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EXHIBIT A
AGREEMENT AND PLAN OF MERGER
DATED AS OF
________________, 0000
XXXXX
XXXXXXXX XXXXX HOLDINGS, INC.
AND
GAMECO
AND
MERGER SUBSIDIARY
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TABLE OF CONTENTS
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ARTICLE I THE MERGER; CLOSING................................................................1
Section 1.01. The Merger.............................................................1
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Section 1.02. Effective Time.........................................................1
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Section 1.03. Effects of the Merger..................................................1
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Section 1.04. Conversion of Shares...................................................1
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Section 1.05. Payment of Shares......................................................2
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Section 1.06. Stock Options..........................................................3
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Section 1.07. The Closing............................................................4
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Section 1.08. Dissenters' Rights.....................................................4
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ARTICLE II THE SURVIVING CORPORATION; DIRECTORS AND OFFICERS.................................4
Section 2.01. Articles of Incorporation..............................................4
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Section 2.02. Bylaws.................................................................4
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Section 2.03. Directors and Officers.................................................4
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ARTICLE III REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUBSIDIARY...................4
Section 3.01. Organization and Qualification.........................................5
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Section 3.02. Authority; Non-Contravention; Approvals................................5
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Section 3.03. Proxy Statement........................................................6
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Section 3.04. Financing..............................................................6
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Section 3.05. Brokers and Finders....................................................6
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ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE COMPANY.....................................7
Section 4.01. Organization and Qualification.........................................7
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Section 4.02. Capitalization.........................................................7
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Section 4.03. Subsidiaries...........................................................8
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Section 4.04. Authority; Non-Contravention; Approvals................................8
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Section 4.05. Reports and Financial Statements.......................................9
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Section 4.06. Absence of Undisclosed Liabilities....................................10
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Section 4.07. Absence of Certain Changes or Events..................................10
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Section 4.08. Litigation............................................................10
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Section 4.09. Proxy Statement.......................................................10
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Section 4.10. No Violation of Law...................................................11
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Section 4.11. Compliance with Agreements............................................11
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Section 4.12. Taxes.................................................................11
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Section 4.13. Employee Benefit Plans; ERISA.........................................12
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Section 4.14. Labor Controversies...................................................13
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Section 4.15. Environmental Matters.................................................13
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Section 4.16. Title to Assets.......................................................14
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Section 4.17. Company Shareholders' Approval........................................15
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Section 4.18. Brokers and Finders...................................................15
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Page
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ARTICLE V COVENANTS.........................................................................15
Section 5.01. Conduct of Business by the Company Pending the Merger.................15
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Section 5.02. Control of the Company's Operations...................................17
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Section 5.03. Acquisition Transactions..............................................17
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Section 5.04. Access to Information.................................................18
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Section 5.05. Notices of Certain Events.............................................18
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Section 5.06. Meeting of the Company's Shareholders.................................19
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Section 5.07. Proxy Statement.......................................................19
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Section 5.08. Public Announcements..................................................20
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Section 5.09. Expenses and Fees.....................................................20
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Section 5.10. Agreement to Cooperate................................................20
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Section 5.11. Directors' and Officers' Indemnification..............................21
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ARTICLE VI CONDITIONS TO THE MERGER.........................................................23
Section 6.01. Conditions to the Obligations of Each Party...........................23
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Section 6.02. Conditions to Obligation of the Company to Effect the Merger..........23
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Section 6.03. Conditions to Obligations of Parent and Subsidiary to Effect
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the Merger............................................................24
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ARTICLE VII TERMINATION.....................................................................24
Section 7.01. Termination...........................................................24
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ARTICLE VIII MISCELLANEOUS..................................................................26
Section 8.01. Effect of Termination.................................................26
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Section 8.02. Nonsurvival of Representations and Warranties.........................26
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Section 8.03. Notices...............................................................26
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Section 8.04. Interpretation........................................................27
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Section 8.05. Miscellaneous.........................................................27
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Section 8.06. Counterparts..........................................................27
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Section 8.07. Amendments; No Waivers................................................27
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Section 8.08. Entire Agreement......................................................27
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Section 8.09. Severability..........................................................27
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Section 8.10. Specific Performance..................................................28
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AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER (this "Agreement") is entered into
as of __________________, 2001 by and among GAMECO, a [_________________]
corporation ("Parent"), __________________, a Virginia corporation and wholly
owned subsidiary of Parent ("Merger Subsidiary"), and Colonial Downs Holdings,
Inc., a Virginia corporation (the "Company"). Parent, Merger Subsidiary and the
Company are referred to collectively herein as the "Parties."
WHEREAS, the respective Boards of Directors of Parent, Merger Subsidiary
and the Company have each approved the merger of Merger Subsidiary with and into
the Company on the terms and subject to the conditions set forth in this
Agreement (the "Merger");
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth herein, the
parties hereto agree as follows:
ARTICLE I
THE MERGER; CLOSING
Section 1.01. The Merger. Upon the terms and subject to the conditions
of this Agreement, and in accordance with the Virginia Stock Corporation Act
(the "Virginia Act"), Merger Subsidiary shall be merged with and into the
Company at the Effective Time (as defined in Section 1.02). Following the
Merger, the separate existence of Merger Subsidiary shall cease and the Company
shall continue as the surviving corporation (the "Surviving Corporation") and a
wholly owned subsidiary of Parent, and shall succeed to and assume all the
rights and obligations of Merger Subsidiary in accordance with the Virginia
Act.
Section 1.02. Effective Time. The Merger shall become effective when
articles of merger (the "Articles of Merger"), executed in accordance with the
relevant provisions of the Virginia Act, are filed with the State Corporation
Commission of Virginia (the "Commission"); provided, however, that, upon mutual
consent of the constituent corporations to the Merger, the Articles of Merger
may provide for a later date of effectiveness of the Merger. When used in this
Agreement, the term "Effective Time" shall mean the date and time at which the
Articles of Merger are accepted for record or such later time established by
the Articles of Merger. The Articles of Merger shall be filed on the Closing
Date (as defined in Section 1.07).
Section 1.03. Effects of the Merger . The Merger shall have the effects
set forth in Section 13.1-721 of the Virginia Act.
Section 1.04. Conversion of Shares. At the Effective Time, by virtue of
the Merger and without any action on the part of Parent, Merger Subsidiary, the
Company or the holders of any of the following securities:
(a) each issued and outstanding share of the Company's Class A
common stock, par value $.01 per share (the "Class A Stock") and Class B Common
Stock, par value $.01 (the "Class B Stock," together with the Class A Stock,
the "Common Stock") held by the Company as treasury stock and each issued and
outstanding share of the Common Stock owned by any subsidiary of the Company,
Parent, Merger Subsidiary or any other subsidiary of Parent
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(collectively, the "Controlling Stock") shall be canceled and retired and shall
cease to exist, and no payment or consideration shall be made with respect
thereto;
(b) each issued and outstanding share of Class A Stock, other than those
shares of Class A Stock constituting Controlling Stock (the "Class A Exchange
Stock"), shall be converted into the right to receive an amount in cash, without
interest, equal to $1.00 (the "Class A Consideration") and each issued and
outstanding share of Class B Stock, other than those shares of Class B stock
constituting Controlling Stock (the "Class B Exchange Stock," together with the
Class A Exchange Stock, the "Exchange Stock"), shall be converted to the right
to receive an amount in cash, without interest, equal to $________ (the "Class B
Consideration," together with the Class A Consideration, the "Merger
Consideration"). At the Effective Time, all such shares of Common Stock shall no
longer be outstanding and shall automatically be canceled and retired and shall
cease to exist, and each holder of a certificate (a "Certificate") representing
any such shares of Common Stock shall cease to have any rights with respect
thereto, except the right to receive the Merger Consideration, without interest;
and
(c) each issued and outstanding share of capital stock or ownership
interest of Merger Subsidiary shall be converted into one fully paid and
nonassessable share of common stock, par value $__________, of the Surviving
Corporation.
Section 1.05. Payment of Shares. (a) Prior to the Effective Time, Parent
shall appoint a bank or trust company reasonably satisfactory to the Company to
act as disbursing agent (the "Disbursing Agent") for the payment of the Merger
Consideration upon surrender of the Certificates. Parent will enter into a
disbursing agent agreement with the Disbursing Agent, in form and substance
reasonably acceptable to the Company. At or prior to the Effective Time, Parent
shall deposit or cause to be deposited with the Disbursing Agent in trust for
the benefit of the Company's shareholders cash in an aggregate amount necessary
to make the payments pursuant to Section 1.04 to holders of the Exchange Stock
(such amounts being hereinafter referred to as the "Exchange Fund"). The
Disbursing Agent shall invest the Exchange Fund, as the Surviving Corporation
directs, in direct obligations of the United States of America, obligations for
which the full faith and credit of the United States of America is pledged to
provide for the payment of all principal and interest or commercial paper
obligations receiving the highest rating from either Xxxxx'x Investors Service,
Inc. or Standard & Poor's, or a combination thereof, provided that, in any such
case, no such instrument shall have a maturity exceeding three months. Any net
profit resulting from, or interest or income produced by, such investments shall
be payable to the Surviving Corporation. The Exchange Fund shall be used only as
provided in this Agreement.
