Exhibit 2.1
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AGREEMENT AND PLAN OF MERGER
Among
LADBROKE RACING CORPORATION,
CG&E ACQUISITION CORP.
and
COLORADO GAMING & ENTERTAINMENT CO.
Dated as of August 22, 1997
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TABLE OF CONTENTS
Section Page
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ARTICLE I
THE MERGER. . . . . . . . . . . . . . . . 1
1.1 THE MERGER. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 EFFECTIVE TIME; CLOSING . . . . . . . . . . . . . . . . . . . . . . . . 1
1.3 EFFECTS OF THE MERGER . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.4 CERTIFICATE OF INCORPORATION AND BY-LAWS. . . . . . . . . . . . . . . . 2
1.5 DIRECTORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.6 OFFICERS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
ARTICLE II
EFFECT OF THE MERGER ON THE CAPITAL STOCK
OF THE CONSTITUENT CORPORATIONS; EXCHANGE OF CERTIFICATES. . . . 2
2.1 EFFECT ON CAPITAL STOCK . . . . . . . . . . . . . . . . . . . . . . . . 2
2.2 EXCHANGE OF CERTIFICATES. . . . . . . . . . . . . . . . . . . . . . . . 3
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY. . . . . . . 5
3.1 ORGANIZATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
3.2 SUBSIDIARIES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
3.3 CAPITALIZATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
3.4 AUTHORITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
3.5 NONCONTRAVENTION; FILINGS AND CONSENTS. . . . . . . . . . . . . . . . . 7
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TABLE OF CONTENTS
Section Page
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3.6 SEC DOCUMENTS; FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . 8
3.7 ABSENCE OF CERTAIN CHANGES OR EVENTS. . . . . . . . . . . . . . . . . . 8
3.8 NO UNDISCLOSED LIABILITIES. . . . . . . . . . . . . . . . . . . . . . . 9
3.9 INFORMATION SUPPLIED. . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.10 LITIGATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.11 LABOR MATTERS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.12 EMPLOYEE BENEFITS; ERISA . . . . . . . . . . . . . . . . . . . . . . . 10
3.13 TAXES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
3.14 COMPLIANCE WITH APPLICABLE LAWS. . . . . . . . . . . . . . . . . . . . 13
3.15 ENVIRONMENTAL MATTERS. . . . . . . . . . . . . . . . . . . . . . . . . 13
3.16 REAL PROPERTY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
3.17 INTELLECTUAL PROPERTY. . . . . . . . . . . . . . . . . . . . . . . . . 14
3.18 INSURANCE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
3.19 STATE TAKEOVER STATUTES. . . . . . . . . . . . . . . . . . . . . . . . 15
3.20 BROKERS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND PURCHASER. . . . . 15
4.1 ORGANIZATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
4.2 AUTHORITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
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TABLE OF CONTENTS
Section Page
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4.3 NONCONTRAVENTION; FILINGS AND CONSENTS. . . . . . . . . . . . . . . . . 16
4.4 INFORMATION SUPPLIED. . . . . . . . . . . . . . . . . . . . . . . . . . 17
4.5 FINANCING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
4.6 INTERIM OPERATIONS OF PURCHASER . . . . . . . . . . . . . . . . . . . . 17
4.7 LITIGATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
4.8 BROKERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
ARTICLE V
COVENANTS OF THE COMPANY . . . . . . . . . . . . 18
5.1 CONDUCT OF BUSINESS . . . . . . . . . . . . . . . . . . . . . . . . . . 18
5.2 OTHER ACTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
5.3 NO SOLICITATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
5.4 OPINION OF FINANCIAL ADVISOR. . . . . . . . . . . . . . . . . . . . . . 23
ARTICLE VI
ADDITIONAL AGREEMENTS. . . . . . . . . . . . . 23
6.1 SHAREHOLDERS MEETING; PREPARATION OF THE PROXY STATEMENT. . . . . . . . 23
6.2 ACCESS TO INFORMATION; CONFIDENTIALITY. . . . . . . . . . . . . . . . . 23
6.3 REASONABLE EFFORTS. . . . . . . . . . . . . . . . . . . . . . . . . . . 24
6.4 FEES AND EXPENSES . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
6.5 PUBLIC ANNOUNCEMENTS. . . . . . . . . . . . . . . . . . . . . . . . . . 25
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TABLE OF CONTENTS
Section Page
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6.6 NOTIFICATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
6.7 CERTAIN LITIGATION. . . . . . . . . . . . . . . . . . . . . . . . . . . 26
6.8 OTHER ACTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
ARTICLE VII
CONDITIONS PRECEDENT . . . . . . . . . . . . . 26
7.1 CONDITIONS TO OBLIGATION OF EACH PARTY TO EFFECT THE MERGER . . . . . . 26
7.2 CONDITIONS TO OBLIGATIONS OF THE COMPANY TO EFFECT THE MERGER . . . . . 26
7.3 CONDITIONS TO OBLIGATIONS OF PARENT AND PURCHASER TO EFFECT THE
MERGER. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER. . . . . . . . . . 28
8.1 TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
8.2 EFFECT OF TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . 29
8.3 AMENDMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
8.4 WAIVER. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
ARTICLE IX
GENERAL PROVISIONS. . . . . . . . . . . . . . 29
9.1 NOTICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
9.2 DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
9.3 INTERPRETATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
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TABLE OF CONTENTS
Section Page
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9.4 COUNTERPARTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
9.5 ENTIRE AGREEMENT; THIRD PARTY BENEFICIARIES . . . . . . . . . . . . . . 31
9.6 ASSIGNMENT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
9.7 GOVERNING LAW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
9.8 ENFORCEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
9.9 SEVERABILITY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
9.10 ATTORNEYS' FEES. . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Exhibit A - Form of Opinion of Counsel for Parent and Purchaser
Exhibit B - Form of Opinion of Counsel for the Company
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AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER is entered into as of August 22,
1997, among Ladbroke Racing Corporation, a Delaware corporation ("PARENT"),
CG&E Acquisition Corp., a Delaware corporation ("PURCHASER"), and Colorado
Gaming & Entertainment Co., a Delaware corporation (the "COMPANY").
WHEREAS, the respective Boards of Directors of Parent, Purchaser and
the Company have each determined that it is in the best interests of their
respective shareholders for Parent to acquire the Company upon the terms and
subject to the conditions set forth in this Agreement;
WHEREAS, in furtherance of such acquisition, the respective Boards of
Directors of Parent, Purchaser and the Company have approved the merger of
Purchaser with and into the Company (the "MERGER") upon the terms and subject to
the conditions set forth in this Agreement and in accordance with the provisions
of the Delaware General Corporation Law (the "DGCL"), whereby each share of
common stock, $.01 par value, of the Company ("COMPANY COMMON STOCK"), other
than shares owned directly or indirectly by Parent or by the Company and other
than Dissenting Shares (as defined in Section 2.1(d)), will be converted into
the right to receive cash;
WHEREAS, as an inducement to Parent to enter into this Agreement,
Parent, and the Company have entered into a Stock Option Agreement (the "STOCK
OPTION AGREEMENT") pursuant to which the Company has granted to Parent an option
to purchase newly issued shares of Company Common Stock under certain
circumstances;
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements herein contained, and intending to be legally bound
hereby, Parent, Purchaser and the Company hereby agree as follows:
ARTICLE I
THE MERGER
SECTION 1.1 THE MERGER. Upon the terms and subject to the conditions
set forth in this Agreement, and in accordance with the DGCL, Purchaser shall be
merged with and into the Company at the Effective Time (as defined in
Section 1.2). Following the Effective Time, the separate corporate existence of
Purchaser shall cease and the Company shall continue its corporate existence
under the laws of the State of Delaware as the surviving corporation (the
"SURVIVING CORPORATION").
SECTION 1.2 EFFECTIVE TIME; CLOSING. As promptly as practicable
after the satisfaction or, if permissible, waiver of the conditions set forth in
Article VII, the parties will cause the Merger to be consummated by delivering
to the Secretary of State of the State of
Delaware a certificate of merger together with the requisite officer's
certificates, each in such form or forms as may be required by, and executed
and acknowledged in accordance with, the relevant provisions of the DGCL
(such documents being referred to collectively as the "MERGER DOCUMENTS"),
and shall make all other filings and recordings required by the DGCL in
connection with the Merger. The Merger shall become effective at the time of
filing of the appropriate Merger Documents with the Secretary of State of the
State of Delaware, or at such later time, which shall be as soon as
reasonably practicable, specified as the effective time in the Merger
Documents (the "EFFECTIVE TIME"). Prior to such filing, a closing shall be
held at the offices of O'Melveny & Xxxxx LLP, 000 Xxxxx Xxxx Xxxxxx, Xxx
Xxxxxxx, Xxxxxxxxxx 00000, unless another date, time or place is agreed to in
writing by the parties hereto, for the purpose of confirming the satisfaction
or waiver, as the case may be, of the conditions set forth in Article VII.
SECTION 1.3 EFFECTS OF THE MERGER. The Merger shall have the effects
set forth in Section 259 of the DGCL.
SECTION 1.4 CERTIFICATE OF INCORPORATION AND BY-LAWS. (a) The
Certificate of Incorporation of the Company as in effect immediately prior to
the Effective Time shall be the Certificate of Incorporation of the Surviving
Corporation until thereafter amended as provided therein and as permitted by law
and this Agreement.
(b) The Bylaws of the Company as in effect immediately prior to the
Effective Time shall be the Bylaws of the Surviving Corporation upon completion
of the Merger and remain the Bylaws of the Surviving Corporation until
thereafter amended as provided therein and as permitted by law and this
Agreement.
SECTION 1.5 DIRECTORS. At the Effective Time, the directors of the
Company immediately prior to the Effective Time shall be deemed to have
resigned. At the Effective Time, the directors of Purchaser immediately prior
to the Effective Time shall become the directors of the Surviving Corporation,
until the earlier of their resignation or removal or until their respective
successors are duly elected and qualified, as the case may be.
SECTION 1.6 OFFICERS. The officers of the Company immediately prior
to the Effective Time shall be the officers of the Surviving Corporation, until
the earlier of their resignation or removal or until their respective successors
are duly elected and qualified, as the case may be, or as otherwise provided in
the Bylaws of the Company.
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ARTICLE II
EFFECT OF THE MERGER ON THE CAPITAL STOCK
OF THE CONSTITUENT CORPORATIONS; EXCHANGE OF CERTIFICATES
SECTION 2.1 EFFECT ON CAPITAL STOCK. As of the Effective Time, by
virtue of the Merger and without any action on the part of the holder of any
shares of Company Common Stock or any shares of capital stock of Purchaser:
(a) CAPITAL STOCK OF PURCHASER. Each issued and outstanding share of
capital stock of Purchaser shall be converted into and become one fully
paid and nonassessable share of Common Stock, no par value, of the
Surviving Corporation.
(b) CANCELLATION OF PARENT OWNED STOCK. Each share of Company Common
Stock that is owned by the Company or by any subsidiary of the Company and
each share of Company Common Stock that is owned by Parent, Purchaser or
any other subsidiary of Parent shall automatically be cancelled and shall
cease to exist, and no consideration shall be delivered in exchange
therefor.
