance, lease or transfer of any of the
Company Real Property, or any portion of it, or the businesses operated by the
Company or any of the Company Subsidiaries thereon.
Section 3.8.11 The agreement between JCC ▇▇▇▇▇▇ Development LLC
and The Varna Group New Orleans LLC, dated April 23, 2002 (the "▇▇▇▇▇▇ Street
Agreement") has been terminated in accordance with its terms. There are no
contracts or other obligations relating to the sale, exchange, encumbrance, use,
lease or transfer of such Company Real Property that was the subject of the
▇▇▇▇▇▇ Street Agreement. None of the transactions that were contemplated by the
▇▇▇▇▇▇ Street Agreement were consummated prior to termination.
Section 3.8.12 The Company has delivered or made available for
review to Parent true and correct copies of (A) all Title Policies, together
with legible copies of all underlying title exception documents referenced
therein, and any updated preliminary title
14
reports, commitments or lender's policies of title insurance in the Company's
possession or control relating to the Company Real Property, and (B) all
Surveys.
Section 3.9 Title to Personal Property; Liens.
To the Company's knowledge, the Company and each of the Company
Subsidiaries has sufficiently good and valid title to, or an adequate leasehold
interest in, its tangible personal properties and assets in order to allow it to
conduct, and continue to conduct, its business as and where currently conducted.
To the Company's knowledge, such tangible personal assets and properties are
sufficiently free of liens to allow each of the Company and the Company
Subsidiaries to conduct, and continue to conduct, its business as and where
currently conducted and to the Company's knowledge the consummation of the
transactions contemplated by this Agreement and the Ancillary Agreements will
not alter or impair such ability in any respect. To the Company's knowledge,
there are no material defects in the physical condition or operability of such
tangible personal assets and properties which would impair the use of such
assets and properties as and where such assets and properties are currently
used.
Section 3.10 Intellectual Property. Section 3.10 of the Company
Disclosure Schedule contains a complete and accurate description of all
Intellectual Property owned by the Company. To the Company's knowledge, it owns
or has the defensible right to use, whether through ownership, licensing or
otherwise, all Intellectual Property used in the businesses of the Company and
each Company Subsidiary as such businesses are conducted on the date hereof
("Material Intellectual Property"). Except as would not, individually or in the
aggregate, reasonably be expected to have a material adverse impact on the
validity or value of any Material Intellectual Property; (A) to the Company's
knowledge, no claim of invalidity or conflicting ownership rights with respect
to any Material Intellectual Property has been made by a third party and no such
Material Intellectual Property is the subject of any pending or, to the
Company's knowledge, threatened action, suit, claim, investigation, arbitration
or other proceeding; (B) no person or entity has given notice to the Company or
any Company Subsidiary that the use of any Material Intellectual Property by the
Company, any Company Subsidiary or any licensee is infringing or has infringed
any domestic or foreign patent, trademark, service ▇▇▇▇, trade name, or
copyright or design right, or that the Company, any Company Subsidiary or any
licensee has misappropriated or improperly used or disclosed any trade secret,
confidential information or know-how; and (C) to the Company's knowledge, the
making, using, selling, manufacturing, marketing, licensing, reproduction,
distribution, or publishing of any process, machine, manufacture or product
related to any Material Intellectual Property, does not and will not infringe
any domestic or foreign patent, trademark, service ▇▇▇▇, trade name, copyright
or other intellectual property right of any third party, and does not and will
not involve the misappropriation or improper use or disclosure of any trade
secrets, confidential information or know-how of any third party. None of the
matters, if any, disclosed on Section 3.10 of the Company Disclosure Schedule
would individually or in the aggregate, reasonably be expected to have a Company
Material Adverse Effect.
Section 3.11 Contracts. Except as filed as exhibits to the Company SEC
Filings filed prior to the date of this Agreement, or entered into by the
Management Company (acting as an agent of the Company), or as disclosed in
Section 3.11 of the Company Disclosure Schedule, none of the Company or any
Company Subsidiary is a party to or bound by any contract (A) any
15
of the benefits to any party of which will be increased, or the vesting of the
benefits to any party of which will be accelerated, by the occurrence of any of
the transactions contemplated by this Agreement or any Ancillary Agreement, or
the value of any of the benefits to any party of which will be calculated on the
basis of any of the transactions contemplated by this Agreement or any Ancillary
Agreement, or (B) which (1) is a "material contract" (as such term is defined in
Item 601(b)(10) of Regulation S-K of the SEC), (2) which involves aggregate
expenditures in excess of $200,000, (3) which involves annual expenditures in
excess of $50,000 and is not cancelable within one year, (4) which contains any
non-compete or exclusivity provisions with respect to any line of business or
geographic area with respect to the Company, any Company Subsidiary or any of
the Company's current or future affiliates, or which restricts the conduct of
any line of business by the Company, any Company Subsidiary or any of the
Company's current or future affiliates or any geographic area in which the
Company, any Company Subsidiary or any of the Company's current or future
affiliates may conduct business, in each case in any material respect, (5) which
relates to the borrowing of money or the incurrence of any indebtedness by the
Company or any Company Subsidiary or the guarantee by the Company or any Company
Subsidiary of any such obligation of any other person, (6) which involves a
partnership, joint venture or limited liability or management agreement with any
person, (7) which relates to or involves any merger, consolidation, business
combination, share exchange, business acquisition, or the purchase, acquisition,
sale or disposition of any assets of the Company or any of the Company
Subsidiaries outside the ordinary course of business, (8) which relates to the
Company Real Property, (9) which relates to the food and beverage services of
the Company, (10) which relates to any hotel development activity, (11) which
relates to construction or renovation at any Company Real Property, (12) which
involves the provision of funds to any charitable or community organization
which, in the aggregate, exceed $5,000, (13) which relates to the operation of
the Company's casino business and which was not entered into on behalf of the
Company by any Parent Subsidiary, or (14) which require or obligate the Company
or any Company Subsidiary to provide funds to (other than recurring purchases of
office products and supplies in the ordinary course of business), or make any
investment (in the form of a loan, capital contribution or otherwise) in, any
Company Subsidiary or any other person, (15) which would prohibit or delay the
consummation of the Merger or any of the transactions contemplated by this
Agreement or any Ancillary Agreement. Each contract of the type described in
Section 3.11, whether or not set forth in Section 3.11 of the Company Disclosure
Schedule and except those contracts entered into by the Management Company
(acting as an agent of the Company), is referred to herein as a "Company
Material Contract." Each Company Material Contract is valid and binding on the
Company and each Company Subsidiary party thereto and, to the Company's
knowledge, each other party thereto, and in full force and effect, and the
Company and each Company Subsidiary has in all material respects performed all
obligations required to be performed by it to date under each such Company
Material Contract and, to the Company's knowledge, each other party to each
Company Material Contract has performed all obligations required to be performed
by it to date under such Company Material Contract, except for such failures
that would not result in a Company Material Adverse Effect. None of the Company
or any Company Subsidiary knows of, or has received notice of, any violation or
default under (or any condition which with the passage of time or the giving of
notice would cause such a violation of or default under) any Company Material
Contract or any other contract to which it is a party or by which it or any of
its properties or assets is bound, except for violations or defaults that would
not, individually or in the aggregate, reasonably be expected to
16
(1) prevent or delay consummation of the Merger or (2) otherwise prevents or
materially delays performance by the Company of any of its obligations under
this Agreement or any Ancillary Agreement. Section 3.11 of the Company
Disclosure Schedule provides the Company's good faith estimate of the additional
costs which will accrue to the Company under the contracts described in clause
(A) of Section 3.11 as a result of the transactions contemplated by this
Agreement or any Ancillary Agreement, and such estimate is, in the aggregate,
accurate.
Section 3.12 Employee Benefit Plans.
Section 3.12.1 Section 3.12.1 of the Company Disclosure Schedule
sets forth a true and complete list of each "employee benefit plan" as defined
in Section 3(3) of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA") and any other plan, policy, program practice, agreement,
understanding or arrangement (whether written or oral) providing compensation or
other benefits to any current or former director, officer, employee or
consultant (or to any dependent or beneficiary thereof of the Company or any
ERISA Affiliate (as defined below)), which are now, or were within the past 6
years, maintained, sponsored or contributed to by the Company or any ERISA
Affiliate, or under which the Company or any ERISA Affiliate has any obligation
or liability, whether actual or contingent, including, without limitation, all
incentive, bonus, deferred compensation, vacation, holiday, cafeteria, medical,
disability, stock purchase, stock option, stock appreciation, phantom stock,
restricted stock or other stock-based compensation plans, policies, programs,
practices or arrangements (each a "Company Benefit Plan"). For purposes of this
Section 3.12, "ERISA Affiliate" shall mean any entity (whether or not
incorporated) other than the Company that, together with the Company, is
considered under common control and treated as one employer under Section
414(b), (c), (m) or (o) of the Code. Neither the Company, nor to the Company's
knowledge, or any other person or entity, has any express or implied commitment,
whether legally enforceable or not, to modify, change or terminate any Company
Benefit Plan, other than with respect to a modification, change or termination
required by ERISA or the Code.
With respect to each Company Benefit Plan, the Company has delivered
or made available to Parent true, correct and complete copies of (A) each
Company Benefit Plan (or, if not written a written summary of its material
terms), including without limitation all plan documents, trust agreements,
insurance contracts or other funding vehicles and all amendments thereto, (B)
all summaries and summary plan descriptions, including any summary of material
modifications (C) the most recent annual reports (Form 5500 series) filed with
the IRS with respect to such Company Benefit Plan (and, if the most recent
annual report is a Form 5500R, the most recent Form 5500C filed with respect to
such Company Benefit Plan), (D) the most recent actuarial report or other
financial statement relating to such Company Benefit Plan, (E) the most recent
determination or opinion letter, if any, issued by the IRS with respect to any
Company Benefit Plan and any pending request for such a determination letter,
(F) the most recent nondiscrimination tests performed under the Code (including
401(k) and 401(m) tests) for each Company Benefit Plan, (G) all filings made
with any Governmental Entities, including but not limited any filings under the
Voluntary Compliance Resolution or Closing Agreement Program or the Department
of Labor Delinquent Filer Program.
Section 3.12.2 Each Company Benefit Plan has been administered in
all material respects in accordance with its terms and all applicable Laws,
including ERISA and the
17
Code, and contributions required to be made under the terms of any of the
Company Benefit Plans as of the date of this Agreement have been timely made or,
if not yet due, have been properly reflected on the most recent consolidated
balance sheet filed or incorporated by reference in the Company SEC Filings
prior to the date of this Agreement. With respect to the Company Benefit Plans,
no event has occurred and, to the Company's knowledge, there exists no condition
or set of circumstances in connection with which the Company could be subject to
any material liability (other than for routine benefit liabilities) under the
terms of, or with respect to, such Company Benefit Plans, ERISA, the Code or any
other applicable Law.