(b) Promptly after the Effective Time, the Surviving Corporation shall
cause the Disbursing Agent to mail to each person who is a record holder of the
Exchange Stock at the Effective Time, a letter of transmittal (which shall
specify that delivery shall be effected, and risk of loss and title to the
Certificates shall pass, only upon proper delivery of the Certificates to the
Disbursing Agent) and instructions for use in effecting the surrender of the
Certificates in exchange for payment of the Merger Consideration. Upon surrender
to the Disbursing Agent of a Certificate, together with such letter of
transmittal duly executed and such other documents as may be reasonably required
by the Disbursing Agent, the holder of such Certificate shall be paid promptly
in exchange therefor cash in an amount equal to, in the case of the Class A
Stock, the product of the number of shares of Class A Stock represented by such
Certificate multiplied by the Class A Consideration, and, in the case of the
Class B Stock, the product of the number of shares of Class B Stock represented
by such Certificate multiplied by the Class B Consideration,
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and each such Certificate shall be cancelled. No interest will be paid or accrue
on the cash payable upon the surrender of the Certificates. If payment is to be
made to a person other than the person in whose name the Certificate surrendered
is registered, it shall be a condition of payment that the Certificate so
surrendered be properly endorsed or otherwise be in proper form for transfer and
that the person requesting such payment pay any transfer or other taxes required
by reason of the payment to a person other than the registered holder of the
Certificate surrendered or establish to the satisfaction of the Surviving
Corporation that such tax has been paid or is not applicable. Until surrendered
in accordance with this Section 1.05, each Certificate (other than Certificates
representing Controlling Shares) shall represent for all purposes only the right
to receive the Merger Consideration without any interest thereon.
(c) From and after the Effective Time, there shall be no registration of
transfers of shares of the Common Stock which were outstanding immediately prior
to the Effective Time on the stock transfer books of the Surviving Corporation.
From and after the Effective Time, the holders of shares of the Common Stock
outstanding immediately prior to the Effective Time shall cease to have any
rights with respect to such shares except as otherwise provided in this
Agreement or by applicable law. All cash paid upon the surrender of Certificates
in accordance with this Article I shall be deemed to have been paid in full
satisfaction of all rights pertaining to the shares of the Common Stock
previously represented by such Certificates. If, after the Effective Time,
Certificates are presented to the Surviving Corporation for any reason, such
Certificates shall be canceled and exchanged for cash as provided in this
Article I. At the close of business on the day of the Effective Time the stock
ledger of the Company shall be closed.
(d) At any time more than six months after the Effective Time, the
Surviving Corporation shall be entitled to require the Disbursing Agent to
deliver to it any funds which had been made available to the Disbursing Agent
and not disbursed in exchange for Certificates (including, without limitation,
all interest and other income received by the Disbursing Agent in respect of all
such funds). Thereafter, holders of shares of the Common Stock shall look only
to Parent (subject to the terms of this Agreement, abandoned property, escheat
and other similar laws) as general creditors thereof with respect to any Merger
Consideration that may be payable, without interest, upon due surrender of the
Certificates held by them. If any Certificates shall not have been surrendered
prior to five years after the Effective Time (or immediately prior to such time
on which any payment in respect hereof would otherwise escheat or become the
property of any governmental unit or agency), the payment in respect of such
Certificates shall, to the extent permitted by applicable law, become the
property of the Surviving Corporation, free and clear of all claims or interest
of any person previously entitled thereto. Notwithstanding the foregoing, none
of Parent, the Company, the Surviving Corporation nor the Disbursing Agent shall
be liable to any holder of the Common Stock for any Merger Consideration in
respect of such Common Stock delivered to a public official pursuant to any
abandoned property, escheat or other similar law.
Section 1.06. Stock Options. At the Effective Time, each unexercised option,
whether or not then vested or exercisable in accordance with its terms, to
purchase shares of Common Stock (the "Options") previously granted by the
Company or any of its subsidiaries shall be canceled automatically and the
Parent shall or shall cause the Surviving Corporation to provide the holder
thereof with a lump sum cash payment equal to the product of (i) in the case of
the Class A Stock, the total number of shares of the Class A Stock subject to
such Option immediately prior to the Effective Time and the excess (if any) of
the Class A Consideration over the purchase price per share of the Class A Stock
subject to such Option, and/or (ii) in the
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case of the Class B Stock, the total number of shares of Class B Stock subject
to such Option immediately prior to the Effective Time and the excess, (if any)
of the Class B Consideration over the purchase price per share of the Class B
Stock subject to such Option.
Section 1.07. The Closing. The closing of the transactions contemplated by
this Agreement (the "Closing") shall take place at the executive offices of
[_____________ in ________________], commencing at 9:00 a.m. local time on the
second business day following the satisfaction or waiver of all conditions to
the obligations of the Parties to consummate the transactions contemplated
hereby (other than conditions with respect to actions the Parties will take at
the Closing) or such other place and date as the Parties may mutually determine
(the "Closing Date").
Section 1.08. Dissenters' Rights. Notwithstanding anything in this Agreement
to the contrary, shares of the Common Stock outstanding immediately prior to the
Effective Time and held by a holder who has not voted in favor of the Merger and
who has dissented from the Merger in accordance with Article 15 of the Virginia
Act ("Dissenting Shares") shall not be converted into the right to receive the
Merger Consideration as provided in Section 1.05, unless and until such holder
fails to perfect or withdraws or otherwise loses his right to payment under the
Virginia Act. If, after the Effective Time, any such holder fails to perfect or
withdraws or loses his right to such payment, such Dissenting Shares shall
thereupon be treated as if they had been converted as of the Effective Time into
the right to receive the Merger Consideration, if any, to which such holder is
entitled, without interest thereon. The Company shall give Parent and Merger
Subsidiary prompt notice of any notice of dissent received by the Company and,
prior to the Effective Time, Parent and Merger Subsidiary shall have the right
to participate in all negotiations and proceedings with respect to any exercise
of dissenters rights. Prior to the Effective Time, Company shall not, except
with the prior written consent of Parent and Merger Subsidiary, make any payment
with respect to, or settle or offer to settle, any such dissents.
ARTICLE II
THE SURVIVING CORPORATION; DIRECTORS AND OFFICERS
Section 2.01. Articles of Incorporation. The articles of incorporation of
the Company in effect at the Effective Time shall be the articles of
incorporation of the Surviving Corporation.
Section 2.02. Bylaws. The bylaws of Merger Subsidiary in effect at the
Effective Time shall be the bylaws of the Surviving Corporation, until amended
in accordance with applicable law and this Agreement.
Section 2.03. Directors and Officers. The directors of Merger Subsidiary
immediately prior to the Effective Time shall be the directors of the Surviving
Corporation as of the Effective Time. The officers of the Company shall be the
officers of the Surviving Corporation as of the Effective Time.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUBSIDIARY
Parent and Merger Subsidiary jointly and severally represent and warrant to
the Company that, except as set forth in the Disclosure Schedule dated as of the
date hereof and signed by an
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authorized officer of Parent (the "Parent Disclosure Schedule"), it being
agreed that disclosure of any item on the Parent Disclosure Schedule shall be
deemed disclosure with respect to all Sections of this Agreement if the
relevance of such item is reasonably apparent from the face of the Parent
Disclosure Schedule as follows:
Section 3.01. Organization and Qualification. Parent is a corporation and
Merger Subsidiary is a corporation, in each case duly organized, validly
existing and in good standing under the laws of the state of its incorporation
and has the requisite corporate power and authority to own, lease and operate
its assets and properties and to carry on its business as it is now being
conducted. Each of Parent and Merger Subsidiary is qualified to transact
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 necessary, except where the failure to be so
qualified and in good standing would not reasonably be expected to have Parent
Material Adverse Effect (as hereinafter defined). The term "Parent Material
Adverse Effect" means an effect that is materially adverse to (i) the
business, financial condition or ongoing operations of Parent and its
subsidiaries, taken as a whole or (ii) the ability of Parent or any of its
subsidiaries to obtain financing for or to consummate any of the transactions
contemplated by this Agreement.
Section 3.02. Authority; Non-Contravention; Approvals. (a) Each of Parent
and Merger Subsidiary has full corporate power and authority to enter into
this Agreement and to consummate the transactions contemplated hereby,
including without limitation, the consummation of the financing of the Merger
pursuant to the Financing Arrangement (as defined in Section 3.04). This
Agreement and the Merger have been approved and adopted by the boards of
directors of Parent and Merger Subsidiary and the sole shareholder of Merger
Subsidiary, and no other corporate or similar proceeding on the part of Parent
or Merger Subsidiary is necessary to authorize the execution and delivery of
this Agreement or the consummation by Parent and Merger Subsidiary of the
transactions contemplated hereby, including without limitation, the Financing
Arrangement. This Agreement has been duly executed and delivered by each of
Parent and Merger Subsidiary and, assuming the due authorization, execution
and delivery hereof by the Company, constitutes a valid and legally binding
agreement of each of Parent and Merger Subsidiary enforceable against each of
them in accordance with its terms, except that such enforcement may be subject
to (i) bankruptcy, insolvency, reorganization, moratorium or other similar
laws affecting or relating to enforcement of creditors' rights generally and
(ii) general equitable principles.