(c) CONVERSION OF COMPANY COMMON STOCK. Subject to Section 3.1(d),
each share of Company Common Stock issued and outstanding (other than
shares to be cancelled in accordance with Section 2.1(b)) shall be
converted into the right to receive an amount in cash equal to $6.25 per
share (the "MERGER CONSIDERATION"). As of the Effective Time, all such
shares of Company Common Stock shall no longer be outstanding and shall
automatically be cancelled and shall cease to exist, and each holder of a
certificate representing any such shares of Company Common Stock shall
cease to have any rights with respect thereto, except the right to receive
the Merger Consideration.
(d) Notwithstanding anything in this Agreement to the contrary, in
the event that dissenters' rights are available in connection with the
Merger pursuant to Section 262 of the DGCL, shares of Company Common Stock
that are issued and outstanding immediately prior to the Effective Time and
that are held by shareholders who did not vote in favor of the Merger and
who comply with all of the relevant provisions of Section 262 of the DGCL
("DISSENTING SHARES") shall not be converted into or be exchangeable for
the right to receive the Merger Consideration, but instead shall be
converted into the right to receive such consideration as may be determined
to be due to such shareholders pursuant to Section 262 of the DGCL, unless
and until such holders shall have failed to perfect or shall have
effectively withdrawn or lost their rights to appraisal under the DGCL. If
any such holder shall have failed to perfect or shall have effectively
withdrawn or lost such right, such holders shares shall thereupon be deemed
to have been converted into and to have become exchangeable for the right
to receive, as of the Effective Time, the Merger Consideration without any
interest thereon. The
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Company shall give Parent (i) prompt notice of any written demands for
appraisal of shares received by the Company and (ii) the opportunity to
participate in all negotiations and proceedings with respect to any such
demands. The Company shall not, without the prior written consent of
the Parent, voluntarily make any payment with respect to, or settle or
offer to settle, any such demands.
SECTION 2.2 EXCHANGE OF CERTIFICATES. (a) PAYING AGENT. Prior
to the Effective Time, Parent shall designate a bank or trust company
reasonably acceptable to the Company to act as paying agent in the Merger
(the "PAYING AGENT"), and prior to or at the Effective Time, Parent shall
make available, or cause the Surviving Corporation to make available, to the
Paying Agent cash in the amount necessary for the payment of the Merger
Consideration upon surrender of certificates representing Company Common
Stock as part of the Merger pursuant to Section 2.1. The Paying Agent shall
invest portions of the Merger Consideration as Parent directs (it being
understood that any and all interest earned on funds made available to the
Paying Agent pursuant to this Agreement shall be the property of, and shall
be turned over to, Parent). The Merger Consideration shall not be used for
any other purpose, except as provided in this Agreement.
(b) EXCHANGE PROCEDURE. As soon as reasonably practicable after
the Effective Time, the Surviving Corporation shall cause the Paying Agent to
mail to each holder of record of a certificate or certificates which
immediately prior to the Effective Time represented outstanding shares of
Company Common Stock (the "CERTIFICATES") whose shares were converted into
the right to receive the Merger Consideration pursuant to Section 2.1, (i) a
letter of transmittal (which shall specify that delivery shall be effected,
and risk of loss and title to the Certificates shall pass, only upon delivery
of the Certificates to the Paying Agent and shall be in such form and have
such other provisions as Parent may specify) and (ii) instructions for use in
effecting the surrender of the Certificates in exchange for the Merger
Consideration. Upon surrender of a Certificate for cancellation to the
Paying Agent or to such other agent or agents as may be appointed by Parent,
together with such letter of transmittal, duly executed, and such other
documents as may reasonably be required pursuant to such instructions, the
holder of such Certificate shall be entitled to receive in exchange therefor
the amount of cash into which the shares of Company Common Stock theretofore
represented by such Certificate shall have been converted pursuant to Section
2.1, and the Certificate so surrendered shall forthwith be cancelled. In the
event of a transfer of ownership of Company Common Stock which is not
registered in the transfer records of the Company, payment may be made to a
person other than the person in whose name the Certificate so surrendered is
registered if such Certificate shall be properly endorsed or otherwise be in
proper form for transfer and the person requesting such payment shall pay any
transfer or other taxes required by reason of the payment to a person other
than the registered holder of such Certificate or establish to the
satisfaction of Parent that such tax has been paid or is not applicable.
Until surrendered as contemplated by this Section 2.3, each Certificate shall
be deemed at any time after the Effective Time to represent only the right to
receive upon such surrender the Merger Consideration, without interest, into
which the shares of Company Common Stock theretofore
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represented by such Certificate shall have been converted pursuant to Section
2.1. No interest will be paid or will accrue on the cash payable upon the
surrender of any Certificate.
(c) NO FURTHER OWNERSHIP RIGHTS IN COMPANY COMMON STOCK. All cash
paid upon the surrender of Certificates in accordance with the terms of this
Article II shall be deemed to have been paid in full satisfaction of all
rights pertaining to the shares of Company Common Stock theretofore
represented by such Certificates, and, from and after the Effective Time,
there shall be no further registration of transfers on the stock transfer
books of the Surviving Corporation of the shares of Company Common Stock
which were outstanding immediately prior to the Effective Time. If, after
the Effective Time, Certificates are presented to the Surviving Corporation
or the Paying Agent for any reason, they shall be cancelled and exchanged as
provided in this Article II.
(d) NO LIABILITY. At any time following the twelfth month after
the Effective Time, the Surviving Corporation shall be entitled to require
the Paying Agent to deliver to it any funds which had been made available to
the Paying Agent and not disbursed to holders of shares of Company Common
Stock (including, without limitation, all interest and other income received
by the Paying Agent in respect of all funds made available to it), and
thereafter such holders shall be entitled to look to the Surviving
Corporation (subject to abandoned property, escheat and other similar laws)
only as general creditors thereof with respect to any Merger Consideration
that may be payable upon due surrender of the Certificates held by them.
Notwithstanding the foregoing, neither the Surviving Corporation nor the
Paying Agent shall be liable to any holder of a share of Company Common Stock
for any Merger Consideration properly delivered in respect of such share to a
public official as required pursuant to any abandoned property, escheat or
other similar law.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to Parent and Purchaser as
follows (with such exceptions thereto as are set forth in the disclosure
schedule delivered by the Company to Parent (the "DISCLOSURE SCHEDULE") with
reference to the particular Sections of this Agreement referred to in the
Disclosure Schedule):
SECTION 3.1 ORGANIZATION. The Company and each of its subsidiaries
is a corporation duly organized, validly existing and in good standing under the
laws of the jurisdiction of its incorporation and has all requisite power and
authority and governmental approvals to own, lease or operate its properties and
to carry on its business as now being conducted. The Company and each of its
subsidiaries is duly qualified or licensed to do business and is in good
standing in each jurisdiction in which the properties owned, leased or operated
by it or the nature of the business conducted by it makes such qualification or
licensing necessary. The Company has delivered to Parent complete and correct
copies of its
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Certificate of Incorporation and By-Laws and the certificates of
incorporation and by-laws (or other comparable organizational documents) of
its subsidiaries, in each case as amended to the date of this Agreement.
SECTION 3.2 SUBSIDIARIES. Section 3.2 of the Disclosure Schedule
lists each subsidiary of the Company. All the outstanding shares of capital
stock or other ownership interest of each such subsidiary are owned by the
Company (or by another wholly owned subsidiary of the Company) free and clear
of all Liens (as defined in Section 9.2), and are duly authorized, validly
issued, fully paid and nonassessable. Except for the capital stock of its
subsidiaries or as set forth in Section 3.2 of the Disclosure Schedule, the
Company does not own, directly or indirectly, any capital stock or other
ownership interest in any corporation, partnership, limited liability
company, joint venture or other entity.
SECTION 3.3 CAPITALIZATION. The authorized capital stock of the
Company consists of 20,000,000 shares of Company Common Stock. As of August
21, 1997, 5,236,091 shares of Company Common Stock were issued and
outstanding. As of August 21, 1997, 319,464 shares of Company Common Stock
were reserved for issuance under the Company's Management Incentive and
Non-Employee Director Stock Plans (the "STOCK PLANS"), of which 276,631
shares have been allocated (including 9,260 shares to be allocated to
directors) and 42,833 shares remain unallocated. Section 3.3 of the
Disclosure Schedule contains a complete list of all persons entitled to
receive shares of Company Common Stock pursuant to the Stock Plans together
with the number of shares allocated to each such person as of the date
hereof. Except as set forth above, as of the date of this Agreement, no
shares of capital stock or other voting securities of the Company were
issued, reserved for issuance or outstanding. All outstanding shares of
capital stock of the Company are, and all shares which may be issued will,
when issued, be duly authorized, validly issued, fully paid and nonassessable
and not subject to preemptive rights. There are no bonds, debentures, notes
or other indebtedness of the Company having the right to vote (or convertible
into, or exchangeable for, securities having the right to vote) on any
matters on which shareholders of the Company may vote. Except as set forth
above, there are no securities, options, warrants, calls, rights,
commitments, agreements, arrangements or undertakings of any kind to which
the Company or any of its subsidiaries is a party or by which any of them is
bound obligating the Company or any of its subsidiaries to issue, deliver or
sell, or cause to be issued, delivered or sold, additional shares of capital
stock or other voting securities of the Company or of any of its subsidiaries
or obligating the Company or any of its subsidiaries to issue, grant, extend
or enter into any such security, option, warrant, call, right, commitment,
agreement, arrangement or undertaking. There are not any shareholder
agreements, voting trusts or other agreements or understandings to which the
Company is a party or by which it is bound relating to the voting,
registration or disposition of any shares of the capital stock of the Company
(including any such agreements or understandings that may limit in any way
the solicitation of proxies by or on behalf of the Company from, or the
casting of votes by, the shareholders of the Company with respect to the
Merger) or granting to any person or group of persons the right to elect, or
to designate or nominate for election, a director to the Board of Directors of
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the Company. There are not any outstanding contractual obligations of the
Company or any of its subsidiaries (i) to repurchase, redeem or otherwise
acquire any shares of capital stock of the Company or any of its subsidiaries
or (ii) to vote or to dispose of any shares of the capital stock of any of
the Company's subsidiaries.
SECTION 3.4 AUTHORITY. The Company has all requisite corporate power
and authority to execute and deliver this Agreement and the Stock Option
Agreement, to perform its obligations hereunder and thereunder and to consummate
the transactions contemplated hereby and thereby, subject to, in the case of the
Merger, the approval of this Agreement by the affirmative vote of the holders of
a majority of the outstanding shares of Company Common Stock (the "COMPANY
SHAREHOLDER VOTE"). The execution and delivery of this Agreement and the Stock
Option Agreement by the Company and the consummation by the Company of the
transactions contemplated hereby and thereby have been duly and validly
authorized by all necessary corporate action on the part of the Company, subject
to, with respect to the Merger, the Company Shareholder Vote. This Agreement
has been duly executed and delivered by the Company and, assuming the due
authorization, execution and delivery thereof by Parent and Purchaser,
constitutes the legal, valid and binding obligation of the Company, enforceable
against the Company in accordance with its terms.