Section 3.12.3 Except as disclosed on Section 3.12.3 of the
Company Disclosure Schedule: (A) to the Company's knowledge each Company Benefit
Plan which is intended to qualify under Section 401(a), Section 401(k), Section
401(m) or Section 4975(e)(6) of the Code has either received a favorable
determination letter from the IRS as to its qualified status or the remedial
amendment period for such Company Benefit Plan has not yet expired, and each
trust established in connection with any Company Benefit Plan which is intended
to be exempt from federal income taxation under Section 501(a) of the Code is so
exempt, and to the Company's knowledge no fact or event has occurred that could
adversely affect the qualified status of any such Company Benefit Plan or the
exempt status of any such trust, (B) to the Company's knowledge there has been
no prohibited transaction (within the meaning of Section 406 of ERISA or Section
4975 of the Code, other than a transaction that is exempt under a statutory or
administrative exemption) with respect to any Company Benefit Plan that could
result in liability to the Company or a Company ERISA Affiliate, (C) no suit,
administrative proceeding, action or other litigation has been brought, or to
the Company's knowledge is threatened, against or with respect to any such
Company Benefit Plan, including any audit or inquiry by the IRS or United States
Department of Labor (other than routine benefits claims), (D) no Company Benefit
Plan is a multiemployer pension plan (as defined in Section 3(37) of ERISA)
("Multiemployer Plan") or other pension plan subject to Title IV of ERISA and
neither the Company nor any ERISA Affiliate has sponsored or contributed to or
been required to contribute to a Multiemployer Plan or other pension plan
subject to Title IV of ERISA, (E) no material liability under Title IV of ERISA
has been incurred by the Company or any ERISA Affiliate that has not been
satisfied in full, and no condition exists that presents a material risk to the
Company or any Company ERISA Affiliate of incurring or being subject (whether
primarily, jointly or secondarily) to a material liability thereunder, (F) none
of the assets of the Company or any Company ERISA Affiliate is, or may
reasonably be expected to become, the subject of any lien arising under ERISA or
Section 412(n) of the Code, (G) neither the Company nor any ERISA Affiliate has
any liability under ERISA Section 502, and (H) all Tax, annual reporting and
other governmental filings required by ERISA and the Code have been timely filed
with the appropriate Governmental Entity and all notices and disclosures have
been timely provided to participants.
Section 3.12.4 Except as set forth on Section 3.12.4 of the
Company Disclosure Schedule, no amount that could be received (whether in cash
or property or the vesting of property) as a result of the consummation of the
transactions contemplated by this Agreement or any Ancillary Agreement by any
employee, officer or director of the Company or any Company Subsidiary who is a
"disqualified individual" (as such term is defined in proposed Treasury
Regulation Section 1.280G-1) under any Company Benefit Plan could be
characterized as an "excess parachute payment" (as defined in Section 280G(b)(1)
of the Code). Set forth in
18
Section 3.12.4 of the Company Disclosure Schedule is (A) the estimated maximum
amount that could be paid to any disqualified individual as a result of the
transactions contemplated by this Agreement under all employment, severance and
termination agreements, other compensation arrangements and Company Benefit
Plans currently in effect, and (B) the "base amount" (as defined in Section
280G(b)(e) of the Code) for each such individual as of the date of this
Agreement.
Section 3.12.5 Except as required by Law, no Company Benefit Plan
provides any of the following retiree or post-employment benefits to any person:
medical, disability or life insurance benefits. No Company Benefit Plan is a
voluntary employee benefit association under Section 501(a)(9) of the Code. The
Company and each ERISA Affiliates are in material compliance with (A) the
requirements of the applicable health care continuation and notice provisions of
the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended and the
regulations (including proposed regulations) thereunder and any similar state
law and (B) the applicable requirements of the Health Insurance Portability and
Accountability Act of 1996, as amended, and the regulations (including the
proposed regulations) thereunder.
Section 3.12.6 Neither the Company nor any of the Company
Subsidiaries maintains, sponsors, contributes or has any liability with respect
to any employee benefit plan program or arrangement that provides benefits to
non-resident aliens with no U.S. source income outside of the United States.
Section 3.12.7 There are no pending or threatened claims (other
than claims for benefits in the ordinary course), lawsuits or arbitrations which
have been asserted or instituted against any Company Benefit Plan, any
fiduciaries thereof with respect to their duties to the Company Benefit Plans or
the assets of any of the trusts thereunder which could reasonably be expected to
result in any material liability of the Company or any Company Subsidiary to the
PBGC, the Department of Treasury, the Department of Labor or any Multiemployer
Plan.
Section 3.13 Labor and Other Employment Matters.
Section 3.13.1 Except as would not reasonably be expected to have
a Company Material Adverse Effect, and except as to employees of the Company and
the Company Subsidiaries whose compensation is administered by the Management
Company, neither the Company, nor any Company Subsidiary is delinquent in
payments to any of its employees or any other person for any wages, salaries,
commissions, bonuses or other direct compensation for any services performed for
it or amounts required to be reimbursed to such employees. Except as would not
reasonably be expected to have a Company Material Adverse Effect, and except as
to employees of the Company and the Company Subsidiaries whose compensation is
administered by the Management Company, the Company and the Company Subsidiaries
are in compliance with all applicable material Laws respecting labor,
employment, fair employment practices, terms and conditions of employment,
workers' compensation, occupational safety, plant closings, and wages and hours.
Except as to employees of the Company and the Company Subsidiaries whose
compensation is administered by the Management Company, the Company and the
Company Subsidiaries has withheld all amounts required by Law or by agreement to
be withheld from the wages, salaries, and other payments to
19
employees or any other person, and is not liable for any arrears of wages or any
Taxes or any penalty for failure to comply with any of the foregoing. Except as
would not reasonably be expected to have a Company Material Adverse Effect, and
except as to employees of the Company and the Company Subsidiaries whose
compensation is administered by the Management Company, neither the Company nor
any Company Subsidiary is liable for any payment to any trust or other fund or
to any Governmental Entity, with respect to unemployment compensation benefits,
social security or other benefits or obligations for employees (other than
routine payments to be made in the ordinary course of business and consistent
with past practice). Except those contracts entered into by the Management
Company (acting as an agent of the Company), none of the Company or any Company
Subsidiary is a party to any collective bargaining or other labor union contract
applicable to persons employed by the Company or any Company Subsidiary, and no
collective bargaining agreement or other labor union contract is being
negotiated by Company or any Company Subsidiary. Except as to employees of the
Company and the Company Subsidiaries whose employment is administered by the
Management Company, there is no labor dispute, strike, slowdown or work stoppage
against the Company or any Company Subsidiary pending or, to the Company's
knowledge, threatened which may interfere in any respect with the respective
business activities of the Company or any Company Subsidiary. Except as to
employees of the Company and the Company Subsidiaries whose terms and conditions
of employment are determined by the Management Company, no labor union or
similar organization has otherwise been certified or recognized to represent any
persons employed by the Company or any Company Subsidiary or has applied to
represent such employees or is attempting to organize so as to represent such
employees.
Section 3.13.2 To the Company's knowledge, except as would not,
individually or in the aggregate, reasonably be expected to have a Company
Material Adverse Effect, and except for that which written notice has been
delivered or provided by the Company to the Management Company, (A) none of the
Company, any Company Subsidiary or their respective representatives or employees
has committed any unfair labor practices in connection with the operation of the
respective businesses of the Company or any Company Subsidiary, and there is no
charge or complaint against the Company or any Company Subsidiary by the
National Labor Relations Board or any comparable state or foreign agency pending
or, to the Company's knowledge, threatened, except where such unfair labor
practice, charge or complaint would not, individually or in the aggregate,
reasonably be expected to have a Company Material Adverse Effect; (B) there are
no material pending claims against the Company or any Company Subsidiary under
any workers' compensation plan or policy or for long term disability; (C) there
are no material controversies pending or, to the Company's knowledge,
threatened, between the Company and any of its respective current or former
employees, which controversies have or could reasonably be expected to result in
an action, suit, proceeding, claim, arbitration or investigation before any
Governmental Entity; (D) no employees of the Company or any Company Subsidiary
are in any material respect in violation of any term of any employment contract,
non-disclosure agreement, noncompetition agreement, or any restrictive covenant
to a former employer relating to the right of any such employee to be employed
by the Company or any Company Subsidiary because of the nature of the business
conducted or presently proposed to be conducted by the Company or any Company
Subsidiary or to the use of trade secrets or proprietary information of others;
(E) no employees of the Company or any Company Subsidiary have given notice to
the Company or any Company Subsidiary, nor is the Company or any
20
Company Subsidiary otherwise aware, that any such employee intends to terminate
his or her employment with the Company or any Company Subsidiary.
Section 3.13.3 Except with respect to those employees whose
compensation is administered by the Management Company, the Company has
identified in Section 3.13.3 of the Company Disclosure Schedule and has made
available to Parent true and complete copies of (A) all severance and employment
agreements with directors, officers or employees of or consultants to the
Company or any Company Subsidiary; (B) all severance programs and policies of
the Company and each Company Subsidiary with or relating to its employees; and
(C) all plans, programs, agreements and other arrangements of the Company and
each Company Subsidiary with or relating to its directors, officers, employees
or consultants which contain change in control provisions. Neither the execution
and delivery of this Agreement or any Ancillary Agreement nor the consummation
of the transactions contemplated hereby or thereby will (either alone or in
conjunction with any other event, such as termination of employment) (A) result
in any payment (including, without limitation, severance, unemployment
compensation, parachute or otherwise) becoming due to any director, officer or
any employee of the Company or any Company Subsidiary or affiliate from the
Company or any Company Subsidiary or affiliate under any Company Benefit Plan or
otherwise, (B) increase any benefits otherwise payable under any Company Benefit
Plan or (C) result in any acceleration of the time of payment or vesting of any
benefits. No individual who is a party to an employment agreement listed in
Section 3.13.3 of the Company Disclosure Schedule or any agreement incorporating
change in control provisions with the Company has terminated employment or been
terminated, nor has any event occurred that could give rise to a termination
event, in either case under circumstances that have given, or could give, rise
to a severance obligation on the part of the Company under such agreement.
Section 3.13.3 of the Company Disclosure Schedule sets forth the Company's best
estimates of the amounts payable to the executives and other persons listed
therein, as a result of the transactions contemplated by this Agreement, any
Ancillary Agreement and/or any subsequent employment termination (including any
cash-out or acceleration of options and restricted stock and any "gross-up"
payments with respect to any of the foregoing), based on compensation data
applicable as of the date of the Company Disclosure Schedule and the assumptions
stated thereon.
Section 3.14 Litigation. Except as and to the extent set forth in
Company SEC Filings filed prior to the date of this Agreement or with respect to
such matters which are controlled by the Management Company, (A) there is no
suit, claim, action, proceeding or investigation pending or, to the Company's
knowledge, threatened against the Company or any Company Subsidiary or for which
the Company or any Company Subsidiary is obligated to indemnify a third party
that (1) has had or would, individually or in the aggregate, reasonably be
expected to have a Company Material Adverse Effect or (2) challenges the
validity or propriety, or seeks to prevent or delay consummation of, the Merger
or any other transaction contemplated by this Agreement or any Ancillary
Agreement and (B) neither the Company nor any Company Subsidiary is subject to
any outstanding order, writ, injunction, decree or arbitration ruling, award or
other finding which has had or would, individually or in the aggregate,
reasonably be expected to (1) prevent or delay consummation of the Merger, (2)
otherwise prevent or delay performance by the Company of any of its obligations
under this Agreement or any Ancillary Agreement or (3) result in a Company
Material Adverse Effect.
21
Section 3.15 Environmental Matters. Except as would not, individually
or in the aggregate, reasonably be expected to have a Company Material Adverse
Effect:
Section 3.15.1 The Company and each Company Subsidiary (A) is in
compliance with all, and is not subject to any liability, in each case with
respect to any, applicable Environmental Laws, (B) holds or has applied for all
Environmental Permits necessary to conduct their current operations and (C) is
in compliance with their respective Environmental Permits.
Section 3.15.2 Neither the Company nor any Company Subsidiary has
received any written notice, demand, letter, claim or request for information
alleging that the Company or any Company Subsidiary may be in violation of, or
liable under, any Environmental Law.
Section 3.15.3 Neither the Company nor any Company Subsidiary (A)
has entered into or agreed to any consent decree or order or is subject to any
judgment, decree or judicial order relating to compliance with Environmental
Laws, Environmental Permits or the investigation, sampling, monitoring,
treatment, remediation, removal or cleanup of Hazardous Materials and, to the
Company's knowledge, no investigation, litigation or other proceeding is pending
or threatened in writing with respect thereto, or (B) is an indemnitor in
connection with any claim threatened or asserted in writing by any third-party
indemnitee for any liability under any Environmental Law or relating to any
Hazardous Materials.