(b) The execution, delivery and performance of this Agreement by each of
Parent and Merger Subsidiary and the consummation of the Merger and the
transactions contemplated hereby, including without limitation the Financing
Arrangement, do not and will not violate, conflict with or result in a breach
of any provision of, or constitute a default (or an event which, with notice
or lapse of time or both, would constitute a default) under, or result in the
termination of, or accelerate the performance required by, or result in a
right of termination or acceleration under, or result in the creation of any
lien, security interest or encumbrance upon any of the properties or assets of
Parent or any of its subsidiaries under any of the terms, conditions or
provisions of (i) the respective certificates of incorporation or bylaws of
Parent or any of its subsidiaries, (ii) any statute, law, ordinance, rule,
regulation, judgment, decree, order, injunction, writ, permit or license of
any court or governmental authority applicable to Parent or any of its
subsidiaries or any of their respective properties or assets, subject, in the
case of consummation, to obtaining (prior to the Effective Time) the Parent
Required Statutory Approvals (as defined in
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Section 3.02(c)), or (iii) any note, bond, mortgage, indenture, deed of trust,
license, franchise, permit, concession, contract, lease or other instrument,
obligation or agreement of any kind (each a "Contract") to which Parent or any
of its subsidiaries is now a party or by which Parent or any of its
subsidiaries or any of their respective properties or assets may be bound or
affected, except, with respect to any item referred to in clause (ii) or
(iii), for any such violation, conflict, breach, default, termination,
acceleration or creation of liens, security interests or encumbrances that
would not reasonably be expected to have a Parent Material Adverse Effect and
would not materially delay the consummation of the Merger.
(C) Except for (i) the filings by Parent required by the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended (the "HSR
Act"), (ii) applicable filings, if any, with the Securities and Exchange
Commission (the "SEC") pursuant to the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), (iii) filing of the Articles of Merger with the
Commission, and (iv) filings with and approvals by any regulatory authority
with jurisdiction over the Company's gaming operations required under any
Federal, state, local or foreign statute, ordinance, rule, regulation, permit,
consent, approval, license, judgment, order, decree, injunction or other
authorization governing or relating to the current or contemplated gaming
activities and operations of the Company, including, but not limited to, the
Chapter 29 of the Annotated Code of Virginia and the rules and regulations
promulgated thereunder and all other rules and regulations, statutes and
ordinances having authority or with which compliance is required for the
conduct of gambling, and gaming (collectively, the "Gaming Laws") (the filings
and approvals referred to in clauses (i) through (iv) being collectively
referred to as the "Parent Required Statutory Approvals"), no declaration,
filing or registration with, or notice to, or authorization, consent or
approval of, any governmental or regulatory body or authority is necessary for
the execution and delivery of this Agreement by Parent or Merger Subsidiary,
or the consummation by Parent or Merger Subsidiary of the transactions
contemplated hereby, including, without limitation, the Financing Arrangement,
other than such declarations, filings, registrations, notices, authorizations,
consents or approvals which, if not made or obtained, as the case may be,
would not reasonably be expected to have a Parent Material Adverse Effect and
would not materially delay the consummation of the Merger.
Section 3.03. Proxy Statement. None of the information to be supplied by
Parent or its subsidiaries for inclusion in any proxy statement (the "Proxy
Statement") to be distributed in connection with the Company's special meeting
of shareholders (the "Special Meeting") called for the purpose of voting on
this Agreement and the transactions contemplated hereby will, at the time of
the mailing of the Proxy Statement and any amendments or supplements thereto,
and at the time of the Special 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 the light of the
circumstances under which they are made, not misleading.
Section 3.04. Financing. Parent intends to raise $________________ in a
debt financing pursuant to Rule 144(A) promulgated under the Securities Act of
1933, as amended (the "Securities Act") in order to provide financing for the
Merger (the "Financing Arrangement") and has engaged _______________ to
provide financial advisory and debt placement services in connection
therewith.
Section 3.05. Brokers and Finders. Except as disclosed in the Parent
Disclosure Schedule, neither Parent nor Merger Sub has entered into any
contract, arrangement or understanding with any person or firm which may
result in the obligation of the Company to pay
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any investment banking fees, finder's fees or brokerage fees in connection
with the transactions contemplated hereby.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent and Merger Subsidiary
that, except as set forth in the disclosure schedule dated as of the date
hereof and signed by an authorized officer of the Company (the "Company
Disclosure Schedule"), it being agreed that disclosure of any item on the
Company Disclosure Schedule shall be deemed disclosure with respect to all
Sections of this Agreement if the relevance of such item is reasonably
apparent from the face of the Company Disclosure Schedule:
Section 4.01. Organization and Qualification. The Company is a
corporation duly organized, validly existing and in good standing under the
laws of Virginia and has the requisite corporate power and authority to own,
lease and operate its assets and properties and to carry on its business as it
is now being conducted. The Company is qualified to transact 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 necessary, except where the failure to be so qualified and in
good standing would not reasonably be expected to have a Company Material
Adverse Effect (as hereinafter defined). The term "Company Material Adverse
Effect" means an effect or effects that, individually or in the aggregate, (i)
has an adverse economic effect of more than $________________ on the Company
and its subsidiaries, taken as a whole, or (ii) has a materially adverse
effect on the ability of the Company to consummate the Merger or the ability
of the Parties hereto to retain any Material Gaming License (as hereinafter
defined). True, accurate and complete copies of the Company's articles of
incorporation and bylaws, in each case as in effect on the date hereof,
including all amendments thereto, have heretofore been delivered to Parent.
The term "Material Gaming License" means a license or similar authorization
under any Gaming Law without which Parent or the Company, as the case may be,
would be prohibited from operating any of its gaming properties in the state
in which such property is located.
Section 4.02. Capitalization. (a) The authorized capital stock of the
Company consists of (1) 12,000,000 shares of Class A Stock and (2) 3,000,000
shares of Class B Stock. As of the date hereof: (i) ______________ shares of
Class A Stock and _____ shares of Class B Stock are issued and outstanding all
of which shares are validly issued and are fully paid, nonassessable and free
of preemptive rights, (ii) _________________ shares of Class A Stock and
___________ shares of Class B Stock are held in the treasury of the Company,
(iii) ______________ shares of Class A Stock and _______ shares of Class B
Stock are reserved for issuance upon exercise of Options issued and
outstanding, (iv) _______ Options to purchase Class A Stock and _____ Options
to purchase Class B Stock are outstanding. Assuming the exercise of all
outstanding Options, as of the date hereof, there would be ______________
shares of Class A Stock and ____ shares of Class B Stock issued and
outstanding. Since _____________, except as permitted by this Agreement, (i)
no shares of capital stock of the Company have been issued except in
connection with the exercise of the instruments referred to in the second
sentence of this Section 4.02(a) and (ii) no options, warrants, securities
convertible into, or commitments with respect to the issuance of shares of
capital stock of the Company have been issued, granted or made.
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(b) Except as set forth in Section 4.02(a), as of the date hereof, there
are no outstanding subscriptions, options, calls, contracts, commitments,
understandings, restrictions, arrangements, rights or warrants, including any
right of conversion or exchange under any outstanding security, instrument or
other agreement and including any rights plan or other anti-takeover agreement,
obligating the Company or any subsidiary of the Company to issue, deliver or
sell, or cause to be issued, delivered or sold, additional shares of the capital
stock of the Company or obligating the Company or any subsidiary of the Company
to grant, extend or enter into any such agreement or commitment. There are no
outstanding stock appreciation rights or similar derivative securities or rights
of the Company or any of its subsidiaries. Except as disclosed in the SEC
Reports (as defined in Section 4.05) or as otherwise contemplated by this
Agreement, there are no voting trusts, irrevocable proxies or other agreements
or understandings to which the Company or any subsidiary of the Company is a
party or is bound with respect to the voting of any shares of capital stock of
the Company.
Section 4.03. Subsidiaries. Each direct and indirect subsidiary of the
Company is duly organized, validly existing and in good standing under the
laws of its jurisdiction of incorporation or organization and has the
requisite power and authority to own, lease and operate its assets and
properties and to carry on its business as it is now being conducted and each
subsidiary of the Company is qualified to transact 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 necessary; except, in all cases, where the failure to be so
organized, existing, qualified or in good standing would not reasonably be
expected to have a Company Material Adverse Effect. All of the outstanding
shares of capital stock of or other equity interests in each subsidiary of the
Company are validly issued, fully paid, nonassessable and free of preemptive
rights. There are no subscriptions, options, warrants, rights, calls,
contracts or other commitments, understandings, restrictions or arrangements
relating to the issuance or sale with respect to any shares of capital stock
of or other equity interests in any subsidiary of the Company, including any
right of conversion or exchange under any outstanding security, instrument or
agreement. For purposes of this Agreement, the term "subsidiary" means, with
respect to any specified person (the "Owner") any other person of which more
than 50% of the total voting power of shares of capital stock or other equity
interests entitled (without regard to the occurrence of any contingency) to
vote in the election of directors, managers, trustees or other governing body
thereof is at the time owned or controlled, directly or indirectly, by such
Owner or one or more of the other subsidiaries of such Owner.
Section 4.04. Authority; Non-Contravention; Approvals. (a) The Company has
full corporate power and authority to enter into this Agreement and, subject
to the Company Shareholders' Approval (as defined in Section 6.01(a)) with
respect solely to the Merger, to consummate the transactions contemplated
hereby. This Agreement and the Merger have been approved and adopted by the
board of directors of the Company, and no other corporate proceedings on the
part of the Company are necessary to authorize the execution and delivery of
this Agreement or, except for the Company Shareholders' Approval with respect
solely to the Merger, the consummation by the Company of the transactions
contemplated hereby. This Agreement has been duly executed and delivered by
the Company, and, assuming the due authorization, execution and delivery
hereof by Parent and Merger Subsidiary, constitutes a valid and legally
binding agreement of the Company, enforceable against the Company in
accordance with its terms, except that such enforcement may be subject to (i)
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting or relating to enforcement of creditors' rights generally and (ii)
general equitable principles.
