AGREEMENT AND PLAN OF MERGER
DATED AS OF DECEMBER 18, 1997
AMONG
XXXXXX'X ENTERTAINMENT, INC.,
HEI ACQUISITION CORP.
AND
SHOWBOAT, INC.
TABLE OF CONTENTS
Page
----
ARTICLE I. THE MERGER. . . . . . . . . . . . . . . . . . . . . . . . . . .1
Section 1.1. The Merger . . . . . . . . . . . . . . . . . . . . . . . .1
Section 1.2. Effective Time of the Merger . . . . . . . . . . . . . . .1
Section 1.3. Closing. . . . . . . . . . . . . . . . . . . . . . . . . .2
Section 1.4. Effect of the Merger . . . . . . . . . . . . . . . . . . .2
Section 1.5. Articles of Incorporation and Bylaws of the Surviving
Corporation. . . . . . . . . . . . . . . . . . . . . . . .2
Section 1.6. Directors and Officers of the Surviving Corporation. . . .2
ARTICLE II. EFFECT OF THE MERGER ON SECURITIES OF THE CONSTITUENT
CORPORATIONS. . . . . . . . . . . . . . . . . . . . . . . . . .3
Section 2.1. Conversion of Securities . . . . . . . . . . . . . . . . .3
Section 2.2. Payment for Shares of Showboat Common Stock. . . . . . . .3
Section 2.3. Showboat Option Plans; SARs. . . . . . . . . . . . . . . .4
ARTICLE III. REPRESENTATIONS AND WARRANTIES OF SHOWBOAT. . . . . . . . . . .5
Section 3.1. Organization of Showboat and its Subsidiaries. . . . . . .5
Section 3.2. Capitalization.. . . . . . . . . . . . . . . . . . . . . .6
Section 3.3. Authority; No Conflict; Required Filings and Consents. . .8
Section 3.4. Public Filings; Financial Statements . . . . . . . . . . .9
Section 3.5. No Undisclosed Liabilities . . . . . . . . . . . . . . . 10
Section 3.6. Absence of Certain Changes or Events . . . . . . . . . . 11
Section 3.7. Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 3.8. Real Property. . . . . . . . . . . . . . . . . . . . . . 14
Section 3.9. Title to Personal Property; Liens. . . . . . . . . . . . 15
Section 3.10. Intellectual Property. . . . . . . . . . . . . . . . . . 16
Section 3.11. Agreements, Contracts and Commitments. . . . . . . . . . 16
Section 3.12. Litigation . . . . . . . . . . . . . . . . . . . . . . . 17
Section 3.13. Environmental Matters. . . . . . . . . . . . . . . . . . 17
Section 3.14. Employee Benefit Plans . . . . . . . . . . . . . . . . . 18
Section 3.15. Compliance . . . . . . . . . . . . . . . . . . . . . . . 21
Section 3.16. Proxy Statement. . . . . . . . . . . . . . . . . . . . . 23
Section 3.17. Labor Matters. . . . . . . . . . . . . . . . . . . . . . 23
Section 3.18. Insurance. . . . . . . . . . . . . . . . . . . . . . . . 24
Section 3.19. Opinion of Financial Advisor . . . . . . . . . . . . . . 24
Section 3.20. No Existing Discussions. . . . . . . . . . . . . . . . . 24
Section 3.21. Showboat Rights Plan; Nevada Takeover Statute. . . . . . 24
Section 3.22. Brokers. . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 3.23. Transactions With Affiliates . . . . . . . . . . . . . . 25
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ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF XXXXXX'X AND MERGER SUB . . 25
Section 4.1. Organization . . . . . . . . . . . . . . . . . . . . . . 25
Section 4.2. Authority; No Conflict; Required Filings and Consents. . 25
Section 4.3. Proxy Statement. . . . . . . . . . . . . . . . . . . . . 27
Section 4.4. Brokers. . . . . . . . . . . . . . . . . . . . . . . . . 27
Section 4.5. Financing. . . . . . . . . . . . . . . . . . . . . . . . 27
Section 4.6. Compliance with Gaming Laws. . . . . . . . . . . . . . . 27
ARTICLE V. COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 5.1. Conduct of Business of Showboat. . . . . . . . . . . . . 29
Section 5.2. Cooperation; Notice; Cure. . . . . . . . . . . . . . . . 32
Section 5.3. No Solicitation. . . . . . . . . . . . . . . . . . . . . 32
Section 5.4. Proxy Statement. . . . . . . . . . . . . . . . . . . . . 34
Section 5.5. Special Meeting. . . . . . . . . . . . . . . . . . . . . 34
Section 5.6. Access to Information. . . . . . . . . . . . . . . . . . 35
Section 5.7. Governmental Approvals . . . . . . . . . . . . . . . . . 35
Section 5.8. Publicity. . . . . . . . . . . . . . . . . . . . . . . . 36
Section 5.9. Indemnification. . . . . . . . . . . . . . . . . . . . . 36
Section 5.10. Stockholder Litigation . . . . . . . . . . . . . . . . . 37
Section 5.11. Employment Arrangements. . . . . . . . . . . . . . . . . 37
Section 5.12. Further Assurances and Actions.. . . . . . . . . . . . . 37
Section 5.13. Employee Benefits. . . . . . . . . . . . . . . . . . . . 38
Section 5.14. Use of Showboat Name . . . . . . . . . . . . . . . . . . 39
ARTICLE VI. CONDITIONS TO MERGER. . . . . . . . . . . . . . . . . . . . . 39
Section 6.1. Conditions to Each Party's Obligation to Effect the
Merger . . . . . . . . . . . . . . . . . . . . . . . . . 39
Section 6.2. Additional Conditions to Obligations of Showboat . . . . 40
Section 6.3. Additional Conditions to Obligations of Xxxxxx'x . . . . 40
ARTICLE VII. TERMINATION AND AMENDMENT . . . . . . . . . . . . . . . . . . 41
Section 7.1. Termination. . . . . . . . . . . . . . . . . . . . . . . 41
Section 7.2. Effect of Termination. . . . . . . . . . . . . . . . . . 42
Section 7.3. Fees and Expenses. . . . . . . . . . . . . . . . . . . . 43
Section 7.4. Amendment. . . . . . . . . . . . . . . . . . . . . . . . 44
Section 7.5. Extension; Waiver. . . . . . . . . . . . . . . . . . . . 44
ARTICLE VIII. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . 44
Section 8.1. Nonsurvival of Representations, Warranties and
Agreements . . . . . . . . . . . . . . . . . . . . . . . 44
Section 8.2. Notices. . . . . . . . . . . . . . . . . . . . . . . . . 44
Section 8.3. Interpretation . . . . . . . . . . . . . . . . . . . . . 45
Section 8.4. Counterparts . . . . . . . . . . . . . . . . . . . . . . 45
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Section 8.5. Entire Agreement; No Third Party Beneficiaries . . . . . 46
Section 8.6. Governing Law. . . . . . . . . . . . . . . . . . . . . . 46
Section 8.7. Assignment . . . . . . . . . . . . . . . . . . . . . . . 46
EXHIBITS
Exhibit A Form of Stockholder Support Agreement
iii
TABLE OF DEFINED TERMS
CROSS REFERENCE
TERMS IN AGREEMENT
----- ------------
Acquisition Proposal Section 5.3(a)
Agreement Preamble
Alternative Transaction Section 5.3(c)
best knowledge Section 3.2(c)
Benefit Arrangement Section 3.14(a)
Articles of Merger Section 1.2
Closing Section 1.3
Closing Date Section 1.3
Code Section 3.7(a)
Confidentiality Agreements Section 5.3(a)
Effective Time Section 1.2
Employee Plans Section 3.14(a)
Environmental Condition Section 3.13
Environmental Laws Section 3.13
Environmental Liabilities and Costs Section 3.13
ERISA Section 3.14(a)
ERISA Affiliate Section 3.14(a)
Exchange Act Section 2.3
Exchange Agent Section 2.2(a)
Foreign Jurisdiction Section 3.3(c)
Foreign Plan Section 3.14(a)
Foreign Subsidiary Section 3.14(a)
Form 31 Section 3.11(e)
GAAP Section 3.4(c)
Governmental Approvals Section 5.7(a)
Governmental Entity Section 3.3(c)
Xxxxxx'x Preamble
Xxxxxx'x Disclosure Schedule Article IV
Xxxxxx'x Gaming Laws Section 4.6(b)
Xxxxxx'x Permits Section 4.6(c)
HSR Act Section 3.3(c)
Indebtedness Section 3.11(a)
Indemnified Parties Section 5.9(a)
IRS Section 3.7(d)
Merger Sub Preamble
Merger Section 1.1
Merger Consideration Section 2.1(a)
Multiemployer Plan Section 3.14(a)
Nonqualified Plans Section 3.14(c)
Notifying Party Section 5.7(a)
NRS Section 1.1
iv
CROSS REFERENCE
TERMS IN AGREEMENT
----- ------------
Option Settlement Amount Section 2.3
Options Section 2.3
Pension Plan Section 3.14(a)
Proxy Statement Section 3.16
Reporting Subsidiaries Section 3.4(a)
SARs Section 2.3
SAR Settlement Amount Section 2.3
Securities Act Section 3.4(a)
Showboat Preamble
Showboat Balance Sheet Section 3.4(c)
Showboat Common Stock Section 2.1(a)
Showboat Disclosure Schedule Article III
Showboat Gaming Laws Section 3.15(b)
Showboat Leased Property Section 3.8(a)
Showboat Material Adverse Effect Section 3.1
Showboat Material Contracts Section 3.11(a)
Showboat Owned Property Section 3.8(a)
Showboat Permits Section 3.15(a)
Showboat Preferred Stock Section 3.2(a)
Showboat Rights Plan Section 3.2(b)
Showboat SEC Reports Section 3.4(a)
Showboat Stock Appreciation Rights Plan Section 2.3
Showboat Stock Option Plans Section 2.3
Showboat Stock Plans Section 3.2(a)
Special Meeting Section 3.16
SEC Section 3.3(c)
Stockholder Support Agreements Preamble
Subsidiary Section 3.1
Superior Proposal Section 5.3(a)
Surviving Corporation Section 1.1
Sydney Harbour Section 3.2(c)
Sydney Harbour Management Agreement Section 3.11(e)
Sydney Harbour Material Contract Section 3.11(c)
Sydney Harbour Reports Section 3.4(b)
Tax Return Section 3.7(d)
Taxes Section 3.7(d)
Third Party Section 5.3(a)
Voting Debt Section 3.2(b)
Waterfront Section 3.5
Welfare Plan Section 3.14(a)
v
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER (the "Agreement"), dated as of
December 18, 1997, by and among XXXXXX'X ENTERTAINMENT, INC., a Delaware
corporation ("Xxxxxx'x"), HEI ACQUISITION CORP., a Nevada corporation and an
indirect wholly-owned subsidiary of Xxxxxx'x ("Merger Sub"), and SHOWBOAT,
INC., a Nevada corporation ("Showboat").
WHEREAS, the Board of Directors of Showboat has determined
that the merger of Merger Sub with and into Showboat, upon the terms and
subject to the conditions set forth in this Agreement (the "Merger"), is fair
to, and in the best interest of, Showboat and its stockholders;
WHEREAS, the Boards of Directors of Xxxxxx'x and Merger Sub
have determined that the Merger is in the best interests of Xxxxxx'x and
Merger Sub and their respective stockholders;
WHEREAS, the Boards of Directors of Xxxxxx'x, Merger Sub and
Showboat have each approved and adopted this agreement and approved the
Merger and the other transactions contemplated hereby;
WHEREAS, concurrently with the execution and delivery of this
Agreement and as a condition and inducement to each of Xxxxxx'x' and Merger
Sub's willingness to enter into this Agreement, certain stockholders of
Showboat have entered into Stockholder Support Agreements with Xxxxxx'x dated
as of the date of this Agreement in the form attached hereto as Exhibit A
(the "Stockholder Support Agreements"), pursuant to which such stockholders
have agreed, among other things, to vote all voting securities of Showboat
beneficially owned by them in favor of approval and adoption of the Agreement
and the Merger;
NOW, THEREFORE, in consideration of the foregoing and the
respective representations, warranties, covenants and agreements set forth
below, the parties agree as follows:
ARTICLE I
THE MERGER
Section 1.1. THE MERGER. Upon the terms and subject to the
provisions of this Agreement and in accordance with Chapter 92A of the Nevada
Revised Statutes (the "NRS"), at the Effective Time (as defined in Section
1.2), Merger Sub shall be merged with and into Showboat (the "Merger"). As a
result of the Merger, the separate corporate existence of Merger Sub shall
cease and Showboat shall continue as the surviving corporation (the
"Surviving Corporation").
Section 1.2. EFFECTIVE TIME OF THE MERGER. Subject to the
provisions of this Agreement (including Section 7.1 hereof), articles of
merger with respect to the Merger in such form as is required by NRS Section
92A.200 (the "Articles of Merger") shall be duly prepared, executed and
acknowledged and thereafter delivered to the Secretary of State of the State
of Nevada for
1
filing, as provided in the NRS, as early as practicable on the Closing Date (as
defined in Section 1.3). The Merger shall become effective at the later of the
time of filing of the Articles of Merger or at such time as is specified in the
Articles of Merger (the "Effective Time").
Section 1.3. CLOSING. The closing of the Merger (the
"Closing") will take place at such time and place to be agreed upon by the
parties hereto, on a date to be specified by Xxxxxx'x and Showboat, which
shall be no later than the third business day after satisfaction or, if
permissible, waiver of the conditions set forth in Article VI (the "Closing
Date"), unless another date is agreed to by Xxxxxx'x and Showboat.
Section 1.4. EFFECT OF THE MERGER. Upon becoming effective,
the Merger shall have the effects set forth in the NRS. Without limiting the
generality of the foregoing, and subject thereto, at the Effective Time, all
properties, rights, privileges, powers and franchises of Merger Sub and
Showboat shall vest in the Surviving Corporation, and all debts, liabilities
and duties of Merger Sub and Showboat shall become the debts, liabilities and
duties of the Surviving Corporation.
Section 1.5. ARTICLES OF INCORPORATION AND BYLAWS OF THE
SURVIVING CORPORATION. At the Effective Time, the Articles of Incorporation
and Bylaws of the Surviving Corporation shall be amended to be identical to
the Articles of Incorporation and Bylaws, respectively, of Merger Sub as in
effect immediately prior to the Effective Time (except that the name of the
Surviving Corporation shall be "Showboat, Inc."), in each case until duly
amended in accordance with applicable law.
Section 1.6. DIRECTORS AND OFFICERS OF THE SURVIVING
CORPORATION. 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 Articles of Incorporation and Bylaws of
the Surviving Corporation. The officers of Merger Sub immediately prior to
the Effective Time shall be the initial officers of the Surviving
Corporation, each to hold office in accordance with the Articles of
Incorporation and Bylaws of the Surviving Corporation.
ARTICLE II
EFFECT OF THE MERGER ON SECURITIES OF THE CONSTITUENT
CORPORATIONS
Section 2.1. CONVERSION OF SECURITIES. At the Effective
Time, by virtue of the Merger and without any action on the part of any of
the parties hereto or the holders of any of the following:
(a) SHOWBOAT COMMON STOCK. Each share of Showboat
Common Stock, par value $1.00 per share, of Showboat ("Showboat Common
Stock") issued and outstanding immediately prior to the Effective Time (other
than shares to be canceled in accordance with Section 2.1(b)) shall be
converted into the right to receive, without interest, $30.75 in cash (the
"Merger Consideration"). Payment of Merger Consideration shall be made in
the manner described in Section 2.2. All shares of Showboat Common Stock,
when so converted, shall no longer be
2
outstanding and shall automatically be canceled and retired and shall cease
to exist, and each holder of a certificate representing any such shares shall
cease to have any ownership or other rights with respect thereto, except the
right to receive the Merger Consideration for such shares upon the surrender
of such certificate in accordance with Section 2.2.
(b) CANCELLATION OF TREASURY STOCK AND XXXXXX'X-OWNED
STOCK. All shares of Showboat Common Stock that are owned by Showboat as
treasury stock and any shares of Showboat Common Stock owned by Xxxxxx'x or
any wholly-owned Subsidiary (as defined in Section 3.1) of Xxxxxx'x shall be
canceled and retired and shall cease to exist and no consideration shall be
delivered in exchange therefor.
(c) CAPITAL STOCK OF MERGER SUB. Each issued and
outstanding share of the common stock, par value $.01 per share, of Merger
Sub shall be converted into and become one fully paid and nonassessable share
of Common Stock, par value $.01 per share, of the Surviving Corporation.
(d) SHOWBOAT DEBT SECURITIES. All notes and other debt
instruments of Showboat that are outstanding at the Effective Time shall
continue to be outstanding subsequent to the Effective Time as debt
instruments of the Surviving Corporation, subject to their respective terms
and provisions.
Section 2.2. PAYMENT FOR SHARES OF SHOWBOAT COMMON STOCK.
(a) Prior to the Effective Time, Xxxxxx'x shall appoint a bank or trust
company reasonably satisfactory to Showboat to act as exchange agent for the
purpose of paying the Merger Consideration (the "Exchange Agent").
Immediately prior to the Effective Time, Xxxxxx'x shall deposit or cause to
be deposited with the Exchange Agent, for the benefit of the holders of
Showboat Common Stock, cash in an aggregate amount sufficient to pay the
aggregate Merger Consideration. Not later than five business days after the
Effective Time, the Surviving Corporation shall cause the Exchange Agent to
mail to each person who was, immediately prior to the Effective Time, a
holder of record of issued and outstanding shares of Showboat Common Stock, a
form of letter of transmittal and instructions for use in effecting the
surrender of the certificates which, immediately prior to the Effective Time,
represented any of such shares in exchange for payment of the Merger
Consideration. The Exchange Agent's transmittal letter 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 Exchange
Agent. Upon surrender to the Exchange Agent of such certificates, together
with such letter of transmittal, duly executed and completed in accordance
with the instructions thereto, and subject to Section 2.2(b), the Surviving
Corporation shall promptly cause to be paid to each person entitled thereto
cash in an amount equal to the product of (x) the number of shares of
Showboat Common Stock represented by such certificates and (y) the Merger
Consideration. Until surrendered in accordance with the provisions of this
Section 2.2(a), each certificate shall represent for all purposes only the
right to receive the Merger Consideration, without any interest thereon.