SECTION 3.5 NONCONTRAVENTION; FILINGS AND CONSENTS. (a) The
execution and delivery of this Agreement and the Stock Option Agreement by
the Company do not, and, assuming the approval of the Merger by the Company
Shareholder Vote, the performance by the Company of its obligations hereunder
and thereunder and the consummation of the transactions contemplated hereby
and thereby and compliance with the provisions hereof and thereof will not,
(i) conflict with or violate the Certificate of Incorporation or By-laws or
equivalent organizational documents of the Company or any of its
subsidiaries, (ii) assuming that all consents, approvals, orders and
authorizations described in Section 3.5(b) have been obtained and all
registrations, declarations, filings and notifications described in Section
3.5(b) have been made, conflict with or violate any United States federal,
state or local or any foreign statute, law, rule, regulation, ordinance,
code, order, or any other requirement or rule of law (a "LAW"), applicable to
the Company or any subsidiary or by which any property or asset of the
Company or any subsidiary is bound or affected, or (iii) result in any breach
of or constitute a default (or an event which with notice or lapse of time or
both would become a default) under, or give to others any right of
termination, amendment, acceleration or cancellation of, or result in the
creation of a Lien on any property or asset of the Company or any subsidiary
pursuant to, any note, bond, mortgage, indenture, contract, agreement, lease,
license, permit, franchise or other instrument or obligation.
(b) No consent, approval, order or authorization of, or
registration, declaration or filing with, or notice to, any United States
federal, state or local or any foreign government or any court,
administrative or regulatory agency or commission or other governmental
authority or agency, domestic or foreign (a "GOVERNMENTAL ENTITY"), is
required by the Company or any of its subsidiaries in connection with the
execution and delivery of this
7
Agreement or the Stock Option Agreement by the Company, the performance by
the Company of its obligations hereunder and thereunder or the consummation
by the Company of the transactions contemplated hereby and thereby, except
for (i) the filing of a premerger notification and report form by the Company
under the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended
(the "HSR ACT"), and the expiration or termination of the waiting period
thereunder, (ii) the filing with the SEC of (x) a proxy statement relating to
the required approval by the Company's shareholders of this Agreement (as
amended or supplemented from time to time, the "PROXY STATEMENT") and (y)
such reports under Section 13(a) of the Exchange Act as may be required in
connection with this Agreement and the Stock Option Agreement and the
transactions contemplated hereby and thereby, (iii) shareholder approval of
the Merger, and the filing of the applicable Merger Documents with the
Secretary of State of the State of Delaware, and appropriate documents with
the relevant authorities of other states in which the Company is qualified to
do business, (iv) as may be required by any applicable state securities or
"blue sky" laws, (v) the filing of reports with the U.S. Department of
Commerce regarding foreign direct investment in the United States, (vi)
filings with the Colorado Division of Gaming, and prior approval before the
Effective Time by the State of Colorado Limited Gaming Control Commission,
and (vii) filings with, and prior approval before the Effective Time by, the
alcoholic beverage control authorities of the State of Colorado.
SECTION 3.6 SEC DOCUMENTS; FINANCIAL STATEMENTS. The Company and each of
its subsidiaries has filed with the SEC, and has heretofore made available to
Parent true and complete copies of, all forms, reports, schedules, statements
and other documents required to be filed by it since June 7, 1996 under the
Exchange Act or the Securities Act of 1933, as amended (the "SECURITIES ACT")
(such forms, reports, schedules, statements and other documents, including any
financial statements or schedules included therein, are referred to as the
"COMPANY SEC DOCUMENTS"). Each of the Company SEC Documents, at the time it was
filed, (i) did not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they were
made, not misleading and (ii) complied in all material respects with the
applicable requirements of the Exchange Act and the Securities Act, as the case
may be, and the applicable rules and regulations of the SEC thereunder. Except
to the extent that information contained in any Company SEC Document has been
revised or superseded by a subsequently filed Company Filed SEC Document (as
defined in Section 3.7) (a copy of which has been made available to Parent prior
to the date hereof), none of the Company SEC Documents contains an untrue
statement of a material fact or omits to state a material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading. The financial
statements of the Company included in the Company SEC Documents comply as to
form in all material respects with applicable accounting requirements and the
published rules and regulations of the SEC with respect thereto, have been
prepared in accordance with generally accepted accounting principles applied on
a consistent basis during the periods involved (except as may be indicated in
the notes thereto or, in the case of unaudited statements, as
8
permitted by Form 10-Q of the SEC) and fairly present (subject, in the case
of the unaudited statements, to normal, recurring audit adjustments) the
consolidated financial position of the Company and its consolidated
subsidiaries as of the dates thereof and the consolidated results of their
operations and cash flows for the periods then ended.
SECTION 3.7 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except for the
transactions contemplated by this Agreement and except as disclosed in the
Company SEC Documents filed and publicly available prior to the date of this
Agreement (the "COMPANY FILED SEC DOCUMENTS"), since December 31, 1996, the
Company and its subsidiaries have conducted their respective businesses only
in the ordinary course in a manner consistent with past practice, and there
has not been (i) any Material Adverse Change (as defined in Section 9.2(d)),
(ii) any declaration, setting aside or payment of any dividend or other
distribution with respect to the Company's capital stock or any redemption,
purchase or other acquisition of any of its capital stock, (iii) any split,
combination or reclassification of any of its capital stock or any issuance
or the authorization of any issuance of any other securities in respect of,
in lieu of or in substitution for, shares of its capital stock, (iv) (x) any
granting by the Company or any of its subsidiaries to any director, officer,
employee or consultant of the Company or any of its subsidiaries of any
increase in compensation or benefits, (y) any granting by the Company or any
of its subsidiaries to any such director, officer, employee or consultant of
any increase in severance or termination pay, or (z) any entry by the Company
or any of its subsidiaries into any employment, consulting, severance,
termination or indemnification agreement with any such employee or executive
officer, (v) any damage, destruction or loss, whether or not covered by
insurance, that has or reasonably could be expected to have a Material
Adverse Effect (as defined in Section 9.2(d)), (vi) any change in accounting
methods, principles or practices by the Company or (vii) any entry by the
Company or any of its subsidiaries into any commitment or transaction
material to the Company and its subsidiaries taken as a whole.
SECTION 3.8 NO UNDISCLOSED LIABILITIES. Except as and to the
extent set forth in the Company's Annual Report on Form 10-K for the year
ended December 31, 1996 filed with the SEC, as of December 31, 1996, neither
the Company nor any of its subsidiaries had any liabilities or obligations of
any nature, whether or not accrued, contingent or otherwise, that would be
required by generally accepted accounting principles to be reflected on a
consolidated balance sheet of the Company and its subsidiaries (including the
notes thereto). Since December 31, 1996 through and including the date
hereof, except as and to the extent set forth in the Company Filed SEC
Documents, neither the Company nor any of its subsidiaries has incurred any
liabilities of any nature, whether or not accrued, contingent or otherwise,
other than liabilities incurred in the ordinary course of business. The
Company's outstanding liabilities, whether or not accrued, contingent or
otherwise, as of August 22, 1997, do not exceed $61,947,506.
SECTION 3.9 INFORMATION SUPPLIED. None of the information supplied
or to be supplied by the Company for inclusion in the Proxy Statement, will, at
the time the Proxy
9
Statement is first mailed to the Company's shareholders or at the time of the
Company Shareholders Meeting (as defined in Section 6.1), 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
requirements of the Exchange Act and the rules and regulations thereunder,
except that no representation or warranty is made by the Company with respect
to statements made therein based on information supplied by Parent or
Purchaser for inclusion therein.
SECTION 3.10 LITIGATION. Except as disclosed in the Company Filed
SEC Documents, there is no suit, claim, action, proceeding or investigation
(whether judicial, administrative, regulatory, arbitral or otherwise) pending
or, to the knowledge of the Company, threatened against the Company or any of
its subsidiaries. Except as disclosed in the Company Filed SEC Documents,
neither the Company nor any of its subsidiaries is subject to any outstanding
judgment, order, writ, injunction or decree.
SECTION 3.11 LABOR MATTERS. (i) There are no material
controversies pending or, to the knowledge of the Company, threatened between
the Company or any subsidiary and any of their respective employees, (ii)
neither the Company nor any subsidiary is a party to any collective
bargaining agreement or other labor union contract applicable to persons
employed by the Company or any subsidiary, nor, to the knowledge of the
Company, are there any activities or proceedings of any labor union to
organize any such employees, (iii) there are no unfair labor practice
complaints pending against the Company or any subsidiary before the National
Labor Relations Board or any current union representation questions involving
employees of the Company or any subsidiary and (iv) there is no strike,
slowdown, work stoppage or lockout, or, to the knowledge of the Company, any
threat thereof, by or with respect to any employees of the Company or any
subsidiary. The Company and each subsidiary is in material compliance with
all applicable Laws relating to the employment of labor, including, without
limitation, those relating to wages, hours, collective bargaining and the
payment and withholding of taxes and other sums as required by appropriate
Governmental Entities and has withheld and paid to the appropriate
Governmental Entities all amounts required to be withheld from employees of
the Company and its subsidiaries and is not liable for any arrears of wages,
taxes, penalties or other sums for failure to comply with any of the
foregoing.
SECTION 3.12 EMPLOYEE BENEFITS; ERISA. (a) Section 3.12(a) of the
Disclosure Schedule contains a list of all "employee pension benefit plans"
(as defined in Section 3(2) of the Employee Retirement Income Security Act of
1974, as amended ("ERISA")) (sometimes referred to herein as "PENSION
PLANS"), "employee welfare benefit plans" (as defined in Section 3(1) of
ERISA) (sometimes referred to herein as "WELFARE PLANS"), and each other
material plan, material arrangement or material policy (written or oral)
providing for bonuses, pensions, profit sharing, stock options, stock
purchases, compensation, deferred compensation, incentive compensation,
severance, change in control benefit,
10
disability, retiree medical or life insurance, supplemental retirement, death
benefits, hospitalization, medical or dental benefits, fringe benefits or
other employee benefits, in each case maintained, or contributed to, by the
Company or any of its subsidiaries or any other person or entity that,
together with the Company is treated as a single employer (each, together
with the Company, a "COMMONLY CONTROLLED ENTITY") under Section 414(b), (c),
(m) or (o) of the Internal Revenue Code of 1986, as amended (the "CODE"), for
the benefit of any current or former employees, officers, consultants, agents
or directors of the Company or any of its subsidiaries (all of the foregoing
being herein called "BENEFIT PLANS"). The Company has delivered to Parent
true and complete copies of (i) each Benefit Plan (or, in the case of any
unwritten Benefit Plans, descriptions thereof), (ii) the most recent annual
report on Form 5500 (and related schedules and financial statements or
opinions required in connection therewith) filed with the Internal Revenue
Service (the "IRS") with respect to each Benefit Plan (if any such report was
required), (iii) the most recent actuarial report and financial statement
with respect to each Benefit Plan, as applicable, (iv) the most recent
summary plan description (or similar document) for each Benefit Plan for
which a summary plan description is required or was otherwise provided to
plan participants or beneficiaries, (v) the most recent IRS determination
letter, if any, for each Benefit Plan and (vi) each trust agreement and group
annuity contract relating to any Benefit Plan.