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(b) The execution, delivery and performance of this Agreement by the
Company and the consummation of the Merger and the transactions contemplated
hereby do not and will not violate, conflict with or result in a breach of any
provision of, or constitute a default (or an event which, with notice or lapse
of time or both, would constitute a default) under, or result in the termination
of, or accelerate the performance required by, or result in a right of
termination or acceleration under, contractually require any offer to purchase
or any prepayment of any debt, or result in the creation of any lien, security
interest or encumbrance upon any of the properties or assets of the Company or
any of its subsidiaries under any of the terms, conditions or provisions of (i)
the respective certificates of incorporation or bylaws of the Company or any of
its subsidiaries, (ii) any statute, law, ordinance, rule, regulation, judgment,
decree, order, injunction, writ, permit or license of any court or governmental
authority applicable to the Company or any of its subsidiaries or any of their
respective properties or assets, subject, in the case of consummation, to
obtaining (prior to the Effective Time) the Company Required Statutory Approvals
(as defined in Section 4.04(c)) and the Company Shareholders' Approval, or (iii)
any Contract to which the Company or any of its subsidiaries is now a party or
by which the Company or any of its subsidiaries or any of their respective
properties or assets may be bound or affected, subject, in the case of
consummation, to obtaining (prior to the Effective Time) consents required from
commercial lenders, lessors or other third parties as specified in Section
4.04(b) of the Company Disclosure Schedule, except, with respect to any items
referred to in clause (ii) or (iii), for any such violation, conflict, breach,
default, termination, acceleration or creation of liens, security interests or
encumbrances that would not, individually or in the aggregate, have a Company
Material Adverse Effect and would not prevent or materially delay the
consummation of the Merger.
(c) Except for (i) the filings by the Company required by the HSR Act,
(ii) the filing of the Proxy Statement with the SEC pursuant to the Exchange
Act, (iii) the filing of the Articles of Merger with the Commission, (iv) any
filings with or approvals from authorities required solely by virtue of the
jurisdictions in which Parent or its subsidiaries conduct any business or own
any assets, and (v) filings with and approvals in respect of the Gaming Laws
(the filings and approvals referred to in clauses (i) through (v) and those
disclosed in Section 4.04(c) of the Company Disclosure Schedule being
collectively referred to as the "Company Required Statutory Approvals"), no
declaration, filing or registration with, or notice to, or authorization,
consent or approval of, any governmental or regulatory body or authority is
necessary for the execution and delivery of this Agreement by the Company or the
consummation by the Company of the transactions contemplated hereby, other than
such declarations, filings, registrations, notices, authorizations, consents or
approvals which, if not made or obtained, as the case may be, would not
individually or in the aggregate have a Company Material Adverse Effect and
would not prevent or materially delay the consummation of the Merger.
Section 4.05. Reports and Financial Statements. Since January 1, 1998, the
Company has filed with the SEC all forms, statements, reports and documents
(including all exhibits, post-effective amendments and supplements thereto)
(collectively, the "SEC Reports") required to be filed by it under each of the
Securities Act, the Exchange Act and the respective rules and regulations
promulgated thereunder, all of which, as amended if applicable, complied when
filed in all material respects with all requirements of the applicable act and
the rules and regulations promulgated thereunder. As of their respective dates,
the SEC Reports did not contain any untrue statement of a material fact or omit
to state a material fact required to make the statements therein, in the light
of the circumstances under which they were made, not misleading. The
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audited consolidated financial statements of the Company (the "Company
Financial Statements") included as an exhibit to the Company's proxy statement
relating to its 2000 annual meeting of shareholders have been prepared in
accordance with generally accepted accounting principles applied on a
consistent basis (except as may be indicated therein or in the notes thereto)
and fairly present in all material respects the financial position of the
Company and its subsidiaries as of the dates thereof and the results of their
operations and changes in financial position for the periods then ended.
Section 4.06. Absence of Undisclosed Liabilities. Except as disclosed in
the SEC Reports or the Company Disclosure Schedule, neither the Company nor
any of its subsidiaries had at September 30, 2000, or has incurred since that
date and as of the date hereof, any liabilities or obligations (whether
absolute, accrued, contingent or otherwise) of any nature, except (a)
liabilities, obligations or contingencies (i) which are accrued or reserved
against in the Company Financial Statements or reflected in the notes thereto,
or (ii) which were incurred after September 30, 2000 in the ordinary course of
business and consistent with past practice, (b) liabilities, obligations or
contingencies which (i) would not, individually or in the aggregate, have a
Company Material Adverse Effect, or (ii) have been discharged or paid in full
prior to the date hereof in the ordinary course of business, and (c)
liabilities, obligations and contingencies which are of a nature not required
to be reflected in the consolidated financial statements of the Company and
its subsidiaries prepared in accordance with generally accepted accounting
principles consistently applied.
Section 4.07. Absence of Certain Changes or Events . Since the date of the
most recent SEC Report filed prior to the date of this Agreement that contains
consolidated financial statements of the Company, there has not been any
Company Material Adverse Effect.
Section 4.08. Litigation. Except as referred to in the SEC Reports, there
are no claims, suits, actions or proceedings pending or, to the knowledge of
the Company, threatened against, relating to or affecting the Company or any
of its subsidiaries, before any court, governmental department, commission,
agency, instrumentality or authority, or any arbitrator that would,
individually or in the aggregate, have a Company Material Adverse Effect.
Except as referred to in the SEC Reports, neither the Company nor any of its
subsidiaries is subject to any judgment, decree, injunction, rule or order of
any court, governmental department, commission, agency, instrumentality or
authority, or any arbitrator which prohibits the consummation of the
transactions contemplated hereby or would, individually or in the aggregate,
have a Company Material Adverse Effect.
Section 4.09. Proxy Statement. None of the information to be supplied by
the Company or any of its subsidiaries for inclusion in the Proxy Statement
will, at the time of the mailing thereof and any amendments or supplements
thereto, and at the time of the meeting of shareholders of the Company to be
held in connection with the transactions contemplated by this Agreement,
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 the light of the circumstances under which they are
made, not misleading. The Proxy Statement will comply in all material respects
with all applicable laws, including, but not limited to, the provisions of the
Exchange Act and the rules and regulations promulgated thereunder, except that
no representation is made by the Company with respect to information supplied
by Parent, Merger Subsidiary or any stockholder of Parent for inclusion
therein.
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Section 4.10. No Violation of Law. Except as disclosed in the SEC
Reports, neither the Company nor any of its subsidiaries is in violation of or
has been given notice of any violation of, any law, statute, order, rule,
regulation, ordinance or judgment (including, without limitation, any
applicable environmental law, ordinance or regulation) of any governmental or
regulatory body or authority, except for violations which would not,
individually or in the aggregate, have a Company Material Adverse Effect.
Except as disclosed in the SEC Reports, to the knowledge of the Company, no
investigation or review by any governmental or regulatory body or authority is
pending or threatened, nor has any governmental or regulatory body or
authority indicated an intention to conduct the same, other than, in each
case, those the outcome of which would not, individually or in the aggregate,
have a Company Material Adverse Effect. The Company and its subsidiaries are
not in violation of the terms of any permit, license, franchise, variance,
exemption, order or other governmental authorization, consent or approval
necessary to conduct their businesses as presently conducted (collectively,
the "Company Permits"), except for delays in filing reports or violations
which would not reasonably be expected, individually or in the aggregate, to
have a Company Material Adverse Effect.
Section 4.11. Compliance with Agreements. Except as disclosed in the SEC
Reports, neither the Company nor any of its subsidiaries is in breach,
violation or default in the performance or observance of any term or provision
of, and no event has occurred which, with lapse of time or action by a third
party, would result in a default under, any Contract to which the Company or
any of its subsidiaries is a party or by which any of them is bound or to
which any of their property is subject, other than breaches, violations and
defaults which would not, individually or in the aggregate, have a Company
Material Adverse Effect. The Company's insurance policies relating to
directors' and officers' liability are in full force and effect.
Section 4.12. Taxes. (a) The Company and its subsidiaries have (i) duly
filed with the appropriate governmental authorities all Tax Returns (as
defined in Section 4.12(c)) required to be filed by them, and such Tax Returns
are true, correct and complete, and (ii) duly paid in full or reserved in
accordance with generally accepted accounting principles on the Company
Financial Statements all Taxes (as defined in Section 4.12(c)) required to be
paid, except in each such case as would not, individually or in the aggregate,
have a Company Material Adverse Effect. Except as would not, individually or
in the aggregate, have a Company Material Adverse Effect, there are no liens
for Taxes upon any property or asset of the Company or any subsidiary thereof,
other than liens for Taxes not yet due or Taxes contested in good faith and
reserved against in accordance with generally accepted accounting principles.
There are no unresolved issues of law or fact arising out of a notice of
deficiency, proposed deficiency or assessment from the Internal Revenue
Service (the "IRS") or any other governmental taxing authority with respect to
Taxes of the Company or any of its subsidiaries which would individually or in
the aggregate, have a Company Material Adverse Effect. Except as would not,
individually or in the aggregate, have a Company Material Adverse Effect,
neither the Company nor any of its subsidiaries has agreed to an extension of
time with respect to a Tax deficiency, other than extensions which are no
longer in effect. Except as would not, individually or in the aggregate, have
a Company Material Adverse Effect, neither the Company nor any of its
subsidiaries is a party to any agreement providing for the allocation or
sharing of Taxes with any entity that is not, directly or indirectly, a
wholly-owned subsidiary of the Company, other than agreements the consequences
of which are fully and adequately reserved for in the Company Financial
Statements.
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(b) Except as would not, individually or in the aggregate, have a
Company Material Adverse Effect, the Company and each of its subsidiaries has
withheld or collected and has paid over to the appropriate governmental entities
(or is properly holding for such payment) all material Taxes required to be
collected or withheld.