(b) The Surviving Corporation or the Exchange Agent shall be
entitled to deduct and withhold from the consideration otherwise payable
pursuant to this Agreement to any holder of shares of Showboat Common Stock
such amounts as the Surviving Corporation or the Exchange
3
Agent is required to deduct and withhold with respect to the making of such
payment under the Code (as defined in Section 3.7(a)), or any provision of
state, local or foreign tax law. To the extent that amounts are so withheld
by the Surviving Corporation or the Exchange Agent, such withheld amounts
shall be treated for all purposes of this Agreement as having been paid to
the holder of shares of Showboat Common Stock in respect of which deduction
and withholding was made by the Surviving Corporation or the Exchange Agent.
(c) Promptly following the first anniversary of the Effective
Time, the Exchange Agent shall deliver to the Surviving Corporation all cash,
certificates and other documents in its possession relating to the
transactions described in this Agreement, and the Exchange Agent's duties
shall terminate. Thereafter, each holder of a certificate formerly
representing a share of Showboat Common Stock may surrender such certificate
to the Surviving Corporation and (subject to applicable abandoned property,
escheat and similar laws) receive in consideration therefor the aggregate
Merger Consideration relating thereto, without any interest or dividends
thereon. None of Xxxxxx'x, the Surviving Corporation or the Exchange Agent
shall be liable to any holder of shares of Showboat Common Stock for any cash
constituting the Merger Consideration delivered to a public official pursuant
to any applicable abandoned property, escheat or similar law.
Section 2.3. SHOWBOAT OPTION PLANS; SARS. At the Effective
Time, each unexpired and unexercised outstanding option, whether or not then
vested or exercisable in accordance with its terms, to purchase shares of
Showboat Common Stock ("Options") previously granted by Showboat or its
Subsidiaries under Showboat's 1989 Long Term Incentive Plan, 1994 Long Term
Incentive Plan, 1992 Employee Stock Option Plan and 1989 Board of Directors'
Stock Option Plan as amended and restated on January 30, 1996 (collectively,
the "Showboat Stock Option Plans") will become exercisable in full and each
holder of an Option shall be entitled to receive from Showboat (or the
Surviving Corporation) in cancellation thereof a payment (subject to
applicable income tax withholding and employer taxes) in an amount equal to
the excess, if any, of the Merger Consideration over the per share exercise
price of such Option, multiplied by the number of shares of Showboat Common
Stock subject to such Option (the "Option Settlement Amount"). The Option
Settlement Amount shall be paid in cash at the Effective Time. At the
Effective Time, each then outstanding stock appreciation right granted by
Showboat under its 1996 Stock Appreciation Rights Plan (the "Showboat Stock
Appreciation Rights Plan"), whether or not then vested or exercisable in
accordance with its terms (collectively, "SARs"), shall become exercisable in
full and each holder of a SAR shall be entitled to receive from Showboat (or
the Surviving Corporation) in cancellation thereof a payment of an amount in
cash equal to the excess, if any, of the Merger Consideration over the
exercise price of such SAR multiplied by the number of shares of Showboat
Common Stock subject to such SAR, subject to any withholding of taxes and any
reduction in the Rights Payments (as defined in the Showboat Stock
Appreciation Rights Plan) pursuant to the terms of Section IV of the Stock
Appreciation Rights Plan (the "SAR Settlement Amount"). The SAR Settlement
Amount shall be paid in cash at the Effective Time. From and after the
Effective Time, all Options and SARs shall represent only the right of the
holders of such Options or SARs to receive payment of the Option Settlement
Amount or SAR Settlement Amount, as the case may be, upon the surrender
thereof. The surrender of an Option or a SAR shall be deemed a release of
any and all rights the holder had or may have in respect of such Option or
SAR.
4
Notwithstanding the foregoing, with respect to any person subject to Section
16(a) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), any amount of the Option Settlement Amount or the SAR Settlement
Amount, as the case may be, shall be paid as soon as practicable after the
first date payment can be made without liability to such person under Section
16(b) of the Exchange Act. All agreements, plans, programs or arrangements
of Showboat and its Subsidiaries that provide for the issuance or grant of
Options or any other interest in respect of the capital stock of Showboat or
capital stock of or other ownership interest in any of its Subsidiaries shall
terminate as of the Effective Time. Showboat shall take all permitted
actions necessary to ensure that, following the Effective Time, no
participant in any agreement, plan, program or arrangement of Showboat shall
have any right thereunder to acquire equity securities or other ownership
interests of Showboat, the Surviving Corporation or any Subsidiary thereof
and to terminate all such plans.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SHOWBOAT
Showboat represents and warrants to Xxxxxx'x and Merger Sub
that the statements contained in this Article III are true and correct except
as set forth herein and in the disclosure schedule delivered by Showboat to
Xxxxxx'x and Merger Sub on or before the date of this Agreement (the
"Showboat Disclosure Schedule"). The Showboat Disclosure Schedule shall be
arranged in paragraphs corresponding to the numbered and lettered paragraphs
contained in this Article III and the disclosure in any paragraph shall
qualify other paragraphs in this Article III only to the extent that it is
reasonable from a reading of such disclosure that it also qualifies or
applies to such other paragraphs.
Section 3.1. ORGANIZATION OF SHOWBOAT AND ITS SUBSIDIARIES.
Each of Showboat and its Subsidiaries (as defined below) is duly organized,
validly existing and in good standing under the laws of the jurisdiction of
its organization and has all requisite corporate, partnership or limited
liability company power and authority to carry on its business as now being
conducted and as proposed to be conducted. Each of Showboat and its
Subsidiaries is duly qualified or licensed to do business and is in good
standing in each jurisdiction in which the property owned, leased or operated
by it or the nature of the business conducted by it makes such qualification
or licensing necessary, except where the failure to be so qualified, licensed
or in good standing would not have a material adverse effect on the business,
properties, condition (financial or otherwise), results of operations or
prospects of Showboat and its Subsidiaries, taken as a whole, or any of the
three separate businesses operated as the Atlantic City Showboat, the East
Chicago Showboat and the Sydney Harbour Casino (a "Showboat Material Adverse
Effect"). Showboat has delivered to Xxxxxx'x a true and correct copy of the
Articles of Incorporation and Bylaws of Showboat, in each case as amended to
the date of this Agreement. Assuming compliance by Xxxxxx'x with all
Showboat Gaming Laws (as defined in Section 3.15(b)) (including obtaining all
necessary consents and approvals), the respective organizational documents of
Showboat's Subsidiaries do not contain any provision that would limit or
otherwise restrict the ability of Xxxxxx'x, following the Effective Time,
from owning or operating such Subsidiaries on the same basis as Showboat.
Except as set forth in Showboat SEC Reports (as defined in Section 3.4)
5
filed prior to the date hereof or as disclosed in Section 3.1 of the Showboat
Disclosure Schedule, neither Showboat nor any of its Subsidiaries directly or
indirectly owns (other than ownership interests in Showboat or in one or more
of its Subsidiaries) any equity or similar interest in, or any interest
convertible into or exchangeable or exercisable for, any corporation,
partnership, joint venture or other business association or entity. As used
in this Agreement, the word "Subsidiary" means, with respect to any party,
any corporation or other organization, whether incorporated or
unincorporated, of which (i) such party or any other Subsidiary of such party
is a general partner or (ii) at least a majority of the securities or other
interests having by their terms ordinary voting power to elect a majority of
the Board of Directors or others performing similar functions with respect to
such corporation or other organization is directly or indirectly owned or
controlled by such party or by any one or more of its Subsidiaries, or by
such party and one or more of its Subsidiaries. Without limiting the
generality of the foregoing, the partnership between Showboat Australia Pty
Ltd. and Leighton Properties Pty Ltd. shall be considered a "Subsidiary" of
Showboat for all purposes of this Agreement.
Section 3.2. CAPITALIZATION.
(a) The authorized capital stock of Showboat consists of
50,000,000 shares of Showboat Common Stock and 1,000,000 shares of preferred
stock, $1.00 par value per share ("Showboat Preferred Stock"). As of the
date hereof, (i) 16,228,620 shares of Showboat Common Stock were issued and
outstanding, all of which are validly issued, fully paid and nonassessable,
(ii) 137,070 shares of Showboat Common Stock were held in the treasury of
Showboat or by Subsidiaries of Showboat, and (iii) no shares of Showboat
Preferred Stock are issued and outstanding. Section 3.2(a) of the Showboat
Disclosure Schedule sets forth the number of shares of Showboat Common Stock
reserved for issuance upon exercise of Options granted and outstanding as of
the date hereof and the Showboat Stock Option Plans and shares reserved for
issuance in connection with Showboat's employee stock purchase plans (the
"Showboat Stock Purchase Plans," and together with the Showboat Stock Option
Plans, the "Showboat Stock Plans"). Section 3.2(a) of the Showboat Disclosure
Schedule also sets forth, for each Showboat Stock Option Plan, the dates on
which Options under such plan were granted, the number of Options granted on
each such date and the exercise price thereof. Since September 30, 1997,
Showboat has not made any grants under any of the Showboat Stock Plans. As
of the date of this Agreement, Showboat has not granted any SARs or any other
contractual rights the value of which is derived from the financial
performance of Showboat or the value of shares of Showboat Common Stock,
except for 640,000 SARs granted to employees of Showboat at an exercise price
of $24.58, prior to the date of this Agreement pursuant to the Showboat Stock
Appreciation Rights Plan. Except as disclosed in Section 3.2(a) of the
Showboat Disclosure Schedule, there are no obligations, contingent or
otherwise, of Showboat or any of its Subsidiaries to repurchase, redeem or
otherwise acquire any shares of Showboat Common Stock or the capital stock or
ownership interests of any Subsidiary or to provide funds to or make any
material investment (in the form of a loan, capital contribution or
otherwise) in any such Subsidiary or any other entity other than guarantees
of bank obligations or indebtedness for borrowed money of Subsidiaries
entered into in the ordinary course of business. All of the outstanding
shares of capital stock (including shares which may be issued upon exercise
of outstanding options) or other ownership interests of each of Showboat's
Subsidiaries are duly authorized, validly issued, fully paid and
nonassessable and, except as disclosed in Section 3.2 of
6
the Showboat Disclosure Schedule, all such shares and ownership interests are
owned by Showboat or another Subsidiary of Showboat free and clear of all
security interests, liens, claims, pledges, agreements, limitations on
Showboat's voting rights, charges or other encumbrances or restrictions on
transfer of any nature.
(b) There are no bonds, debentures, notes or other
indebtedness having voting rights (or convertible into securities having such
rights) ("Voting Debt") of Showboat or any of its Subsidiaries issued and
outstanding. Except as set forth in this Section 3.2(b) or as reserved for
future grants of options or restricted stock under the Showboat Stock Plans
and except for the preferred stock purchase rights issued and issuable under
the Rights Agreement dated October 5, 1995, between Showboat and American
Stock Transfer and Trust Company (the "Showboat Rights Plan"), (i) there are
no shares of capital stock of any class of Showboat, or any security
exchangeable into or exercisable for such equity securities, issued, reserved
for issuance or outstanding; (ii) there are no options, warrants, equity
securities, calls, rights, commitments or agreements of any character to
which Showboat or any of its Subsidiaries is a party or by which it is bound
obligating Showboat or any of its Subsidiaries to issue, deliver or sell, or
cause to be issued, delivered or sold, additional shares of capital stock or
other ownership interests (including Voting Debt) of Showboat or any of its
Subsidiaries or obligating Showboat or any of its Subsidiaries to grant,
extend, accelerate the vesting of or enter into any such option, warrant,
equity security, call, right, commitment or agreement; and (iii) there are
no voting trusts, proxies or other voting agreements or understandings with
respect to the shares of capital stock of Showboat. All shares of Showboat
Common Stock subject to issuance as specified in this Section 3.2(b) are duly
authorized and, upon issuance on the terms and conditions specified in the
instruments pursuant to which they are issuable, shall be validly issued,
fully paid and nonassessable.
(c) To the best knowledge of Showboat, the capitalization of
Sydney Harbour Casino Holdings Limited ("Sydney Harbour") is accurately
described in the Showboat SEC Reports (as defined in Section 3.4(a)) or the
Sydney Harbour Reports (as defined in Section 3.4(b)). As used in this
Agreement, "best knowledge" means, with respect to Showboat or Xxxxxx'x, as
the case may be, the actual knowledge (without inquiry) of such entity's
executive officers (including, for the purposes of Section 3.7, Showboat's
Vice President of Taxes). All of the outstanding shares of capital stock
(including shares which may be issued upon exercise of outstanding options)
or other ownership interests held by Showboat or any of its Subsidiaries in
Sydney Harbour are (or, in the case of options, the shares subject to such
options will be) duly authorized, validly issued, fully paid, and
nonassessable and, except as disclosed in Schedule 3.2(c) of the Showboat
Disclosure Schedule, all such shares and ownership interests are owned by
Showboat or a Subsidiary of Showboat free and clear of all security
interests, liens, claims, pledges, agreements, limitations on Showboat's or
its Subsidiary's voting rights, charges or other encumbrances or restrictions
on transfer of any nature.
Section 3.3. AUTHORITY; NO CONFLICT; REQUIRED FILINGS AND
CONSENTS.
(a) Showboat has all requisite corporate power and authority
to enter into this Agreement and to consummate the transactions contemplated
by this Agreement. The execution and delivery of this Agreement and the
consummation of the transactions contemplated by this
7
Agreement by Showboat have been duly authorized by all necessary corporate
action on the part of Showboat, subject only to the approval and adoption of
this Agreement and the Merger by two-thirds of Showboat's stockholders. This
Agreement has been duly executed and delivered by Showboat and constitutes
the valid and binding obligations of Showboat, enforceable against it in
accordance with their terms.
(b) Other than as disclosed in Section 3.3(b) of the Showboat
Disclosure Schedule, the execution and delivery of this Agreement by Showboat
does not, and the consummation of the transactions contemplated by this
Agreement will not, (i) conflict with, or result in any violation or breach
of, any provision of the Articles of Incorporation or Bylaws of Showboat or
the comparable charter or organizational documents of any of its
Subsidiaries, (ii) result in any violation or breach of, or constitute (with
or without notice or lapse of time, or both) a default (or give rise to a
right of termination, cancellation or acceleration of any obligation or loss
of any material benefit) under, or require a consent or waiver under, any of
the terms, conditions or provisions of any note, bond, mortgage, indenture,
lease, contract or other agreement, instrument or obligation to which
Showboat or any of its Subsidiaries is a party or by which any of them or any
of their properties or assets may be bound, or (iii) subject to the
governmental filings and other matters referred to in Section 3.3(c),
conflict with or violate any permit, concession, franchise, license,
judgment, order, decree, statute, law, ordinance, rule or regulation
applicable to Showboat or any of its Subsidiaries or any of its or their
properties or assets, except in the case of clauses (ii) and (iii) for any
such conflicts, violations, defaults, terminations, cancellations or
accelerations which (x) are not, individually or in the aggregate, reasonably
likely to have a Showboat Material Adverse Effect or (y) would not impair or
delay the consummation of the Merger.
(c) No consent, approval, order or authorization of, or
registration, declaration or filing with, any court, administrative agency,
commission, gaming authority or other governmental authority or
instrumentality ("Governmental Entity") is required by or with respect to
Showboat or any of its Subsidiaries in connection with the execution and
delivery of this Agreement or the consummation of the transactions
contemplated hereby or thereby, except for (i) the filing of the pre-merger
notification report under the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of
1976, as amended ("HSR Act") and any similar statute, rule or regulation of
any foreign country, state, province, territory or city (each, a "Foreign
Jurisdiction"), (ii) the filing of the Articles of Merger with respect to the
Merger with the Secretary of State of the State of Nevada, (iii) the filing
of the Proxy Statement (as defined in Section 3.16 below) with the Securities
and Exchange Commission (the "SEC") in accordance with the Exchange Act, (iv)
any approvals and filing of notices required under the Showboat Gaming Laws
(as defined in Section 3.15(b)), (v) such consents, approvals, orders,
authorizations, permits, filings or registrations related to, or arising out
of, compliance with statutes, rules or regulations regulating the
consumption, sale or serving of alcoholic beverages, (vi) such consents,
approvals, orders, authorizations, registrations, declarations and filings as
may be required under applicable state securities laws and the securities
laws of any Foreign Jurisdiction, (vii) the approvals required from the
Australian Securities Commission (with respect to compliance with the
Australian Corporations Law) and the Australian Foreign Investment Review
Board, (viii) such immaterial filings and consents as may be required under
any environmental health or safety law or regulation pertaining to any
notification, disclosure or required approval triggered by the Merger
8
or the transactions contemplated by this Agreement, and (ix) such other
filings, consents, approvals, orders, registrations and declarations as may
be required under the laws of any jurisdiction in which Showboat or any of
its Subsidiaries conducts any business or owns any assets the failure of
which to obtain would not have a Showboat Material Adverse Effect.
Section 3.4. PUBLIC FILINGS; FINANCIAL STATEMENTS.
(a) Showboat and its Subsidiaries that are required to file
forms, reports or other documents with the SEC (the "Reporting Subsidiaries")
have filed and made available to Xxxxxx'x all forms, reports and documents
required to be filed by Showboat and the Reporting Subsidiaries with the SEC
since January 1, 1995 (collectively, the "Showboat SEC Reports"). The
Showboat SEC Reports (including any financial statements filed as a part
thereof or incorporated by reference therein) (i) at the time filed, complied
in all material respects with the applicable requirements of the Securities
Act of 1933, as amended (the "Securities Act"), and the Exchange Act, as the
case may be, and (ii) did not, at the time they were filed (or if amended or
superseded by a filing prior to the date of this Agreement, then on the date
of such filing), contain any untrue statement of a material fact or omit to
state a material fact required to be stated in such Showboat SEC Reports or
necessary in order to make the statements in such Showboat SEC Reports, in
the light of the circumstances under which they were made, not misleading.