Section 3.15.4 None of the real property owned or leased by the
Company or any Company Subsidiary is listed or, to the Company's knowledge,
proposed for listing on the "National Priorities List" under CERCLA, or any
similar state or foreign list of sites requiring investigation or cleanup.
Section 3.15.5 The Company has provided true and correct copies
of all reports, studies and other documentation regarding any applicable
environmental laws, environmental permits and hazardous materials to the Parent,
included but not limited to, phase one environmental site assessments and phase
two environmental studies.
Section 3.16 Insurance. The Company maintains or causes the Management
Company to maintain insurance coverage with reputable insurers, or maintains
self-insurance practices, in such amounts and covering such risks as are in
accordance with normal industry practice for companies engaged in businesses
similar to that of the Company.
Section 3.17 Opinion of Financial Advisors. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ &
▇▇▇▇▇ (the "Company Financial Advisor") has delivered to the Special Committee
and to the Company Board its written opinion that the Merger Consideration is
fair from a financial point of view to the holders of Company Common Stock
(other than Parent and any Parent Subsidiary).
Section 3.18 Vote Required. The affirmative vote of the holders of a
majority of the outstanding shares of Company Common Stock is the only vote, if
any, of the holders of any class or series of capital stock or other Equity
Interests of the Company necessary to approve this Agreement, the Ancillary
Agreements, the Merger and the other transactions contemplated hereby and
thereby (the "Requisite Stockholder Approval").
22
Section 3.19 Permits; Compliance with Gaming Laws.
Section 3.19.1 To the Company's knowledge, and except for such
matters for which the Management Company has sole responsibility pursuant to the
Management Agreement, each of the Company and the Company Subsidiaries, and each
of their respective directors, officers, persons performing management functions
similar to officers and, to the Company's knowledge, partners, is in possession
of all permits, registrations, findings of suitability, licenses, variances,
exemptions, certificates of occupancy, orders and approvals of all Governmental
Entities (including but not limited to all authorizations under the Company
Gaming Laws), necessary for the Company and the Company Subsidiaries to own,
lease and operate its properties and to conduct the business and operations of
the Company and the Company Subsidiaries in the manner described in the Company
SEC Filings filed prior to the date hereof and as it is being conducted as of
the date hereof (the "Company Permits"), and all of such Company Permits are
valid, and in full force and effect, except for where the failure to have, or
the suspension or cancellation of, or failure to be valid or in full force and
effect of, any of the Company Permits would not, individually or in the
aggregate, be reasonably expected to have a Company Material Adverse Effect and
no event has occurred which permits, or upon the giving of notice or passage of
time or both would permit, revocation, non-renewal, modification, suspension,
limitation or termination of any Company Permit that currently is in effect the
loss of which either individually or in the aggregate would be reasonably
expected to have a Company Material Adverse Effect. To the Company's knowledge,
each of the Company and the Company Subsidiaries, and each of their respective
directors, officers, persons performing management functions similar to officers
and, partners, are in compliance with the terms of the Company Permits, except
for such failures to comply, which individually or in the aggregate, would not,
individually or in the aggregate, be reasonably expected to have a Company
Material Adverse Effect. Except as disclosed in the Company SEC Filings filed
prior to the date of this Agreement, to the Company's knowledge, none of the
Company, the Company Subsidiaries or the businesses of the Company and the
Company Subsidiaries are being conducted in violation or default of or in
conflict with (A) any Law, ordinance or regulation of any Governmental Entity
(including, without limitation, any Company Gaming Laws), (B) any Law applicable
to the Company or any Company Subsidiary or by which any property or asset of
any Company Subsidiary is bound or affected or (C) any Company Permit, except
for possible violations, conflicts or defaults which individually or in the
aggregate do not and would not be reasonably expected to have a Company Material
Adverse Effect. The Company has received no notice of any investigation or
review by any Governmental Entity with respect to the Company or any of the
Company Subsidiaries that is pending, and, to the Company's knowledge, no
investigation or review is threatened, nor has any Governmental Entity indicated
any intention to conduct the same, other than those the outcome of which would
not, individually or in the aggregate, be reasonably expected to have a Company
Material Adverse Effect.
Section 3.19.2 Except as disclosed in Section 3.19.2 of the
Company Disclosure Schedule and except those received by the Management Company,
neither the Company nor any of the Company Subsidiaries, nor any of their
respective directors, officers, key employees or persons performing management
functions similar to officers or, to the Company's knowledge, partners of the
Company or any of the Company Subsidiaries has received any claim, demand,
notice, complaint, court order or administrative order from any Governmental
Entity since March 29, 2001 under, or relating to any violation or possible
23
violation of any Company Gaming Laws, except for such possible violations which
would not, individually or in the aggregate, have a Company Material Adverse
Effect. To the Company's knowledge, there are no facts unknown to the executive
officers of the Management Company, which if known to the regulators under the
Company Gaming Laws would be reasonably expected to result in the revocation,
limitation or suspension of a Company Permit, finding of suitability,
registration, or approval of it, any Company Subsidiary, or of any officer,
director, key employees or other person performing management functions similar
to an officer or partner, under any Company Gaming Laws. To the Company's
knowledge, neither the Company nor any of the Company Subsidiaries has suffered
a suspension or revocation of any Company Permit held under the Company Gaming
Laws.
Section 3.20 Disclosure Documents. (A) The Proxy Statement, as
supplemented or amended, if applicable, at the time such Proxy Statement or any
amendment or supplement thereto is first mailed to stockholders of the Company,
at the time such stockholders vote on adoption of this Agreement, and at the
Effective Time and (B) the Schedule 13E-3 and any Other Filings or any
supplement or amendment thereto, at the time of the filing thereof and at the
time of any distribution or dissemination thereof, in each case, will not
contain any untrue statement of a material fact or omit to state any material
fact necessary in order to make the statements made therein, in the light of the
circumstances under which they were made, not misleading. The representations
and warranties contained in this Section 3.20 will not apply to statements or
omissions included in the Proxy Statement or any Other Filings based upon
information furnished in writing to the Company by Parent, the Management
Company or Merger Sub specifically for use therein.
Section 3.21 Brokers. No broker, finder or investment banker (other
than the Company Financial Advisor) is entitled to any brokerage, finder's or
other fee or commission in connection with the Merger based upon arrangements
made by or on behalf of the Company or any Company Subsidiary. The Company has
heretofore made available to Parent a true and complete copy of all agreements
between the Company and the Company Financial Advisor pursuant to which such
firm would be entitled to any payment relating to the Merger or any other
transaction contemplated by this Agreement or any Ancillary Agreement.
ARTICLE 4.
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
Except as set forth in the Disclosure Schedule delivered by Parent and
Merger Sub to the Company prior to the execution of this Agreement (the "Parent
Disclosure Schedule"), which shall identify exceptions by specific Section
references, Parent and Merger Sub hereby jointly and severally represent and
warrant to the Company as follows:
Section 4.1 Organization and Qualification; Subsidiaries. Each of
Parent and Merger Sub is a corporation duly organized, validly existing and in
good standing, under the laws of the State of
Delaware, and has the requisite
power and authority and all necessary governmental approvals to own, lease and
operate its properties and to carry on its business as it is now being
conducted. Each of Parent and Merger Sub is duly qualified or licensed to do
business, and is in good standing, in each jurisdiction where the character of
the properties owned, leased or operated by it or the nature of its business
makes such qualification, licensing
24
or good standing necessary, except for such failures to be so qualified,
licensed or in good standing that would not, individually or in the aggregate,
reasonably be expected to have a Parent Material Adverse Effect.
Section 4.2 Authority; No Conflict.
Section 4.2.1 Each of Parent and Merger Sub has all necessary
corporate power and authority to execute and deliver this Agreement and each
Ancillary Agreement to which it is a party, to perform its obligations hereunder
and thereunder and to consummate the transactions contemplated by this Agreement
and each Ancillary Agreement to be consummated by it. The execution and delivery
of this Agreement and each Ancillary Agreement to which it is a party by each of
Parent and Merger Sub, as applicable, and the consummation by Parent and Merger
Sub of the transactions contemplated hereby and thereby have been duly and
validly authorized by all necessary corporate action (including approval by
Parent as the sole stockholder of the Merger Sub) and no other corporate
proceedings on the part of Parent and Merger Sub and no other stockholder votes
are necessary to authorize this Agreement or any such Ancillary Agreement or to
consummate the transactions contemplated hereby or thereby. This Agreement and
each Ancillary Agreement to which Parent or the Merger Sub is a party have been
duly authorized and validly executed and delivered by Parent and Merger Sub, as
applicable, and constitute a legal, valid and binding obligation of Parent and
Merger Sub, enforceable against Parent and Merger Sub in accordance with their
terms except to the extent that the enforceability thereof may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other similar
laws generally affecting creditors' rights and by equitable principles
(regardless of whether enforcement is sought in equity or at law).
Section 4.2.2 The execution and delivery of this Agreement and
each Ancillary Agreement to which it is a party by Parent or Merger Sub does
not, and the performance of this Agreement and each Ancillary Agreement to which
it is a party by the Parent and Merger Sub will not, (A) conflict with or
violate any provision of the Parent Certificate or Parent By-laws or any
equivalent organizational documents of Merger Sub, or (B) require any consent or
approval under, result in any breach of or any loss of any benefit under, or
constitute a change of control or default (or an event which with notice or
lapse of time or both would become a default) under, or give to others any right
of termination, vesting, amendment, acceleration or cancellation of, or result
in the creation of a lien or other encumbrance on any property or asset of
Parent or any Parent Subsidiary pursuant to, any note, bond, mortgage,
indenture, material agreement, material lease or material license, to which
Parent is a party, except in any such case for any matters described in Section
4.2.2(B) above that would not be reasonably likely to prevent Parent or Merger
Sub from performing its obligations under this Agreement or any Ancillary
Agreement (to which Parent or Merger Sub is a party) in all material respects.
Section 4.3 Ownership of Merger Sub; No Prior Activities.
Section 4.3.1 Merger Sub was formed solely for the purpose of
engaging in the transactions contemplated by this Agreement.
25
Section 4.3.2 Parent has delivered to the Company a true and
correct copy of the organizational documents of Merger Sub.
Section 4.3.3 Except for obligations or liabilities incurred in
connection with its incorporation or organization and the transactions
contemplated by this Agreement and each Ancillary Agreement, Merger Sub has not
and will not have incurred, directly or indirectly, through any subsidiary or
affiliate, any obligations or liabilities or engaged in any business activities
of any type or kind whatsoever or entered into any agreements or arrangements
with any person.
Section 4.4 Brokers. No broker, finder or investment banker (other
than Bear ▇▇▇▇▇▇▇ & Co., Inc., Parent's financial advisor) is entitled to any
brokerage, finder's or other fee or commission in connection with the Merger
based upon arrangements made by or on behalf of Parent or any Parent Subsidiary.
ARTICLE 5.