(c) For purposes of this Agreement, "Taxes" means all federal, state,
local and foreign income, profits, franchise, gross receipts, environmental,
customs duty, capital stock, communications services, severance, stamp, payroll,
sales, employment, unemployment, disability, use, property, withholding, excise,
production, value added, occupancy and other taxes, duties or assessments of any
nature whatsoever, together with all interest, penalties and additions imposed
with respect to such amounts and any interest in respect of such penalties and
additions, and includes any liability for Taxes of another person by contract,
as a transferee or successor, under Treasury Regulation 1.1502-6 or analogous
state, local or foreign law provision or otherwise, and "Tax Return" means any
return, report or similar statement (including attached schedules) required to
be filed with respect to any Tax, including without limitation, any information
return, claim for refund, amended return or declaration of estimated Tax.
Section 4.13. Employee Benefit Plans; ERISA. (a) The SEC Reports and the
Company Disclosure Schedule set forth each material employee or director benefit
plan, arrangement or agreement, including, without limitation, any employee
welfare benefit plan within the meaning of Section 3(1) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), any employee
pension benefit plan within the meaning of Section 3(2) of ERISA (whether or not
such plan is subject to ERISA) and any bonus, incentive, deferred compensation,
vacation, stock purchase, stock option, severance, employment, change of control
or fringe benefit plan, program or agreement (excluding any multi-employer plan
as defined in Section 3(37) of ERISA (a "Multi-employer Plan") and any multiple
employer plan within the meaning of Section 413(c) of the Internal Revenue Code
of 1986, as amended (the "Code")) that is sponsored, maintained or contributed
to by the Company or any of its subsidiaries or by any trade or business,
whether or not incorporated, all of which together with the Company would be
deemed a "single employer" within the meaning of Section 4001 of ERISA
(collectively, the "Company Plans").
(b) Except as disclosed in the SEC Reports or in the Company Disclosure
Schedule, (i) there have been no prohibited transactions within the meaning of
Section 406 or 407 of ERISA or Section 4975 of the Code with respect to any of
the Company Plans that could result in penalties, taxes or liabilities which
would individually or in the aggregate, have a Company Material Adverse Effect,
(ii) no Company Plan is subject to Title IV of ERISA, (iii) each of the Company
Plans has been operated and administered in accordance with all applicable laws
during the period of time covered by the applicable statute of limitations,
except for failures to comply which would not, individually or in the aggregate,
have a Company Material Adverse Effect, (iv) each of the Company Plans which is
intended to be "qualified" within the meaning of Section 401(a) of the Code has
been determined by the IRS to be so qualified and such determination has not
been revoked by failure to satisfy any condition thereof or by a subsequent
amendment thereto or a failure to amend, except that it may be necessary to make
additional amendments retroactively to maintain the "qualified" status of such
Company Plans, and the period for making any such necessary retroactive
amendments has not expired, (v) to the knowledge of the Company and its
subsidiaries, there are no pending, threatened or anticipated claims involving
any of the Company Plans other than claims for benefits in the ordinary course
or claims which would not reasonably be expected, individually or in the
aggregate, to have a
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Company Material Adverse Effect, (vi) no Company Plan provides post-retirement
medical benefits to employees or directors of the Company or any of its
subsidiaries beyond their retirement or other termination of service, other
than coverage mandated by applicable law, (vii) all material contributions or
other amounts payable by the Company or its subsidiaries as of the date hereof
with respect to each Company Plan in respect of current or prior plan years
have been paid or accrued in accordance with generally accepted accounting
principles, (viii) with respect to each Multi-employer Plan contributed to by
the Company, to the knowledge of the Company and its subsidiaries, as of the
date hereof, none of the Company or any of its subsidiaries has received any
notification that any such Multi-employer Plan is in reorganization, has been
terminated or is insolvent, (ix) the Company and each of its subsidiaries has
complied in all respects with the Worker Adjustment and Retraining
Notification Act, except for failures which would not, individually or in the
aggregate, have a Company Material Adverse Effect, and (x) no act, omission or
transaction has occurred with respect to any Company Plan that has resulted or
could result in any liability of the Company or any subsidiary under Section
409 or 502(c)(1) of ERISA or Chapter 43 of Subtitle (A) of the Code, except
for liabilities which would not, individually or in the aggregate, have a
Company Material Adverse Effect.
(c) Except as set forth in the Company Disclosure Schedule, and
excluding payments in respect of outstanding Options or Common Stock, neither
the execution and delivery of this Agreement nor the consummation of the
transactions contemplated hereby will (i) result in any payment (including,
without limitation, any severance or "excess parachute payment" (within the
meaning of Section 280G of the Code)) becoming due to any director or employee
of the Company or any of its subsidiaries under any Company Plan, (ii) increase
any benefits otherwise payable under any Company Plan, or (iii) result in any
acceleration of the time of payment or vesting of any such benefits.
Section 4.14. Labor Controversies. Except as disclosed in the SEC Reports,
(a) there are no significant controversies pending or, to the knowledge of the
Company, threatened between the Company or any of its subsidiaries and any
representatives (including unions) of any of their employees, and (b) to the
knowledge of the Company, there are no organizational efforts presently being
made involving any of the presently unorganized employees of the Company or any
of its subsidiaries.
Section 4.15. Environmental Matters. (a) Except as disclosed in the SEC
Reports, (i) the Company and its subsidiaries have conducted their respective
businesses in compliance with all applicable Environmental Laws, including,
without limitation, having all permits, licenses and other approvals and
authorizations necessary for the operation of their respective businesses as
presently conducted, (ii) none of the properties owned by the Company or any of
its subsidiaries contain any Hazardous Substance (as defined in Section 4.15(c))
in amounts exceeding the levels permitted by applicable Environmental Laws (as
defined in Section 4.15(b)), (iii) since January 1, 1998, neither the Company
nor any of its subsidiaries has received any notices, demand letters or requests
for information from any Federal, state, local or foreign governmental entity
indicating that the Company or any of its subsidiaries may be in violation of,
or liable under, any Environmental Law in connection with the ownership or
operation of their businesses, (iv) there are no civil, criminal or
administrative actions, suits, demands, claims, hearings, investigations or
proceedings pending or threatened, against the Company or any of its
subsidiaries relating to any violation, or alleged violation, of any
Environmental Law, (v) no Hazardous Substance has been disposed of, released or
transported in violation of any applicable Environmental Law from any properties
owned by the Company or any of its subsidiaries as a
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result of any activity of the Company or any of its subsidiaries during the
time such properties were owned, leased or operated by the Company or any of
its subsidiaries, and (vi) neither the Company, its subsidiaries nor any of
their respective properties are subject to any liabilities or expenditures
(fixed or contingent) relating to any suit, settlement, court order,
administrative order, regulatory requirement, judgment or claim asserted or
arising under any Environmental Law, except for violations of the foregoing
clauses (i) through (vi) that would not, individually or in the aggregate,
have a Company Material Adverse Effect.
(b) As used herein, "Environmental Law" means any federal, state, local
or foreign law, statute, ordinance, rule, regulation, code, license, permit,
authorization, approval, consent, legal doctrine, order, judgment, decree,
injunction, requirement or agreement with any governmental entity relating to
(x) the protection, preservation or restoration of the environment (including,
without limitation, air, water vapor, surface water, groundwater, drinking water
supply, surface land, subsurface land, plant and animal life or any other
natural resource) or to human health or safety, or (y) the exposure to, or the
use, storage, recycling, treatment, generation, transportation, processing,
handling, labeling, production, release or disposal of Hazardous Substances, in
each case as amended and as in effect at the Effective Time. The term
"Environmental Law" includes, without limitation, (i) the Federal Comprehensive
Environmental Response Compensation and Liability Act of 1980, the Superfund
Amendments and Reauthorization Act, the Federal Water Pollution Control Act of
1972, the Federal Clean Air Act, the Federal Clean Water Act, the Federal
Resource Conservation and Recovery Act of 1976 (including the Hazardous and
Solid Waste Amendments thereto), the Federal Solid Waste Disposal Act and the
Federal Toxic Substances Control Act, the Federal Insecticide, Fungicide and
Rodenticide Act, and the Federal Occupational Safety and Health Act of 1970,
each as amended and as in effect at the Effective Time, and (ii) any common law
or equitable doctrine (including, without limitation, injunctive relief and tort
doctrines such as negligence, nuisance, trespass and strict liability) that may
impose liability or obligations for injuries or damages arising from or
threatened as a result of, the presence of, effects of or exposure to any
Hazardous Substance.
(c) As used herein, "Hazardous Substance" means any substance presently
or hereafter listed, defined, designated or classified as hazardous, toxic,
radioactive, or dangerous, or otherwise regulated, under any Environmental Law.
Hazardous Substance includes any substance to which exposure is regulated by any
government authority or any Environmental Law including, without limitation, any
toxic waste, pollutant, contaminant, hazardous substance, toxic substance,
hazardous waste, special waste, industrial substance or petroleum or any
derivative or by-product thereof, radon, radioactive material, asbestos, or
asbestos-containing material, urea formaldehyde foam insulation, lead or
polychlorinated biphenyls.