Other than Showboat Marina Casino Partnership and Showboat Marina Finance
Corporation, none of Showboat's Subsidiaries is a Reporting Subsidiary.
(b) To the best knowledge of Showboat, the forms, reports,
and documents required to be filed by Sydney Harbour with the Australian
Securities Commission since June 1, 1995 (collectively, the "Sydney Harbour
Reports"), when taken together with the Showboat SEC Reports, did not, at the
time they were filed (or if amended or superseded by a filing prior to the
date of this Agreement, then on the date of such filing), contain any untrue
statement of a material fact or omit to state a material fact required to be
stated in such Sydney Harbour Reports and the Showboat SEC Reports or
necessary in order to make the statements in such Sydney Harbour Reports and
Showboat SEC Reports, in the light of the circumstances in which they were
made, not misleading. Except as disclosed in Section 3.4(b) of the Showboat
Disclosure Schedule and to the best knowledge of Showboat, since the end of
the most recent fiscal year of Sydney Harbour for which audited financial
statements have been filed in a Sydney Harbour Report, there has not been any
event, development, state or affairs or condition, or series or combination
of events, developments, states of affairs or conditions, which, individually
or in the aggregate, has had or is reasonably likely to have a Showboat
Material Adverse Effect.
(c) Each of the consolidated financial statements (including,
in each case, any related notes) of Showboat contained in the Showboat SEC
Reports complied as to form in all material respects with the applicable
published rules and regulations of the SEC with respect thereto, was prepared
in accordance with generally accepted accounting principles ("GAAP") applied
on a consistent basis throughout the periods involved (except as may be
indicated in the notes to such financial statements or, in the case of
unaudited statements, as permitted by Form 10-Q under the Exchange Act) and
fairly presented the consolidated financial position of Showboat and its
consolidated Subsidiaries as of the dates and the consolidated results of its
operations and cash flows for the periods indicated, except that the
unaudited interim financial
9
statements were or are subject to normal and recurring year-end adjustments
which, with respect to interim periods since December 31, 1996, were not or
are not expected to be material in amount. The audited balance sheet of
Showboat as of December 31, 1996 is referred to herein as the "Showboat
Balance Sheet."
Section 3.5. NO UNDISCLOSED LIABILITIES. Except as
disclosed in the Showboat SEC Reports and the Sydney Harbour Reports filed
prior to the date hereof or in Section 3.5 of the Showboat Disclosure
Schedule, and except for liabilities and obligations incurred since December
31, 1996 in the ordinary course of business consistent with past practices,
Showboat and its consolidated Subsidiaries (and, to the best knowledge of
Showboat, Sydney Harbour) do not have any indebtedness, obligations or
liabilities of any kind, whether accrued, contingent or otherwise (whether or
not required to be reflected in financial statements in accordance with
GAAP), and whether due or to become due, which would be reasonably likely to
have a Showboat Material Adverse Effect. Without limiting the generality of
the foregoing, as of the date of this Agreement (a) Waterfront Entertainment
& Development, Inc. ("Waterfront") has not incurred any expense relating to
Showboat Mardi Gras Casino which is material to Showboat Marina Partnership
that has not been reimbursed which would entitle Waterfront to receive
preferential distributions from Showboat Marina Partnership, and (b) except
as disclosed in Section 3.5 of the Showboat Disclosure Schedule, Showboat
Marina Partnership has no liabilities, obligations or commitments to any
Governmental Entity arising out of or relating to the involvement of Showboat
Marina Partnership with the Showboat Mardi Gras Casino which are material to
Showboat Marina Partnership.
Section 3.6. ABSENCE OF CERTAIN CHANGES OR EVENTS. Except
as disclosed in the Showboat SEC Reports filed prior to the date hereof or in
Section 3.6 of the Showboat Disclosure Schedule, since the date of the
Showboat Balance Sheet, Showboat and its Subsidiaries have conducted their
businesses only in the ordinary course and in a manner consistent with past
practice and, since such date, there has not been (i) any event, development,
state of affairs or condition, or series or combination of events,
developments, states of affairs or conditions, which, individually or in the
aggregate, has had or is reasonably likely to have a Showboat Material
Adverse Effect; (ii) any damage, destruction or loss (whether or not covered
by insurance) with respect to Showboat or any of its Subsidiaries which is
reasonably likely to have a Showboat Material Adverse Effect; (iii) any
material change by Showboat in its accounting methods, principles or
practices of which Xxxxxx'x has not previously been informed; (iv) any
revaluation by Showboat of any of its assets which is reasonably likely to
have a Showboat Material Adverse Effect; (v) any declaration, setting aside
or payment of any dividend or other distribution (whether in cash, stock or
property) with respect to the equity interests of Showboat or of any of its
Subsidiaries, other than dividends paid by wholly owned Subsidiaries or the
$0.025 per share cash dividend on shares of Showboat Common Stock declared on
November 20, 1997 and payable on January 9, 1998, or any redemption, purchase
or other acquisition by Showboat or any of its Subsidiaries of any securities
of Showboat or any of its Subsidiaries; (vi) any split, combination or
reclassification of any of Showboat's capital stock or any issuance or the
authorization of any issuance of any other securities in respect of, in lieu
of or in substitution for, shares of Showboat's capital stock; (vii) any
increase in or establishment of any bonus, insurance, severance, deferred
compensation, pension, retirement, profit sharing, stock option, stock
purchase or other employee benefit plan, or any other increase in the
10
compensation payable or to become payable to any officers or key employees of
Showboat or any Subsidiary other than increases which would not be material,
individually or in the aggregate, with respect to such officers or employees
receiving such benefit or compensation (based on a comparison to benefits and
compensation received in the year ended December 31, 1996); (viii) any entry
into, renewal, modification or extension of, any material contract,
arrangement or agreement with any other party except for contracts,
arrangements or agreements in the ordinary course of business or as
contemplated by this Agreement; or (ix) any settlement of pending or
threatened litigation involving Showboat or any of its Subsidiaries (whether
brought by a private party or a Governmental Entity) other than any
settlement which is not likely to have a Showboat Material Adverse Effect.
Section 3.7. TAXES.
(a) Except as set forth in Section 3.7(a) of the Showboat
Disclosure Schedule:
(i) Each of Showboat and its Subsidiaries (and any
affiliated group (within the meaning of Section 1504 of the Internal Revenue
Code of 1986, as amended (the "Code"))) of which Showboat or any of its
Subsidiaries is now or has been a member) has timely filed with the
appropriate taxing authorities all federal, state and local income Tax
Returns (as defined in Section 3.7(c)) and all other material Tax Returns
required to be filed through the date hereof and will timely file any such
returns required to be filed on or prior to the Closing Date. Such Tax
Returns are (and, to the extent they will be filed prior to the Effective
Time, will be) complete and accurate in all material respects. None of
Showboat, its Subsidiaries, nor any affiliated group (within the meaning of
Section 1504 of the Code) of which Showboat or its Subsidiaries 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. Showboat has provided to
Xxxxxx'x and Merger Sub complete and accurate (in all material respects)
copies of Showboat's federal and state income Tax Returns for the taxable
years ended June 30, 1995, June 30, 1996 and December 31, 1996.
(ii) All Taxes (as defined in Section 3.7(c)) in
respect of periods beginning before the Closing Date 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 Showboat and its Subsidiaries
subject to such exceptions as are not likely to have a Showboat Material
Adverse Effect.
(iii) Showboat and its Subsidiaries have complied in
all respects with all applicable laws, rules and regulations relating to the
payment and withholding of Taxes and have, within the time and the manner
prescribed by law, withheld and paid over to the proper governmental
authorities all amounts required to be so withheld and paid over under
applicable laws subject to such exceptions as are not likely to have a
Showboat Material Adverse Effect.
(iv) No federal, state, local or foreign audits or
other administrative proceedings or court proceedings are presently pending
with regard to any material Taxes or material Tax Returns of any of Showboat
or its Subsidiaries subject to such exceptions as are not likely to have a
Showboat Material Adverse Effect. Neither Showboat nor any of its
Subsidiaries has received a written notice of any such pending audits or
proceedings.
11
(v) Neither the IRS nor any other taxing authority
(whether domestic or foreign) has asserted, or to the best knowledge of
Showboat, is threatening to assert, against Showboat or any of its
Subsidiaries any material deficiency or material claim for Taxes in excess of
the reserves established therefor except as which is not likely to have a
Showboat Material Adverse Effect.
(b) Except as set forth in Section 3.7(b) of Showboat
Disclosure Schedule:
(i) There are no liens for Taxes upon any property
or assets of Showboat or any 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(a) of Showboat
Disclosure Schedule and as to which adequate reserves have been established
in accordance with generally accepted accounting standards except as which is
not likely to have a Showboat Material Adverse Effect.
(ii) Neither Showboat nor any of its Subsidiaries is
or has been a member of an affiliated group of corporations filing a
consolidated federal income tax return (or a group of corporations filing a
consolidated, combined or unitary income tax return under comparable
provisions of state, local or foreign tax law) for any taxable period
beginning on or after the taxable period ending June 30, 1992, other than a
group the common parent of which is or was Showboat or any Subsidiary of
Showboat.
(iii) Neither Showboat nor any of its Subsidiaries
has any obligation under any Tax sharing agreement or similar arrangement
with any other person with respect to Taxes of such other person.
(iv) Neither Showboat nor any of its Subsidiaries
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 Showboat or any of its Subsidiaries;
(v) To the best knowledge of Showboat no member of
the Showboat 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 Treas. Reg. Section 1.1502-13 or
comparable provisions of state, local or foreign Tax laws except as which is
not likely to have a Showboat Material Adverse Effect.
(c) "TAXES" shall mean any and all taxes, charges, fees,
levies, duties, liabilities, impositions or other assessments, including,
without limitation, income, gross receipts, profits, 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, imposed by the Internal Revenue Service ("IRS") or
any other taxing authority (whether domestic or foreign
12
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 or other
assessments. For purposes of this Agreement, "Taxes" also includes any
obligations under any agreements or arrangements with any other person with
respect to Taxes of such other person (including pursuant to Treas. Reg.
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, 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.
Section 3.8. REAL PROPERTY.
(a) Section 3.8(a) of the Showboat Disclosure Schedule
identifies all real property owned by Showboat and its subsidiaries (the
"Showboat Owned Property") and all real property leased or operated by
Showboat and its Subsidiaries (the "Showboat Leased Property"). The Showboat
Owned Property and the Showboat Leased Property is referred to herein
collectively as the "Showboat Real Property."
(b) Showboat and its Subsidiaries have good and
marketable fee simple title to the Showboat Owned Property, and a valid
leasehold interest in the Showboat Leased Property, free and clear of any and
all liens, encumbrances, restrictions, leases, options to purchase, options
to lease, conditions, covenants, assessments, defects, claims or exceptions,
except for the exceptions described in the Showboat SEC Reports or on
Schedule 3.8(b) of the Showboat Disclosure Schedule and such other liens or
exceptions that do not and would not, individually or in the aggregate,
materially interfere with the use of the Showboat Real Property as currently
used.
(c) True and correct copies of the documents under which
the Showboat Owned Property and Showboat Leased Property is leased or
operated (the "Lease Documents") have been delivered or made available for
review to Xxxxxx'x. The Lease Documents are unmodified and in full force and
effect, and there are no other agreements, written or oral, between Showboat
or any of its Subsidiaries in the Showboat Owned Property, Showboat Leased
Property or otherwise relating to the use and occupancy of the Showboat Owned
Property or Showboat Leased Property. None of Showboat, its Subsidiaries or
any other party is in material default under the Lease Documents, and, to the
best knowledge of Showboat, no defaults (whether or not subsequently cured)
by Showboat, its Subsidiaries or any other party have been alleged
thereunder. To the best knowledge of Showboat and its Subsidiaries, each
landlord named in any of the Lease Documents is not in material default
thereunder, and no material defaults (whether or not subsequently cured) by
such landlord have been alleged thereunder.
13
(d) Except as disclosed in Section 3.8(d) of the
Showboat Disclosure Schedule, (i) to the best knowledge of Showboat, no land
or property adjacent to the Showboat Real Property is in material violation
of any applicable laws, regulations or Restrictions, except for such
violations which, individually or in the aggregate, would not be reasonably
likely to result in a Showboat Material Adverse Effect; and (ii) there are no
material defects in the physical condition of the Showboat Real Property or
the improvements located on the Showboat Real Property, except for defects
which, individually or in the aggregate, would not be reasonably likely to
have a Showboat Material Adverse Effect.
(e) Except as disclosed in Section 3.8(e) of the
Showboat Disclosure Schedule, there is no action, proceeding or litigation
pending (or, to the best knowledge of Showboat, overtly contemplated or
threatened) (i) to take all or any portion of the Showboat Real Property, or
any interest therein, by eminent domain; (ii) to modify the zoning of, or
other governmental rules or restrictions applicable to, the Showboat Real
Property or the use or development thereof; (iii) for any street widening or
changes in highway or traffic lanes or patterns in the immediate vicinity of
the Showboat Real Property; or (iv) otherwise relating to the Showboat Real
Property or the interests of Showboat and its Subsidiaries therein, or which
otherwise would interfere with the use, ownership, improvement, development
and/or operation of the Showboat Real Property; in each case except for such
actions, proceedings or litigation which, individually or in the aggregate,
would not be reasonably expected to have a Showboat Material Adverse Effect.
(f) Except as disclosed in Section 3.8(f) of the
Showboat Disclosure Schedule, no portion of the Showboat Real Property or the
roads immediately adjacent to the Showboat Real Property: (i) based on title
reports and surveys, is situated in a "Special Flood Hazard Area," as set
forth on a Federal Emergency Management Agency Flood Insurance Rate Map or
Flood Hazard Boundary Map; (ii) to the best knowledge of Showboat, was the
former site of any public or private landfill, dump site, retention basin or
settling pond; (iii) to the best knowledge of Showboat, was the former site
of any oil or gas drilling operations; or (iv) to the best knowledge of
Showboat, was the former site of any experimentation, processing, refining,
reprocessing, recovery or manufacturing operation for any petrochemicals.
(g) The parcels constituting the Showboat Real Property
are assessed separately from all other adjacent property for purposes of real
property taxes.
(h) The Showboat Real Property is connected to and
serviced by adequate water, sewage disposal, gas and electricity facilities
and all material systems (heating, air conditioning, electrical, plumbing and
the like) for the basic operation of the Showboat Real Property are operable
and in good condition (ordinary wear and tear excepted), except as would not
be reasonably expected to have a Showboat Material Adverse Effect.
(i) There are no material commitments to or agreements
with any governmental authority or agency (federal, state or local) affecting
the Showboat Real Property which are not listed in Schedule 3.8(i) of the
Showboat Disclosure Schedule or described in the Showboat SEC Reports.
14
(j) There are no contracts or other obligations
outstanding for the sale, exchange, lease or transfer of any of the Showboat
Real Property, or any portion of it, or the businesses operated by Showboat
or any of its Subsidiaries thereon, except as disclosed on Schedule 3.8(j) of
the Showboat Disclosure Schedule and other than contracts and obligations
entered into after the date of this Agreement in compliance with Section 5.1.
Section 3.9. TITLE TO PERSONAL PROPERTY; LIENS. To the best
knowledge of Showboat, Showboat and each of its Subsidiaries has sufficiently
good and valid title to, or an adequate leasehold interest in, its material
tangible personal properties and assets (including all riverboats operated by
Showboat and its Subsidiaries) in order to allow it to conduct, and continue
to conduct, its business as currently conducted. Such material tangible
personal assets and properties are sufficiently free of liens to allow each
of Showboat and its Subsidiaries to conduct, and continue to conduct, its
business as currently conducted and, to the best knowledge of Showboat, the
consummation of the transactions contemplated by this Agreement will not
alter or impair such ability in any respect which, individually or in the
aggregate, would be reasonably likely to have a Showboat Material Adverse
Effect. There are no defects in the physical condition or operability of
such material tangible personal assets and properties which would impair the
use of such assets and properties as such assets and properties are currently
used, except for such defects which, individually or in the aggregate, would
not be reasonably likely to have a Showboat Material Adverse Effect.
Section 3.10 INTELLECTUAL PROPERTY. Section 3.10 of the
Showboat Disclosure Schedule lists all (i) trademark and service xxxx
registrations and applications owned by Showboat or any of its Subsidiaries
and (ii) trademark, service xxxx and trade name license agreements to which
Showboat or any of its Subsidiaries is a party. Except as disclosed in
Section 3.10 of the Showboat Disclosure Schedule, Showboat and its
Subsidiaries own or possess adequate and enforceable rights to use all
material trademarks, trademark applications, trade names, service marks,
trade secrets (including customer lists and customer databases), copyrights,
patents, licenses, know-how and other proprietary intellectual property
rights as are necessary in connection with the businesses of Showboat and its
Subsidiaries as currently conducted without material restrictions or material
conditions on use, and, to the best knowledge of Showboat, there is no
conflict with the rights of Showboat and its Subsidiaries therein or any
conflict by them with the rights of others therein which, individually or in
the aggregate would be reasonably likely to have a Showboat Material Adverse
Effect.
Section 3.11 AGREEMENTS, CONTRACTS AND COMMITMENTS.