(b) All Pension Plans and related trusts that are intended to be
tax-qualified plans have been the subject of determination letters from the
IRS to the effect that such Pension Plans and related trusts are qualified
and exempt from federal income taxes under Sections 401(a) and 501(a),
respectively, of the Code (including the Tax Reform Act of 1986), and no such
determination letter has been revoked nor, to the knowledge of the Company,
has revocation been threatened; no event has occurred and no circumstances
exist that would adversely affect or would reasonably be likely to adversely
affect the tax qualification of such Pension Plan nor has any such Pension
Plan been amended since the date of its most recent determination letter or
application therefor in any respect that would adversely affect or would
reasonably be likely to adversely affect its qualification or materially
increase its costs or require security under Section 302 of ERISA.
(c) Each Benefit Plan has been administered in all material
respects in accordance with its terms. The Benefit Plans are, and have been
operated, in compliance in all material respects with the applicable
provisions of ERISA, the Code and all other applicable Laws. All material
contributions or payments required to be made to or in respect of the Benefit
Plans has been timely made or provided for or properly accrued. There are no
unfunded benefit obligations under the Benefit Plans which have not been
accounted for by reserves, or otherwise properly footnoted in accordance with
generally accepted accounting principles, on the consolidated financial
statements of the Company and its subsidiaries. No Benefit Plan has incurred
an "accumulated funding deficiency" (within the meaning of Section 302 of
ERISA or Section 412 of the Code), whether or not waived. All contributions,
premiums or payments required to be made with respect to any Benefit Plan are
fully deductible for income tax purposes and no such deduction previously
claimed has been
11
challenged by any Governmental Entity; PROVIDED, HOWEVER, that no benefits
under any nonqualified pension or deferred compensation plan are deductible
until actually paid. There are no investigations by any Governmental Entity,
termination proceedings or other claims (except claims for benefits payable
in the normal operation of the Benefit Plans), suits or proceedings against
or involving any Benefit Plan or asserting any rights to or claims for
benefits under any Benefit Plan that could give rise to any material
liability, and there are not any facts or circumstances that would reasonably
be expected to give rise to any material liability in the event of any such
investigation, claim, suit or proceeding.
(d) No Commonly Controlled Entity is required to contribute to any
"multiemployer plan" as defined in Section 4001(a)(3) of ERISA or has withdrawn
or expects to withdraw from any such multiemployer plan where such withdrawal
has resulted or would result in any material "withdrawal liability" (within the
meaning of Section 4201 of ERISA) that has not been fully paid. None of the
Company, any of its subsidiaries, any officer of the Company or any of its
subsidiaries or any of the Benefit Plans which are subject to ERISA, including
the Pension Plans, any trusts created thereunder or any trustee or administrator
thereof, has engaged in a "prohibited transaction" (as such term is defined in
Section 406 of ERISA or Section 4975 of the Code) or any other breach of
fiduciary responsibility that could subject the Company, any of its subsidiaries
or any officer of the Company or any of its subsidiaries to any material tax or
penalty on prohibited transactions imposed by such Section 4975 of ERISA or to
any material liability under Section 502(i) or (1) of ERISA. Neither any of
such Benefit Plans nor any of such trusts has been terminated, nor has there
been, nor is there expected to be, any "reportable event" (as that term is
defined in Section 4043 of ERISA) as to which notice would be required with the
Pension Benefit Guaranty Corporation (the "PBGC") with respect thereto, during
the last five years.
(e) No Commonly Controlled Entity has or reasonably expects to incur
liability under Title IV of ERISA (other than for the payment of premiums, none
of which are overdue). Each Benefit Plan subject to Title IV of ERISA is fully
funded in accordance with the actuarial assumptions used by the PBGC to
determine the level of funding required in the event of the termination of such
plan. No Commonly Controlled Entity has completely or partially terminated a
plan subject to Title IV of ERISA within the last five years. None of the
assets of the Company or any subsidiary is the subject of any lien arising under
Section 302 of ERISA or Section 412(n) of the Code; neither the Company nor any
subsidiary has been required to post any security under Section 307 of ERISA or
Section 401(a)(29) of the Code; and no fact or event exists which could give
rise to any such lien or requirement to post any such security.
(f) No employee of the Company or any of its subsidiaries will be
entitled to any additional benefits or any acceleration of the time of payment
or vesting of any benefits under any Benefit Plan as a result of the
transactions contemplated by this Agreement. No amount paid or payable by the
Company or any of its subsidiaries in connection with the transactions
contemplated hereby (either solely as a result thereof or as a result of any
12
transactions in conjunction with any other event) will be an "excess
parachute payment" within the meaning of Section 280G of the Code.
(g) The Company and its subsidiaries have not incurred any
liability under, and have complied in all respects with, the Worker
Adjustment Retraining Notification Act and the rules and regulations
promulgated thereunder ("WARN") and do not reasonably expect to incur any
such liability as a result of actions taken or not taken prior to the
Effective Time. The Company will advise Parent and Purchaser in writing of
any material terminations, layoffs and reductions in hours from the date
hereof through the Effective Time and will provide Parent and Purchaser with
any related information that they may reasonably request.
(h) Since December 31, 1996 there has not been any adoption or
amendment in any material respect by the Company or any of its subsidiaries of
any Benefit Plan.
(i) There exist no employment, consulting, severance, termination
or indemnification agreements, arrangements or understandings between the
Company or any of its subsidiaries and any current or former employee,
officer, director or consultant of the Company or any of its subsidiaries,
and there is no oral or written understanding or arrangement to enter into
any such agreement with any such individual.
(j) The Commonly Controlled Entities have complied in all material
respects with the requirements of Part 6 of Subtitle B of Title I of ERISA
and of Code Section 4980B. Except for coverage described in the preceding
sentence or as disclosed in Section 3.12(j) of the Disclosure Schedule,
neither the Company nor any of its subsidiaries has any liability for life,
health, medical or other welfare plans to former employees or beneficiaries.
SECTION 3.13 TAXES. The Company and each of its subsidiaries has
filed all federal, state, local and foreign tax returns and reports required
to be filed by it. All such returns and reports are complete and correct in
all material respects. The Company and each of its subsidiaries has paid (or
the Company has paid on its subsidiaries' behalf) all taxes required to be
paid by it, and the most recent financial statements contained in the Company
Filed SEC Documents reflect reserves sufficient to cover all taxes payable by
the Company and its subsidiaries for all taxable periods and portions thereof
through the date of such financial statements. No deficiencies for any taxes
have been proposed, asserted or assessed against the Company or any of its
subsidiaries, and no requests for waivers of the time to assess any such
taxes are pending. The federal income tax returns of the Company and each of
its subsidiaries consolidated in such returns have been examined by and
settled with the IRS for all years through December 31, 1993. As used in
this Agreement, "TAXES" shall include all federal, state, local and foreign
income, property, sales, excise and other taxes, tariffs or governmental
charges of any nature whatsoever.
SECTION 3.14 COMPLIANCE WITH APPLICABLE LAWS. The Company and its
subsidiaries and affiliates hold all permits, licenses, variances, exemptions,
orders and
13
approvals of all Governmental Entities, including but not limited to the
Colorado Division of Gaming and the State of Colorado Limited Gaming Control
Commission, necessary for the lawful conduct of their respective businesses
(the "COMPANY PERMITS"). The Company and its subsidiaries are in compliance
in all material respects with the terms of the Company Permits. Except as
disclosed in the Company Filed SEC Documents, to the knowledge of the
Company, the businesses of the Company and its subsidiaries are not being
conducted in violation of any Law. Except as set forth in the Company Filed
SEC Documents, as of the date of this Agreement, no investigation or review
by any Governmental Entity with respect to the Company or any of its
subsidiaries or any Company Permits is pending or, to the knowledge of the
Company, threatened.
SECTION 3.15 ENVIRONMENTAL MATTERS. Neither the Company nor any
of its subsidiaries has (i) placed, held, located, released, transported or
disposed of any Hazardous Substances (as defined below) on, under, from or at
any of the Company's or any of its subsidiaries' properties or any other
properties, (ii) any knowledge or reason to know of the presence of any
Hazardous Substances on, under or at any of the Company's or any of its
subsidiaries' properties, or (iii) received any written notice (A) of any
violation of or liability under any Law relating to any matter of pollution,
protection of the environment or natural resources, environmental regulation
or control or regarding Hazardous Substances (collectively, "ENVIRONMENTAL
LAWS") on, under or emanating from any of the Company's or any of its
subsidiaries' current or former properties or operations or any other
properties, (B) of the institution or pendency of any suit, action, claim,
proceeding or investigation by any Governmental Entity or any third party in
connection with any such violation or liability, (C) requiring the response
to or remediation of Hazardous Substances at or arising from any of the
Company's or any of its subsidiaries' current or former properties or
operations or any other properties, (D) alleging noncompliance by the Company
or any of its subsidiaries with the terms of any permit required under any
Environmental Law in any manner reasonably likely to require material
expenditures or to result in material liability or (E) demanding payment for
response to or remediation of Hazardous Substances at or arising from any of
the Company's or any of its subsidiaries' current or former properties or
operations. For purposes of this Agreement, the term "HAZARDOUS SUBSTANCE"
shall mean any toxic or hazardous materials or substances, including
asbestos, buried contaminants, chemicals, flammable explosives, radioactive
materials, petroleum and petroleum products, chemicals and products used in
or associated with the mining, extraction or refining of minerals and any
substances defined or regulated as a pollutant or contaminant under any
Environmental Law.
SECTION 3.16 REAL PROPERTY. (a) Section 3.16(a) of the
Disclosure Schedule sets forth a true and complete list of all the real
property owned by the Company and its subsidiaries (the "OWNED REAL
PROPERTY").
(b) Section 3.16(b) of the Disclosure Schedule sets forth a true and
complete list of the real property leased by the Company and the Subsidiaries
(the "LEASED REAL PROPERTY" and, together with the Owned Real Property, the
"REAL PROPERTY").
14
(c) The Company and its subsidiaries have sufficient title to all
their properties and assets, both real and personal, to conduct their
respective businesses as currently conducted or as contemplated to be
conducted.
(d) Each parcel of Real Property (i) is owned or leased free and
clear of all Liens, and (ii) is neither subject to any governmental decree or
order to be sold nor is being condemned, expropriated or otherwise taken by
any public authority with or without payment of compensation therefor, nor,
to the knowledge of the Company, has any such condemnation, expropriation or
taking been proposed.
(e) All leases of real property leased for the use or benefit of
the Company or any subsidiary to which the Company or any subsidiary is a
party, and all amendments and modifications thereto, are in full force and
effect and have not been modified or amended, and there exists no default
under any such lease by the Company or any subsidiary, nor any event which
with notice or lapse of time or both would constitute a default thereunder by
the Company or any subsidiary.
SECTION 3.17 INTELLECTUAL PROPERTY. The Company and its
subsidiaries own, or are validly licensed or otherwise have the legal right
to use, all patents, patent rights, trademarks, trade names, service marks,
copyrights, know-how and other proprietary intellectual property rights and
computer programs (collectively, "INTELLECTUAL PROPERTY RIGHTS") that are
material to the conduct of the business of the Company and its subsidiaries.