Section 4.16. Title to Assets. The Company and each of its subsidiaries has
good and valid title in fee simple to all its real property and good title to
all its leasehold interests and other properties, as reflected in the most
recent balance sheet included in the Company Financial Statements, except for
properties and assets that have been disposed of in the ordinary course of
business since the date of such balance sheet, free and clear of all mortgages,
liens, pledges, charges or encumbrances of any nature whatsoever, except (i) the
lien for current taxes, payments of which are not yet delinquent, (ii) such
imperfections in title and easements and encumbrances, if any, as are not
substantial in character, amount or extent and do not materially detract from
the value, or interfere with the present use of the property subject thereto or
affected thereby, or otherwise materially impair the Company's business
operations (in the manner
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presently carried on by the Company), or (iii) as disclosed in the SEC
Reports, and except for such matters which would not, individually or in the
aggregate, have a Company Material Adverse Effect. All leases under which the
Company or any of its subsidiaries leases any real or personal property are in
good standing, valid and effective in accordance with their respective terms,
and there is not, under any of such leases, any existing default or event
which with notice or lapse of time or both would become a default other than
failures to be in good standing, valid and effective and defaults under such
leases which would not reasonably be expected, individually or in the
aggregate, to have a Company Material Adverse Effect.
Section 4.17. Company Shareholders' Approval. The affirmative vote of
shareholders of the Company required for approval and adoption of this Agreement
and the Merger is a majority of the outstanding shares of the Common Stock
entitled to vote thereon.
Section 4.18. Brokers and Finders. The Company has not entered into any
contract, arrangement or understanding with any person or firm which may result
in the obligation of the Company to pay any investment banking fees, finder's
fees or brokerage fees in connection with the transactions contemplated hereby,
other than fees payable to ___________________________ (the "Company Financial
Advisor"), or as disclosed in Section 4.18 of the Company Disclosure Schedule.
An accurate copy of any fee agreement with the Company Financial Advisor has
been made available to Parent.
ARTICLE V
COVENANTS
Section 5.01. Conduct of Business by the Company Pending the Merger. Except
as otherwise contemplated by this Agreement or disclosed in Section 5.01 of the
Company Disclosure Schedule, after the date hereof and prior to the Effective
Time or earlier termination of this Agreement, unless Parent shall otherwise
agree in writing, the Company shall, and shall cause its subsidiaries to:
(a) conduct their respective businesses in the ordinary and usual course
of business and consistent with past practice;
(b) not (i) amend or propose to amend their respective certificates of
incorporation or bylaws or equivalent constitutional documents, (ii) split,
combine or reclassify their outstanding capital stock, or (iii) declare, set
aside or pay any dividend or distribution payable in cash, stock, property or
otherwise, except for the payment of dividends or distributions to the Company
or a wholly-owned subsidiary of the Company by a direct or indirect wholly-owned
subsidiary of the Company;
(c) not issue, sell, pledge or dispose of, or agree to issue, sell,
pledge or dispose of, any additional shares of, or any options, warrants or
rights of any kind to acquire any shares of, their capital stock of any class or
any debt or equity securities convertible into or exchangeable for any such
capital stock, except that the Company may issue shares upon the exercise of
Options outstanding on the date hereof;
(d) not (i) incur or become contingently liable with respect to any
indebtedness for borrowed money other than (A) borrowings in the ordinary course
of business or borrowings under the existing credit facilities of the Company or
of any of its subsidiaries up to the existing
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borrowing limit on the date hereof, and (B) borrowings to refinance existing
indebtedness on terms which are reasonably acceptable to Parent; provided that
in no event shall aggregate indebtedness of the Company and its subsidiaries,
net of all cash and cash equivalents, exceed $______________, (ii) redeem,
purchase, acquire or offer to purchase or acquire any shares of its capital
stock or any options, warrants or rights to acquire any of its capital stock
or any security convertible into or exchangeable for its capital stock other
than in connection with the exercise of outstanding Options pursuant to the
terms of the Company Plans, (iii) make any acquisition of any assets or
businesses other than expenditures for current assets for fixed or capital
assets in each case in the ordinary course of business, (iv) without Parent's
consent, acquire any gaming property, (v) sell, pledge, dispose of or encumber
any assets or businesses other than (A) sales of businesses or assets
disclosed in Section 5.01 of the Company Disclosure Schedule, (B) pledges or
encumbrances pursuant to existing credit facilities or other permitted
borrowings, (C) sales of real estate, assets or facilities for cash
consideration (including any debt assumed by the buyer of such real estate,
assets or facilities) to non-affiliates of the Company of less than
$______________ in each such case and $____________ in the aggregate, (D)
sales or dispositions of businesses or assets as may be required by applicable
law, and (E) sales or dispositions of assets in the ordinary course of
business, or (vi) enter into any binding contract, agreement, commitment or
arrangement with respect to any of the foregoing;
(e) use all reasonable efforts to preserve intact their respective
business organizations and goodwill, keep available the services of their
respective present officers and key employees, and preserve the goodwill and
business relationships with customers and others having business relationships
with them other than as expressly permitted by the terms of this Agreement;
(f) not enter into, amend, modify or renew any employment, consulting,
severance or similar agreement with, or grant any salary, wage or other increase
in compensation or increase in any employee benefit to, any director or officer
of the Company or of any of its subsidiaries, except (i) for changes that are
required by applicable law, (ii) to satisfy obligations existing as of the date
hereof, or (iii) in the ordinary course of business consistent with past
practice;
(g) not enter into, establish, adopt, amend or modify any pension,
retirement, stock purchase, savings, profit sharing, deferred compensation,
consulting, bonus, group insurance or other employee benefit, incentive or
welfare plan, agreement, program or arrangement, in respect of any director,
officer or employee of the Company or of any of its subsidiaries, except, in
each such case, as may be required by applicable law or by the terms of
contractual obligations existing as of the date hereof, including any collective
bargaining agreement;
(h) not make expenditures, including, but not limited to, capital
expenditures, or enter into any binding commitment or contract to make
expenditures, except (i) expenditures which the Company or its subsidiaries are
currently contractually committed to make, (ii) other expenditures not exceeding
$_____________ in the aggregate, (iii) for emergency repairs and other
expenditures necessary in light of circumstances not anticipated as of the date
of this Agreement which are necessary to avoid significant disruption to the
Company's business or operations consistent with past practice (and, if
reasonably practicable, after consultation with Parent), or (iv) for repairs and
maintenance in the ordinary course of business consistent with past practice.
With respect to the subject matter of this paragraph (h), if the Company
requests
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approval of Parent to exceed the limits set forth herein, Parent shall respond
to such request and grant or withhold approval promptly following receipt of
such request;
(i) not make, change or revoke any material Tax election unless required
by law or make any agreement or settlement with any taxing authority regarding
any material amount of Taxes or which would reasonably be expected to materially
increase the obligations of the Company or the Surviving Corporation to pay
Taxes in the future.
Section 5.02. Control of the Company's Operations. Nothing contained in
this Agreement shall give to Parent, directly or indirectly, rights to control
or direct the Company's operations prior to the Effective Time. Prior to the
Effective Time, the Company shall exercise, consistent with the terms and
conditions of this Agreement, complete control and supervision of its
operations.
Section 5.03. Acquisition Transactions. (a) After the date hereof and prior
to the Effective Time or earlier termination of this Agreement, the Company
shall not, and shall not permit any of its subsidiaries to, initiate, solicit,
negotiate, encourage or provide confidential information to facilitate, and the
Company shall use all reasonable efforts to cause any officer, director or
employee of the Company, or any attorney, accountant, investment banker,
financial advisor or other agent retained by it or any of its subsidiaries, not
to initiate, solicit, negotiate, encourage or provide non-public or confidential
information to facilitate, any proposal or offer to acquire all or any
substantial part of the business, properties or capital stock of the Company,
whether by merger, purchase of assets, tender offer or otherwise, whether for
cash, securities or any other consideration or combination thereof (any such
transactions being referred to herein as an "Acquisition Transaction").
(b) Notwithstanding the provisions of paragraph (a) above, (i) the
Company may, prior to receipt of the Company Shareholders' Approval, in response
to an unsolicited bona fide written offer or proposal with respect to a
potential or proposed Acquisition Transaction (an "Acquisition Proposal") from a
corporation, partnership, person or other entity or group (a "Potential
Acquirer") which the Company's Board of Directors determines, in good faith and
after consultation with its independent financial advisor, would reasonably be
expected to result (if consummated pursuant to its terms) in an Acquisition
Transaction more favorable to the Company's shareholders than the Merger (a
"Qualifying Proposal"), furnish (subject to the execution of a confidentiality
agreement substantially similar to the Confidentiality Agreement (as defined in
Section 5.04)) confidential or non-public information to, and negotiate with,
such Potential Acquirer, may resolve to accept, or recommend, and, upon
termination of this Agreement in accordance with Section 7.01(v) and after
payment to Parent of the fee pursuant to Section 5.09(b), enter into agreements
relating to, a Qualifying Proposal which the Company's Board of Directors, in
good faith, has determined is reasonably likely to be consummated (such
Qualifying Proposal being a "Superior Proposal") and (ii) the Company's Board of
Directors may take and disclose to the Company's shareholders a position
contemplated by Rule 14e-2 under the Exchange Act or otherwise make disclosure
required by the federal securities laws. It is understood and agreed that
negotiations and other activities conducted in accordance with this paragraph
(b) shall not constitute a violation of paragraph (a) of this Section 5.03.
(c) The Company shall promptly notify Parent after receipt of any
Acquisition Proposal, indication of interest or request for non-public
information relating to the Company or its subsidiaries in connection with an
Acquisition Proposal or for access to the properties, books or records of the
Company or any subsidiary by any person or entity that informs the Board of
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Directors of the Company or such subsidiary that it is considering making, or
has made, an Acquisition Proposal. Such notice to Parent shall be given orally
and in writing and shall indicate in reasonable detail the identity of the
offeror and the material terms and conditions of such proposal, inquiry or
contact.