(a) Except as disclosed in the Showboat SEC Reports
filed prior to the date of this Agreement or as disclosed in Section 3.11(a)
of the Showboat Disclosure Schedule, neither Showboat nor any of its
Subsidiaries is a party to any oral or written (i) agreement, contract,
indenture or other instrument relating to Indebtedness (as defined below) in
an amount exceeding $1,000,000, (ii) partnership, joint venture or limited
liability or management agreement with any person, (iii) agreement, contract,
or other instrument relating to any merger, consolidation, business
combination, share exchange, business acquisition, or for the purchase,
acquisition, sale or disposition of any assets of Showboat or any of its
Subsidiaries outside the ordinary course of business, (iv) other contract,
agreement or commitment to be performed after the date hereof
15
which would be a material contract (as defined in Item 601(b)(10) of
Regulation S-K of the SEC), (v) agreement, contract, or other instrument
relating to any "strategic alliances" (i.e., cross-marketing, affinity
relationships, etc.) or (vi) contract, agreement or commitment which
materially restricts (geographically or otherwise) the conduct of any line of
business by Showboat or any of its Subsidiaries or Sydney Harbour
(collectively, the "Showboat Material Contracts"). "Indebtedness" means any
liability in respect of (A) borrowed money, (B) capitalized lease
obligations, (C) the deferred purchase price of property or services (other
than trade payables in the ordinary course of business) and (D) guarantees of
any of the foregoing incurred by any other person other than Showboat or any
of its Subsidiaries.
(b) Except as disclosed in the Showboat SEC Reports or
as disclosed in Section 3.11(b) of the Showboat Disclosure Schedule, (i) each
of the Showboat Material Contracts is valid and binding upon Showboat or any
of its Subsidiaries (and, to Showboat's best knowledge, on all other parties
thereto) in accordance with its terms and is in full force and effect, (ii)
there is no material breach or violation of or default by Showboat or any of
its Subsidiaries under any of the Showboat Material Contracts, whether or not
such breach, violation or default has been waived, and (iii) no event has
occurred with respect to Showboat or any of its Subsidiaries which, with
notice or lapse of time or both, would constitute a material breach,
violation or default, or give rise to a right of termination, modification,
cancellation, foreclosure, imposition of a lien, prepayment or acceleration
under any of the Showboat Material Contracts, which breach, violation or
default referred to in clauses (ii) or (iii), alone or in the aggregate with
other such breaches, violations or defaults referred to in clauses (ii) or
(iii), would be reasonably likely to have a Showboat Material Adverse Effect.
Section 3.11(b) of the Showboat Disclosure Schedule describes any consents
or approvals required to terminate or transfer the Casino Complex Management
Agreement, dated April 21, 1994, relating to the Sydney Harbour Casino.
(c) Except as disclosed in Section 3.11(c) of the
Showboat Disclosure Schedule, Showboat and its Subsidiaries have terminated,
and have no continuing liabilities or obligations under, any agreement,
contract or arrangement with any person or entity relating to the Southboat
Casino project in Xxxxx, Missouri.
Section 3.12. LITIGATION. Except as disclosed in the
Showboat SEC Reports or the Sydney Harbour Reports filed prior to the date of
this Agreement or in Section 3.12 of the Showboat Disclosure Schedule, (a)
there is no action, suit or proceeding, claim, arbitration or investigation
against Showboat, Sydney Harbour or any of their respective Subsidiaries
pending, or as to which Showboat, Sydney Harbour or any of their respective
Subsidiaries has received any written notice of assertion or, to the best
knowledge of Showboat, threatened against or affecting, Showboat, Sydney
Harbour or any of their respective Subsidiaries or any property or asset of
Showboat, Sydney Harbour or any of their respective Subsidiaries, before any
court, arbitrator, or administrative, governmental or regulatory authority or
body, domestic or foreign, that, individually or in the aggregate, could
reasonably be expected to (i) have a Showboat Material Adverse Effect or (ii)
prevent the consummation of the transactions contemplated by this Agreement;
and (b) there is no judgment, order, injunction or decree of any Governmental
Entity outstanding against Showboat, Sydney Harbour or any of their
respective Subsidiaries that could reasonably be expected to have any effect
referred to in clauses (i) or (ii) above.
16
Section 3.13. ENVIRONMENTAL MATTERS.
Except as disclosed in Section 3.13 of the Showboat Disclosure Schedule
and as would not be reasonably likely to have a Showboat Material Adverse
Effect, (a) Showboat is in compliance with all applicable Environmental Laws,
(b) there are no Environmental Liabilities and Costs of Showboat and its
Subsidiaries, (c) there are no Environmental Conditions, (d) none of Showboat
and its Subsidiaries has received any notices from any governmental agency or
other third party alleging liability under or violation of any Environmental
Law, or alleging responsibility for the removal, clean-up, or remediation of
any Environmental Condition, (e) Showboat is not subject to any enforcement
or investigatory action by any governmental agency regarding an Environmental
Condition with respect to any Showboat Real Property or any other property
related in any way to Showboat or its Subsidiaries, (f) no asbestos
containing materials or polychlorinated biphenyls (i.e., PCBs) are contained
in or stored on any of the Showboat Real Properties, and (g) there have been
no leaks, releases, spills or discharge of fluids from any underground or
above-ground storage tanks located on any of the Showboat Real Properties,
and each underground storage tank meets 1998 monitoring standards. As used
herein, the terms "toxic" or "hazardous" wastes, substances or materials
shall include, without limitation, all those so designated and all those in
any way regulated by any Environmental Laws.
For purposes of this Section 3.13, the following definitions shall apply:
"ENVIRONMENTAL LAWS" means all applicable foreign, federal, state and
local statutes or laws, common law, judgments, orders, regulations, licenses,
permits, rules and ordinances relating to pollution or protection of health,
safety or the environment, including, but not limited to the Federal Water
Pollution Control Act (33 U.S.C. Section 1251 ET SEQ.), Resource Conservation
and Recovery Act (42 U.S.C. Section 6901 ET SEQ.), Safe Drinking Water Act (42
U.S.C. Section 3000(f) ET SEQ.), Toxic Substances Control Act (15 U.S.C.
Section 2601 ET SEQ.), Clean Air Act (42 U.S.C. Section 7401 ET SEQ.),
Comprehensive Environmental Response, Compensation and Liability Act (42
U.S.C. Section 9601 ET SEQ.) and other similar state and local statutes, in
effect as of the date hereof.
"ENVIRONMENTAL CONDITION" means the release into the environment of any
pollution, including without limitation any contaminant, pollutant, hazardous
or toxic waste, substance or material as a result of which Showboat (1) has or
may become liable to any person, (2) is or was in violation of any
Environmental Law, (3) has or may be required to incur response costs for
investigation or remediation, or (4) by reason of which any of the Properties
or other assets of Showboat, may be subject to any lien under Environmental
Laws.
"ENVIRONMENTAL LIABILITIES AND COSTS" means all liabilities, obligations,
responsibilities, obligations to conduct cleanup, losses, damages,
deficiencies, punitive damages, consequential damages, treble damages, costs
and expenses (including, without limitation, all reasonable fees, disbursements
and expenses of counsel, expert and consulting fees and costs of investigations
and feasibility studies and responding to government requests for information
or documents), fines, penalties, restitution and monetary sanctions, interest,
direct or indirect, known or unknown, absolute or contingent, past, present or
future, resulting from any claim or demand, by any person or entity, under any
Environmental Law, or arising from environmental, health or safety conditions.
17
Section 3.14. EMPLOYEE BENEFIT PLANS.
(a) DEFINITIONS. The following terms, when used in this Section
3.14 shall have the following meanings. Any of these terms may, unless the
context otherwise requires, be used in the singular or the plural depending
on the reference.
(i) BENEFIT ARRANGEMENT. "Benefit Arrangement" shall mean
any employment, consulting, severance or other similar contract, arrangement
or policy and each plan, program or agreement providing for workers'
compensation, disability benefits, supplemental unemployment benefits,
vacation benefits, retirement benefits, life insurance, health, accident
benefits (including without limitation any "voluntary employees' beneficiary
association" as defined in Section 501(c)(9) of the Code providing for the
same or other benefits), deferred compensation, profit-sharing bonuses, stock
options, stock appreciation rights, stock purchases or other forms of
incentive compensation which
(1) is not a Welfare Plan, Pension Plan,
Foreign Plan or Multiemployer Plan under which Showboat or ERISA Affiliate
may incur any liability, and (2) covers any employee or former employee of
Showboat or any ERISA Affiliate (with respect to their relationship with such
entities).
(ii) CODE. "Code" shall have the meaning set forth in
Section 3.7(a)(vi).
(iii) EMPLOYEE PLANS. "Employee Plans" shall mean all Benefit
Arrangements, Multiemployer Plans, Foreign Plans, Pension Plans and Welfare
Plans.
(iv) ERISA. "ERISA" shall mean the Employee Retirement Income
Security Act of 1974, as amended.
(v) ERISA AFFILIATE. "ERISA Affiliate" shall mean any entity
which is (or at any relevant time was) a member of a "controlled group of
corporations" with, under "common control" with, or a member of an "affiliated
service group" with, Showboat as defined in Section 414(b), (c), (m) or (o) of
the Code or any partnership of which Showboat or any of its Subsidiaries is a
general partner.
(vi) FOREIGN PLAN. "Foreign Plan" shall mean any employee
benefit plan covering employees or former employees of any Subsidiary of
Showboat or any ERISA Affiliate which is organized under the laws of any
country other than the U.S. (with respect to such employees' relationship
with such entities) which if maintained or administered in or otherwise
subject to the laws of the United States would constitute a Pension Plan, a
Multiemployer Plan or Welfare Plan.
(vii) MULTIEMPLOYER PLAN. "Multiemployer Plan" shall mean any
"multiemployer plan," as defined in Section 4001(a)(3) of ERISA, under which
Showboat or any ERISA Affiliate may incur any liability.
18
(viii) PENSION PLAN. "Pension Plan" shall mean any "employee
pension benefit plan" as defined in Section 3(2) of ERISA (other than a
Multiemployer Plan) under which Showboat or any ERISA Affiliate may incur any
liability.
(ix) WELFARE PLAN. "Welfare Plan" shall mean any "employee
welfare benefit plan" as defined in Section 3(1) of ERISA, under which
Showboat or any ERISA Affiliate may incur any liability.
(b) DISCLOSURE; DELIVERY OF COPIES OF RELEVANT DOCUMENTS AND OTHER
INFORMATION. Section 3.14 of the Showboat Disclosure Schedule contains a
complete list of the Employee Plans. Each copy of each (i) an Employee Plan
(other than any Multiemployer Plan) and, if applicable, related trust
agreement, and any amendment thereto, (ii) a determination letter issued by
the IRS or analogous ruling under foreign law with respect to each Employee
Plan, (iii) an Annual Report on Form 5500 Series required to be filed with
any governmental agency for each Pension Plan and Welfare Plan, and (iv) an
actuarial report prepared for a Pension Plan, in each case delivered by
Showboat to Xxxxxx'x is a true and complete copy of such documents.
(c) REPRESENTATIONS. Except as set forth in Section 3.14(c) of the
Showboat Disclosure Schedule:
(i) EMPLOYEE PLANS
(A) No Pension Plan is subject to Title IV of ERISA or the
minimum funding requirements of Section 412 of the Code. Each Pension Plan
and each related trust that is intended to qualify under the provisions of
Code Section 401(a) and 501(a) has so qualified during the period from its
adoption to date.
(B) Each Employee Plan has been maintained in material
compliance with its terms and, both as to form and in operation, with the
requirements prescribed by any and all applicable laws, including without
limitation ERISA and the Code to the extent applicable, except for such
non-compliance which would not be reasonably likely to have a Showboat
Material Adverse Effect.
(C) Section 3.14 (c) of the Showboat Disclosure Schedule sets
forth Showboat's good faith estimate as of September 30, 1997 of the accrued
liability under Showboat's 401(k) Restoration Plan, which has been accrued on
Showboat's financial statements in accordance with GAAP. Section 5.13(e) of
the Showboat Disclosure Schedule also sets forth the actuarial assumptions
and reflects the methodologies used by Showboat to determine participants'
benefits and Showboat's liabilities under Showboat's Supplemental Executive
Retirement Plan and Showboat's good faith estimate of Showboat's projected
liabilities under the Supplemental Executive Retirement Plan as of May 31,
1998, assuming enhancements of such benefits pursuant to Showboat's change in
control severance agreements and assuming that the employment of all
participants who are parties to such agreements is terminated without cause
on May 1, 1998 immediately after a change in control of Showboat.
19
(ii) MULTIEMPLOYER PLANS
(A) Neither Showboat nor any ERISA Affiliate has, at any
time, withdrawn from a Multiemployer Plan in a "complete withdrawal" or a
"partial withdrawal" as defined in Sections 4203 and 4205 of ERISA,
respectively, so as to result in a liability, contingent or otherwise
(including without limitation the obligations pursuant to an agreement
entered into in accordance with Section 4204 of ERISA), of Showboat or any
ERISA Affiliate which has not been fully satisfied. Neither Showboat nor any
ERISA Affiliate has engaged in, or is a successor or parent corporation to an
entity that has engaged in, a transaction described in Section 4212(c) of
ERISA.
(B) To the best of Showboat's knowledge, with respect to each
Multiemployer Plan: (1) no such Multiemployer Plan has been terminated or is
in reorganization under ERISA so as to result, directly or indirectly, in any
liability, contingent or otherwise, of Showboat or any ERISA Affiliate under
Title IV of ERISA; and (2) no proceeding has been initiated by any person
(including the Pension Benefit Guaranty Corporation) to terminate any
Multiemployer Plan.
(iii) WELFARE PLANS. None of Showboat, any ERISA Affiliate or any
Welfare Plan has any present or future obligation to make any payment to, or
with respect to any present or former employee of Showboat or any ERISA
Affiliate pursuant to, any retiree medical benefit plan, or other retiree
Welfare Plan, except to the extent required by the Code or ERISA.
(iv) DEDUCTIBILITY OF PAYMENTS. There is no contract, agreement,
plan or arrangement covering any employee or former employee of Showboat
(with respect to its relationship with such entities) that, individually or
collectively, provides for the payment by Showboat of any amount (i) that is
not deductible under Section 404 of the Code or (ii) that is an "excess
parachute payment" pursuant to Section 280G of the Code.
(v) LITIGATION. There is no material action, order, writ,
injunction, judgment or decree outstanding or claim, suit, litigation,
proceeding, arbitral action, governmental audit or investigation relating to
or seeking benefits under any Employee Plan that is pending against Showboat,
any ERISA Affiliate or any Employee Plan (other than routine claims for
benefits).
(vi) NO ACCELERATION OR CREATION OF RIGHTS. Except as provided in
Section 2.3, 5.11 or disclosed in Section 5.13(c) of the Showboat Disclosure
Schedule neither the execution and delivery of this Agreement by Showboat nor
the consummation of the transactions contemplated hereby will result in the
acceleration or creation of any rights of any current or former employee of
Showboat or any of its Subsidiaries to benefits under any Employee Plan
(including, without limitation, the acceleration of the vesting or
exercisability of any stock options, the acceleration of the vesting of any
restricted stock, the acceleration of the accrual or vesting of any benefits
under any Pension Plan or the acceleration or creation of any rights under
any severance, parachute or change in control agreement).
20
Section 3.15. COMPLIANCE.
(a) Each of Showboat and its Subsidiaries, and each of their respective
directors (but with respect to non-employee directors, only to Showboat's best
knowledge), officers, persons performing management functions similar to
officers and, to Showboat's best knowledge, partners hold all permits,
registrations, findings of suitability, licenses, variances, exemptions,
certificates of occupancy, orders and approvals of all Governmental Entities
(including all authorizations under Environmental Laws, Showboat Gaming Laws,
the Merchant Marine Act of 1920 and the Shipping Act of 1916 and Certificates
of Inspection issued by the U.S. Coast Guard), necessary to conduct the
business and operations of Showboat and each of its Subsidiaries, each of which
is in full force and effect in all material respects, except for such permits,
registrations, findings of suitability, licenses, variances, exemptions,
certificates of occupancy, orders and approvals the failure of which to hold
would not, individually or in the aggregate, be reasonably likely to have a
Showboat Material Adverse Effect (the "Showboat Permits") 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 Showboat Permit that currently is in effect the loss of
which either individually or in the aggregate would be reasonably likely to
have a Showboat Material Adverse Effect. Each of Showboat and its
Subsidiaries, and each of their respective directors (but with respect to non-
employee directors, only to Showboat's best knowledge), officers, persons
performing management functions similar to officers and, to Showboat's best
knowledge, partners, are in compliance with the terms of the Showboat Permits,
except for such failures to comply, which singly or in the aggregate, would
not, individually or in the aggregate, be reasonably likely to have a Showboat
Material Adverse Effect. Except as disclosed in the Showboat SEC Reports filed
prior to the date of this Agreement, the businesses of Showboat and its
Subsidiaries are not being conducted in violation of any law, ordinance or
regulation of any Governmental Entity (including, without limitation, any
Showboat Gaming Laws), except for possible violations which individually or in
the aggregate do not and would not be reasonably likely to have a Showboat
Material Adverse Effect. No investigation or review by any Governmental Entity
with respect to Showboat or any of its Subsidiaries is pending, or, to the best
knowledge of Showboat, 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 likely to have a Showboat
Material Adverse Effect.
(b) The term "Showboat Gaming Laws" means any Federal, state, local or
foreign statute, ordinance, rule, regulation, permit, consent, registration,
finding of suitability, approval, license, judgment, order, decree, injunction
or other authorization, including any condition or limitation placed thereon,
governing or relating to the current or contemplated casino and gaming
activities and operations of Showboat or any of its Subsidiaries, including,
without limitation, the Nevada Gaming Control Act and the rules and regulations
promulgated thereunder, the City of Las Vegas Ordinances, the Xxxxx County,
Nevada Code and the rules and regulations promulgated thereunder, the Riverboat
Gambling Act and the rules and regulations of the Indiana Gaming Commission,
the codes, rules and regulations promulgated thereunder, the New Jersey Casino
Control Act and the rules and regulations promulgated thereunder, the Casino
Control Act 1992 (New South Wales) and the rules and regulations promulgated
thereunder, the Indian Gaming Regulatory Act of 1988 and the rules and
regulations promulgated thereunder, any state-
21
tribal gaming compact and any applicable state gaming law and any federal or
state laws relating to currency transactions.