ADDITIONAL AGREEMENTS
Section 5.1 Conduct of Business by the Company Pending the Effective
Time. The Company shall conduct its business in the ordinary course consistent
with past practice. Furthermore, the Company expressly agrees and undertakes
that, between the date of this Agreement and the Effective Time, except as set
forth in Section 5.1 of the Company Disclosure Schedule or as specifically
permitted by any other provision of this Agreement, unless Parent shall
otherwise agree in writing: the Company will, and will cause each Company
Subsidiary to, (A) subject to the restrictions set forth in this Section 5.1,
conduct its operations only in the ordinary and usual course of business
consistent with past practice and in substantially the same manner as heretofore
conducted and in compliance in all material respects with all applicable Laws,
ordinances, rules and regulations of any Governmental Entity, (B) pay debts and
Taxes when due subject to good faith disputes over such debts or Taxes, (C) pay
or perform other material obligations when due subject to good faith disputes
over such obligations, (D) use its reasonable best efforts to preserve
substantially intact the business organization of the Company and the Company
Subsidiaries, and to preserve the current relationships of the Company and each
Company Subsidiary with such of the customers, suppliers and other persons with
which the Company or any Company Subsidiary has significant business relations,
with the intention that its goodwill and ongoing business will be unimpaired at
the Effective Time, (E) maintain its books, accounts and records in its usual
manner consistent with past practices, (F) maintain and keep its properties and
equipment in good repair, working order and condition (except ordinary wear and
tear) and (G) notify Parent in writing of any material event involving its or
any of the Company Subsidiaries' business or operations promptly upon its
occurrence. Notwithstanding the foregoing, nothing in this Section 5.1 shall
prohibit, prevent or otherwise restrict the ability or the obligations of the
Management Company to take any action, to manage the Company's casino business
or to otherwise fulfill its obligations under the Management Agreement. Without
limiting the foregoing, and as an extension thereof, except as specifically
permitted by any other provision of this Agreement and except as set forth in
Section 5.1 of the Company Disclosure Schedule, the Company shall not (unless
required by applicable Law or the regulations or requirements of any stock
exchange or regulatory organization applicable to the Company), and shall not
permit any Company Subsidiary to, between the date of this Agreement
26
and the Effective Time, directly or indirectly, do, or agree to do or authorize
or enter into a contract, agreement or otherwise make a commitment to do, any of
the following without the prior written consent of Parent:
Section 5.1.1 amend or otherwise change its certificate of
incorporation or By-laws or equivalent organizational documents;
Section 5.1.2 (A) issue, sell, pledge, dispose of, grant,
transfer, encumber, or authorize the issuance, sale, pledge, disposition, grant,
transfer, or encumbrance of any shares of capital stock of, or other Equity
Interests in, the Company or any Company Subsidiary of any class, or securities
convertible or exchangeable or exercisable for any shares of such capital stock
or other Equity Interests, or any options, warrants or other rights of any kind
to acquire any shares of such capital stock or other Equity Interests or such
convertible or exchangeable securities, or any other ownership interest
(including, without limitation, any such interest represented by contract right)
or "phantom" stock, "phantom" stock rights, stock appreciation rights or stock
based performance units, of the Company or any Company Subsidiary, other than
the issuance of shares of Company Common Stock upon the exercise of Company
Options outstanding as of the date hereof in accordance with their terms or (B)
sell, pledge, dispose of, transfer, lease, license, guarantee or encumber,
including by operation of Law or authorize the sale, pledge, disposition,
transfer, lease, license, guarantee or encumbrance of, any material property or
assets (including Intellectual Property and Company Real Property) of the
Company or any Company Subsidiary, except pursuant to existing contracts or
commitments or the sale or purchase of goods in the ordinary course of business
consistent with past practice;
Section 5.1.3 declare, set aside, make or pay any dividend or
other distribution (whether payable in cash, stock, property or a combination
thereof) with respect to any of its capital stock or enter into any agreement
with respect to the voting of its capital stock;
Section 5.1.4 reclassify, combine, split, exchange, recapitalize,
subdivide or redeem, purchase or otherwise acquire, directly or indirectly, any
of its capital stock, other Equity Interests or other securities;
Section 5.1.5 (i) (A) acquire (including, without limitation, by
merger, consolidation, or acquisition of stock or assets) any interest in any
person or any division thereof or any assets, (B) enter into any joint ventures,
strategic alliances or partnerships (other than as may be entered into by the
Management Company on behalf of the Company or the Company Subsidiaries pursuant
to the Management Agreement), or (C) otherwise enter into any other contracts,
agreements, transactions or understandings which, in the aggregate, involve
expenditures in excess of $50,000 or otherwise are not cancelable within one
year, (ii) incur any indebtedness for borrowed money or issue any debt
securities or assume, guarantee or endorse, or otherwise as an accommodation
become responsible for, the obligations of any person for borrowed money, or
enter into any "keep well" or other agreement to maintain any financial
statement condition of another person or enter into any derivative contracts or
make investments in marketable securities, (iii) terminate, cancel, amend or
request any material change in, or agree to any material change in, any Company
Material Contract, (iv) enter into (A) any licensing, distribution, marketing,
reseller, merchant services, advertising, sponsorship or other similar agreement
other than in the ordinary course of business consistent with past practice,
27
(B) any contracts, agreements, or obligations granting any non-competition,
exclusive distribution or other exclusive rights, (C) any contracts, agreements
or obligations with affiliates of the Company or any Company Subsidiary (other
than Parent or any Parent Subsidiary), regardless of whether such transaction
may otherwise be in accordance with any other provision of this Agreement or (D)
any contract, agreement or obligation with any of the Company's officers,
directors or employees, (E) any contracts that would have been Company Material
Contracts if they had been entered into prior to the date hereof, (F) enter into
or amend any contract, agreement, commitment or arrangement that, if fully
performed, would not be permitted under this Section 5.1 or (G) make or
authorize any capital expenditures, or (v) terminate, cancel, amend or request
any change in or agree to any change in, or otherwise take any action with
respect to, the Management Agreement;
Section 5.1.6 make any payments to non-employee service
providers, including without limitation attorneys, accountants, architects and
consultants, in excess of $10,000 individually, or $25,000 in the aggregate.
Section 5.1.7 transfer or license to any person or otherwise
extend, amend or modify in any material respect any rights to the Company's
Intellectual Property;
Section 5.1.8 except as may be required by contractual
commitments or corporate policies with respect to severance or termination pay
in existence on the date of this Agreement as disclosed in Section 3.12.1 of the
Company Disclosure Schedule: (A) increase the compensation or benefits payable
or to become payable to any of its directors, officers or employees, (B) grant
any rights to severance or termination pay to, or enter into any employment or
severance agreement with, any director, officer or other employee of the Company
or any Company Subsidiary, (C) establish, adopt, enter into or amend any
collective bargaining, bonus, profit sharing, thrift, compensation, stock
option, restricted stock, pension, retirement, deferred compensation,
employment, termination, severance or other plan, agreement, trust, fund, policy
or arrangement for the benefit of any director, officer or employee, except to
the extent required by applicable Law, ordinance, rule or regulation of any
Governmental Entity or the terms of a collective bargaining agreement in
existence on the date of this Agreement, (D) take any affirmative action to
amend or waive any performance or vesting criteria or accelerate vesting,
exercisability or funding under any Company Benefit Plan or pay any benefit not
required by any Company Benefit Plan or (E) change in any material respect any
management policies or procedures;
Section 5.1.9 (A) pre-pay any debt or pay, discharge or satisfy
any claims, liabilities or obligations (absolute, accrued, contingent or
otherwise), except as may be required in any existing credit agreement between
the Company and Company Subsidiaries and any other person or in the ordinary
course of business consistent with past practice and in accordance with their
terms, (B) accelerate or delay collection of notes or accounts receivable in
advance of or beyond their regular due dates or the dates when the same would
have been collected in the ordinary course of business consistent with past
practice, (C) delay or accelerate payment of any account payable or other
obligation or liability in advance of its due date or the date such liability
would have been paid in the ordinary course of business consistent with past
practice, or (D) vary the Company's inventory practices in any material respect
from the Company's past practices;
28
Section 5.1.10 fail to maintain its existing insurance coverage
of all types in effect or, in the event any such coverage shall be terminated or
lapse, procure substantially similar substitute insurance policies which in all
material respects provide coverage in at least such amounts and insure against
such risks as are currently covered by such policies;
Section 5.1.11 make any change in accounting policies or
procedures, other than in the ordinary course of business consistent with past
practice or except as required by GAAP or by a Governmental Entity;
Section 5.1.12 initiate, waive, release, assign, settle or
compromise any contingent claims, suit, proceedings, investigations, actions, or
any litigation or arbitration;
Section 5.1.13 make or rescind any express or deemed election
relating to Taxes, settle or compromise any claim, action, suit, litigation,
proceeding, arbitration, investigation, audit or controversy relating to Taxes,
or except as may be required by applicable law, make any change to any of its
material methods of reporting income or deductions for Federal income tax
purposes from those employed in the preparation of its Federal income Tax Return
for any taxable year ending after December 31, 1998;
Section 5.1.14 modify, amend or terminate, or waive, release or
assign any rights or claims with respect to any confidentiality or standstill
agreement to which the Company or any Company Subsidiary is a party;
Section 5.1.15 write up, write down or write off the book value
of any assets;
Section 5.1.16 take any action to exempt or make not subject to
(A) the provisions of Section 203 of the DGCL or, (B) any other state takeover
law or state law that purports to limit or restrict business combinations or the
ability to acquire or vote shares, any person or entity (other than Parent,
Merger Sub and any Parent Subsidiary) or any action taken thereby, which person,
entity or action would have otherwise been subject to the restrictive provisions
thereof and not exempt therefrom;
Section 5.1.17 form any Subsidiary;
Section 5.1.18 pledge, commit or provide funds to any charitable
or community organization;
Section 5.1.19 dissolve, liquidate or otherwise terminate the
existence in good standing of the Company or any Company Subsidiary under
applicable law;
Section 5.1.20 take any action with respect to the Company's food
and beverage services, parking facilities and services, any hotel development
activities, the second floor of the Company's casino facilities, the Company
Real Property located on ▇▇▇▇▇▇ Street, or facilities of the Company or any
Company Subsidiary;
29
Section 5.1.21 except as permitted by Section 5.6.1, take any
action that is intended or would reasonably be expected to result in any of the
conditions to the Merger set forth in Article 6 not being satisfied; or
Section 5.1.22 authorize or enter into any agreement or otherwise
make any commitment to do any of the foregoing.
Notwithstanding the foregoing, no action or inaction by the Management
Company, except for such action and inaction directed by the Company or any
Company Subsidiary, shall constitute a breach or violation by the Company of
this Section 5.1.
Section 5.2 Cooperation. The Company and Parent shall coordinate and
cooperate in connection with (A) the preparation of the Proxy Statement, the
Schedule 13E-3 and any Other Filings, (B) determining whether any action by or
in respect of, or filing with, any Governmental Entity is required, or any
actions, consents, approvals or waivers are required to be obtained from parties
to any Company Material Contracts, in connection with the consummation of the
Merger and (C) seeking any such actions, consents, approvals or waivers or
making any such filings, furnishing information required in connection therewith
or with the Proxy Statement, the Schedule 13E-3 or any Other Filings and timely
seeking to obtain any such actions, consents, approvals or waivers.
Section 5.3 Proxy Statement and Schedule 13E-3.
Section 5.3.1 As promptly as practicable after the execution of
this Agreement, the Company and Parent shall cooperate and promptly prepare and
file with the SEC a proxy statement relating to the meeting of the Company's
stockholders to be held in connection with the Merger (together with any
amendments thereof or supplements thereto, the "Proxy Statement") and a joint
Rule 13e-3 Transaction Statement on Schedule 13E-3 (the "Schedule 13E-3") with
respect to the Merger and any Other Filings, if any. The respective parties
shall cause the Proxy Statement and the Schedule 13E-3 to comply as to form in
all material respects with the applicable provisions of the Exchange Act and the
rules and regulations promulgated thereunder, including Regulation 14A and Rule
13e-3. The respective parties, after consultation with the other, will use all
reasonable efforts to respond to any comments made by the SEC with respect to
the Proxy Statement, any Other Filings and the Schedule 13E-3. Parent and the
Company shall furnish to each other all information concerning it and the
holders of its capital stock as the other may reasonably request in connection
with such actions and the preparation of the Proxy Statement, any Other Filings
and the Schedule 13E-3. As promptly as practicable after the clearance of the
Proxy Statement and the Schedule 13E-3 by the SEC, the Company shall mail the
Proxy Statement to its stockholders (or, if the SEC chooses not to review the
Proxy Statement and the Schedule 13E-3, within 10 days after the date that the
SEC notifies the Company that it will not review the Proxy Statement). The Proxy
Statement shall include the recommendation of the Company Board that adoption of
the
Merger Agreement by the Company's stockholders is advisable and that the
Company Board has determined that the Merger is fair and in the best interests
of the Company's stockholders.