Section 5.04. Access to Information. The Company and its subsidiaries
shall afford to Parent and Merger Subsidiary and their respective accountants,
counsel, financial advisors, sources of financing and other representatives
(the "Parent Representatives") reasonable access during normal business hours
with reasonable notice throughout the period prior to the Effective Time to
all of their respective properties, books, contracts, commitments and records
(including, but not limited to, Tax Returns) and, during such period, shall
furnish promptly (i) a copy of each report, schedule and other document filed
or received by any of them pursuant to the requirements of federal or state
securities laws or filed by any of them with the SEC in connection with the
transactions contemplated by this Agreement, and (ii) such other information
concerning its businesses, properties and personnel as Parent or Merger
Subsidiary shall reasonably request and will obtain the reasonable cooperation
of the Company's officers, employees, counsel, accountants, consultants and
financial advisors in connection with the investigation of the Company by
Parent and the Parent Representatives. All nonpublic information provided to,
or obtained by, Parent or any Parent Representative in connection with the
transactions contemplated hereby shall be "Information" for purposes of the
Confidentiality Agreement dated ______________, 2001 between Parent and the
Company (the "Confidentiality Agreement"), provided that Parent, Merger
Subsidiary and the Company may disclose such information as may be necessary
in connection with seeking the Parent Required Statutory Approvals, the
Company Required Statutory Approvals and the Company Shareholders' Approval.
Notwithstanding the foregoing, the Company shall not be required to provide
any information which it reasonably believes it may not provide to Parent by
reason of applicable law, rules or regulations, which constitutes information
protected by attorney/client privilege, or which the Company or any subsidiary
is required to keep confidential by reason of contract, agreement or
understanding with third parties entered into prior to the date hereof.
Section 5.05. Notices of Certain Events. (a) The Company shall promptly as
reasonably practicable after executive officers of the Company acquire
knowledge thereof, notify Parent of: (i) any notice or other communication
from any person alleging that the consent of such person (or another person)
is or may be required in connection with the transactions contemplated by this
Agreement which consent relates to a material Contract to which the Company or
any of its subsidiaries is a party or which, if not obtained, would materially
delay consummation of the Merger; (ii) any notice or other communication from
any governmental or regulatory agency or authority in connection with the
transactions contemplated by this Agreement; and (iii) any actions, suits,
claims, investigations or proceedings commenced or, to the best of its
knowledge threatened against, relating to or involving or otherwise affecting
the Company or any of its subsidiaries that, if pending on the date of this
Agreement, would have been required to have been disclosed pursuant to Section
4.08 or 4.10 or which relate to the consummation of the transactions
contemplated by this Agreement.
(b) Each of Parent and Merger Subsidiary shall as promptly as reasonably
practicable after executive officers of Parent acquire knowledge thereof,
notify the Company of: (i) any notice or other communication from any person
alleging that the consent of such person (or other person) is or may be
required in connection with the transactions contemplated by this Agreement
which consent relates to a material Contract to which Parent or any of its
subsidiaries
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is a party or which, if not obtained, would materially delay the Merger, (ii)
any notice or other communication from any governmental or regulatory agency
or authority in connection with the transactions contemplated by this
Agreement, and (iii) any actions, suits, claims, investigations or proceedings
commenced or, to the best of its knowledge, threatened against Parent or
Merger Subsidiary, which relate to consummation of the transactions
contemplated by this Agreement.
(c) Each of the Company, Parent and Merger Subsidiary agrees to give
prompt notice to each other of, and to use commercially reasonable efforts to
remedy, (i) the occurrence or failure to occur of any event which occurrence
or failure would be likely to cause any of its representations or warranties
in this Agreement to be untrue or inaccurate at the Effective Time unless such
failure or occurrence would not have a Company Material Adverse Effect or a
Parent Material Adverse Effect, as the case may be, and (ii) any failure on
its part to comply with or satisfy any covenant, condition or agreement to be
complied with or satisfied by it hereunder unless such failure or occurrence
would not have a Company Material Adverse Effect or a Parent Material Adverse
Effect, as the case may be. The delivery of any notice pursuant to this
Section 5.05(c) shall not limit or otherwise affect the remedies available
hereunder to the party receiving such notice.
Section 5.06. Meeting of the Company's Shareholders. The Company shall as
promptly as practicable after the date of this Agreement take all action
necessary in accordance with the Virginia Act and its articles of
incorporation and bylaws to convene the Special Meeting. The board of
directors of the Company shall recommend that the Company's shareholders vote
to approve the Merger and adopt this Agreement; provided, however, that the
Company may change its recommendation in any manner if its recommendation of
the Merger would be inconsistent with the Board of Directors' fiduciary duties
under applicable law, as determined by the board of directors in good faith
after consultation with its financial and legal advisors.
Section 5.07. Proxy Statement. As promptly as practicable after execution
of this Agreement, the Company shall prepare and file the Proxy Statement, and
use all reasonable efforts to have the Proxy Statement cleared by the SEC.
Parent, Merger Subsidiary and the Company shall cooperate with each other in
the preparation of the Proxy Statement, and the Company shall notify Parent of
the receipt of any comments of the SEC with respect to the Proxy Statement and
of any requests by the SEC for any amendment or supplement thereto or for
additional information and shall provide promptly to Parent copies of all
correspondence between the Company or any representative of the Company and
the SEC. The Company shall give Parent and its counsel the opportunity to
review the Proxy Statement prior to its being filed with the SEC and shall
give Parent and its counsel the opportunity to review all amendments and
supplements to the Proxy Statement and all responses to requests for
additional information and replies to comments prior to their being filed
with, or sent to, the SEC. Each of the Company, Parent and Merger Subsidiary
agrees to use its reasonable best efforts, after consultation with the other
parties hereto, to respond promptly to all such comments of and requests by
the SEC. As promptly as practicable after the Proxy Statement has been cleared
by the SEC, the Company shall mail the Proxy Statement to the shareholders of
the Company. Prior to the date of approval of the Merger by the Company's
shareholders, each of the Company, Parent and Merger Subsidiary shall correct
promptly any information provided by it to be used specifically in the Proxy
Statement that shall have become false or misleading in any material respect
and the Company shall take all steps necessary to file with the SEC any
amendment to the Proxy Statement so as to correct the same and to cause the
amended Proxy Statement to be
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disseminated to the Shareholders of the Company, in each case to the extent
required by applicable law.
Section 5.08. Public Announcements Parent and the Company will consult
with each other before issuing any press release or making any public
statement with respect to this Agreement and the transactions contemplated
hereby and, except as may be required by applicable law or any listing
agreement with the NASDAQ - National Market System, will not issue any such
press release or make any such public statement prior to such consultation.
Section 5.09. Expenses and Fee. (a) All costs and expenses incurred in
connection with this Agreement and the transactions contemplated hereby shall
be paid by the party incurring such expenses, except that those expenses
incurred in connection with printing and filing the Proxy Statement shall be
shared equally by Parent and the Company.
(b) The Company agrees to pay to Parent a fee equal to
$_____________ if:
(i) the Company terminates this Agreement pursuant to
clause (v) of Section 7.01, which fee shall be payable within two
business days of such termination;
(ii) Parent terminates this Agreement pursuant to
clause (vi) of Section 7.01, which fee shall be payable within two
business days of such termination;
(iii) this Agreement is terminated for any reason at a
time at which Parent was not in material breach of its
representations, warranties, covenants and agreements contained in
this Agreement and was entitled to terminate this Agreement
pursuant to clause (vii) of Section 7.01, and (A) prior to the
time of the Special Meeting, a proposal by a third party relating
to an Acquisition Transaction had been publicly proposed or
publicly announced, and (B) on or prior to the 12 month
anniversary of the termination of this Agreement, the Company or
any of its subsidiaries or affiliates enters into an agreement or
letter of intent (or resolves or announces an intention to do)
with respect to an Acquisition Transaction involving a person,
entity or group if such person, entity, group (or any member of
such group, or any affiliate of any of the foregoing) made a
proposal with respect to an Acquisition Transaction on or after
the date hereof and prior to the Special Meeting and such
Acquisition Transaction is consummated, which fee shall be payable
within two business days of such termination.
Section 5.10. Agreement to Cooperate. (a) Subject to the terms and
conditions of this Agreement, including Section 5.03, each of the parties
hereto shall use all best efforts to take, or cause to be taken, all action
and to do, or cause to be done, all things necessary, proper or advisable
under applicable laws and regulations including, but not limited to, the HSR
Act and the Gaming Laws, to consummate and make effective the transactions
contemplated by this Agreement, including using its best efforts to obtain all
necessary or appropriate waivers, consents or approvals of third parties
required in order to preserve material contractual relationships of Parent and
the Company and their respective subsidiaries, all necessary or appropriate
waivers, consents and approvals to effect all necessary registrations, filings
and submissions and to lift any injunction or other legal bar to the Merger
(and, in that case, to proceed with the Merger as expeditiously as possible).
In addition, subject to the terms and
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conditions herein provided and subject to the fiduciary duties of the
respective boards of directors of the Company and Parent, none of the parties
hereto shall knowingly take or cause to be taken any action which would
reasonably be expected to delay materially or prevent consummation of the
Merger.