(c) Except as disclosed in Section 3.15(c) of the Showboat Disclosure
Schedule, neither Showboat nor any of its Subsidiaries, nor any director (but
with respect to non-employee directors, only to Showboat's best knowledge),
officer, key employee or, to Showboat's best knowledge, partners of Showboat or
any of its Subsidiaries has received any written claim, demand, notice,
complaint, court order or administrative order from any Governmental Entity in
the past three years under, or relating to any violation or possible violation
of any Showboat Gaming Laws which did or would be reasonably likely to result
in fines or penalties of $50,000 or more. To Showboat's best knowledge, there
are no facts, which if known to the regulators under the Showboat Gaming Laws
could reasonably be expected to result in the revocation, limitation or
suspension of a license, finding of suitability, registration, permit or
approval of it or them, or of any officer, director, other person performing
management functions similar to an officer or partner, under any Showboat
Gaming Laws. Neither Showboat nor any of its Subsidiaries has suffered a
suspension or revocation of any material license, finding of suitability,
registration, permit or approval held under the Showboat Gaming Laws.
(d) For purposes of this Section 3.15, Sydney Harbour and each of its
Subsidiaries shall be considered a "Subsidiary" of Showboat such that the
representations contained in this Section 3.15 shall apply to Sydney Harbour,
except that all such representations shall be limited to Showboat's best
knowledge.
Section 3.16. PROXY STATEMENT. None of the information with respect to
Showboat or its Subsidiaries to be included or incorporated by reference in the
proxy statement to be sent to the stockholders of Showboat in connection with
the meeting of Showboat's stockholders to consider the Agreement and Merger (the
"Proxy Statement"), or any amendment thereof or supplement thereto, will, on the
date filed with the SEC, at the time of the mailing of the Proxy Statement or
any amendment or supplement, at the time of the meeting of Showboat's
stockholders (the "Special Meeting") and at the Effective Time, contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they are made, not misleading. The Proxy
Statement will comply as to form in all material respects with the provisions of
the Exchange Act and the rules and regulations thereunder; provided, however,
that Showboat makes no representation with respect to any information supplied
or to be supplied by Xxxxxx'x or Merger Sub for inclusion in the Proxy Statement
or any amendment thereof or supplement thereto.
Section 3.17. LABOR MATTERS. Except as disclosed in Section 3.17 of the
Showboat Disclosure Schedule or as would not have a Showboat Material Adverse
Effect, (i) there are no controversies pending or, to the best knowledge of
Showboat, threatened between Showboat or any of its Subsidiaries and any of
their respective employees; (ii) to the best knowledge of Showboat, there are no
activities or proceedings of any labor union to organize any non-unionized
employees; (iii) neither Showboat nor any of its Subsidiaries has breached or
otherwise failed to comply with any provision of any collective bargaining
agreement or contract and there are no grievances outstanding against Showboat
or any of its Subsidiaries under any
22
such agreement or contract; (iv) there are no unfair labor practice
complaints pending against Showboat or any of its Subsidiaries before the
National Labor Relations Board, or any similar foreign labor relations
governmental bodies, or any current union representation questions involving
employees of Showboat or any of its Subsidiaries; and (v) there is no strike,
slowdown, work stoppage or lockout, or, to the best knowledge of Showboat,
threat thereof, by or with respect to any employees of Showboat or any of its
Subsidiaries. Showboat and its Subsidiaries are not parties to any collective
bargaining agreements, except for collective bargaining agreements disclosed in
Section 3.17 of the Showboat Disclosure Schedule.
Section 3.18. INSURANCE. Showboat has provided to Xxxxxx'x accurate and
complete copies of all material fire and casualty, general liability, business
interruption, product liability, and sprinkler and water damage insurance
policies maintained by Showboat or any of its Subsidiaries. All such insurance
policies are with reputable insurance carriers and provide coverage as is
reasonably prudent to cover normal risks incident to the business of Showboat
and its Subsidiaries and their respective properties and assets.
Section 3.19. OPINION OF FINANCIAL ADVISOR. Showboat has received the
opinion of Xxxxxxxxx, Lufkin & Xxxxxxxx Securities Corporation, dated the date
of this Agreement, to the effect that the Merger Consideration is fair to the
holders of Showboat Common Stock from a financial point of view.
Section 3.20. NO EXISTING DISCUSSIONS. As of the date hereof, Showboat is
not engaged, directly or indirectly, in any discussions or negotiations with any
other party with respect to an Acquisition Proposal (as defined in Section 5.3).
Section 3.21. SHOWBOAT RIGHTS PLAN; NEVADA TAKEOVER STATUTE.
(a) Under the terms of the Showboat Rights Plan, neither the execution
of this Agreement, the Stockholder Support Agreements, nor the transactions
contemplated hereby or thereby, will cause a Distribution Date to occur or
cause the rights issued pursuant to the Showboat Rights Plan to become
exercisable, and all such rights shall become non-exercisable at the Effective
Time.
(b) As of the date hereof and at all times on or prior to the Effective
Date, the restrictions of Sections 78.378 through 78.3793 of the NRS are, and
shall be, inapplicable to the Merger, and the transactions contemplated by this
Agreement.
Section 3.22. BROKERS. None of Showboat, any of its Subsidiaries, or any
of their respective officers, directors or employees have employed any broker,
financial advisor or finder or incurred any liability for any brokerage fees,
commissions or finder's fees in connection with the transactions contemplated by
this Agreement, except that Showboat has retained Xxxxxxxxx, Xxxxxx & Xxxxxxxx
Securities Corporation as its financial advisor, the arrangements with which
have been disclosed in writing to Xxxxxx'x and Merger Sub prior to, and will
not be modified subsequent to, the date of this Agreement.
Section 3.23. TRANSACTIONS WITH AFFILIATES. Other than the transactions
contemplated by this Agreement and except to the extent disclosed in the
Showboat SEC Documents or as
23
disclosed in Section 3.23 of the Showboat Disclosure Schedule, from January 1,
1995 through the date of this Agreement, there have been no transactions,
agreements, arrangements or understandings between Showboat or any of its
Subsidiaries, on the one hand, and Showboat's affiliates or other persons, on
the other hand, that would be required to be disclosed under Item 404 of
Regulation S-K under the Securities Act.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF XXXXXX'X AND MERGER SUB
Xxxxxx'x and Merger Sub represent and warrant to Showboat that the
statements contained in this Article IV are true and correct except as set
forth herein and in the disclosure schedule delivered by Xxxxxx'x and Merger
Sub to Showboat on or before the date of this Agreement (the "Xxxxxx'x
Disclosure Schedule"). The Xxxxxx'x Disclosure Schedule shall be arranged in
paragraphs corresponding to the numbered and lettered paragraphs contained in
this Article IV and the disclosure in any paragraph shall qualify other
paragraphs in this Article IV only to the extent that it is reasonable from a
reading of such disclosure that it also qualifies or applies to such other
paragraphs.
Section 4.1. ORGANIZATION. Each of Xxxxxx'x and its Subsidiaries is duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its organization and has all requisite corporate, partnership
and limited liability company power and authority to carry on its business as
now being conducted and as proposed to be conducted. Each of Xxxxxx'x and its
Subsidiaries is duly qualified or licensed to do business and is in good
standing in each jurisdiction in which the property owned, leased or operated by
it or the nature of the business conducted by it makes such qualification or
licensing necessary, except where the failure to be so qualified, licensed or in
good standing would not have a material adverse effect on the business,
properties, condition (financial or otherwise), results of operations or
prospects of Xxxxxx'x and its Subsidiaries, taken as a whole (a "Xxxxxx'x
Material Adverse Effect"). Xxxxxx'x has delivered to Showboat true and correct
copy of the Certificate of Incorporation and Bylaws of each of Xxxxxx'x and
Merger Sub, in each case as amended to the date of this Agreement.
Section 4.2. AUTHORITY; NO CONFLICT; REQUIRED FILINGS AND CONSENTS.
(a) Xxxxxx'x and Merger Sub have all requisite corporate power and
authority to enter into this Agreement and the Stockholder Support Agreements
to which each is a party and to consummate the transactions contemplated by
this Agreement and the Stockholder Support Agreements. The execution and
delivery of this Agreement and the Stockholder Support Agreements and the
consummation of the transactions contemplated by this Agreement and the
Stockholder Support Agreements by Xxxxxx'x and Merger Sub have been duly
authorized by all necessary corporate action on the part of Xxxxxx'x and Merger
Sub. This Agreement and the Stockholder Support Agreements have been duly
executed and delivered by Xxxxxx'x and Merger Sub (as applicable) and
constitute the valid and binding obligations of Xxxxxx'x and Merger Sub (as
applicable), enforceable against each of them in accordance with their terms.
24
(b) Other than or as disclosed in Section 4.2(b) of the Xxxxxx'x
Disclosure Schedule, the execution and delivery of this Agreement and the
Stockholder Support Agreements by Xxxxxx'x and Merger Sub (as applicable) does
not, and the consummation of the transactions contemplated by this Agreement
and the Stockholder Support Agreements will not, (i) conflict with, or result
in any violation or breach of, any provision of the Certificate of
Incorporation or Bylaws of Xxxxxx'x or the comparable charter or organizational
documents of any of its Subsidiaries, (ii) result in any violation or breach
of, or constitute (with or without notice or lapse of time, or both) a default
(or give rise to a right of termination, cancellation or acceleration of any
obligation or loss of any material benefit) under, or require a consent or
waiver under, any of the terms, conditions or provisions of any note, bond,
mortgage, indenture, lease, contract or other agreement, instrument or
obligation to which Xxxxxx'x or any of its Subsidiaries is a party or by which
any of them or any of their properties or assets may be bound, or (iii) subject
to the governmental filings and other matters referred to in Section 4.2(c),
conflict with or violate any permit, concession, franchise, license, judgment,
order, decree, statute, law, ordinance, rule or regulation applicable to
Xxxxxx'x or any of its Subsidiaries or any of its or their properties or
assets, except in the case of clauses (ii) and (iii) for any such conflicts,
violations, defaults, terminations, cancellations or accelerations which
(x) are not, individually or in the aggregate, reasonably likely to have a
Xxxxxx'x Material Adverse Effect or (y) would not impair or delay the
consummation of the Merger.
(c) No consent, approval, order or authorization of, or registration,
declaration or filing with, any Governmental Entity is required by or with
respect to Xxxxxx'x or any of its Subsidiaries in connection with the execution
and delivery of this Agreement or the consummation of the transactions
contemplated hereby or thereby, except for (i) the filing of the pre-merger
notification report under the HSR Act and any similar statute, rule or
regulation of any Foreign Jurisdiction, (ii) the filing of the Articles of
Merger with respect to the Merger with the Secretary of State of the State of
Nevada, (iii) any approvals and filing of notices required under the Xxxxxx'x
Gaming Laws (as defined in Section 4.6) or the Showboat Gaming Laws, (iv) such
consents, approvals, orders, authorizations, permits, filings, or registrations
related to, or arising out of, compliance with statutes, rules or regulations
regulating the consumption, sale or serving of alcoholic beverages, (v) such
consents, approvals, orders, authorizations, registrations, declarations and
filings as may be required under applicable state securities laws and the
securities laws of any Foreign Jurisdiction, (vii) the approvals required from
the Australian Securities Commission (with respect to compliance with the
Australian Corporations Law) and the Australian Foreign Investment Review
Board, (viii) such immaterial filings and consents as may be required under any
environmental health or safety law or regulation pertaining to any
notification, disclosure or required approval triggered by the Merger or the
transactions contemplated by this Agreement, and (ix) such other filings,
consents, approvals, orders, registrations and declarations as may be required
under the laws of any jurisdiction in which the Company or any of its
Subsidiaries conducts any business or owns any assets the failure of which to
obtain would not have a Xxxxxx'x Material Adverse Effect.
Section 4.3. PROXY STATEMENT. None of the information supplied or to be
supplied by Xxxxxx'x or Merger Sub for inclusion in the Proxy Statement and any
amendments thereof or supplements thereto will, on the date filed with the SEC,
at the time of the mailing of the Proxy Statement or any amendment or supplement
thereto to the stockholders of Showboat, at the time
25
of the Special Meeting and at the Effective Time, contain any untrue statement
of a material fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements made therein, in light of
the circumstances under which they were made, not misleading.
Section 4.4. BROKERS. None of Xxxxxx'x, any of its Subsidiaries, or any
of their respective officers, directors or employees have employed any broker,
financial advisor or finder or incurred any liability for any brokerage fees,
commissions or finder's fees in connection with the transactions contemplated by
this Agreement, except that Xxxxxx'x has retained XX Xxxxxxxxxx and Xxxxxx
Xxxxxxx & Co. as financial advisors, the arrangements with which have been
disclosed in writing to Showboat prior to the date hereof.
Section 4.5. FINANCING. Xxxxxx'x has received and provided to
Showboat a letter, dated December 18, 1997, from Bankers Trust Company.
Xxxxxx'x will have available on the Closing Date sufficient funds to enable
Xxxxxx'x to (i) pay the Merger Consideration, the Option Settlement Amount
and the SAR Settlement Amount and (ii) purchase any of Showboat's outstanding
9 1/4% First Mortgage Bonds due 2008 and 13% Senior Subordinated Notes due
2009 required to be purchased pursuant to the change of control provisions
contained in the instruments governing such indebtedness.
Section 4.6. COMPLIANCE WITH GAMING LAWS.
(a) Each of Xxxxxx'x and its Subsidiaries, and each of their
respective directors (but with respect to non-employee directors, only to
Xxxxxx'x' best knowledge), officers, persons performing management functions
similar to officers and, to Xxxxxx'x' best knowledge, partners, hold all
permits, registrations, findings of suitability, licenses, variances,
exemptions, certificates of occupancy, orders and approvals of all
Governmental Entities under the Xxxxxx'x Gaming Laws necessary to conduct the
business and operations of Xxxxxx'x and each of its Subsidiaries, each of
which is in full force and effect in all material respects, except for such
permits, registrations, findings of suitability, licenses, variances,
exemptions, certificates of occupancy, orders and approvals the failure of
which to hold would not, individually or in the aggregate, be reasonably
likely to have a Xxxxxx'x Material Adverse Effect (the "Xxxxxx'x Permits")
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 Xxxxxx'x Permit that currently
is in effect the loss of which either individually or in the aggregate would
be reasonably likely to have a Xxxxxx'x Material Adverse Effect. Each of
Xxxxxx'x and its Subsidiaries, and each of their respective directors (but
with respect to non-employee directors, only to Xxxxxx'x' best knowledge),
officers, persons performing management functions similar to officers and, to
Xxxxxx'x' best knowledge, partners, are in compliance with the terms of the
Xxxxxx'x Permits, except for such failures to comply, which singly or in the
aggregate, would not, individually or in the aggregate, be reasonably likely
to have a Xxxxxx'x Material Adverse Effect. Except as disclosed in the
forms, reports, and documents required to be filed by Xxxxxx'x with the SEC
since January 1, 1995 and filed prior to the date of this Agreement, the
businesses of Xxxxxx'x and its Subsidiaries are not being conducted in
violation of any Xxxxxx'x Gaming Law, except for possible violations which
individually or in the aggregate do not and would not be reasonably likely to
have a Xxxxxx'x Material Adverse Effect. No investigation or review by
26
any Governmental Entity under any Xxxxxx'x Gaming Law with respect to Xxxxxx'x
or any of its Subsidiaries is pending, or, to the best knowledge of Xxxxxx'x,
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 likely to have a Xxxxxx'x Material Adverse Effect.
(b) The term "Xxxxxx'x Gaming Laws" means any Federal, state, local or
foreign statute, ordinance, rule, regulation, permit, consent, registration,
finding of suitability, approval, license, judgment, order, decree,
injunction or other authorization, including any condition or limitation
placed thereon, governing or relating to the current or contemplated casino
and gaming activities and operations of Xxxxxx'x or any of its Subsidiaries,
including, without limitation, the Nevada Gaming Control Act and the rules
and regulations promulgated thereunder, the Xxxxx County, Nevada Code and the
rules and regulations promulgated thereunder, the Xxxxxxx County, Nevada Code
and the rules and regulations promulgated thereunder, the Louisiana Economic
Development and Gaming Act and the rules and regulations promulgated
thereunder, the Louisiana Riverboat Economic Gaming Control Act and the rules
and regulations promulgated thereunder, the New Jersey Casino Control Act and
the rules and regulations promulgated thereunder, the Casino Control Act of
1990 (New Zealand) and the rules and regulations promulgated thereunder, the
Illinois Riverboat Gambling Act and the rules and regulations promulgated
thereunder, the Mississippi Gaming Control Act and the rules and regulations
promulgated thereunder, the Missouri Riverboat Gambling Act and the rules and
regulations promulgated thereunder, the Indian Gaming Regulatory Act of 1988
and the rules and regulations promulgated thereunder, any state-tribal gaming
compact and any applicable state gaming law and any federal or state laws
relating to currency transactions.
(c) Except as disclosed in Section 4.6(c) of the Xxxxxx'x Disclosure
Schedule, neither Xxxxxx'x nor any of its Subsidiaries, nor any director (but
with respect to non-employee directors, only to Xxxxxx'x' best knowledge),
officer, key employee or, to Xxxxxx'x' best knowledge, partners of Xxxxxx'x
or any of its Subsidiaries has received any written claim, demand, notice,
complaint, court order or administrative order from any Governmental Entity
in the past three years under, or relating to any violation or possible
violation of any Xxxxxx'x Gaming Laws which did or would be reasonably likely
to result in fines or penalties of $50,000 or more. To Xxxxxx'x' best
knowledge, there are no facts, which if known to the regulators under the
Xxxxxx'x Gaming Laws could reasonably be expected to result in the
revocation, limitation or suspension of a license, finding of suitability,
registration, permit or approval of it or them, or of any officer, director,
person performing management functions similar to an officer or partner,
under any Xxxxxx'x Gaming Laws. Neither Xxxxxx'x nor any of its Subsidiaries
has suffered a suspension or revocation of any material license , finding of
suitability, registration, permit or approval held under the Xxxxxx'x Gaming
Laws.
27
ARTICLE V.