No amendment or supplement (other than pursuant to Section 425 of the
Securities Act with respect to releases made in compliance with Section 5.9) to
the Proxy
30
Statement, the Schedule 13E-3 or any Other Filings will be made by the Company
without the approval of Parent. The Company will advise Parent, promptly after
it receives notice thereof, of any request by the SEC for amendment of the Proxy
Statement or any Other Filings or comments thereon and responses thereto or
requests by the SEC for additional information.
Section 5.3.2 Each of the parties agrees to use its best efforts
to cooperate and to provide each other with such information as any of such
parties may reasonably request in connection with the preparation of the Proxy
Statement, the Other Filings and the Schedule 13E-3. Each party agrees promptly
to supplement, update and correct any information provided by it for use in the
Proxy Statement, the Other Filings and the Schedule 13E-3 if and to the extent
that it is of shall have become incomplete, false or misleading. If at any time
prior to the Effective Time, any event or circumstance relating to Parent or
Parent Subsidiary or the respective officers and directors, should be discovered
by Parent which should be set forth in an amendment to the Proxy Statement,
Other Filings or Schedule 13E-3, Parent shall promptly inform the Company. If at
any time prior to the Effective Time, any event or circumstance relating to the
Company or any Company Subsidiary, or their respective officers or directors,
should be discovered by the Company which should be set forth in an amendment or
a supplement to the Proxy Statement, any Other Filing or the Schedule 13E-3, the
Company shall promptly inform Parent. All documents that the Company is
responsible for filing in connection with the transactions contemplated herein
will comply as to form and substance in all material respects with the
applicable requirements of the Exchange Act, the rules and regulations,
thereunder and other applicable Laws.
Section 5.4 Stockholders' Meetings. In accordance with the Company's
Certificate of Incorporation and By-Laws, the Company shall call and hold a
meeting of its stockholders (the "Company Stockholders' Meeting") as promptly as
practicable for the purpose of voting upon the approval of the Merger, and the
Company shall use its best efforts to hold the Company Stockholders' Meeting as
promptly as practicable after the date on which the Proxy Statement is cleared
by the SEC.
Section 5.5 Access to Information; Confidentiality. From the date of
this Agreement to the Effective Time, the Company shall, and shall cause each
Company Subsidiary and each of their respective directors, officers, employees,
accountants, consultants, legal counsel, advisors, and agents and other
representatives (collectively, "Company Representatives") to: (A) provide to
Parent and Merger Sub and their respective officers, directors, employees,
accountants, consultants, legal counsel, advisors, agents and other
representatives (collectively, "Parent Representatives')) access at reasonable
times upon prior notice to the officers, employees, agents, properties, offices
and other facilities of such party and its subsidiaries and to the books and
records thereof and (B) furnish promptly such information concerning the
business, properties, contracts, assets, liabilities, personnel and other
aspects of such party and its subsidiaries as the Parent or the Parent
Representatives may reasonably request. No investigation conducted pursuant to
this Section 5.5 shall affect or be deemed to modify or limit any representation
or warranty made in this Agreement.
31
Section 5.6 No Solicitation of Transactions.
Section 5.6.1 None of the Company or any Company Subsidiary
shall, directly or indirectly, take (and the Company shall not authorize or
permit the Company Representatives or, to the extent within the Company's
control, other affiliates to take) any action to (A) encourage (including by way
of furnishing non-public information), solicit, initiate or facilitate any
Acquisition Proposal, (B) enter into any agreement with respect to any
Acquisition Proposal or enter into any agreement, arrangement or understanding
requiring it to abandon, terminate or fail to consummate the Merger or any other
transaction contemplated by this Agreement or (C) participate in any way in
discussions or negotiations with, or furnish any information to, any person in
connection with, or take any other action to facilitate any inquiries or the
making of any proposal that constitutes, or could reasonably be expected to lead
to, any Acquisition Proposal; provided, however, that prior to the Company
receiving the Requisite Stockholder Approval, this Section 5.6 shall not
prohibit the Company from furnishing nonpublic information regarding the Company
or any Company Subsidiary to a person making an unsolicited Qualifying
Acquisition Proposal submitted to the Company by such person (and not withdrawn)
if (i) neither the Company nor any Representative of any of the Company or any
Company Subsidiary shall have violated the provisions of this Section 5.6, and
(ii) the Company Board concludes in good faith by majority vote of those
directors entitled to vote thereon, after having taken into account the advice
of the Special Committee and upon receiving the opinion of its outside legal
counsel, that such action is necessary for the Company Board to comply with its
fiduciary obligations to the Company's stockholders.
For purposes of this Section 5.6.1, a "Qualifying Acquisition
Proposal" shall mean an offer to purchase for cash, at a price per share of at
least 115% of the Merger Consideration, all outstanding capital stock of the
Company from a person that has demonstrated (to the satisfaction of all Non-HET
Nominated Directors and Non-HET Affiliated Directors, as such terms are defined
in the Company Certificate) the financial ability to consummate such a purchase.
Section 5.6.2 The Company shall, as promptly as practicable (and
in no event later than 24 hours after receipt thereof), advise Parent of any
inquiry received by it relating to any potential Acquisition Proposal and of the
material terms of any proposal or inquiry, including the identity of the person
and its affiliates making the same, that it may receive in respect of any such
potential Acquisition Proposal, or of any information requested from it or of
any negotiations or discussions being sought to be initiated with it, shall
furnish to Parent a copy of any such proposal or inquiry, if it is in writing,
or a written summary of any such proposal or inquiry, if it is not in writing
and shall keep Parent fully informed on a prompt basis with respect to any
developments with respect to the foregoing.
Section 5.6.3 Neither the Company Board nor any committee
thereof, including the Special Committee, shall (A) withdraw or modify, or
propose publicly to withdraw or modify, in a manner adverse to Parent, the
approval or recommendation by the Company Board or such committee of the
adoption and approval of the Merger and the matters to be considered at the
Company Stockholders' Meeting, (B) other than the Merger, approve or recommend,
or propose publicly to approve or recommend, any Acquisition Proposal, or (C)
32
other than the Merger, cause the Company to enter into any letter of intent,
agreement in principle, acquisition agreement or other similar agreement related
to any Acquisition Proposal.
Section 5.7 Appropriate Action; Consents; Filings.
Section 5.7.1 The Company and Parent shall use their reasonable
best efforts to (A) take, or cause to be taken, all appropriate action, and do,
or cause to be done, all things necessary, proper or advisable under any
applicable Law or otherwise to consummate and make effective the transactions
contemplated by this Agreement and each Ancillary Agreement as promptly as
practicable, (B) obtain from any Governmental Entities any consents, licenses,
permits, waivers, approvals, authorizations or orders required to be obtained or
made by Parent or the Company or any of their respective Subsidiaries, or to
avoid any action or proceeding by any Governmental Entity (including, without
limitation, those in connection with the Company Gaming Laws), in connection
with the authorization, execution and delivery of this Agreement and each
Ancillary Agreement and the consummation of the transactions contemplated herein
and therein, including, without limitation, the Merger, and (C) make all
necessary filings, and thereafter make any other required submissions, with
respect to this Agreement and each Ancillary Agreement and the Merger required
under (w) the Exchange Act, and any other applicable federal or state securities
Laws, (x) Company Gaming Laws, and (z) any other applicable Law; provided, that
Parent and the Company shall cooperate with each other in connection with the
making of all such filings, including providing copies of all such documents to
the non-filing party and its advisors prior to filing and, if requested, to
accept all reasonable additions, deletions or changes suggested in connection
therewith and, provided, however, that nothing in this Section 5.7.1 shall
require Parent to agree to (AA) the imposition of conditions, (BB) the
requirement of divestiture of assets or property or (CC) the requirement of
expenditure of money by Parent or the Company to a third party in exchange for
any such consent. The Company and Parent shall furnish to each other all
information required for any application or other filing under the rules and
regulations of any applicable Law (including all information required to be
included in the Proxy Statement and the Schedule 13E-3) in connection with the
transactions contemplated by this Agreement and each Ancillary Agreement.
Section 5.7.2 The Company and Parent shall give (or shall cause
their respective Subsidiaries to give) any notices to third parties, and use,
and cause their respective Subsidiaries to use, all reasonable efforts to obtain
any third party consents, (A) necessary, proper or advisable to consummate the
transactions contemplated in this Agreement and each Ancillary Agreement, (B)
required to be disclosed in the Company Disclosure Schedule or the Parent
Disclosure Schedule, as applicable, (C) required to prevent a Company Material
Adverse Effect from occurring prior to or after the Effective Time or a Parent
Material Adverse Effect from occurring after the Effective Time, or (D)
otherwise referenced in Section 6.2.3. In the event that either party shall fail
to obtain any third party consent described in the first sentence of this
Section 5.7.2, such party shall use all reasonable efforts, and shall take any
such actions reasonably requested by the other party hereto, to minimize any
adverse effect upon the Company and Parent, their respective Subsidiaries, and
their respective businesses resulting, or which could reasonably be expected to
result after the Effective Time, from the failure to obtain such consent.
33
Section 5.7.3 From the date of this Agreement until the Effective
Time, the Company shall promptly notify Parent in writing of any pending or, to
the Company's knowledge, threatened action, suit, arbitration or other
proceeding or investigation by any Governmental Entity or any other person (A)
challenging or seeking damages in connection with the Merger or the conversion
of Company Common Stock into the Merger Consideration pursuant to the Merger or
(B) seeking to restrain or prohibit the consummation of the Merger or otherwise
limit the right of Parent or any Parent Subsidiary to own or operate all or any
portion of the businesses or assets of the Company or any Company Subsidiary.
Section 5.8 Certain Notices. From and after the date of this Agreement
until the Effective Time, each party hereto shall promptly notify the other
party hereto of (A) the occurrence, or non-occurrence, of any event that would
be likely to cause any condition to the obligations of any party to effect the
Merger and the other transactions contemplated by this Agreement or any
Ancillary Agreement not to be satisfied or (B) the failure of the Company or
Parent, as the case may be, to comply with or satisfy any covenant, condition or
agreement to be complied with or satisfied by it pursuant to this Agreement or
any Ancillary Agreement which would reasonably be expected to result in any
condition to the obligations of any party to effect the Merger and the other
transactions contemplated by this Agreement or any Ancillary Agreement not to be
satisfied; provided, however, that the delivery of any notice pursuant to this
Section 5.8 shall not cure any breach of any representation or warranty
requiring disclosure of such matter prior to the date of this Agreement or
otherwise limit or affect the remedies available hereunder to the party
receiving such notice.
Section 5.9 Public Announcements. Parent and the Company shall consult
with each other before issuing any press release or otherwise making any public
statements with respect to the Merger and shall not issue any such press release
or make any such public statement prior to such consultation. Parent and the
Company agree that the initial press release to be issued with respect to the
transactions contemplated by this Agreement shall be in the form attached hereto
as Annex C.
Section 5.10 Employee Benefit Matters. With respect to any "employee
benefit plan" as defined in Section 3(3) of ERISA maintained by Parent or any
Parent Subsidiary (collectively, the "Parent Benefit Plans") in which any
director, officer or employee of the Company or any Company Subsidiary (the
"Company Employees") will participate effective as of the Effective Time, Parent
shall, or shall cause the Surviving Corporation to, recognize all service of the
Company Employees with the Company or a Company Subsidiary, as the case may be,
for purposes of vacation and severance and participation in, but not for
purposes of benefit accrual, in any Parent Benefit Plan in which such Company
Employees may be eligible to participate after the Effective Time.