Section 3.17 of the Disclosure Schedule sets forth a description of all
Intellectual Property Rights that are material to the conduct of the business
of the Company and its subsidiaries. No claims are pending or, to the
knowledge of the Company, threatened that the Company or any of its
subsidiaries is infringing or otherwise adversely affecting the rights of any
person with regard to any Intellectual Property Right, and the Company is not
aware of any basis for any such claims. To the knowledge of the Company, no
person is infringing the rights of the Company or any of its subsidiaries
with respect to any material Intellectual Property Right.
SECTION 3.18 INSURANCE. The Company and its subsidiaries have
obtained and maintained in full force and effect public liability insurance,
insurance against claims for personal injury or death or property damage
occurring in connection with the activities of the Company or its
subsidiaries or any properties owned, occupied or controlled by the Company
or its subsidiaries and other insurance, in each case, with responsible and
reputable insurance companies or associations in such amounts, on such terms
and covering such risks as is customary in the business engaged in by the
Company.
SECTION 3.19 STATE TAKEOVER STATUTES. To the knowledge of the
Company, no state takeover statute or similar statute applies or purports to
apply to the Merger, this Agreement or the Stock Option Agreement or any of
the transactions contemplated by this Agreement or the Stock Option Agreement.
15
SECTION 3.20 BROKERS. No broker, investment banker, financial
advisor or other person, other than CIBC Wood Gundy Securities Corp. and
UniRock Management Corporation, the fees and expenses of which will be paid
by the Company, is entitled to any broker's, finder's, financial advisor's or
other similar fee or commission in connection with the transactions
contemplated by this Agreement based upon arrangements made by or on behalf
of the Company. The Company has provided Parent true and correct copies of
the agreement between the Company and CIBC Wood Gundy Securities Corp. and
UniRock Management Corporation.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND PURCHASER
Parent and Purchaser hereby, jointly and severally, represent and
warrant to the Company as follows:
SECTION 4.1 ORGANIZATION. Each of Parent and Purchaser is a
corporation duly organized, validly existing and in good standing under the
laws of the jurisdiction of its incorporation.
SECTION 4.2 AUTHORITY. Each of Parent and Purchaser has all
requisite corporate power and authority to execute and deliver this
Agreement, to perform its obligations hereunder and thereunder and to
consummate the transactions contemplated hereby and thereby. The execution
and delivery of this Agreement by Parent and Purchaser and the consummation
by Parent and Purchaser of the transactions contemplated hereby have been
duly and validly authorized by all necessary corporate action on the part of
Parent and Purchaser. This Agreement has been duly and validly executed and
delivered by Parent and Purchaser and, assuming the due authorization,
execution and delivery thereof by the Company, constitutes the legal, valid
and binding obligation of Parent and Purchaser, enforceable against each of
Parent and Purchaser in accordance with its terms.
SECTION 4.3 NONCONTRAVENTION; FILINGS AND CONSENTS. (a) The
execution and delivery of this Agreement and the Stock Option Agreement by
Parent and Purchaser as applicable do not, and the performance by Parent and
Purchaser of their respective obligations hereunder and thereunder and the
consummation of the transactions contemplated hereby and thereby and
compliance with the provisions hereof and thereof will not, (i) conflict with
or violate the certificate of incorporation or by-laws or equivalent
organizational documents of Parent or Purchaser, (ii) assuming that all
consents, approvals, orders and authorizations described in Section 4.3(b)
have been obtained and all registrations, declarations, filings and
notifications described in Section 4.3(b) have been made, conflict with or
violate any Law applicable to Parent or Purchaser or by which any property or
asset of Parent or Purchaser is bound or affected or (iii) result in any
breach of or constitute a default (or an event which with notice or lapse of
time or both would become a default) under, or give to others any right of
16
termination, amendment, acceleration or cancellation of, or result in the
creation of a Lien on any property or asset of Parent or Purchaser pursuant
to, any note, bond, mortgage, indenture, contract, agreement, lease, license,
permit, franchise or other instrument or obligation, other than, in the case
of clauses (ii) and (iii), any such conflicts, violations, breaches,
defaults, rights or Liens that would not prevent or materially delay the
consummation of the transactions contemplated by this Agreement or the Stock
Option Agreement or the performance by Parent or Purchaser of any of their
respective material obligations hereunder or thereunder.
(b) No consent, approval, order or authorization of, or
registration, declaration or filing with, or notice to, any Governmental
Entity is required by Parent or Purchaser in connection with the execution
and delivery of this Agreement or the Stock Option Agreement by Parent and
Purchaser, the performance by Parent and Purchaser of their respective
obligations hereunder and thereunder or the consummation by Parent or
Purchaser of any of the transactions contemplated hereby and thereby, except
for (i) the filing of a premerger notification and report form under the HSR
Act, and the expiration or termination of the waiting period thereunder, (ii)
the filing with the SEC of such reports under the Exchange Act as may be
required in connection with this Agreement or the Stock Option Agreement and
the transactions contemplated hereby and thereby, (iii) shareholder approval
of the Merger and the filing of the applicable Merger Documents with the
Secretary of State of the State of Delaware, and the filing of appropriate
documents with the relevant authorities of other states in which the Company
is qualified to do business, (iv) as may be required by any applicable state
securities or "blue sky" laws, (v) the filing of reports with the U.S.
Department of Commerce regarding foreign direct investment in the United
States, (vi) filings with the Colorado Division of Gaming and prior approval
before the Effective Time by the State of Colorado Limited Gaming Control
Commission, (vii) filings with, and prior approval before the Effective Time
by, the alcoholic beverage control authorities of the State of Colorado, and
(viii) such other consents, approvals, orders, authorizations, registrations,
declaration, filings and notices the failure of which to be obtained or made
would not prevent or materially delay the consummation of the transactions
contemplated by this Agreement or the Stock Option Agreement or the
performance by Parent or Purchaser of any of their respective material
obligations hereunder or thereunder.
SECTION 4.4 INFORMATION SUPPLIED. None of the information to be
supplied by Parent or Purchaser for inclusion in the Proxy Statement will, at
the time the Proxy Statement is first mailed to the Company's shareholders or
at the time of the Company Shareholders Meeting, contain any untrue statement
of a material fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading.
SECTION 4.5 FINANCING. Parent and Purchaser have funds available
sufficient to consummate the Merger on the terms contemplated by this Agreement.
17
SECTION 4.6 INTERIM OPERATIONS OF PURCHASER. Purchaser was formed
solely for the purpose of engaging in the transactions contemplated by this
Agreement and has not engaged in any business activities or conducted any
operations other than in connection with the transactions contemplated hereby.
SECTION 4.7 LITIGATION. There is no suit, claim, action,
proceeding or investigation (whether judicial, administrative, regulatory,
arbitral or otherwise) pending or, to the knowledge of Parent, threatened
against Parent or Purchaser that could reasonably be expected to prevent or
materially delay the consummation of the transactions contemplated by this
Agreement or the Stock Option Agreement or the performance by Parent and
Purchaser of their respective obligations hereunder and thereunder. Neither
Parent nor Purchaser is subject to any outstanding judgment, order, writ,
injunction or decree that could reasonably be expected to prevent or
materially delay the consummation of the transactions contemplated by this
Agreement or the Stock Option Agreement or the performance by Parent and
Purchaser of their respective obligations hereunder and thereunder.
SECTION 4.8 BROKERS. No broker, investment banker, financial
advisor or other person is entitled to any broker's, finder's, financial
advisor's or other similar fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by
or on behalf of Parent or Purchaser.
ARTICLE V
COVENANTS OF THE COMPANY
SECTION 5.1 CONDUCT OF BUSINESS. Until the Effective Time, the Company
agrees (except as expressly permitted by this Agreement, the Stock Option
Agreement or to the extent that Parent shall otherwise consent in writing) as
follows:
(a) ORDINARY COURSE. The Company shall and shall cause its
subsidiaries to carry on their respective businesses in the usual, regular
and ordinary course in substantially the same manner as heretofore
conducted and shall use all reasonable efforts to preserve intact their
present business organizations, keep available the services of their
present officers and employees and preserve their relationships with
customers, suppliers and others having business dealings with the Company
and its subsidiaries.
(b) DIVIDENDS; CHANGES IN STOCK. The Company shall not, and shall
not permit any of its subsidiaries to, (i) declare or pay any dividends on
or make other distributions in respect of any of its capital stock, except
dividends by a direct or indirect wholly owned subsidiary of the Company to
its parent, (ii) split, combine or reclassify any of its capital stock or
issue or authorize or propose the issuance of any other securities in
respect of, in lieu of or in substitution for shares of its capital stock
18
or (iii) repurchase, redeem or otherwise acquire any shares of capital
stock of the Company or its subsidiaries or any other securities thereof
or any rights, warrants or options to acquire any such shares or other
securities.
(c) ISSUANCE OF SECURITIES. The Company shall not, and shall not
permit any of its subsidiaries to, issue, deliver, sell, pledge or
encumber, or authorize or propose the issuance, delivery, sale, pledge or
encumbrance of, any shares of its capital stock of any class or any
securities convertible into, or any rights, warrants, calls, subscriptions
or options to acquire, any such shares or convertible securities, or any
other ownership interest other than the issuance of shares of Company
Common Stock pursuant to the Stock Plans but only with respect to
allocations outstanding on the date hereof.
(d) GOVERNING DOCUMENTS. The Company shall not, and shall not permit
any of its subsidiaries to, amend or propose to amend its Certificate of
Incorporation or By-Laws (or comparable organizational documents).
(e) NO ACQUISITIONS. The Company shall not, and shall not permit any
of its subsidiaries to, acquire or agree to acquire (i) by merging or
consolidating with, or by purchasing a substantial equity interest in all
or a substantial portion of the assets of, or by any other manner, any
business or any corporation, partnership, limited liability company,
association or other business organization or division thereof or (ii) any
assets that are material, individually or in the aggregate, to the Company
and its subsidiaries taken as a whole, except purchases of inventory and
supplies in the ordinary course of business consistent with past practice;
PROVIDED, HOWEVER, that the Company shall be permitted to engage in any or
all of the transactions identified in Section 5.1(e) of the Disclosure
Schedule but only after having received the prior written consent of Parent
to the final terms of any such transaction, which consent shall not be
unreasonably withheld or delayed.
(f) NO DISPOSITIONS. The Company shall not, and shall not permit any
of its subsidiaries to, sell, lease, license, encumber or otherwise dispose
of, or agree to sell, lease, license, encumber or otherwise dispose of, any
of its assets other than the sale or disposition of unnecessary, obsolete,
or worn-out equipment in the ordinary course of business.
(g) CAPITAL EXPENDITURES. The Company shall not, nor shall the
Company permit any of its subsidiaries to, make or agree to make any
capital expenditures or incur any obligations under capital or financing
leases in the aggregate in excess of $2 million during the remainder of the
Company's current fiscal year and $1 million per fiscal quarter thereafter.