COVENANTS
Section 5.1. CONDUCT OF BUSINESS OF SHOWBOAT. During the period from
the date of this Agreement and continuing until the earlier of the
termination of this Agreement or the Effective Time, Showboat agrees as to
itself and each of its Subsidiaries (except to the extent that Xxxxxx'x shall
otherwise consent in writing) to carry on its business in the usual, regular
and ordinary course in substantially the same manner as previously conducted,
to pay its debts and taxes when due subject to good faith disputes over such
debts or taxes, to pay or perform its other obligations when due, and, to the
extent consistent with such business, use all reasonable efforts consistent
with past practices and policies to preserve intact its present business
organization, keep available the services of its present officers and key
employees and preserve its relationships with customers, suppliers,
distributors, and others having business dealings with it. Without limiting
the generality of the foregoing and except as expressly contemplated by this
Agreement, except as disclosed on Section 5.1 of the Showboat Disclosure
Schedule, during the period from the date of this Agreement and continuing
until the earlier of the termination of this Agreement or the Effective Time,
without the written consent of Xxxxxx'x, Showboat shall not and shall not
permit any of its Subsidiaries to:
(i) adopt any amendment to its Articles of Incorporation or
Bylaws or comparable charter or organizational documents;
(ii) (A) issue, pledge or sell, or authorize the issuance, pledge
or sale of additional shares of capital stock of any class (other than upon
exercise of Options outstanding on the date of this Agreement), or securities
convertible into capital stock of any class, or any rights, warrants or options
to acquire any convertible securities or capital stock, or any other securities
in respect of, in lieu of, or in substitution for, shares of Showboat Common
Stock outstanding on the date hereof or (B) amend, waive or otherwise modify
any of the terms of any option, warrant or stock option plan of Showboat or any
of its Subsidiaries, including without limitation, the Options or the Showboat
Stock Plans;
(iii) declare, set aside or pay any dividend or other
distribution (whether in cash, securities or property or any combination
thereof) in respect of any class or series of its capital stock other than (A)
between any wholly-owned Subsidiary of Showboat and Showboat or any other
wholly-owned Subsidiary of Showboat or (B) regular quarterly dividends on
shares of Showboat Common Stock not to exceed $.025 per share;
(iv) split, combine, subdivide, reclassify or redeem, purchase
or otherwise acquire, or propose to redeem or purchase or otherwise acquire,
any shares of its capital stock, or any of its other securities;
(v) increase the compensation or fringe benefits payable or to
become payable to its directors, officers or employees (whether from Showboat
or any of its Subsidiaries), or pay any benefit not required by any existing
plan or arrangement (including, without limitation, the granting of stock
options, stock appreciation rights, shares of restricted
28
stock or performance units) or grant any severance or termination pay to
(except pursuant to existing agreements or policies, which shall be
interpreted and implemented in a manner consistent with past practice), or
enter into any employment or severance agreement with, any director, officer
or employee of Showboat or any of its Subsidiaries or establish, adopt, enter
into, or amend any collective bargaining, bonus, profit sharing, thrift,
compensation, stock option, restricted stock, pension, retirement, savings,
welfare, deferred compensation, employment, termination, severance or other
employee benefit plan, agreement, trust, fund, policy or arrangement for the
benefit or welfare of any directors, officers or current or former employees,
including any Benefit Arrangement, Pension Plan or Welfare Plan, except (i)
to the extent required by applicable law or regulation, (ii) pursuant to any
collective bargaining agreements or Employee Plan as in effect on the date of
this Agreement consistent with past practices or (iii) for salary increases
in the ordinary course of business consistent with past practice to employees
other than executive officers of Showboat;
(vi) (A) sell, pledge, lease, dispose of, grant, encumber, or
otherwise authorize the sale, pledge, disposition, grant or encumbrance of
any of the properties or assets of Showboat or any of its Subsidiaries,
except for (1) sales of assets in the ordinary course of business in
connection with Showboat's gaming operations in an amount not to exceed
$500,000 individually or $2,000,000 in the aggregate or (2) other sales
which, individually do not exceed $100,000 or which, in the aggregate, do not
exceed $250,000 or (B) acquire (including, without limitation, by merger,
consolidation, lease or acquisition of stock or assets) any corporation,
partnership, other business organization or any division thereof (or a
substantial portion of the assets thereof) or any other assets, except for
(1) acquisitions of assets in the ordinary course of business in connection
with Showboat's gaming operations in an amount individually not to exceed
$500,000 or (2) other acquisitions which, individually, do not exceed
$100,000 or which, in the aggregate, do not exceed $250,000;
(vii) (A) incur, assume or pre-pay any long-term debt or incur or
assume any short-term debt, except that Showboat and its Subsidiaries may incur
or pre-pay debt in the ordinary course of business consistent with past
practice under existing lines of credit, (B) assume, guarantee, endorse or
otherwise become liable or responsible (whether directly, contingently or
otherwise) for the obligations of any other person except in the ordinary
course of business consistent with past practice, or (C) make any loans,
advances or capital contributions to, or investments in, any other person
except in the ordinary course of business consistent with past practice
(including advances to employees) and except for loans, advances, capital
contributions or investments between any wholly-owned Subsidiary of Showboat
and Showboat or another wholly-owned Subsidiary of Showboat;
(viii) authorize, recommend, propose or announce an intention to
adopt a plan of complete or partial liquidation or dissolution of Showboat or
any of its Subsidiaries;
(ix) make or rescind any material express or deemed election
relating to Taxes, settle or compromise any material 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
29
return for the taxable year ending December 31, 1996, provided, however, that
Xxxxxx'x shall not unreasonably withheld its consent to any such matter that
would preclude Showboat from timely filing its Tax Returns or timely paying
its Tax Liabilities;
(x) pay, discharge or satisfy any material claims, liabilities
or obligations (absolute, accrued, asserted, unasserted, contingent or
otherwise), other than the payment, discharge or satisfaction in the ordinary
course of business and consistent with past practice of liabilities reflected
or reserved against in the consolidated financial statements of Showboat;
(xi) other than in the ordinary course of business and
consistent with past practice, waive any rights of substantial value or make
any payment, direct or indirect, of any material liability of Showboat or of
any of its Subsidiaries before the same comes due in accordance with its
terms;
(xii) fail to maintain its existing insurance coverage of all
types in effect or, in the event any such coverage shall be terminated or
lapse, to the extent available at reasonable cost, procure substantially
similar substitute insurance policies which in all material respects are in at
least such amounts and against such risks as are currently covered by such
policies;
(xiii) enter into any collective bargaining agreement or any
successor collective bargaining agreement other than collective bargaining
agreements covering employees at the Las Vegas Showboat on terms consistent
with those agreed to by the majority of casinos in Downtown Las Vegas;
(xiv) take any action, other than reasonable and usual actions in
the ordinary course of business and consistent with past practice, with respect
to accounting policies or procedures, unless required by GAAP or the SEC;
(xv) modify, amend or terminate any of the Showboat Material
Contracts or waive, release or assign any material rights or claims, except in
the ordinary course of business consistent with past practice;
(xvi) take, or agree to commit to take, any action that would
make any representation or warranty of Showboat contained herein inaccurate in
any respect at, or as of any time prior to, the Effective Time;
(xvii) engage in any transaction with, or enter into any
agreement, arrangement, or understanding with, directly or indirectly, any of
Showboat's affiliates which involves the transfer of consideration or has a
financial impact on Showboat, other than pursuant to such agreements,
arrangements, or understandings existing on the date of this Agreement;
(xviii) close, shut down, or otherwise eliminate any of the casinos
owned or operated by Showboat or any of its Subsidiaries, except for such
closures, shutdowns or eliminations which are (i) required by action, order,
writ, injunction, judgment or decree or otherwise required by law, or (ii) due
to acts of God or other force majeure events; or
30
(xix) enter into an agreement, contract, commitment or
arrangement to do any of the foregoing, or to authorize, recommend, propose or
announce an intention to do any of the foregoing.
Section 5.2. COOPERATION; NOTICE; CURE. Subject to compliance with
applicable law, from the date hereof until the Effective Time, each of
Xxxxxx'x and Showboat shall confer on a regular and frequent basis with one
or more representatives of the other party to report on the general status of
ongoing operations. Each of Xxxxxx'x and Showboat shall promptly notify the
other in writing of, and will use all commercially reasonable efforts to cure
before the Closing Date, any event, transaction or circumstance, as soon as
practical after it becomes known to such party, that causes or will cause any
covenant or agreement of Xxxxxx'x or Showboat under this Agreement to be
breached in any material respect or that renders or will render untrue in any
material respect any representation or warranty of Xxxxxx'x or Showboat
contained in this Agreement. No notice given pursuant to this paragraph
shall have any effect on the representations, warranties, covenants or
agreements contained in this Agreement for purposes of determining
satisfaction of any condition contained herein.
Section 5.3. NO SOLICITATION.
(a) Showboat shall not, directly or indirectly, through any officer,
director, employee, financial advisor, representative or agent of such party
(i) solicit, initiate, or encourage any inquiries or proposals that
constitute, or could reasonably be expected to lead to, a proposal or offer
for a merger, consolidation, business combination, sale of substantial
assets, sale of shares of capital stock (including without limitation by way
of a tender offer) or similar transaction involving Showboat or any of its
Subsidiaries, other than the transactions contemplated by this Agreement (any
of the foregoing inquiries or proposals being referred to in this Agreement
as an "Acquisition Proposal"), (ii) engage in negotiations or discussions
with any person (or group of persons) other than Xxxxxx'x or its respective
affiliates (a "Third Party") concerning, or provide any non-public
information to any person or entity relating to, any Acquisition Proposal, or
(iii) agree to or recommend any Acquisition Proposal; provided, however, that
nothing contained in this Agreement shall prevent Showboat or its Board of
Directors from (A) furnishing non-public information to, or entering into
discussions or negotiations with, any person or entity in connection with an
unsolicited bona fide written proposal for an Alternative Transaction (as
defined below) by such person or entity or modifying or withdrawing its
recommendation with respect to the transactions contemplated hereby or
recommending an unsolicited bona fide written proposal for an Alternative
Transaction to the stockholders of Showboat, if and only to the extent that
(1) a Third Party has made a written proposal to the Board of Directors of
Showboat to consummate an Alternative Transaction, which proposal identifies
a price or range of values to be paid for the outstanding securities or
substantially all of the assets of Showboat, (2) the Board of Directors of
Showboat believes in good faith, after consultation with its financial
advisor, that such Alternative Transaction is reasonably capable of being
completed on the terms proposed and would, if consummated, result in a
transaction more favorable to the stockholders of such party than the
transaction contemplated by this Agreement (a "Superior Proposal"), (3) the
Board of Directors of Showboat determines in good faith, based on the advice
of outside legal counsel, that the failure to take such action would be
inconsistent with its fiduciary duties to Showboat's stockholders under
31
applicable law, and (4) prior to furnishing such non-public information to,
or entering into discussions or negotiations with, such person or entity,
such Board of Directors receives from such person or entity an executed
confidentiality and standstill agreement with material terms no less
favorable to such party than those contained in the Confidentiality
Agreements dated September 16, 1997 between Xxxxxx'x and Showboat (the
"Confidentiality Agreements"); or (B) complying with Rule 14e-2 promulgated
under the Exchange Act with regard to an Acquisition Proposal. Showboat
agrees not to release any Third Party from, or waive any provision of, any
standstill agreement to which it is a party or any confidentiality agreement
between it and another person who has made, or who may reasonably be
considered likely to make, an Acquisition Proposal, unless the Board of
Directors of Showboat determines in good faith, based on the written advice
of outside legal counsel, that the failure to take such action would be
inconsistent with its fiduciary duties to Showboat's stockholders under
applicable law.
(b) Showboat shall notify Xxxxxx'x immediately after receipt by
Showboat or (or any of their advisors) of any Acquisition Proposal or any
request for non-public information in connection with an Acquisition Proposal
or for access to the properties, books or records of such party by any person
or entity that informs such party that it is considering making, or has made,
an Acquisition Proposal. Such notice shall be made orally and in writing and
shall indicate the identity of the offeror and the terms and conditions of
such proposal, inquiry or contact. Notwithstanding the foregoing, Showboat
shall not accept or enter into any agreement concerning a Superior Proposal
for a period of at least two business days after Xxxxxx'x' receipt of the
notification of the terms thereof pursuant the second preceding sentence,
during which period Xxxxxx'x shall be afforded the opportunity to match the
terms and conditions contained in such Superior Proposal.
(c) As used in this Agreement, "Alternative Transaction" means (i) a
transaction pursuant to which any Third Party acquires more than 30% of the
outstanding shares of Showboat Common Stock, pursuant to a tender offer or
exchange offer or otherwise, (ii) a merger or other business combination
involving Showboat pursuant to which any Third Party (or the stockholders of
a Third Party) acquires more than 30% of the outstanding shares of Showboat
Common Stock, as the case may be, or the entity surviving such merger or
business combination, or (iii) any other transaction pursuant to which any
Third Party acquires control of assets (including for this purpose the
outstanding equity securities of Subsidiaries of Showboat, and the entity
surviving any merger or business combination including any of them) of
Showboat having a fair market value (as determined by the Board of Directors
of Showboat, in good faith) equal to more than 30% of the fair market value
of all the assets of Showboat, and its Subsidiaries, taken as a whole,
immediately prior to such transaction.
(d) Nothing contained in this Section 5.3 is intended to or shall
limit in any respect Showboat's ability to solicit, negotiate and consummate
any transaction permitted by Section 5.1(vi) of this Agreement or in Section
5.1 of the Seller Disclosure Schedule.
Section 5.4. PROXY STATEMENT.
(a) As promptly as practical after the execution of this Agreement,
Showboat shall prepare and file with the SEC the Proxy Statement under the
Exchange Act, and shall use
32
reasonable efforts to have the Proxy Statement cleared by the SEC as soon
after such filing as practical. Xxxxxx'x, Merger Sub and Showboat shall
cooperate with each other in the preparation of the Proxy Statement, and
Showboat shall notify Xxxxxx'x of the receipt of any comments of the SEC with
respect to the Proxy Statement and of any requests by the SEC for any
amendment or supplement thereto or for additional information and shall
provide to Xxxxxx'x promptly copies of all correspondence between Showboat or
any representative of Showboat and the SEC. Showboat shall give Xxxxxx'x and
its counsel the opportunity to review the Proxy Statement prior to its being
filed with the SEC and shall give Xxxxxx'x and its counsel the opportunity to
review all amendments and supplements to the Proxy Statement and all
responses to requests for additional information and replies to comments
prior to their being filed with, or sent to, the SEC. Each of Showboat,
Xxxxxx'x and Merger Sub agrees to use all reasonable efforts, after
consultation with the other parties hereto, to respond promptly to all such
comments of and requests by the SEC and to cause the Proxy Statement and all
required amendments and supplements thereto to be mailed to the holders of
shares of Showboat Common Stock entitled to vote at the Special Meeting at
the earliest practicable time.
(b) Subject to the provisions of Section 5.3, the Proxy Statement
shall include the recommendation of the Board of Directors of Showboat in
favor of adoption of this Agreement and the Merger; provided that the Board
of Directors of Showboat may modify or withdraw such recommendation if
Showboat's Board of Directors believes in good faith, based on the advice of
outside legal counsel, that the failure to modify or withdraw such
recommendation would be inconsistent with its fiduciary duties to Showboat's
stockholders under applicable law.
Section 5.5. SPECIAL MEETING. Showboat shall call a meeting of its
stockholders to be held as promptly as practicable for the purpose of voting
upon this Agreement and the Merger. Subject to Sections 5.3 and 5.4,
Showboat shall, through its Board of Directors, recommend to its stockholders
adoption of this Agreement and approval of such matters and shall use its
best efforts to hold such meeting as soon as practicable after the date
hereof. Showboat shall use all reasonable efforts to solicit from its
stockholders proxies in favor of such matters unless doing so would be
inconsistent with the Showboat Board of Directors' fiduciary duties to its
stockholders under applicable law based on the advice of outside legal
counsel.
Section 5.6. ACCESS TO INFORMATION. Upon reasonable notice, Showboat
shall (and shall cause its Subsidiaries to) afford to the officers,
employees, accountants, counsel and other representatives of Xxxxxx'x,
access, during normal business hours during the period prior to the Effective
Time, to all its personnel, properties, books, contracts, commitments and
records and, during such period, Showboat shall, and shall cause its
Subsidiaries to, furnish promptly to the other (a) copies of monthly
financial reports and development reports, (b) a copy of each report,
schedule, registration statement and other document filed or received by it
during such period pursuant to the requirements of federal securities laws
and (c) all other information concerning its business, properties and
personnel as Xxxxxx'x may reasonably request. Xxxxxx'x will hold any such
information furnished to it by Showboat which is nonpublic in confidence in
accordance with the Confidentiality Agreement binding Xxxxxx'x. No
information or knowledge obtained in any investigation pursuant to this
Section 5.6 shall affect or be deemed to modify any representation or
warranty contained in this Agreement or the conditions to the obligations of
the parties to consummate the Merger. Paragraph 7 of the Confidentiality
Agreement binding
33
Xxxxxx'x shall be terminated and be without effect upon any termination of
this Agreement pursuant to Sections 7.1(e) or 7.1(f).
Section 5.7. GOVERNMENTAL APPROVALS.
(a) The parties hereto shall cooperate with each other and use their
best efforts (and, with respect to the Showboat Gaming Laws and the Xxxxxx'x
Gaming Laws, shall use their best efforts to cause their respective directors
and officers to do so) to promptly prepare and file all necessary
documentation, to effect all applications, notices, petitions and filings, to
obtain as promptly as practicable all permits, registrations, licenses,
findings of suitability, consents, variances, exemptions, orders, approvals
and authorizations of all third parties and Governmental Entities which are
necessary or advisable to consummate the transactions contemplated by this
Agreement, including, without limitation, all filings required under the HSR
Act, the Australian Corporations Act, the Foreign Acquisitions & Takeovers
Act, the Showboat Gaming laws and the Xxxxxx'x Gaming Laws ("Governmental
Approvals"), and to comply (and, with respect to the Showboat Gaming Laws and
the Xxxxxx'x Gaming Laws, to cause their respective directors and officers to
so comply) with the terms and conditions of all such Governmental Approvals.