Section 5.11 Indemnification of Directors and Officers.
Section 5.11.1 After the Effective Time, through the sixth
anniversary of the Effective Time, the Surviving Corporation shall indemnify and
hold harmless each present (as of the Effective Time) and former officer and
director of the Company or any Company Subsidiary (the "Indemnified Parties"),
against all claims, losses, liabilities, damages, judgments, fines and
reasonable fees, costs and expenses (including reasonable attorneys' fees and
expenses)
34
incurred in connection with any claim, action, proceeding or investigation,
whether civil, criminal, administrative or investigative, arising out of or
pertaining to such officer's or director's actions taken in good faith (and in a
manner reasonably believed to be in or not opposed to the best interests of the
Company) with respect to the Merger and this Agreement, whether asserted or
claimed prior to, at or after the Effective Time, to the fullest extent
permitted under applicable law and to the same extent as provided in the Company
Certificate or Company By-Laws in effect on the date hereof; provided that no
Indemnified Party may settle any such claim without the prior approval of the
Surviving Corporation (which approval shall not be unreasonably withheld or
delayed).
Section 5.11.2 Parent and the Surviving Corporation agree that
the indemnification obligations set forth in the Company Certificate and the
Company By-laws, in each case as of the date of this Agreement, shall survive
the Merger (and, prior to the Effective Time, Parent shall cause the Certificate
of Incorporation and By-laws of Merger Sub to reflect such provisions) and shall
not be amended, repealed or otherwise modified for a period of six years after
the Effective Time in any manner that would adversely affect the rights
thereunder of any individual who on or prior to the Effective Time was a
director, officer, trustee, fiduciary, employee or agent of the Company or any
Company Subsidiary or who served at the request of the Company or any Company
Subsidiary as a director, officer, trustee, partner, fiduciary, employee or
agent of another corporation, partnership, joint venture, trust, pension or
other employee benefit plan or enterprise, unless such amendment or modification
is required by Law.
Section 5.11.3 For six years from the Effective Time, the
Surviving Corporation shall provide to the Company's current and former
directors and officers an insurance and indemnification policy that provides
coverage for events occurring prior to the Effective Time (the "D&O Insurance")
that is no less favorable than the Company's existing policy (true and complete
copies which have been previously provided to Parent) or, if substantially
equivalent insurance coverage is unavailable, the best available coverage;
provided, however, that the Surviving Corporation shall not be required to pay
an annual premium for the D&O Insurance in excess of 200% of the last annual
premium paid prior to the date of this Agreement, which premium the Company
represents and warrants to be approximately $360,000. The provisions of the
immediately preceding sentence shall be deemed to have been satisfied if prepaid
policies have been obtained prior to the Effective Time for purposes of this
Section 5.11.3, which policies provide such directors and officers with coverage
for an aggregate period of three years with respect to claims arising from facts
or events that occurred on or before the Effective Time, including, without
limitation, in respect of the transactions contemplated by this Agreement. If
such prepaid policies have been obtained prior to the Effective Time, Parent
shall, and shall cause the Surviving Corporation to, maintain such policies in
full force and effect, and continue to honor the obligations thereunder. The
obligations under this Section 5.11 shall not be terminated or modified in such
a manner as to adversely affect any indemnitee to whom this Section 5.11 applies
without the consent of such affected indemnitee (it being expressly agreed that
the indemnitees to whom this Section 5.11 applies shall be third party
beneficiaries of this Section 5.11).
Section 5.11.4 In the event Parent or the Surviving Corporation
(A) consolidates with or merges into any other person and shall not be the
continuing or surviving corporation or entity of such consolidation or merger or
(B) transfers all or substantially all of its
35
properties and assets to any person, then, and in each such case, proper
provisions shall be made so that such continuing or surviving corporation or
entity or transferee of such assets, as the case may be, shall assume the
obligations set forth in this Section 5.11.
ARTICLE 6.
CLOSING CONDITIONS
Section 6.1 Conditions to Obligations of Each Party Under This
Agreement. The respective obligations of each party to effect the Merger and the
other transactions contemplated herein shall be subject to the satisfaction at
or prior to the Effective Time of the following conditions, any or all of which
may be waived, in whole or in part, to the extent permitted by applicable Law:
Section 6.1.1 Stockholder Approval. The Requisite Stockholder
Approval shall have been obtained.
Section 6.1.2 No Order. No Governmental Entity, nor any federal
or state court of competent jurisdiction or arbitrator shall have enacted,
issued, promulgated, enforced or entered any statute, rule, regulation,
executive order, decree, judgment, injunction or order (whether temporary,
preliminary or permanent), in any case which is in effect and which prevents or
prohibits consummation of the Merger.
Section 6.2 Additional Conditions to Obligations of Parent and Merger
Sub. The obligations of Parent and Merger Sub to effect the Merger and the other
transactions contemplated herein are also subject to the following conditions
(which may be waived in Parent's sole and absolute discretion):
Section 6.2.1 Representations and Warranties. (A) Each of the
representations and warranties of the Company contained in this Agreement that
are qualified by materiality or Company Material Adverse Effect shall be true
and correct as of the date hereof and as of the Effective Time as though made on
and as of the Effective Time, (except that those representations and warranties
which address matters only as of a particular date need only be true and correct
as of such date); (B) all representations and warranties which are not so
qualified shall be true and correct in all respects (except that those
representations and warranties which address matters only as of a particular
date need only remain true and correct in all respects as of such date) except
for such breaches of any representation and warranty which, individually or in
the aggregate, would not reasonably be expected to have a Company Material
Adverse Effect; and (C) the representations and warranties of the Company set
forth in Section 3.3 shall be true and correct in all respects as of the date
hereof and as of the Effective Time as though made on and as of the Effective
Time. Parent shall have received a certificate of the Chief Executive Officer of
the Company dated as of the Effective Date certifying as to (A), (B) and (C)
above.
Section 6.2.2 Agreements and Covenants. The Company shall have
performed or complied in all material respects with all agreements and covenants
required by this Agreement to be performed or complied with by it on or prior to
the Effective Time. Parent shall have received a certificate of the Chief
Executive Officer of the Company certifying as to its performance or compliance.
36
Section 6.2.3 Consents and Approvals. All consents, approvals and
authorizations listed in Section 3.4, or required to be set forth in the related
section of the Company Disclosure Schedule shall have been obtained in each
case, without (A) the imposition of conditions, (B) the requirement of
divestiture of assets or property or (C) the requirement of expenditure of money
by Parent to a third party in exchange for any such consent.
Section 6.2.4 Disinterested Stockholder Approval. The Company
shall have received the affirmative vote of the holders of a majority of the
outstanding shares of Company Common Stock not held by Parent, any Parent
Subsidiary and their respective officers and directors.
Section 6.2.5 Litigation. The Company shall have dismissed the
action pending in the Louisiana Civil District Court of New Orleans, Jazz Casino
Co., LLC and
JCC Holding Co. ▇. ▇▇▇▇▇▇'▇ New Orleans Mgmt. Co., et. al., No.
02-6098, and shall have either (a) dismissed the proceeding pending in the
Delaware Court of Chancery entitled ▇▇▇▇▇▇'▇ Enter., Inc. v.
JCC Holding
Company, Civil Action No. 19479, and any appeals thereof including that certain
appeal pending in the Supreme Court of the State of
Delaware (No. 331,2002) or
(b) shall have executed all documents, in a form satisfactory to Parent
necessary to permit Parent to dismiss such lawsuit immediately following the
Effective Time.
Section 6.2.6 Dissenting Shares. The total number of Dissenting
Shares shall not exceed 10% of the outstanding shares of Company Common Stock at
the Effective Time.
Section 6.2.7 Separation Agreements. The Separation Agreements
entered into by ▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇▇▇▇▇ shall be in full force and effect
and no party thereto shall be in breach thereof.
Section 6.2.8 Material Adverse Effect. Since the date of this
Agreement, there shall not have occurred any Company Material Adverse Effect or
any event or development that would, individually or in the aggregate,
reasonably be expected to have a Company Material Adverse Effect.
Section 6.3 Additional Conditions to Obligations of the Company. The
obligation of the Company to effect the Merger and the other transactions
contemplated herein are also subject to the following conditions:
Section 6.3.1 Representations and Warranties. Each of the
representations and warranties of Parent contained in this Agreement that are
qualified by materiality or Parent Material Adverse Effect shall be true and
correct as of the date hereof and as of the Effective Time as though made on and
as of the Effective Time, (except that those representations and warranties
which address matters only as of a particular date need only be true and correct
as of such date) and all representations and warranties which are not so
qualified shall be true and correct in all material respects (except that those
representations and warranties which address matters only as of a particular
date need only remain true and correct in all material respects as of such
date). The Company shall have received a certificate of an officer of Parent
certifying as to performance or compliance.
37
Section 6.3.2 Agreements and Covenants. Parent shall have
performed or complied in all material respects with all agreements and covenants
required by this Agreement to be performed or complied with by it on or prior to
the Effective Time. The Company shall have received a certificate of a
responsible officer of Parent certifying as to its performance or compliance.
ARTICLE 7.
TERMINATION, AMENDMENT AND WAIVER
Section 7.1 Termination. This Agreement may be terminated, and the
Merger contemplated hereby may be abandoned at any time prior to the Effective
Time, by action taken or authorized by the Board of Directors of the terminating
party or parties, whether before or after approval of the matters presented in
connection with the Merger by the stockholders of the Company:
Section 7.1.1 By mutual written consent of Parent and the
Company;
Section 7.1.2 By either the Company or Parent if the Merger shall
not have been consummated prior to January 30, 2003; provided, however, that
such date may, from time to time, be extended by Parent (by written notice
thereof to the Company) up to and including April 30, 2003 in the event all
conditions to effect the Merger other than those set forth in Section 6.1.2 and
Section 6.2.3 (the "Regulatory Conditions") have been or are capable of being
satisfied at the time of each such extension and the Regulatory Conditions have
been or are reasonably capable of being satisfied on or prior to April 30, 2003,
(such earlier date, as it may be so extended, shall be referred to herein as the
"Outside Date"); provided further that the right to terminate this Agreement
under this Section 7.1.2 shall not be available to any party whose failure to
fulfill any obligation under this Agreement has been the cause of, or resulted
in, the failure of the Merger to occur on or before such date;
Section 7.1.3 By Parent if any Governmental Entity shall have
issued an order, decree or ruling or taken any other action permanently
restraining, enjoining or otherwise prohibiting the transactions contemplated by
this Agreement or any Ancillary Agreement, and such order, decree, ruling or
other action shall have become final and nonappealable (which order, decree,
ruling or other action the parties shall have used their reasonable best effort
to resist, resolve or lift, as applicable, subject to the provisions of Section
5.7);
Section 7.1.4 By Parent if (A) the Company Board (with the
concurrence of a majority of the Non-HET Nominated Directors and Non-HET
Affiliated Directors, each term as defined in the Company Certificate) shall
have withdrawn, or adversely modified, or failed (upon Parent's request) to
reconfirm its recommendation of the Merger or this Agreement or any Ancillary
Agreement (or determined to do so), (B) the Company Board (with the concurrence
of a majority of the Non-HET Nominated Directors and Non-HET Affiliated
Directors, each term as defined in the Company Certificate) shall have
determined to recommend to the stockholders of the Company that they approve an
Acquisition Proposal other than that contemplated by this Agreement, (C) a
tender offer or exchange offer that, if successful, would result in any person
or group (other than Parent or an affiliate of Parent) becoming a beneficial
owner of 10% or more of the outstanding shares of Company Common Stock is
commenced
38
(other than by Parent or an affiliate of Parent) and the Company Board fails to
recommend that the stockholders of the Company not tender their shares in such
tender or exchange offer, (D) any person (other than Parent or an Affiliate of
Parent) or group becomes the beneficial owner of 10% or more of the outstanding
shares of Company Common Stock, or (E) for any reason the Company (with the
concurrence of a majority of the Non-HET Nominated Directors and Non-HET
Affiliated Directors, each term as defined in the Company Certificate) fails to
call or hold the Company Stockholders' Meeting by the Outside Date;
Section 7.1.5 By Parent, if since the date of this Agreement,
there shall have been any event, development or change of circumstance that
constitutes, has had or could reasonably be expected to have, individually or in
the aggregate, a Company Material Adverse Effect and such Company Material
Adverse Effect is not cured within 10 days after written notice thereof or if
(A)(1) there shall be breached any covenant or agreement on the part of a party
other than Parent or Merger Sub set forth in this Agreement or any Ancillary
Agreement, (2) any representation or warranty of a party other than Parent or
Merger Sub set forth in this Agreement or any Ancillary Agreement that is
qualified as to materiality or Material Adverse Effect shall have become untrue
or (3) any representation or warranty of a party other than Parent or Merger Sub
set forth in this Agreement or any Ancillary Agreement that is not so qualified
shall have become untrue in any material respect, (B) such breach or
misrepresentation is not cured within 10 days after written notice thereof and
(C) such breach of misrepresentation would cause the conditions set forth in
Section 6.2.1 or Section 6.2.2 not to be satisfied (a "Terminating Company
Breach");
Section 7.1.6 By the Company, if (A)(1) Parent has breached any
covenant or agreement on the part of Parent or Merger Sub set forth in this
Agreement or any Ancillary Agreement, (2) any representation or warranty of
Parent or Merger Sub that is qualified as to materiality or Material Adverse
Effect shall have become untrue or (3) any representation or warranty of Parent
or Merger Sub that is not so qualified shall have become untrue in any material
respect, (B) such breach or misrepresentation is not cured within 10 days after
written notice thereof and (C) such breach or misrepresentation would cause the
conditions set forth in Section 6.3.1 or Section 6.3.2 not to be satisfied (a
"Terminating Parent Breach").