(h) INDEBTEDNESS. The Company shall not, and shall not permit any of
its subsidiaries to, incur any indebtedness for borrowed money or guarantee
any such
19
indebtedness or issue or sell any debt securities or warrants or
rights to acquire any debt securities of the Company or any of its
subsidiaries or guarantee any debt securities of others except in the
ordinary course and pursuant to credit agreements existing on the date
hereof or any extensions, renegotiations, renewals or replacements
therefor; PROVIDED, HOWEVER, that all such indebtedness shall be prepayable
at the option of the Company without premium or penalty but may provide for
termination fees of the type contained in the Company's credit agreements
existing on the date hereof.
(i) TAX MATTERS. The Company shall not make any tax election that
would have a material effect on the tax liability of the Company or settle
or compromise any income tax liability of the Company of any of its
subsidiaries that would materially affect the aggregate tax liability of
the Company or any of its subsidiaries. The Company shall, before filing
or causing to be filed any material tax return of the Company or any of its
subsidiaries, consult with Parent and its advisors as to the positions and
elections that may be taken or made with respect to such return.
(j) DISCHARGE OF LIABILITIES. Without the prior written consent of
Parent, which consent will not be unreasonably withheld or delayed, the
Company shall not, and shall not permit any of its subsidiaries to, pay,
discharge, settle or satisfy any claims, liabilities or obligations
(absolute, accrued, asserted or unasserted, contingent or otherwise), other
than the payment, discharge or satisfaction, in the ordinary course of
business, consistent with past practice or in accordance with their terms,
of liabilities recognized or disclosed in the most recent consolidated
financial statements of the Company included in the Company Filed SEC
Documents or incurred since the date of such financial statements in the
ordinary course of business consistent with past practice, or waive the
benefits of, or agree to modify in any manner, any confidentiality,
standstill or similar agreement to which the Company or any of its
subsidiaries is a party.
(k) MATERIAL CONTRACTS. Except in the ordinary course of business
and consistent with past practices, the Company shall not, and shall not
permit any of its subsidiaries to, enter into, modify, amend or terminate
any lease or other agreement, instrument, permit, concession, franchise or
license which is material to the Company and its subsidiaries or waive,
release or assign any material rights or claims other than operating leases
for equipment and other agreements having a term of, or being terminable by
the Company without penalty within, one year or less; provided, however,
that the Company shall be permitted to enter into material agreements in
connection with any or all of the transactions identified in Section 5.1(e)
of the Disclosure Schedule but only after having received the prior written
consent of Parent to the final terms of any such material agreement, which
consent shall not be unreasonably withheld or delayed.
20
(l) EMPLOYEE BENEFITS. The Company shall not, and shall not permit
any of its subsidiaries to, (i) grant any increase in the compensation of
any of its directors, officers or employees, except for increases for
employees, other than officers, in the ordinary course of business
consistent with past practice, (ii) pay or agree to pay any pension,
retirement allowance or other employee benefit not required or
contemplated by any of the existing Benefit Plans as in effect on the date
hereof to any director, officer or employee, (iii) enter into any new
employment, severance or termination agreement with any director, officer
or employee or (iv) except as may be required to comply with applicable
Law, become obligated under any Benefit Plan which was not in existence
on the date hereof or amend any such plan in existence on the date hereof.
(m) ACCOUNTING MATTERS. The Company shall not, and shall not permit
any of its subsidiaries to, 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 (including,
without limitation, procedures with respect to the payment of accounts
payable and collection of accounts receivable).
SECTION 5.2 OTHER ACTIONS. (a) The Company shall not, and shall
not permit any of its subsidiaries to, take any action that would, or that
would reasonably be expected to, result in (i) any of the representations and
warranties of the Company set forth in this Agreement that are qualified as
to materiality becoming untrue, (ii) any of such representations and
warranties that are not so qualified becoming untrue in any material respect,
(iii) any of the conditions to the Merger set forth in Article VII, not being
satisfied or (iv) a Material Adverse Effect.
(b) The Company shall promptly advise Parent of any change or
event having, or which, insofar as can reasonably be foreseen, could have, a
Material Adverse Effect.
SECTION 5.3 NO SOLICITATION. (a) The Company shall, and shall
cause its subsidiaries and their respective officers, directors, employees,
consultants, investment bankers, accountants, attorneys and other advisors,
representatives and agents ("COMPANY REPRESENTATIVES") to immediately cease
any discussions or negotiations with any parties that may be ongoing with
respect to any "Acquisition Proposal" (as defined below). The Company shall
not, nor shall it permit any of its subsidiaries to, nor shall it authorize
or permit any Company Representative to, directly or indirectly, (i) solicit
or initiate, or encourage the submission of, any Acquisition Proposal or (ii)
participate in any discussions or negotiations regarding, or furnish to any
person any information with respect to any proposal that constitutes, or may
reasonably be expected to lead to, an Acquisition Proposal; PROVIDED,
HOWEVER, that if, prior to the approval of the Merger by the shareholders of
the Company, the Board of Directors of the Company determines in good faith,
based upon written advice of independent counsel who is not an employee of
the Company, that not to do so would be inconsistent with its fiduciary
duties to the Company's shareholders under applicable Law, the
21
Company may, in response to an unsolicited Acquisition Proposal, and subject
to compliance with Section 5.3(c), (x) furnish information with respect to
the Company pursuant to a customary confidentiality agreement and (y)
participate in discussions or negotiations regarding such Acquisition
Proposal. Without limiting the foregoing, it is understood that any
violation of the restrictions set forth in the preceding sentence by any
subsidiary of the Company or any Company Representative, whether or not such
person is purporting to act on behalf of the Company or any of its
subsidiaries or otherwise, shall be deemed to be a breach of this Section
5.3(a) by the Company. For purposes of this Agreement, "ACQUISITION
PROPOSAL" means any proposal or offer from any person relating to any direct
or indirect acquisition or purchase of all or a substantial part of the
assets of the Company or any of its subsidiaries or of over 25% of any class
of equity securities of the Company or any of its subsidiaries, any tender
offer or exchange offer that if consummated would result in any person
beneficially owning 25% or more of any class of equity securities of the
Company or any of its subsidiaries, any merger, consolidation, business
combination, sale of all or substantially all the assets, recapitalization,
liquidation, dissolution or similar transaction involving the Company or any
of its subsidiaries, other than the transactions contemplated by this
Agreement.
(b) Except as set forth in this Section 5.3, neither the Board of
Directors of the Company nor any committee thereof shall (i) withdraw or
modify, or propose to withdraw or modify, in a manner adverse to Parent, the
approval or recommendation by the Board of Directors or any such committee of
this Agreement or the Merger, (ii) approve or recommend, or propose to
approve or recommend, any Acquisition Proposal or (iii) enter into any
agreement with respect to any Acquisition Proposal. Notwithstanding the
foregoing, in the event that, prior to the approval of the Merger by the
shareholders of the Company, the Board of Directors of the Company determines
in good faith, based upon advice of independent counsel who is not an
employee of the Company, that it is necessary to do so in order to comply
with its fiduciary duties to the Company's shareholders under applicable Law,
the Board of Directors of the Company may (subject to this and the following
sentences) (x) withdraw or modify (or propose to withdraw or modify) its
approval or recommendation of the Merger and this Agreement or (y) approve or
recommend (or propose to approve or recommend) a Superior Proposal (as
defined below) or terminate (or propose to terminate) this Agreement (and
concurrently with or after such termination, if it so chooses, cause the
Company to enter into an agreement with respect to any Superior Proposal),
but in any case, only at a time that is at least [fifteen] days after
Parent's receipt of written notice (a "NOTICE OF SUPERIOR PROPOSAL") advising
Parent that the Board of Directors of the Company has received a Superior
Proposal. The Notice of Superior Proposal shall specify the amount and type
of consideration to be paid and such other terms and conditions of the
Superior Proposal as the Company determines in good faith to be material and
identifying the person making such Superior Proposal. For purposes of this
Agreement, a "SUPERIOR PROPOSAL" means any bona fide proposal made by a third
party to acquire, directly or indirectly, for consideration consisting of
cash and/or securities, all of the shares of Company Common Stock then
outstanding or all or substantially all the assets of the Company and
otherwise on terms which the Board of Directors of the Company determines in
its good faith judgment (based on the
22
advice of a financial advisor of nationally recognized reputation) to be more
favorable to the Company's shareholders than the Merger and for which
financing, to the extent required, is then committed.
(c) In addition to the obligations of the Company set forth in
paragraphs (a) and (b) of this Section 5.3, the Company shall promptly advise
Parent orally and in writing of the Company's receipt of any Acquisition
Proposal, specifying the amount and type of consideration proposed to be paid
and all other material terms and conditions of such proposal, and any request
for information that may reasonably be expected to lead to or is otherwise
related to any such Acquisition Proposal and the identity of the person
making such request or Acquisition Proposal. The Company will keep Parent
informed on a reasonable basis of the status and details (including
amendments) of any such request or Acquisition Proposal.
(d) During the [fifteen] day period after receipt by Parent of any
notice given pursuant to Section 5.3(b) with respect to an Acquisition
Proposal which constitutes a Superior Proposal, Parent may, but shall not be
obligated to, propose in writing to the Company amendments to this Agreement
and the Merger which would meet or exceed the terms and conditions of such
Superior Proposal (a "Notice of Amendment"). Upon receipt of any such Notice
of Amendment, the Company shall enter into such amendments to this Agreement
and the Merger as shall be necessary to reflect the terms proposed by Parent
and, if and to the extent required, shall amend or supplement the Proxy
Statement to reflect any such amendments to this Agreement and the Merger.
Immediately following the execution by the Company and Parent of the
amendments to this Agreement and the Merger contemplated by this Section
5.3(d), the Company shall notify the person submitting the Superior Proposal
that such proposal is rejected and shall proceed to consummate the Merger and
the other transactions contemplated by this Agreement in accordance with the
terms hereof as so amended. Following the rejection of any Superior Proposal
pursuant to this Section 5.3(d), the Company and the Company Representatives
shall be bound by the provisions of this Section 5.3 with respect to any
subsequent Acquisition Proposal, including without limitation Parent's rights
hereunder to propose subsequent amendments to this Agreement and the Merger
in response to any subsequent Superior Proposal.
SECTION 5.4 OPINION OF FINANCIAL ADVISOR. The Company shall
receive, by no later than September 5, 1997, an opinion from CIBC Wood Gundy
Securities Corp. to the effect that, as of the date of this Agreement, the
consideration to be received in the Merger by the Company's shareholders is
fair to the Company's shareholders from a financial point of view, and a true
and correct signed copy of such opinion, promptly upon receipt thereof, shall
be delivered to Parent.
23
ARTICLE VI
ADDITIONAL AGREEMENTS
SECTION 6.1 SHAREHOLDERS MEETING; PREPARATION OF THE PROXY
STATEMENT. (a) The Company shall as soon as practicable following the
execution of this Agreement, duly call, give notice of, convene and hold a
meeting of its shareholders (the "COMPANY SHAREHOLDERS MEETING") for the
purpose of approving this Agreement. Subject to the provisions of Section
5.3(b), the Company shall, through its Board of Directors, recommend to its
shareholders approval of this Agreement.