Each of the parties hereto and their respective officers, directors and
affiliates shall use their best efforts to file within 30 days after the date
hereof, and in all events shall file within 60 days after the date hereof,
all required initial applications and documents in connection with obtaining
the Governmental Approvals (including without limitation under applicable
Showboat Gaming Laws and Xxxxxx'x Gaming Laws) and shall act reasonably and
promptly thereafter in responding to additional requests in connection
therewith. Showboat and Xxxxxx'x shall have the right to review in advance,
and to the extent practicable each will consult the other on, in each case
subject to applicable laws relating to the exchange of information, all the
information relating to Showboat or the Xxxxxx'x, as the case may be, and any
of their respective Subsidiaries, directors, officers and stockholders which
appear in any filing made with, or written materials submitted to, any third
party or any Governmental Entity in connection with the transactions
contemplated by this Agreement. Without limiting the foregoing, each of
Showboat and Xxxxxx'x (the "Notifying Party") will notify the other promptly
of the receipt of comments or requests from Governmental Entities relating to
Governmental Approvals, and will supply the other party with copies of all
correspondence between the Notifying Party or any of its representatives and
Governmental Entities with respect to Governmental Approvals; provided,
however, that it shall not be required to supply the other party with copies
of correspondence relating to the personal applications of individual
applicants except for evidence of filing.
(b) Showboat and Xxxxxx'x shall promptly advise each other upon
receiving any communication from any Governmental Entity whose consent or
approval is required for consummation of the transactions contemplated by
this Agreement which causes such party to believe that there is a reasonable
likelihood that any approval needed from a Governmental Entity will not be
obtained or that the receipt of any such approval will be materially delayed.
Showboat and Xxxxxx'x shall take any and all actions reasonably necessary to
vigorously defend, lift, mitigate and rescind the effect of any litigation or
administrative proceeding adversely affecting this Agreement or the
transactions contemplated hereby or thereby, including, without limitation,
promptly appealing any adverse court or administrative order or injunction to
the extent reasonably necessary for the foregoing purposes.
34
(c) Notwithstanding the foregoing or any other provision of this
Agreement, Xxxxxx'x shall have no obligation or affirmative duty under this
Section 5.7 to dispose of any of its assets or properties, disassociate
itself from any person or entity, or agree to do any of the foregoing at any
time in the future, in connection with seeking any Governmental Approval.
Section 5.8. PUBLICITY. Xxxxxx'x and Showboat shall agree on the form
and content of the initial press release regarding the transactions
contemplated hereby and thereafter shall consult with each other before
issuing, and use all reasonable efforts to agree upon, any press release or
other public statement with respect to any of the transactions contemplated
hereby and shall not issue any such press release or make any such public
statement prior to such consultation, except as may be required by law.
Section 5.9. INDEMNIFICATION.
(a) From and after the Effective Time, Xxxxxx'x agrees that it will,
and will cause the Surviving Corporation to, indemnify and hold harmless each
present and former director and officer of Showboat (the "Indemnified
Parties"), against any costs or expenses (including attorneys' fees),
judgments, fines, losses, claims, damages, liabilities or amounts paid in
settlement incurred in connection with any claim, action, suit, proceeding or
investigation, whether civil, criminal, administrative or investigative,
arising out of or pertaining to matters existing or occurring at or prior to
the Effective Time, whether asserted or claimed prior to, at or after the
Effective Time, to the fullest extent that Showboat would have been permitted
under Nevada law and its Articles of Incorporation or Bylaws in effect on the
date hereof to indemnify such Indemnified Party.
(b) For a period of six years after the Effective Time, Xxxxxx'x shall
maintain or shall cause the Surviving Corporation to maintain in effect a
directors' and officers' liability insurance policy covering those persons
who are currently covered by Showboat's directors' and officers' liability
insurance policy (copies of which have been heretofore delivered by Showboat
to Xxxxxx'x) with coverage in amount and scope at least as favorable as
Showboat's existing coverage; provided that in no event shall Xxxxxx'x or the
Surviving Corporation be required to expend in the aggregate in excess of
200% of the annual premium currently paid by Showboat for such coverage; and
if such premium would at any time exceed 200% of the such amount, then
Xxxxxx'x or the Surviving Corporation shall maintain insurance policies which
provide the maximum and best coverage available at an annual premium equal to
200% of such amount.
(c) The provisions of this Section 5.9 are intended to be an addition
to the rights otherwise available to the current officers and directors of
Showboat by law, charter, statute, bylaw or agreement, and shall operate for
the benefit of, and shall be enforceable by, each of the Indemnified Parties,
their heirs and their representatives.
Section 5.10. STOCKHOLDER LITIGATION. Showboat shall give Xxxxxx'x the
reasonable opportunity to participate in the defense of any stockholder
litigation against Showboat and its directors relating to the transactions
contemplated hereby.
35
Section 5.11. EMPLOYMENT ARRANGEMENTS. Prior to the Closing, Xxxxxx'x
shall offer to enter into employment agreements with X. Xxxx Houssels, III
and H. Xxxxxxx Xxxxx on terms mutually satisfactory to each such person and
Xxxxxx'x. Xxxxxx'x agrees to appoint, or take such actions as are necessary
to nominate and seek the election of X. Xxxx Houssels, III to its Board of
Directors for a three year term in accordance with his employment agreement.
For so long as X. Xxxx Houssels, III is employed by Xxxxxx'x pursuant to such
employment agreement, Xxxxxx'x shall maintain a "Showboat Division" in its
business.
Section 5.12. FURTHER ASSURANCES AND ACTIONS.
(a) Subject to the terms and conditions herein, each of the parties
hereto agrees to use its reasonable best efforts to take, or cause to be
taken, all appropriate action, and to do, or cause to be done, all things
necessary, proper or advisable under applicable laws and regulations to
consummate and make effective the transactions contemplated by this
Agreement, including, without limitation, (i) using their respective
reasonable best efforts to obtain all licenses, permits, consents, approvals,
authorizations, qualifications and orders of Governmental Entities and
parties to contracts with each party hereto as are necessary for consummation
of the transactions contemplated by this Agreement, and (ii) to fulfill all
conditions precedent applicable to such party pursuant to this Agreement.
(b) In case at any time after the Effective Date any further action is
necessary or desirable to carry out the purposes of this Agreement or to vest
the Surviving Corporation with full title to all properties, assets, rights,
approvals, immunities, franchises of any of the parties to the Merger, the
proper officers and/or directors of Xxxxxx'x, Showboat and the Surviving
Corporation shall take all such necessary action.
Section 5.13. EMPLOYEE BENEFITS(a) For at least one year following the
Effective Time, Showboat's current employees (other than Showboat's
employees that are covered by collective bargaining agreements) shall be
entitled to participate in either, at Xxxxxx'x' option, (A) benefits plans
and arrangements substantially similar to Showboat's existing benefit plans
and arrangements, (B) Xxxxxx'x' employee benefit plans and arrangements on
substantially the same basis as similarly-situated employees of Xxxxxx'x
(based on such employees' duties, geographic location, seniority and other
similar factors), or (C) some combination of the benefit plans and
arrangements described in clauses (A) and (B).
(b) Xxxxxx'x shall cause the Surviving Corporation to honor all
written employment, severance and termination agreements (including change in
control provisions) of the employees of Showboat and its Subsidiaries
provided to Xxxxxx'x on or prior to the date of this Agreement.
(c) For purposes of determining eligibility to participate, vesting
and accrual or entitlement to benefits where length of service is relevant
under any employee benefit plan or arrangement of Xxxxxx'x or the Surviving
Corporation, employees of Showboat and its Subsidiaries as of the Effective
Time shall receive service credit for service with Showboat and any of its
Subsidiaries to the same extent such service was granted under the Employee
Plans subject to offsets for previously accrued benefits and no duplication
of benefits.
36
(d) Prior to the Effective Time, Showboat shall amend its Supplemental
Executive Retirement Plan to clarify that only the bonuses payable under the
Executive Incentive Plan shall be taken into account under the Supplemental
Executive Retirement Plan.
(e) The Surviving Corporation shall cause the following actions to be
taken with respect to the Showboat's Supplemental Executive Retirement Plan:
(i) retirement payments to Xxxxxxx Xxxxxx and Xxxxx Modice shall
continue to be paid in the same amount and in the same manner as such payments
are currently being made to such participants;
(ii) retirement benefits shall be paid to X.X. Xxxxxxxx, Xx.
and Xxxxxxx Xxxxx and such benefits shall be non-forfeitable for any reason
other than death;
(iii) Xxxx Xxxxxx shall be eligible to receive a retirement
benefit under the Supplemental Executive Retirement Plan notwithstanding his
termination of employment, if any, prior to September 1, 1998; and
(iv) retirement benefits shall be calculated and payable to
participants who have not yet commenced receipt of such benefits in
accordance with the actuarial methods and assumptions set forth in Section
5.14(e) of the Showboat Disclosure Schedule.
(f) From and after the Effective Time, Xxxxxx'x and the Surviving
Corporation shall not amend Showboat's Supplemental Executive Retirement Plan
in any manner that adversely affects a participant's rights with respect to the
amount of his or her accrued benefit as of the Effective Time; provided,
however, that the Surviving Corporation reserves the right, in its sole
discretion, to terminate such plan at any time in accordance with Section 5.2
thereof.
(g) Nothing in this Agreement is intended to create any right of
employment for any person or to create any obligation for Xxxxxx'x or the
Surviving Corporation to continue any Plan of Showboat following the Effective
Time.
(h) Showboat will use its reasonable best efforts to cooperate with
Xxxxxx'x to minimize the effect of the application of Section 162(m) of the
Code.
Section 5.14. USE OF SHOWBOAT NAME. Until the third anniversary of the
Effective Time, Xxxxxx'x shall cause the "Showboat" name to be used in
connection with its hotel-casino operations as set forth on Section 5.14 of
the Xxxxxx'x Disclosure Schedule.
ARTICLE VI.
CONDITIONS TO MERGER
Section 6.1. CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE
MERGER. The respective obligations of each party to this Agreement to effect
the Merger shall be subject to the satisfaction or waiver by each party prior
to the Effective Time of the following conditions:
37
(a) STOCKHOLDER APPROVAL. This Agreement and the Merger shall have been
approved by the stockholders of Showboat in the manner required under the NRS
and the Articles of Incorporation of Showboat.
(b) NO INJUNCTIONS. No Governmental Entity shall have enacted, issued,
promulgated, enforced or entered any order, executive order, stay, decree,
judgment or injunction or statute, rule, regulation which is in effect and
which has the effect of making the Merger illegal or otherwise prohibiting
consummation of the Merger.
(c) GOVERNMENTAL APPROVALS. All Governmental Approvals required to
consummate the transactions contemplated hereby shall have been obtained
(including, without limitation, under the Showboat Gaming Laws and the Xxxxxx'x
Gaming Laws), all such approvals shall remain in full force and effect, all
statutory waiting periods in respect thereof (including, without limitation,
under the HSR Act) shall have expired and no such approval shall contain any
conditions, limitations or restrictions which Xxxxxx'x reasonably determines in
good faith will have or would reasonably be expected to have a Showboat
Material Adverse Effect or a Xxxxxx'x Material Adverse Effect.
Section 6.2. ADDITIONAL CONDITIONS TO OBLIGATIONS OF SHOWBOAT. The
obligation of Showboat to effect the Merger is subject to the satisfaction of
each of the following conditions prior to the Effective Time, any of which
may be waived in writing exclusively by Showboat:
(a) REPRESENTATIONS AND WARRANTIES. The representations and warranties
of Xxxxxx'x and Merger Sub set forth in this Agreement shall be true and
correct in all material respects (except for those qualified as to materiality
or a Xxxxxx'x Material Adverse Effect, which shall be true and correct) as of
the date of this Agreement and, except to the extent such representations speak
as of an earlier date, as of the Closing Date as though made on and as of the
Closing Date, except for changes contemplated by this Agreement. Showboat
shall have received a certificate signed on behalf of Xxxxxx'x by the chief
executive officer and the chief financial officer of Xxxxxx'x to such effect.
(b) PERFORMANCE OF OBLIGATIONS OF XXXXXX'X. Xxxxxx'x shall have
performed in all material respects all obligations required to be performed by
it under this Agreement at or prior to the Closing Date, and Showboat shall
have received a certificate signed on behalf of Xxxxxx'x by the chief executive
officer and the chief financial officer of Xxxxxx'x to such effect.
(c) THIRD-PARTY CONSENTS. Xxxxxx'x shall have received all third-party
consents and approvals required to be obtained by Xxxxxx'x in connection with
the transactions contemplated hereby under any contract to which Xxxxxx'x or
any of its Subsidiaries may be a party, except for such third-party consents
and approvals as to which the failure to obtain, individually or in the
aggregate, would not reasonably be expected to impair or delay the consummation
of the Merger.
Section 6.3. ADDITIONAL CONDITIONS TO OBLIGATIONS OF XXXXXX'X. The
obligations of Xxxxxx'x and Merger Sub to effect the Merger are subject to
the satisfaction of each of the following conditions prior to the Effective
Time, any of which may be waived in writing exclusively by Xxxxxx'x:
38
(a) REPRESENTATIONS AND WARRANTIES. The representations and warranties
of Showboat set forth in this Agreement shall be true and correct in all
material respects (except for those qualified as to materially or a Showboat
Material Adverse Effect, which shall be true and correct) as of the date of
this Agreement and, except to the extent such representations and warranties
speak as of an earlier date, as of the Closing Date as though made on and as of
the Closing Date, except for changes contemplated by this Agreement; provided
that, with respect to the truth and correctness of such representations and
warranties as of the Closing Date, the use of the term "Showboat Material
Adverse Effect" in such representations and warranties shall mean a material
adverse effect on the business, properties, condition (financial or otherwise),
results of operations or prospects of Showboat and its Subsidiaries, taken as a
whole. Xxxxxx'x shall have received a certificate signed on behalf of Showboat
by the chief executive officer and the chief financial officer of Showboat to
such effect.
(b) PERFORMANCE OF OBLIGATIONS OF SHOWBOAT. Showboat shall have
performed in all material respects all obligations required to be performed by
it under this Agreement at or prior to the Closing Date; and Xxxxxx'x shall
have received a certificate signed on behalf of Showboat by the chief executive
officer and the chief financial officer of Showboat to such effect.
(c) NO MATERIAL ADVERSE CHANGE. Between the date of this Agreement and
the Effective Date, there shall have been no material adverse change in the
business, properties, assets, liabilities, operations, condition (financial or
otherwise) or prospects of Showboat and its Subsidiaries, taken as a whole.
(d) THIRD-PARTY CONSENTS. Xxxxxx'x and Showboat shall have received all
third-party consents and approvals required to be obtained by Xxxxxx'x or
Showboat in connection with the transactions contemplated hereby, under any
contract to which Xxxxxx'x or Showboat (or any of their respective
Subsidiaries) may be a party, except for such third-party consents and
approvals as to which the failure to obtain, either individually or in the
aggregate, would not reasonably be expected to result in (i) a material adverse
change in the business, properties, assets, liabilities, operations, condition
(financial or otherwise) or prospects of Showboat and its Subsidiaries, taken
as a whole, or (ii) a Xxxxxx'x Material Adverse Effect, as the case may be.
(e) NO TRIGGER OF SHOWBOAT RIGHTS PLAN. No event shall have occurred
that has or would result in the triggering of any right or entitlement of
stockholders of Showboat under the Showboat Rights Plan, or will occur as a
result of the consummation of the Merger.
ARTICLE VII.
TERMINATION AND AMENDMENT
Section 7.1. TERMINATION. This Agreement may be terminated at any
time prior to the Effective Time (with respect to Sections 7.1(b) through
7.1(h), by written notice by the terminating party to the other party),
whether before or after approval of the matters presented in connection with
the Merger by the stockholders of Showboat:
39
(a) by mutual written consent of Showboat and Xxxxxx'x; or
(b) by either Xxxxxx'x or Showboat if the Merger shall not have been
consummated by July 1, 1998 (provided that (i) if the Merger shall not have
been consummated because the requisite Governmental Approvals required under
Section 6.1(c) shall not have been obtained and are still being pursued, either
Xxxxxx'x or Showboat may extend such date to January 1, 1999 by providing
written notice thereof to the other party on or prior to July 1, 1998 and
(ii) the right to terminate this Agreement under this Section 7.1(b) 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); or
(c) by either Xxxxxx'x or Showboat if a court of competent jurisdiction
or other Governmental Entity shall have issued a nonappealable final order,
decree or ruling or taken any other nonappealable final action, in each case
having the effect of permanently restraining, enjoining or otherwise
prohibiting the Merger; or
(d) by either Xxxxxx'x or Showboat, if, at the Special Meeting
(including any adjournment or postponement), the requisite vote of the
stockholders of Showboat in favor of the approval and adoption of this
Agreement and the Merger shall not have been obtained; or
(e) by Xxxxxx'x, if (i) the Board of Directors of Showboat shall have
withdrawn or modified its recommendation of this Agreement or the Merger in
accordance with Sections 5.3, 5.4 or 5.5 (provided that Xxxxxx'x' right to
terminate this Agreement under such clause (i) shall not be available if at
such time Showboat would be entitled to terminate this Agreement under
Section 7.1(g)); (ii) after the receipt by Showboat of a proposal for an
Alternative Transaction, Xxxxxx'x requests in writing that the Board of
Directors of Showboat reconfirm its recommendation of this Agreement and the
Merger to the stockholders of Showboat and the Board of Directors of Showboat
fails to do so within five business days after its receipt of Xxxxxx'x'
request; (iii) the Board of Directors of Showboat shall have recommended to
the stockholders of Showboat, or entered into a definitive agreement with
respect to, an Alternative Transaction; or (iv) for any reason Showboat fails
to call and hold the Stockholders' Meeting by July 1, 1998 (provided that
Xxxxxx'x' right to terminate this Agreement under such clause (iv) shall not
be available if at such time Showboat would be entitled to terminate this
Agreement under Section 7.1(g)); or
(f) by Showboat, prior to the approval of this Agreement by its
stockholders, if, as a result of a Superior Proposal received by such party
from a Third Party, the Board of Directors of Showboat determines in good
faith, based on advice of outside legal counsel, that the failure to accept
such Superior Proposal would be inconsistent with its fiduciary duties to
stockholders under applicable law; provided, however, that no termination shall
be effective pursuant to this Section 7.1(f) under circumstances in which a
termination fee is payable by Showboat pursuant to Section 7.3(b)(iv), unless
concurrently with such termination, such termination fee is paid in full by
Showboat in accordance with Section 7.3(b)(iv); or
(g) by Xxxxxx'x or Showboat, if there has been a breach of any
representation, warranty, covenant or agreement on the part of the other party
set forth in this Agreement, which
40
breach will cause the conditions set forth in Section 6.2(a) or (b) (in the
case of termination by Showboat) or 6.3(a) or (b) (in the case of termination
by Xxxxxx'x) not to be satisfied.