Section 7.2 Effect of Termination.
Section 7.2.1 Limitation on Liability. In the event of
termination of this Agreement by either the Company or Parent as provided in
Section 7.1 this Agreement shall forthwith become void and there shall be no
liability or obligation on the part of Parent or the Company or their respective
Subsidiaries, officers or directors except (A) with respect to Section 5.5,
Section 5.9, this Section 7.2 and Article 8 and (B) with respect to any
liabilities or damages incurred or suffered by a party as a result of the
willful and material breach by the other party of any of its representations,
warranties, covenants or other agreements set forth in this Agreement or any
Ancillary Agreement.
Section 7.2.2 Parent Expenses. Parent and the Company agree that
if this Agreement is terminated pursuant to Section 7.1.4 or Section 7.1.5, then
the Company shall pay Parent an amount equal to $1.5 million to cover Parent
Expenses.
39
Section 7.2.3 Payment of Expenses. Payment of Expenses pursuant
to Section 7.2.2 shall be made not later than two business days after delivery
to the other party of notice of demand for payment.
Section 7.2.4 Termination Fee. In addition to any payment
required by the foregoing provisions of this Section, in the event that this
Agreement is terminated pursuant to Section 7.1.4(A), (B), (C) or (E) or
7.1.5(A)(1) and a definitive agreement for a transaction which is the subject of
an Acquisition Proposal is entered into, or a transaction which is the subject
of an Acquisition Proposal is consummated, within twelve months of the
termination of this Agreement, then the Company shall pay to Parent within two
business days thereafter, a termination fee of $3.5 million.
Section 7.2.5 All Payments. All payments under Section 7.2 shall
be made by wire transfer of immediately available funds to an account designated
by the party entitled to receive payment.
Section 7.3 Amendment. This Agreement may be amended by the parties
hereto by action taken by or on behalf of their respective Boards of Directors
at any time prior to the Effective Time; provided, however, no amendment to this
Agreement shall be made subsequent to the adoption of this Agreement by the
stockholders of the Company that by law requires further approval by the
stockholders of the Company without such approval having been obtained. This
Agreement may not be amended except by an instrument in writing signed by the
parties hereto.
Section 7.4 Waiver. At any time prior to the Effective Time, any party
hereto may (A) extend the time for the performance of any of the obligations or
other acts of the other party hereto, (B) waive any inaccuracies in the
representations and warranties of the other party contained herein or in any
document delivered pursuant hereto and (C) waive compliance by the other party
with any of the agreements or conditions contained herein; provided, however,
that after any approval of the transactions contemplated by this Agreement by
the stockholders of the Company, there may not be, without further approval of
such stockholders, any extension or waiver of this Agreement or any portion
thereof which, by Law or in accordance with the rules of any relevant stock
exchange, requires further approval by such stockholders. Any such extension or
waiver shall be valid only if set forth in an instrument in writing signed by
the party or parties to be bound thereby, but such extension or waiver or
failure to insist on strict compliance with an obligation, covenant, agreement
or condition shall not operate as a waiver of, or estoppel with respect to, any
subsequent or other failure.
Section 7.5 Fees and Expenses. Subject to Section 7.2.1 and Section
7.2.2 of this Agreement, all Expenses incurred by the parties hereto shall be
borne solely and entirely by the party which has incurred the same; provided,
however, that each of Parent and the Company shall pay one-half of the expenses
related to printing, filing and mailing the Proxy Statement and all SEC and
other regulatory filing fees incurred in connection with the Proxy Statement,
the Schedule 13E-3 and the Other Filings.
40
ARTICLE 8.
GENERAL PROVISIONS
Section 8.1 Non-Survival of Representations and Warranties. None of
the representations and warranties in this Agreement or in any instrument
delivered pursuant to this Agreement shall survive the Effective Time. This
Section 8.1 shall not limit any covenant or agreement of the parties which by
its terms contemplates performance after the Effective Time.
Section 8.2 Notices. Any notices or other communications required or
permitted under, or otherwise in connection with this Agreement shall be in
writing and shall be deemed to have been duly given when delivered in person or
upon confirmation of receipt when transmitted by facsimile transmission or on
receipt after dispatch by registered or certified mail, postage prepaid,
addressed, or on the next Business Day if transmitted by national overnight
courier, in each case as follows:
If to Parent or Merger Sub, addressed to it at:
▇▇▇▇▇▇'▇ Operating Company, Inc.
▇▇▇ ▇▇▇▇▇▇'▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
Attn: General Counsel
with a mandated copy to:
▇▇▇▇▇▇ & ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇, Esquire
If to the Company, addressed to it at:
JCC Holding Company
One Canal Place
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
with a mandated copy to:
▇▇▇▇ & ▇▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, Esquire
Section 8.3 Certain Definitions. For purposes of this Agreement, the
term:
"ACQUISITION PROPOSAL" means any offer or proposal concerning any (a)
merger, consolidation, business combination, or similar transaction involving
the Company or any Company Subsidiary, (b) sale, lease or other disposition
directly or indirectly by merger,
41
consolidation, business combination, share exchange, joint venture, or otherwise
of assets of the Company or the Company Subsidiaries representing 10% or more of
the consolidated assets of the Company and the Company Subsidiaries, (c)
issuance, sale, or other disposition of (including by way of merger,
consolidation, business combination, share exchange, joint venture, or any
similar transaction) securities (or options, rights or warrants to purchase, or
securities convertible into or exchangeable for, such securities) representing
10% or more of the voting power of the Company or (d) transaction in which any
person shall acquire beneficial ownership, or the right to acquire beneficial
ownership or any group shall have been formed which beneficially owns or has the
right to acquire beneficial ownership of, 10% or more of the outstanding voting
capital stock of the Company or (e) any combination of the foregoing (other than
the Merger).
"AFFILIATE" means a person that directly or indirectly, through one or
more intermediaries, controls, is controlled by, or is under common control
with, the first-mentioned person;
"ANCILLARY AGREEMENTS" means the Separation Agreements and the Voting
Agreements;
"BENEFICIAL OWNERSHIP" (and related terms such as "beneficially owned"
or "beneficial owner") shall have the meaning set forth in Rule 13d-3 under the
Exchange Act.
"BLUE SKY LAWS" shall mean state securities or "blue sky" laws.
"BUSINESS DAY" shall mean any day other than a day on which the SEC
shall be closed.
"CERCLA" means the Comprehensive Environmental Response, Compensation
and Liability Act of 1980, as amended as of the date hereof.
"CODE" means the Internal Revenue Code of 1986, as amended.
"COMPANY GAMING LAWS" means any federal, state, local or foreign
statute, ordinance, rule, regulation, permit, consent, registration, finding of
suitability, approval, license, judgment, order, decree, injunction or other
authorization, including any condition or limitation placed thereon, governing
or relating to the current or contemplated casino and gaming activities and
operations and manufacturing and distributing operations of the Company or any
Company Subsidiaries, including, without limitation, the Louisiana Gaming
Control Board and any applicable state gaming law and any federal or state laws
relating to currency transactions.
"COMPANY MATERIAL ADVERSE EFFECT" means any change affecting, or
condition having an effect on, the Company and the Company Subsidiaries that is,
or would reasonably be expected to be, materially adverse to the assets,
liabilities, business, financial condition, results of operations or prospects
of the Company and the Company Subsidiaries, taken as a whole; provided that the
term "Company Material Adverse Effect" shall exclude any effects on the Company
resulting from (a) changes in the U.S. economy in general, (b) changes in the
gaming industry not specifically related to the Company, and (c) changes in the
regional economy in which the Company operates.
42
"COMPANY STOCK OPTION PLANS" means
JCC Holding Company 1998 Long Term
Incentive Plan, any other plan, agreement or arrangement related to any Company
Options.
"CONTRACTS" means any of the agreements, contracts, leases, powers of
attorney, notes, loans, evidence of indebtedness, purchase orders, letters of
credit, settlement agreements, franchise agreements, undertakings, covenants not
to compete, employment agreements, licenses, instruments, obligations,
commitments, understandings, policies, purchase and sales orders, quotations and
other executory commitments to which any company is a party or to which any of
the assets of the companies are subject, whether oral or written, express or
implied.
"CONTROL" (including the terms "controlled by" and "under common
control with") means the possession, directly or indirectly or as trustee or
executor, of the power to direct or cause the direction of the management or
policies of a person, whether through the ownership of stock or as trustee or
executor, by contract or credit arrangement or otherwise.
"ENVIRONMENTAL LAWS" means any federal, state, local or foreign
statute, law, ordinance, regulation, rule, code, treaty, writ or order and any
enforceable judicial or administrative interpretation thereof, including any
judicial or administrative order, consent decree, judgment, stipulation,
injunction, permit, authorization, policy, opinion, or agency requirement, in
each case having the force and effect of law, relating to the pollution,
protection, investigation or restoration of the environment, health and safety
as affected by the environment or natural resources, including, without
limitation, those relating to the use, handling, presence, transportation,
treatment, storage, disposal, release, threatened release or discharge of
Hazardous Materials or noise, odor, wetlands, pollution or contamination.
"ENVIRONMENTAL PERMITS" means any permit, approval, identification
number, license and other authorization required under any applicable
Environmental Law.
"EQUITY INTEREST" means any share, capital stock, partnership, member
or similar interest in any entity, and any option, warrant, right or security
(including debt securities) convertible, exchangeable or exercisable therefor.
"EXCHANGE" means the New York Stock Exchange or any natural securities
exchange or inter-dealer quotation system.
"EXCHANGE ACT" shall mean Securities Exchange Act of 1934, as amended,
and the rules and regulations promulgated thereunder.