(b) The Company shall as soon as practicable prepare and file a
preliminary Proxy Statement with the SEC. The Company and Parent will
cooperate in responding to any comments of the SEC or its staff and the
Company shall cause the Proxy Statement to be mailed to the Company's
shareholders as promptly as practicable after responding to all such comments
to the satisfaction of the staff. The Company shall notify Parent promptly
of the receipt of any comments from the SEC or its staff and of any request
by the SEC or its staff for amendments or supplements to the Proxy Statement
or for additional information and will supply Parent with copies of all
correspondence between the Company or any of the Company Representatives, on
the one hand, and the SEC or its staff, on the other hand, with respect to
the Proxy Statement or the Merger. If at any time prior to the Company
Shareholders Meeting there shall occur any event that should be set forth in
an amendment or supplement to the Proxy Statement, the Company shall promptly
prepare (and if relating to Parent, Parent will also promptly cooperate with
the Company in preparing) and mail to its shareholders such an amendment or
supplement. The Company will not file or mail any Proxy Statement, or any
amendment or supplement thereto, to which Parent reasonably objects.
SECTION 6.2 ACCESS TO INFORMATION; CONFIDENTIALITY. The Company
shall afford to Parent, and to Parent's officers, directors, employees,
consultants, investment bankers, accountants, counsel and other advisors,
representatives and agents, reasonable access during normal business hours
during the period prior to the Effective Time to all the properties, books,
contracts, commitments and records of the Company and its subsidiaries and,
during such period, the Company shall furnish promptly to Parent (a) a copy
of each report, schedule, registration statement and other document filed by
it or its subsidiaries during such period pursuant to the requirements of
federal or state securities laws and (b) all other information concerning its
or its subsidiaries' business, properties and personnel as Parent or any of
its officers, directors, employees, consultants, investment bankers,
accountants, counsel or other advisors, representatives or agents may
reasonably request. All information disclosed and designated in writing as
confidential by any party (or its representatives) whether before or after
the date hereof, in connection with the transactions contemplated by, or the
discussions and negotiations preceding, this Agreement to any other party (or
its representatives) shall be kept confidential by such other party and its
representatives and shall not be used by any such persons other than as
contemplated by this Agreement, except to the extent that such
24
information (i) was known by the recipient when received, (ii) is or
hereafter becomes lawfully obtainable from other sources, (iii) is necessary
or appropriate to disclose to a Governmental Entity having jurisdiction over
the disclosing party, (iv) as may otherwise be required by law or (v) to the
extent such duty as to confidentiality is waived in writing by the other
party. If this Agreement is terminated in accordance with its terms, each
party shall use all reasonable efforts to return upon written request from
the other party all documents (and reproductions thereof) received by it or
its representatives from such other party (and, in the case of reproductions,
all such reproductions made by the receiving party) that include information
not within the exceptions contained herein, unless the recipients provide
assurances reasonably satisfactory to the requesting party that such
documents have been destroyed. No investigation pursuant to this Section 6.2
shall affect any representation or warranty in this Agreement of any party
hereto or any condition to the obligations of the parties hereto.
SECTION 6.3 REASONABLE EFFORTS. Each of the Company, Parent and
Purchaser agree to use all commercially reasonable efforts to take, or cause
to be taken, all actions necessary to comply promptly with all legal
requirements that may be imposed with respect to the Merger (which actions
shall include furnishing all information required under the HSR Act and in
connection with approvals by the State of Colorado Limited Gaming Control
Commission or filings with the Colorado Division of Gaming or any other
Governmental Entity) and shall promptly cooperate with and furnish
information to each other in connection with any such requirements imposed
upon any of them or any of their subsidiaries in connection with the Merger.
Each of the Company, Parent and Purchaser shall, and shall cause its
subsidiaries to, use all commercially reasonable efforts to take all actions
necessary to obtain (and shall cooperate with each other in obtaining) any
consent, approval, order or authorization of, or any exemption by or waiver
from, the Colorado Division of Gaming, the State of Colorado Limited Gaming
Control Commission, or any other Governmental Entity or other public or
private third party required to be obtained or made by Parent, Purchaser, the
Company or any of their respective subsidiaries in connection with the Merger
or the taking of any action contemplated thereby or by this Agreement or the
Stock Option Agreement, except that no party need waive any substantial
rights or agree to any substantial limitation on its operations or to dispose
of any assets having more than a DE MINIMIS value.
SECTION 6.4 FEES AND EXPENSES. (a) Except as provided below in
this Section 6.4, all fees and expenses incurred in connection with the
Merger, this Agreement and the transactions contemplated hereby shall be paid
by the party incurring such fees or expenses, whether or not the Merger is
consummated.
(b) The Company shall pay, or cause to be paid, in immediately
available funds to Parent, and in addition to any amounts paid or payable by
the Company pursuant to the Stock Option, the sum of $3,000,000 (the
"TERMINATION FEE") plus all Expenses (as defined below) upon termination of
this Agreement (i) by Parent, pursuant to Section 8.1(d) by reason of the
failure to satisfy the condition specified in Section 7.3(a) if at the time
of such termination there is an outstanding Acquisition Proposal which has
not been withdrawn by the
25
person making such Acquisition Proposal, (ii) by the Company pursuant to
Section 8.1(e) or (iii) by either party pursuant to Section 8.1(f) and within
twenty-four months after such termination an Acquisition Proposal by a third
party is consummated. "EXPENSES" shall mean documented out-of-pocket fees
and expenses incurred or paid by or on behalf of Parent or Purchaser in
connection with the Merger, the preparation and negotiation of this Agreement
and the Stock Option Agreement and the consummation of any of the
transactions contemplated hereby or thereby, including without limitation all
fees and expenses of law firms, commercial banks, investment banking firms,
accountants, printing firms, information agents, proxy solicitors, experts
and consultants to Parent; PROVIDED, HOWEVER, that in no event shall such
fees and expenses exceed $500,000.
(c) In the event that the Company shall fail to pay the
Termination Fee or the Expenses when due, the amount of any such Termination
Fee or the Expenses shall be increased to include the costs and expenses
actually incurred or accrued by Parent (including, without limitation, fees
and expenses of counsel) in connection with the collection under and
enforcement of this Section 6.4, together with interest on such unpaid
Termination Fee or the Expenses, commencing on the date that such Termination
Fee or the Expenses became due, at a rate equal to the rate of interest
publicly announced by Mellon Bank N.A., from time to time, in the City of
Pittsburgh as such bank's base rate plus 3.00%.
SECTION 6.5 PUBLIC ANNOUNCEMENTS. Parent and the Company shall
consult with each other before issuing any press release or otherwise making
any public statements with respect to this Agreement or the Merger and shall
not issue any such press release or make any such public statement without
the prior written approval of the other, except to the extent required by
applicable Law, in which case the issuing party shall use its reasonable
efforts to consult with the other party before issuing any such release or
making any such public statement.
SECTION 6.6 NOTIFICATION. The Company shall give prompt notice to
Parent of (i) any representation or warranty made by it contained in this
Agreement that is qualified as to materiality becoming untrue or inaccurate
in any respect or any such representation or warranty that is not so
qualified becoming untrue or inaccurate in any material respect or (ii) the
failure by it to comply with or satisfy in any material respect any covenant,
condition or agreement to be complied with or satisfied by it under this
Agreement; provided, however, that no such notification shall affect the
representations, warranties, covenants or agreements of the parties or the
conditions to the obligations of the parties under this Agreement.
SECTION 6.7 CERTAIN LITIGATION. The Company agrees that it shall
not settle any litigation commenced after the date hereof against the Company
or any of its directors by any shareholder of the Company relating to the
Merger, this Agreement or the Stock Option Agreement without the prior
written consent of Parent. In addition, subject to its rights under Section
5.3, the Company shall not voluntarily cooperate with any third party that
may hereafter seek to restrain or prohibit or otherwise oppose the Merger and
shall cooperate with
26
Parent and Purchaser to resist any such effort to restrain or prohibit or
otherwise oppose the Merger.
SECTION 6.8 OTHER ACTIONS. (a) Parent and Purchaser shall not,
and shall not permit any of their subsidiaries to, take any action that
would, or that would reasonably be expected to, result in (i) any of the
representations and warranties of Parent and Purchaser set forth in this
Agreement that are qualified as to materiality becoming untrue, (ii) any of
such representations and warranties that are not so qualified becoming untrue
in any material respect or (iii) any of the conditions to the Merger set
forth in Article VII, not being satisfied.
ARTICLE VII
CONDITIONS PRECEDENT
SECTION 7.1 CONDITIONS TO OBLIGATION OF EACH PARTY TO EFFECT THE
MERGER. The respective obligations of each party to effect the Merger shall
be subject to the satisfaction at or prior to the Effective Time of the
following conditions:
(a) This Agreement shall have been approved by the affirmative vote
or written consent of the shareholders of the Company in accordance with
the Company's Certificate of Incorporation and By-Laws and the DGCL.
(b) No statute, rule, regulation, executive order, decree, ruling,
injunction or other order (whether temporary, preliminary or permanent)
shall have been enacted, entered, promulgated or enforced by any
Governmental Entity which prohibits, restrains or enjoins the consummation
of the Merger.
(c) Any waiting period applicable to the Merger under the HSR Act
shall have terminated or expired.
SECTION 7.2 CONDITIONS TO OBLIGATIONS OF THE COMPANY TO EFFECT THE
MERGER. The obligation of the Company to effect the Merger shall be subject
to the fulfillment at or prior to the Effective Time of the following
additional conditions:
(a) Parent and Purchaser shall have performed or complied with in all
material respects their agreements and covenants contained in this
Agreement required to be performed or complied with at or prior to the
Effective Time; the representations and warranties of parent and Purchaser
contained in this Agreement qualified as to materiality shall be true in
all respects, and those not so qualified shall be true in all material
respects, in each case when made and on and as of the Effective Time with
the same force and effect as if made on and as of such date, except that
those representations and warranties made as of a specific date shall be
true in all respects (or all material respects, as the case may be) on and
as of such date; and the Company
27
shall have received a certificate signed by an authorized officer of
Parent to the foregoing effect.
(b) The Company shall have received from counsel for Parent and
Purchaser an opinion substantially in the form of Exhibit A.
SECTION 7.3 CONDITIONS TO OBLIGATIONS OF PARENT AND PURCHASER TO
EFFECT THE MERGER. The obligations of Parent and Purchaser to effect the Merger
shall be subject to the fulfillment at or prior to the Effective Time of the
following additional conditions:
(a) The Company shall have performed or complied with in all
material respects its agreements and covenants contained in this Agreement
and the Stock Option Agreement required to be performed or complied with
at or prior to the Effective Time; the representations and warranties of
the Company contained in this Agreement and the Stock Option Agreement
qualified as to materiality shall be true in all respects, and those not
so qualified shall be true in all material respects, in each case when
made and on and as of the Effective Time with the same force and effect
as if made on and as of such date, except that those representations and
warranties made as of a specific date shall be true in all respects (or
all material respects, as the case may be) on and as of such date; and
Parent shall have received a certificate signed by an authorized officer
of the Company to the foregoing effect.