Section 7.2. EFFECT OF TERMINATION. In the event of termination of
this Agreement as provided in Section 7.1, this Agreement shall immediately
become void and there shall be no liability or obligation on the part of
Xxxxxx'x, Merger Sub or Showboat, or their respective officers, directors,
stockholders or Affiliates, except as set forth in Section 7.3 and except
that such termination shall not limit liability for a willful breach of this
Agreement; provided that, the provisions of Section 7.3 of this Agreement and
the Confidentiality Agreement shall remain in full force and effect and
survive any termination of this Agreement.
Section 7.3. FEES AND EXPENSES.
(a) Except as set forth in this Section 7.3, all fees and expenses
incurred in connection with this Agreement and the transactions contemplated
hereby shall be paid by the party incurring such expenses, whether or not the
Merger is consummated.
(b) Showboat shall pay Xxxxxx'x a termination fee of $20 million upon
the earliest to occur of the following events:
(i) the termination of this Agreement by Xxxxxx'x or Showboat
pursuant to Section 7.1(d), if a proposal for an Alternative Transaction
involving Showboat shall have been publicly announced prior to the
Stockholders' Meeting and either a definitive agreement for an Alternative
Transaction is entered into, or an Alternative Transaction is consummated,
within one year of such termination;
(ii) the termination of this Agreement by Xxxxxx'x pursuant to
Section 7.1(e)(i), (iii) or (iv);
(iii) the termination of this Agreement by Xxxxxx'x pursuant to
Sections 7.1(e)(ii), and either a definitive agreement for an Alternative
Transaction is entered into, or an Alternative Transaction is consummated,
within one year of such termination; or
(iv) the termination of this Agreement by Showboat pursuant to
Section 7.1(f).
Showboat's payment of a termination fee pursuant to this subsection
shall be the sole and exclusive remedy of Xxxxxx'x against Showboat and any of
its Subsidiaries and their respective directors, officers, employees, agents,
advisors or other representatives with respect to the occurrences giving rise
to such payment; provided that this limitation shall not apply in the event of
a willful breach of this Agreement by Showboat.
(c) The fees payable pursuant to Section 7.3(b) shall be paid
concurrently with the first to occur of the events described in Section
7.3(b)(i), (ii), (iii) or (iv).
(d) In the event that this Agreement is terminated by Xxxxxx'x or
Showboat pursuant to Section 7.1(b) and all the conditions to Closing set forth
in Article VI have been
41
satisfied or waived except for obtaining the consents of lenders set forth in
Section 4.2 of the Xxxxxx'x Disclosure Schedule or the continued accuracy at
such time of Xxxxxx'x' representation in Section 4.5, Xxxxxx'x shall pay to
Showboat liquidated damages in the amount of $10.0 million. Showboat's
payment of such liquidated damages pursuant to this subsection shall be the
sole and exclusive remedy of Showboat against Xxxxxx'x and any of its
Subsidiaries and their respective directors, officers, employees, agents,
advisors or other representatives with respect to the occurrences giving rise
to such payment.
Section 7.4. AMENDMENT. This Agreement may be amended by the parties
hereto, by action taken or authorized by their respective Boards of
Directors, at any time before or after approval of the matters presented in
connection with the Merger by the stockholders of Showboat, but, after any
such approval, no amendment shall be made which (i) by law requires further
approval by such stockholders or (ii) is in any manner adverse to the
stockholders of Showboat, in each case without such further approval. This
Agreement may not be amended except by an instrument in writing signed on
behalf of each of the parties hereto.
Section 7.5. EXTENSION; WAIVER. At any time prior to the Effective
Time, the parties hereto, by action taken or authorized by their respective
Boards of Directors, may, to the extent legally allowed (i) extend the time
for the performance of any of the obligations or other acts of the other
parties hereto, (ii) waive any inaccuracies in the representations and
warranties contained herein or in any document delivered pursuant hereto and
(iii) waive compliance with any of the agreements or conditions contained
here. Any agreement on the part of a party hereto to any such extension or
waiver shall be valid only if set forth in a written instrument signed on
behalf of such party.
ARTICLE VIII.
MISCELLANEOUS
Section 8.1. NONSURVIVAL OF REPRESENTATIONS, WARRANTIES AND
AGREEMENTS. None of the representations, warranties and agreements in this
Agreement or in any instrument delivered pursuant to this Agreement shall
survive the Effective Time, except for the agreements contained in Sections
1.4, 2.1, 2.2, 2.3, 5.9, 5.11, 5.13 and 5.14 and Article VIII. The
Confidentiality Agreements shall survive the execution and delivery of this
Agreement.
Section 8.2. NOTICES. All notices and other communications hereunder
shall be in writing and shall be deemed given if delivered personally,
telecopied (which is confirmed) or mailed by registered or certified mail
(return receipt requested) to the parties at the following addresses (or at
such other address for a party as shall be specified by like notice):
42
(a) if to Showboat, to
Showboat, Inc.
0000 Xxxxxx Xxxxxx Xxxxxxx
Xxxxx 000
Attn: H. Xxxxxxx Xxxxx
Telecopy: (000) 000-0000
with a copy to
Weil, Gotshal & Xxxxxx, LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, XX
Attn: Xxxxxx Xxxx Xxxx, Esq.
Telecopy: (000) 000-0000
(b) if to Xxxxxx'x or Merger Sub, to
Xxxxxx'x Entertainment, Inc.
0000 Xxxxxx Xxxx
Xxxxxxx, Xxxxxxxxx 00000
Attn: Xxxxx X. Xxxx
Telecopy: (000) 000-0000
with a copy to:
Xxxxxx & Xxxxxxx
000 Xxxx Xxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxx, XX 00000-0000
Attn: Xxxxxx Xxxxxxxxxxxx, Xx., Esq.
Telecopy: (000) 000-0000
Section 8.3. INTERPRETATION. When a reference is made in this
Agreement to Sections, such reference shall be to a Section of this Agreement
unless otherwise indicated. The table of contents and headings contained in
this Agreement are for reference purposes only and shall not affect in any
way the meaning or interpretation of this Agreement. Whenever the words
"include," "includes" or "including" are used in this Agreement they shall be
deemed to be followed by the words "without limitation." The phrase "made
available" in this Agreement shall mean that the information referred to has
been made available if requested by the party to whom such information is to
be made available. The phrases "the date of this Agreement", "the date
hereof," and terms of similar import, unless the context otherwise requires,
shall be deemed to refer to December 18, 1997.
Section 8.4. COUNTERPARTS. This Agreement may be executed in two or
more counterparts, all of which shall be considered one and the same
agreement and shall become effective when two or more counterparts have been
signed by each of the parties and delivered to the other parties, it being
understood that all parties need not sign the same counterpart.
43
Section 8.5. ENTIRE AGREEMENT; NO THIRD PARTY BENEFICIARIES. This
Agreement and all documents and instruments referred to herein (a) constitute
the entire agreement and supersedes all prior agreements and understandings,
both written and oral, among the parties with respect to the subject matter
hereof, and (b) except as provided in Section 5.9 are not intended to confer
upon any person other than the parties hereto any rights or remedies
hereunder; provided that the Confidentiality Agreements shall remain in full
force and effect until the Effective Time. Each party hereto agrees that,
except for the representations and warranties contained in this Agreement,
none of Xxxxxx'x, Merger Sub or Showboat makes any other representations or
warranties, and each hereby disclaims any other representations and
warranties made by itself or any of its officers, directors, employees,
agents, financial and legal advisors or other representatives, with respect
to the execution and delivery of this Agreement or the transactions
contemplated hereby, notwithstanding the delivery or disclosure to any of
them or their respective representatives of any documentation or other
information with respect to any one or more of the foregoing.
Section 8.6. GOVERNING LAW. This Agreement shall be governed and
construed in accordance with the laws of the State of Nevada without regard
to any applicable conflicts of law.
Section 8.7. ASSIGNMENT. Neither this Agreement nor any of the
rights, interests or obligations hereunder shall be assigned by any of the
parties hereto (whether by operation of law or otherwise) without the prior
written consent of the other parties, except that Merger Sub may assign its
rights and obligations hereunder to any direct or indirect wholly-owned
subsidiary of Xxxxxx'x; provided that no such assignment shall relieve
Xxxxxx'x of its obligations hereunder. Subject to the preceding sentence,
this Agreement will be binding upon, inure to the benefit of and be
enforceable by the parties and their respective successors and assigns.
44
IN WITNESS WHEREOF, Xxxxxx'x Entertainment, Inc., HEI Acquisition
Corp. and Showboat, Inc. have caused this Agreement to be signed by their
respective duly authorized officers as of the date first written above.
XXXXXX'X ENTERTAINMENT, INC.
/s/ X. X. Xxxxxxxx, Xx.
------------------------------------------------
By: X. X. Xxxxxxxx, Xx.
Its: Senior Vice President and General Counsel
HEI ACQUISITION CORP.
/s/ Xxxxxx X. Xxxxx
------------------------------------------------
By: Xxxxxx X. Xxxxx
Its: President
SHOWBOAT, INC.
/s/ X. X. Xxxxxxxx, III
------------------------------------------------
By: X. X. Xxxxxxxx, III
Its: President and Chief Executive Officer
EXHIBIT A
FORM OF STOCKHOLDER SUPPORT AGREEMENT
STOCKHOLDER SUPPORT AGREEMENT, dated as of December 18, 1997 (this
"Agreement"), by _______________ ("Stockholder") to and for the benefit of
Xxxxxx'x Entertainment, Inc., a Delaware corporation ("Xxxxxx'x"). Capitalized
terms used and not otherwise defined herein shall have the respective meanings
assigned to them in the Merger Agreement referred to below.
WHEREAS, as of the date hereof, Stockholder owns of record and
beneficially ________ shares (such shares, together with any other voting or
equity securities of Showboat, Inc., a Nevada corporation ("Showboat"),
hereafter acquired by Stockholder prior to the termination of this Agreement,
being referred to herein collectively as the "Shares") of common stock, par
value $1.00 per share ("Showboat Common Stock");
WHEREAS, concurrently with the execution of this Agreement, Xxxxxx'x, HEI
Acquisition Corp., a Nevada corporation and indirect wholly-owned subsidiary of
Xxxxxx'x ("Merger Sub"), and Showboat are entering into an Agreement and Plan
of Merger, dated as of the date hereof (the "Merger Agreement"), pursuant to
which, upon the terms and subject to the conditions thereof, Merger Sub will be
merged with and into Showboat such that Showboat will become an indirect wholly-
owned subsidiary of Xxxxxx'x (the "Merger"); and
WHEREAS, as a condition to the willingness of Showboat, Xxxxxx'x and
Merger Sub to enter into the Merger Agreement, Xxxxxx'x has requested the
Stockholder agree, and in order to induce Xxxxxx'x and Merger Sub to enter into
the Merger Agreement, the Stockholder is willing to agree to vote in favor of
adopting the Merger Agreement and approving the Merger, upon the terms and
subject to the conditions set forth herein.
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
and agreements contained herein, and intending to be legally bound hereby, the
parties hereby agree, severally and not jointly, as follows:
Section 1. VOTING OF SHARES. Until the termination of this Agreement
in accordance with the terms hereof, Stockholder hereby agrees that, at the
Special Meeting (as defined in the Merger Agreement) or any other meeting of
the stockholders of Showboat, however called, and in any action by written
consent of the stockholders of Showboat, Stockholder will vote all of his or
her respective Shares (a) in favor of adoption of the Merger Agreement and
approval of the Merger and the other transactions contemplated by the Merger
Agreement, and (b) in favor of any other matter necessary to the consummation
of the transactions contemplated by the Merger Agreement and considered and
voted upon by the stockholders of Showboat (or any class thereof). Stockholder
acknowledges receipt and review of a copy of the Merger Agreement.
Section 2. TRANSFER OF SHARES. Until the termination of this
Agreement in accordance with the terms hereof, Stockholder will not, directly
or indirectly, (a) sell, assign, transfer, pledge, encumber or otherwise
dispose of any of the Shares, (b) deposit any of the Shares into a voting trust
or enter into a voting agreement or arrangement with respect to the Shares or
grant
any proxy or power of attorney with respect thereto which is inconsistent
with this Agreement or (c) enter into any contract, option or other arrangement
or undertaking with respect to the direct or indirect sale, assignment,
transfer (including by merger, testamentary disposition, interspousal
disposition pursuant to a domestic relations proceeding or otherwise by
operation of law) or other disposition of any Shares; provided, however, that
Stockholder may transfer the Shares to family members or to a trust so long as
such trust or family member takes such Shares subject to the obligations and
restrictions contained in this Agreement.
Section 3. REPRESENTATIONS AND WARRANTIES OF STOCKHOLDER. Stockholder
hereby represents and warrants to Xxxxxx'x with respect to himself or herself
and his or her ownership of the Shares as follows:
(a) OWNERSHIP OF SHARES. On the date hereof, the Shares are
owned of record and beneficially by Stockholder. Stockholder has sole voting
power, without restrictions, with respect to all of the Shares.
(b) POWER, BINDING AGREEMENT. Stockholder has the legal
capacity, power and authority to enter into and perform all of his or her
obligations under this Agreement. The execution, delivery and performance of
this Agreement by Stockholder will not violate any other agreement to which
Stockholder is a party, including, without limitation, any voting agreement,
shareholders' agreement, partnership agreement or voting trust. This Agreement
has been duly and validly executed and delivered by Stockholder and constitutes
a valid and binding obligation of Stockholder, enforceable against Stockholder
in accordance with its terms, subject to applicable bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and similar laws affecting
creditors' rights and remedies generally and subject, as to enforceability, to
general principles of equity (regardless of whether enforcement is sought in a
proceeding at law or in equity).
(c) NO CONFLICTS. The execution and delivery of this Agreement
do not, and the consummation of the transactions contemplated hereby will not,
conflict with or result in any violation of, or default (with or without notice
or lapse of time, or both) under, or give rise to a right of termination,
cancellation or acceleration of any obligation or to loss of a material benefit
under, any provision of any loan or credit agreement, note, bond, mortgage,
indenture, lease, or other agreement, instrument, permit, concession,
franchise, license, judgment, order, decree, statute, law, ordinance, rule or
regulation applicable to Stockholder or any of his or her properties or assets,
other than such conflicts, violations or defaults or terminations,
cancellations or accelerations which individually or in the aggregate do not
materially impair the ability of Stockholder to perform his or her obligations
hereunder. No consent, approval, order or authorization of, or registration,
declaration, or filing with, any governmental entity is required by or with
respect to the execution and delivery of this Agreement by Stockholder and the
consummation by Stockholder of the transactions contemplated hereby.
Section 4. NO SOLICITATION. Prior to the termination of this
Agreement in accordance with its terms, Stockholder agrees (a) that he or she
will not, nor will he or she authorize or permit any of his or her employees,
agents and representatives to, directly or indirectly, initiate or
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solicit any inquiries or the making of any Acquisition Proposal (as defined
in the Merger Agreement) and (b) that he or she will notify Xxxxxx'x as soon
as possible if any such inquiries or proposals are received by, any
information or documents is requested from, or any negotiations or
discussions are sought to be initiated or continued with, him or her or any
of his or her affiliates [(b) only as to JKH, III].
Section 5. TERMINATION. This Agreement shall terminate upon the
earliest to occur of (i) the Effective Time (as such term is defined in the
Merger Agreement) or (ii) any termination of the Merger Agreement in
accordance with the terms thereof (including, without limitation, any
termination pursuant to Section 7.1(f) thereof); provided that the provisions
of Section 8 shall survive any termination of this Agreement, and provided
further that no such termination shall relieve any party of liability for a
breach hereof prior to termination.
Section 6. SPECIFIC PERFORMANCE. The parties hereto agree that
irreparable damage would occur in the event any provision of this Agreement was
not performed in accordance with the terms hereof and that the parties shall be
entitled to specific performance of the terms hereof, in addition to any other
remedy at law or in equity.
Section 7. FIDUCIARY DUTIES. Notwithstanding anything in this
Agreement to the contrary, the covenants and agreements set forth herein shall
not prevent Stockholder from serving on Showboat's Board of Directors and from
taking any action, subject to the applicable provisions of the Merger
Agreement, while acting in such designee's capacity as a director of Showboat.
Section 8. MISCELLANEOUS.
(a) This Agreement constitutes the entire agreement
between the parties hereto with respect to the subject matter hereof and
supersedes all prior agreements and understandings, both written and oral,
between the parties with respect thereto. This Agreement may not be amended,
modified or rescinded except by an instrument in writing signed by each of
the parties hereto.
(b) 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. 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 to the fullest extent permitted by applicable law in a mutually
acceptable manner in order that the terms of this Agreement remain as
originally contemplated to the fullest extent possible.
(c) This Agreement shall be governed by and construed in
accordance with the laws of the State of Nevada without regard to the
principles of conflicts of law thereof.
(d) This Agreement may be executed in counterparts, each
of which shall be deemed an original and all of which together shall
constitute one and the same instrument.
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IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement
to be signed by their respective duly authorized officers as of the date first
written above.
STOCKHOLDER
-----------------------------------
Agreed and Acknowledged:
XXXXXX'X ENTERTAINMENT, INC.
--------------------------------
By:
Its:
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