"EXPENSES" includes all reasonable out-of-pocket expenses (including,
without limitation, all fees and expenses of counsel, accountants, investment
bankers, experts and consultants to a party hereto and its affiliates) incurred
by a party or on its behalf in connection with or related to the authorization,
preparation, negotiation, execution and performance of this Agreement, the
Ancillary Agreements and the transactions contemplated hereby, including the
preparation, printing, filing and mailing of the Proxy Statement, the Schedule
13E-3 and any Other Filings and the solicitation of shareholder approvals and
all other matters related to the transactions contemplated hereto.
43
"GAAP" means generally accepted accounting principles as applied in
the United States.
"GOVERNMENTAL ENTITY" means domestic or foreign governmental,
administrative, judicial or regulatory authority.
"GROUP" is defined as in the Exchange Act, except where the context
otherwise requires.
"HAZARDOUS MATERIALS" means (A) any petroleum, petroleum products,
byproducts or breakdown products, radioactive materials, asbestos-containing
materials or polychlorinated biphenyls or (B) any chemical, material or other
substance defined or regulated as toxic or hazardous or as a pollutant or
contaminant or waste under any applicable Environmental Law.
"INTELLECTUAL PROPERTY" means all intellectual property or other
proprietary rights of every kind, foreign or domestic, including all patents,
patent applications, inventions (whether or not patentable), processes,
products, technologies, discoveries, copyrightable and copyrighted works,
apparatus, trade secrets, trademarks, trademark registrations and applications,
domain names, service marks, service ▇▇▇▇ registrations and applications, trade
names, trade secrets, know-how, trade dress, copyright registrations, customer
lists, confidential marketing and customer information, licenses, confidential
technical information, software, and all documentation thereof.
"KNOWLEDGE" will be deemed to be present when the matter in question
was brought to the attention of any officer of Parent or the Company, as the
case may be, and in the case of the Company, the knowledge of ▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇ ▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ after a reasonable due and diligent inquiry,
which shall not include the duty to inquire of the Management Company.
"LAW" means foreign or domestic law, statute, code, ordinance, rule,
regulation, order, judgment, writ, stipulation, award, injunction, decree or
arbitration award or finding.
"MANAGEMENT AGREEMENT" means that certain Third Amended and Restated
Management Agreement, dated as of March 30, 2001, by and between ▇▇▇▇▇▇'▇ New
Orleans Management Company and Jazz Casino Company, L.L.C. Management Company.
"MANAGEMENT COMPANY" means ▇▇▇▇▇▇'▇ New Orleans Management Company.
"OTHER FILINGS" means all filings made by, or required to be made by,
the Company with the SEC other than the Proxy Statement.
"PARENT MATERIAL ADVERSE EFFECT" means any change affecting, or
condition having an effect on, Parent, Merger Sub and the Parent Subsidiaries
that is, or would reasonably be expected to be, materially adverse to the
assets, liabilities, business, financial condition or results of operations of
Parent and the Parent Subsidiaries, taken as a whole, other than any change or
condition relating to the economy or securities markets in general, or the
industries in which Parent operates in general, and not specifically relating to
Parent.
44
"PERSON" means an individual, corporation, limited liability company,
partnership, association, trust, unincorporated organization, other entity or
group (as defined in Section 13(d) of the Exchange Act).
"SEC" means the Securities and Exchange Commission.
"SECURITIES ACT" means the Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder.
"SUBSIDIARY" OR "SUBSIDIARIES" of Parent, the Company, the Surviving
Corporation or any other person means any corporation, partnership, joint
venture or other legal entity of which Parent, the Company, the Surviving
Corporation or such other person, as the case may be (either alone or through or
together with any other subsidiary), owns, directly or indirectly, a majority of
the stock or other equity interests the holders of which are generally entitled
to vote for the election of the Board of Directors or other governing body of
such corporation or other legal entity.
Section 8.4 Terms Defined Elsewhere. The following terms are defined
elsewhere in this Agreement, as indicated below:
"AGREEMENT" Preamble
"CERTIFICATE OF MERGER" Section 1.2
"CERTIFICATES" Section 2.2.2
"COMPANY" Preamble
"COMPANY BENEFIT PLAN" Section 3.12.1
"COMPANY BOARD" Recitals
"COMPANY BY-LAWS" Section 3.2
"COMPANY CERTIFICATE" Section 3.2
"COMPANY COMMON STOCK" Section 2.1.1
"COMPANY DISCLOSURE SCHEDULE" Article 3
"COMPANY EMPLOYEES" Section 5.10
"COMPANY FINANCIAL ADVISOR" Section 3.17
"COMPANY LEASED PROPERTY" Section 3.8.1
"COMPANY MATERIAL CONTRACT" Section 3.11
45
"COMPANY OPTIONS" Section 2.5
"COMPANY OWNED PROPERTY" Section 3.8.1
"COMPANY PERMITS" Section 3.19.1
"COMPANY REAL PROPERTY" Section 3.8.1
"COMPANY REPRESENTATIVES" Section 5.5
"COMPANY SEC FILINGS" Section 3.5.1
"COMPANY STOCKHOLDERS' MEETING" Section 5.4
"COMPANY SUBSIDIARIES" Section 3.1
"D&O INSURANCE" Section 5.11.2
"DISSENTING STOCKHOLDERS" Section 2.1.1
"DGCL" Recitals
"EFFECTIVE TIME" Section 1.2
"ERISA" Section 3.12.1
"ERISA AFFILIATE" Section 3.12.1
"▇▇▇▇▇▇ STREET AGREEMENT" Section 3.8.11
"IRS" Section 3.7.5
"LEASE DOCUMENTS" Section 3.8.3
"MATERIAL INTELLECTUAL PROPERTY" Section 3.10
"MERGER" Recitals
"MERGER CONSIDERATION" Section 2.1.1
"MERGER SUB" Preamble
"MULTIEMPLOYER PLAN" Section 3.12.3
"OPTION PAYMENT" Section 2.5
"OUTSIDE DATE" Section 7.1.2
"PARENT" Preamble
46
"PARENT BENEFIT PLAN" Section 5.10
"PARENT DISCLOSURE SCHEDULE" Article 4
"PARENT REPRESENTATIVES Section 5.5
"PARENT SUBSIDIARIES" Recitals
"PAYING AGENT" Section 2.2.1
"PAYMENT FUND" Section 2.2.1
"PBGC" Section 3.12.4
"PERMITTED EXCEPTIONS" Section 3.8.2
"PROXY STATEMENT" Section 5.3.1
"QUALIFYING ACQUISITION PROPOSAL" Section 5.6.1
"REGULATORY CONDITIONS" Section 7.1.2
"REQUISITE STOCKHOLDER APPROVAL" Section 3.18
"SCHEDULE 13E-3" Section 5.3.1
"SEPARATION AGREEMENTS" Recitals
"SPECIAL COMMITTEE" Recitals
"SURVIVING CORPORATION" Section 1.1
"SURVEYS" Section 3.8.2
"TAXES" Section 3.7.13
"TAX RETURN" Section 3.7.13
"TERMINATING COMPANY BREACH" Section 7.1.5
"TERMINATING PARENT BREACH" Section 7.1.6
"TITLE POLICIES" Section 3.8.2
"VOTING AGREEMENTS" Recitals
Section 8.5 Headings. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
47
Section 8.6 Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of Law
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
materially adverse to any party. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties hereto
shall negotiate in good faith to modify this Agreement so as to effect the
original intent of the parties as closely as possible in an acceptable manner to
the end that transactions contemplated hereby are fulfilled to the extent
possible.
Section 8.7 Entire Agreement. This Agreement (together with the
Exhibits, Parent and Company Disclosure Schedules and the other documents
delivered pursuant hereto), and the Ancillary Agreements constitute the entire
agreement of the parties and supersede all prior agreements and undertakings,
both written and oral, between the parties, or any of them, with respect to the
subject matter hereof and, except as otherwise expressly provided herein, are
not intended to confer upon any other person any rights or remedies hereunder.
Section 8.8 Assignment. This Agreement shall not be assigned by
operation of law or otherwise.
Section 8.9 Parties in Interest. This Agreement shall be binding upon
and inure solely to the benefit of each party hereto and their respective
successors and assigns, and nothing in this Agreement, express or implied, other
than pursuant to Section 5.11, is intended to or shall confer upon any other
person any right, benefit or remedy of any nature whatsoever under or by reason
of this Agreement.
Section 8.10 Mutual Drafting. Each party hereto has participated in
the drafting of this Agreement, which each party acknowledges is the result of
extensive negotiations between the parties.
Section 8.11 Governing Law; Consent to Jurisdiction; Waiver of Trial
by Jury.
Section 8.11.1 This Agreement shall be governed by, and construed
in accordance with, the Laws of the State of
Delaware, without regard to laws
that may be applicable under conflicts of laws principles.
Section 8.11.2 Each of the parties hereto hereby irrevocably and
unconditionally submits, for itself and its property, to the exclusive
jurisdiction of any Delaware State court, or Federal court of the United States
of America, sitting in Delaware, and any appellate court from any thereof, in
any action or proceeding arising out of or relating to this Agreement or the
agreements delivered in connection herewith or the transactions contemplated
hereby or thereby or for recognition or enforcement of any judgment relating
thereto, and each of the parties hereby irrevocably and unconditionally (A)
agrees not to commence any such action or proceeding except in such courts, (B)
agrees that any claim in respect of any such action or proceeding may be heard
and determined in such Delaware State court or, to the extent permitted by law,
in such Federal court, (C) waives, to the fullest extent it may legally and
effectively do so, any objection which it may now or hereafter have to the
laying of venue of any such action or
48
proceeding in any such Delaware State or Federal court, and (D) waives, to the
fullest extent permitted by law, the defense of an inconvenient forum to the
maintenance of such action or proceeding in any such Delaware State or Federal
court. Each of the parties hereto agrees that a final judgment in any such
action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by law.
Each party to this Agreement irrevocably consents to service of process in the
manner provided for notices in Section 8.2. Nothing in this Agreement will
affect the right of any party to this Agreement to serve process in any other
manner permitted by law.
Section 8.11.3 EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY
CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE
COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE IT HEREBY IRREVOCABLY AND
UNCONDITIONALLY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF
ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS
AGREEMENT AND ANY OF THE AGREEMENTS DELIVERED IN CONNECTION HEREWITH OR THE
TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY. EACH PARTY CERTIFIES AND
ACKNOWLEDGES THAT (A) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY
HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE
EVENT OF LITIGATION, SEEK TO ENFORCE EITHER OF SUCH WAIVERS, (B) IT UNDERSTANDS
AND HAS CONSIDERED THE IMPLICATIONS OF SUCH WAIVERS, (C) IT MAKES SUCH WAIVERS
VOLUNTARILY, AND (D) IT HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG
OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 8.11.3.
Section 8.12 Counterparts. This Agreement may be executed in one or
more counterparts, and by the different parties hereto in separate counterparts,
each of which when executed shall be deemed to be an original but all of which
taken together shall constitute one and the same agreement.
Section 8.13 Specific Performance. The parties hereto agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with their specific terms or were
otherwise breached. It is accordingly agreed that the parties shall be entitled
to an injunction or injunctions to prevent breaches of this Agreement and to
enforce specifically the terms and provisions hereof in any Delaware State Court
or Federal Court of the United States of America, sitting in Delaware, or any
appellate court from any thereof, in each case having jurisdiction, this being
in addition to any other remedy to which they are entitled at law or in equity.
[SIGNATURE PAGE FOLLOWS]
49
IN WITNESS WHEREOF, Parent, Merger Sub and the Company have caused
this Agreement to be executed as of the date first written above by their
respective officers thereunto duly authorized.
▇▇▇▇▇▇'▇ OPERATING COMPANY, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Senior Vice President, Chief Financial Officer and
Treasurer
SATCHMO ACQUISITION, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Senior Vice President, Chief Financial Officer and
Treasurer
JCC HOLDING COMPANY
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇
-------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇
Title: Chairman and President