(b) No action or proceeding shall be pending against the Company or
Parent before any Governmental Entity which is reasonably likely to have a
Material Adverse Effect or to prohibit, restrain, enjoin or restrict the
consummation of the Merger.
(c) All consents, approvals, authorizations and permits of, actions
by, filings with or notifications to, Governmental Entities and third
parties required in connection with the Merger, including the issuance of
all required licenses and approvals by the State of Colorado Limited
Gaming Control Commission and the Colorado Division of Gaming shall have
been obtained, taken or made.
(d) The employment agreements in effect between the Company and
Xxxxxxx X. Xxxxxx, Xx., Xxxx X. Xxxxx, Xxxxxxx Xxxxx, Xxxxxx X. Xxxxxxxx
and Xxxx Xxxxxxx on the date of this Agreement shall be in effect at the
Effective Time.
(e) Dissenting Shares shall not constitute more than 5% of the
outstanding Company Common Stock.
(f) Parent and Purchaser shall have received from counsel for the
Company an opinion substantially in the form of Exhibit B.
28
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
SECTION 8.1 TERMINATION. This Agreement may be terminated and the
Merger contemplated hereby may be abandoned at any time prior to the
Effective Time, notwithstanding approval thereof by the Shareholders of the
Company:
(a) By mutual written consent of Parent and the Company;
(b) By either Parent or the Company, if the Merger shall not have
been consummated on or before September 30, 1998, which date may be
extended by the mutual written consent of Parent and the Company;
(c) By the Company, if any of the conditions specified in Section
7.1 or 7.2 have not been met or waived by the Company, but only at and
after such time as such condition can no longer be satisfied;
(d) By Parent, if any of the conditions specified in Section 7.1 or
7.3 have not been met or waived by Parent, but only at and after such time
as such condition can no longer be satisfied;
(e) By the Company in connection with entering into a definitive
agreement in accordance with Section 5.3(b), provided that the Company has
complied with all applicable provisions thereof; or
(f) By either Parent or the Company, if the shareholders of the
Company shall have failed to adopt this Agreement and approve the Merger
by written consent or at the Shareholders Meeting.
(g) By Parent, at any time within sixty days after the date hereof,
if the results of Parent's review and examination of the materials
contained in or disclosed by the Disclosure Schedule or the books and
records, assets, liabilities, commitments, business and prospects of the
Company shall not be satisfactory to Parent, in its sole judgement.
(h) By either Parent or the Company, if, by September 5, 1997, the
opinion of the financial advisor referred to in Section 5.4, has not been
received or, if received, is not reasonably satisfactory in form and
content.
SECTION 8.2 EFFECT OF TERMINATION. In the event of the
termination of this Agreement pursuant to Section 8.1, this Agreement shall
forthwith become void and there
29
shall be no liability on the part of any party hereto except as set forth in
Section 6.4; PROVIDED, HOWEVER, that nothing herein shall (i) relieve any
party from liability for any breach hereof or (ii) affect the validity,
enforceability or effectiveness of the Stock Option Agreement.
SECTION 8.3 AMENDMENT. This Agreement may be amended by the
parties hereto by action taken by or on behalf of their respective Boards of
Directors at any time prior to the Effective Time. This Agreement may not be
amended except by an instrument in writing signed by the parties hereto.
SECTION 8.4 WAIVER. At any time prior to the Effective Time, any
party hereto may (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 herein. Any such extension or waiver
shall be valid if set forth in an instrument in writing signed by the party
or parties to be bound thereby.
ARTICLE IX
GENERAL PROVISIONS
SECTION 9.1 NOTICES. All notices, requests, claims, demands and
other communications under this Agreement shall be in writing and shall be
deemed given if delivered personally or sent by telecopy or by overnight
courier (providing proof of delivery) to the parties at the following
addresses (or at such address for a party as shall be specified by like
notice):
(a) if to Parent or Purchaser, to:
Ladbroke Racing Corporation
Xxxxxx Xxxxx 0
000 Xxxxxxx Xxxxx
Xxxxxxxxxx, Xxxxxxxxxxxx 00000
Attn: Xxxx Xxxx
Telecopier: (000) 000-0000
with a copy to:
O'Melveny & Xxxxx LLP
000 Xxxxx Xxxx Xxxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attn: Xxxx X. Xxxxx, Xx., Esq.
Telecopier: (000) 000-0000
30
(b) if to the Company, to:
Colorado Gaming & Entertainment Co.
Union Terrace
00000 Xxxx Xxx xxx Xxxxxx
Xxxxx 000
Xxxxxxxx, Xxxxxxxx 00000
Attn: Xxxxxxx X. Xxxxxx, Xx.
Telecopier: (000) 000-0000
with a copy to:
LeBoeuf, Lamb, Xxxxxx & XxxXxx LLP
000 Xxxxxxxxxxx Xxxxxx
Xxxxx 0000
Xxxxxx, Xxxxxxxx 00000
Attn: Xxxxxx X. Xxxxx, Esq.
Telecopier: (000) 000-0000
SECTION 9.2 DEFINITIONS. For purposes of this Agreement:
(a) an "AFFILIATE" of any person means another person that directly
or indirectly, through one or more intermediaries, controls, is controlled
by, or is under common control with, such first person;
(b) "control" (including the terms "CONTROLLED BY" and "UNDER COMMON
CONTROL WITH") means the possession, directly or indirectly, of the power
to direct or cause the direction of the management and policies of a
person, whether through the ownership of voting securities, by contract or
otherwise;
(c) "LIEN" means any encumbrance, hypothecation, lien, mortgage,
pledge, security interest or other encumbrance; PROVIDED, HOWEVER, that
the term "lien" does not include (i) liens for water and sewer charges and
current taxes not yet due and payable or being contested in good faith or
(ii) mechanics', carriers', workers', repairers', materialmen's,
warehousemen's and other similar liens arising or incurred in the ordinary
course of business;
(d) "MATERIAL ADVERSE CHANGE" or "MATERIAL ADVERSE EFFECT" means any
change or effect that is or is reasonably likely to be materially adverse
to the business, operations, properties, condition (financial or
otherwise), assets or liabilities (including, without limitation,
contingent liabilities) of the Company and its subsidiaries taken as a
whole;
31
(e) "PERSON" means an individual, corporation, partnership, limited
liability company, joint venture, association, trust, unincorporated
organization or other entity; and
(f) a "SUBSIDIARY" of any person means another person, an amount of
the voting securities, other voting ownership or voting partnership
interests of which is sufficient to elect at least a majority of its Board
of Directors or other governing body (or, if there are no such voting
interests, 50% or more of the equity interests of which) is owned directly
or indirectly by such first person.
SECTION 9.3 INTERPRETATION. When a reference is made in this
Agreement to a Section or Exhibit, such reference shall be to a Section of,
or an Exhibit to, 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."
SECTION 9.4 COUNTERPARTS. This Agreement may be executed and
delivered (including by facsimile transmission) in one or more counterparts,
all of which shall be considered one and the same agreement and shall become
effective when one or more counterparts have been signed by each of the
parties and delivered to the other parties, it being understood that all
parties need not sign the same counterpart.
SECTION 9.5 ENTIRE AGREEMENT; THIRD PARTY BENEFICIARIES. This
Agreement constitutes the entire agreement, and supersedes all prior
agreements and understandings, both written and oral, among the parties with
respect to the subject matter of this Agreement and, except for the
provisions of Article II and Article IX, is not intended to confer upon any
person other than the parties any rights or remedies hereunder.
SECTION 9.6 ASSIGNMENT. Neither this Agreement nor any of the
rights, interests or obligations under this Agreement shall be assigned, in
whole or in part, by operation of law or otherwise by any of the parties
without the prior written consent of the other parties, except that Purchaser
may assign, in its sole discretion, any or all of its rights, interests and
obligations under this Agreement to Parent or to any direct or indirect
wholly owned subsidiary of Parent, but no such assignment shall relieve
Purchaser of any of its obligations under this Agreement. Subject to the
preceding sentence, this Agreement will be binding upon, inure to the benefit
of, and be enforceable by, the parties hereto and their respective successors
and assigns.
SECTION 9.7 GOVERNING LAW. This Agreement shall be governed by,
and construed in accordance with, the laws of the State of Delaware.
32
SECTION 9.8 ENFORCEMENT. The parties agree that irreparable
damage would occur in the event that any of the provisions of this Agreement
were not performed in accordance with their specific terms or were otherwise
breached. It is accordingly agreed that the parties shall be entitled to an
injunction or injunctions to prevent breaches of this Agreement and to
enforce specifically the terms and provisions of this Agreement in any court
of the United States located in the States of Colorado, Delaware or
California or in Colorado, Delaware or California state court (a "SPECIFIED
COURT"), this being in addition to any other remedy to which they are
entitled at law or in equity. In addition, each of the parties hereto (i)
consents to submit itself to the personal jurisdiction of any Specified Court
in the event any dispute arises out of this Agreement or any of the
transactions contemplated by this Agreement, (ii) agrees that it will not
attempt to deny or defeat such personal jurisdiction by motion or other
request for leave from any such court, (iii) agrees that it will not bring
any action relating to this Agreement or any of the transactions contemplated
by this Agreement in any court other than a Specified Court and (iv) agrees
to waive any defense based upon venue or FORUM non CONVENIENS grounds.
SECTION 9.9 SEVERABILITY. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of
Law, or public policy, all other conditions and provisions of this Agreement
shall nevertheless remain in full force and effect so long as the economic or
legal substance of the transactions contemplated hereby is not affected in
any manner materially adverse to any party. Upon such determination that any
term or other provision is invalid, illegal or incapable of being enforced,
the parties hereto shall negotiate in good faith to modify this Agreement so
as to effect the original intent of the parties as closely as possible in a
mutually acceptable manner in order that the transactions contemplated hereby
be consummated as originally contemplated to the fullest extent possible.
SECTION 9.10 ATTORNEYS' FEES. In the event of any action by any
party arising under or out of, in connection with or in respect of, this
Agreement or the transactions contemplated hereby, including any
participation in bankruptcy proceedings to enforce against a party a right or
claim in such proceedings, the prevailing party shall be entitled to
reasonable attorneys' fees, costs and expenses incurred in such action.
Attorneys' fees incurred in enforcing any judgment in respect of this
Agreement are recoverable as a separate item. The parties intend that the
preceding sentence be severable from the other provisions of this Agreement,
survive any judgment and, to the maximum extent permitted by law, not be
deemed merged into such judgment.
33
IN WITNESS WHEREOF, Parent, Purchaser and the Company have caused
this Agreement to be signed by their respective officers thereunto duly
authorized, all as of the date first written above.
LADBROKE RACING CORPORATION
By: /s/ Xxxx Xxxx
-----------------------------------
Name: Xxxx Xxxx
Title: President and Chief
Operating Officer
CG&E ACQUISITION CORP.
By: /s/ Xxxx Xxxx
-----------------------------------
Name: Xxxx Xxxx
Title: President
COLORADO GAMING & ENTERTAINMENT CO.
By: /s/ Xxxxxxx X. Xxxxxx, Xx.
-----------------------------------
Name: Xxxxxxx X. Xxxxxx, Xx.
Title: President
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