(b) Without limitation of the foregoing, each of Parent and the Company
undertakes and agrees to file as soon as practicable a Notification and Report
Form under the HSR Act with the United States Federal Trade Commission (the
"FTC") and the Antitrust Division of the United States Department of Justice
(the "Antitrust Division") and to make such filings and apply for such approvals
and consents as are required under the Gaming Laws. Each of Parent and the
Company shall (i) respond as promptly as practicable to any inquiries received
from the FTC or the Antitrust Division or any authority enforcing applicable
Gaming Laws for additional information or documentation and to all inquiries and
requests received from any State Attorney General or other governmental
authority in connection with antitrust matters or Gaming Laws, and (ii) not
extend any waiting period under the HSR Act or enter into any agreement with the
FTC or the Antitrust Division not to consummate the transactions contemplated by
this Agreement, except with the prior written consent of the other Parties
hereto. Each party shall (i) promptly notify the other party of any written
communication to that party from the FTC, the Antitrust Division, any State
Attorney General or any other governmental entity and, subject to applicable
law, permit the other party to review in advance any proposed written
communication to any of the foregoing; (ii) not agree to participate in any
substantive meeting or discussion with any governmental authority in respect of
any filings, investigation or inquiry concerning this Agreement or the Merger
unless it consults with the other party in advance and, to the extent permitted
by such governmental authority, gives the other party the opportunity to attend
and participate thereat; and (iii) furnish the other party with copies of all
correspondence, filings, and communications (and memoranda setting forth the
substance thereof) between them and their affiliates and their respective
representatives on the one hand, and any government or regulatory authority or
members or their respective staffs on the other hand, with respect to this
Agreement and the Merger.
Section 5.11. Directors' and Officers' Indemnification. (a) The
indemnification provisions of the articles of incorporation and bylaws of the
Company as in effect at the Effective Time shall not be amended, repealed or
otherwise modified for a period of six years from the Effective Time in any
manner that would adversely affect the rights thereunder of individuals who at
the Effective Time were directors, officers, employees or agents of the Company.
(b) Without limiting Section 5.11(a), after the Effective Time, the
Surviving Corporation shall, and Parent shall cause the Surviving Corporation
to, to the fullest extent permitted under applicable law, indemnify and hold
harmless, each present and former director, officer, employee and agent of the
Company or any of its subsidiaries (each, together with such person's heirs,
executors or administrators, an "Indemnified Party" and collectively, the
"Indemnified Parties") against any costs or expenses (including attorneys'
fees), judgments, fines, losses, claims, damages, liabilities and amounts paid
in settlement in connection with any actual or threatened claim, action, suit,
proceeding or investigation, whether civil, criminal, administrative or
investigative (collectively, "Costs and Expenses"), arising out of, relating to
or in connection with (i) any action or omission occurring or alleged to occur
prior to the Effective Time (including, without limitation, acts or omissions in
connection with such persons serving as an officer, director or other fiduciary
of any entity if such service was at the request or for the
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benefit of the Company), or (ii) the Merger and the other transactions
contemplated by this Agreement or arising out of or pertaining to the
transactions contemplated by this Agreement or the events and developments
between Parent and the Company leading up to this Agreement. Any Indemnified
Party hereunder will (1) give prompt notice to the Surviving Corporation of
any claim which arises from or after the Effective Time with respect to which
it seeks indemnification, and (2) permit the Surviving Corporation to assume
the defense of such claim with counsel reasonably satisfactory to a majority
of the Indemnified Parties. In connection with the selection of counsel to
represent the Indemnified Parties in connection with clause (2) above, the
Surviving Corporation shall propose counsel to represent the Indemnified
Parties. The applicable Indemnified Parties shall have the right to approve
such counsel, but such approval shall not be unreasonably withheld. If the
proposed counsel is not approved, the Surviving Corporation shall continue to
propose counsel until counsel for the Surviving Corporation is approved by the
applicable Indemnified Parties. Any Indemnified Party shall have the right to
employ separate counsel and to participate in the defense of such claim, but
the fees and expenses of such counsel shall be at the expense of such person
unless: (x) the Surviving Corporation has agreed, in writing, to pay such fees
or expenses; (y) the Indemnifying Party shall have failed to assume the
defense of such claim after the receipt of notice from the Indemnified Party
as required above and failed to employ counsel reasonably satisfactory to a
majority of the Indemnified Parties, or (z) based upon advice of counsel to
such Indemnified Party and concurrence therewith by counsel for the group of
Indemnified Parties in such matter, there shall be one or more defenses
available to such Indemnified Party that are not available to the Surviving
Corporation or there shall exist conflicts of interest between such
Indemnified Party and the Surviving Corporation and/or the other Indemnified
Parties (in which case, if the Indemnified Party notifies the Surviving
Corporation in writing that such Indemnified Party elects to employ separate
counsel at the expense of the Surviving Corporation, the Surviving Corporation
shall not have the right to assume the defense of such claim on behalf of such
Indemnified Party), in each of which events the reasonable fees and expenses
of such counsel (which counsel shall be reasonably acceptable to the Surviving
Corporation) shall be at the expense of the Surviving Corporation.
(c) In the event the Surviving Corporation or Parent or any of their
successors or assigns (i) consolidates with or merges into any other person and
shall not be the continuing or surviving corporation or entity of such
consolidation or merger, or (ii) transfers all or substantially all of its
properties and assets to any person, then and in each such case, proper
provisions shall be made so that the successors and assigns of the Surviving
Corporation or Parent shall assume the obligations of the Surviving Corporation
or the Parent, as the case may be, set forth in this Section 5.11.
(d) For a period of six years after the Effective Time, Parent shall
cause to be maintained or shall cause the Surviving Corporation to maintain in
effect the current policies of directors' and officers' liability insurance
maintained by the Company and its subsidiaries (provided that Parent may
substitute therefor policies of at least the same coverage and amounts
containing terms and conditions that are no less advantageous to the Indemnified
Parties, and which coverages and amounts shall be no less than the coverages and
amounts provided at that time for Parent's directors and officers) with respect
to matters arising on or before the Effective Time; provided, however, that
Parent and the Surviving Corporation shall not be required to expend in any year
an amount in excess of 125% of the annual aggregate premiums currently paid by
the Company for such insurance; and provided, further, that if the annual
premiums of such insurance coverage exceed such amount, Parent and the Surviving
Corporation shall be
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obligated to obtain a policy with the best coverage available, in the
reasonable judgment of the Parent's board of directors, for a cost not
exceeding such amount.
(e) The indemnification rights of the Indemnified Parties granted under
(i) this Agreement, (ii) the articles of incorporation and bylaws of the
Surviving Corporation, as amended, and (iii) the Virginia Act are the only
indemnification rights available to the Indemnified Parties and supercede any
other rights to indemnification under other agreements if any. The provisions of
this Section 5.12 shall survive the consummation of the Merger and expressly are
intended to benefit each of the Indemnified Parties.
ARTICLE VI
CONDITIONS TO THE MERGER
Section 6.01. Conditions to the Obligations of Each Party. The obligations
of the Company, Parent and Merger Subsidiary to consummate the Merger are
subject to the satisfaction of the following conditions:
(a) this Agreement and the Merger shall have been adopted by the
requisite vote of the shareholders of the Company in accordance with the
Virginia Act (the "Company Shareholders' Approval");
(b) none of the parties hereto shall be subject to any order or
injunction of any governmental authority of competent jurisdiction that
prohibits the consummation of the Merger. In the event any such order or
injunction shall have been issued, each party agrees to use its reasonable best
efforts to have any such order overturned or injunction lifted; and
(c) the waiting period applicable to consummation of the Merger under
the HSR Act shall have expired or been terminated.
Section 6.02. Conditions to Obligation of the Company to Effect the Merger.
Unless waived by the Company, 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 Merger Subsidiary shall have performed in all material
respects their agreements contained in this Agreement required to be performed
on or prior to the Effective Time and the representations and warranties of
Parent and Merger Subsidiary contained in this Agreement shall be true and
correct on and as of the Effective Time as if made at and as of such date
(except to the extent that such representations and warranties speak as of an
earlier date), except for such failures to perform or to be true and correct
that would not have a Parent Material Adverse Effect, and the Company shall have
received a certificate of the chief executive officer or the chief financial
officer of Parent to that effect; and
(b) all Parent Statutory Approvals and Company Statutory Approvals
required to be obtained in order to permit consummation of the Merger under
applicable law shall have been obtained, except for any such Parent Statutory
Approvals or Company Statutory Approvals the unavailability of which would not,
individually or in the aggregate (i) have a Company Material Adverse Effect
after the Effective Time, or (ii) result in the Company or its subsidiaries
failing to
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meet the standards for licensing, suitability or character under any Gaming
Laws relating to the conduct of Parent's or the Company's business which
(after taking into account the anticipated impact of such failure to so meet
such standards on other authorities) would have a Company Material Adverse
Effect (after giving effect to the Merger).
Section 6.03. Conditions to Obligations of Parent and Subsidiary to Effect
the Merger. Unless waived by Parent and Merger Subsidiary, the obligations of
Parent and Merger Subsidiary to effect the Merger shall be subject to the
fulfillment at or prior to the Effective Time of the additional following
conditions:
(a) the Company shall have performed in all material respects its
agreements contained in this Agreement required to be performed on or prior to
the Effective Time and the representations and warranties of the Company
contained in this Agreement shall be true and correct on and as of the
Effective Time as if made at and as of such date (except to the extent that
such representations and warranties speak as of an earlier date), except for
such failures to perform and to be true and correct that would not have a
Company Material Adverse Effect, and Parent shall have received a certificate
of the chief executive officer or the chief financial officer of the Company
to that effect; and
(b) all Parent Statutory Approvals and Company Statutory Approvals
required to be obtained in order to permit consummation of the Merger under
applicable law shall have been obtained, except for any such Parent Statutory
Approvals or Company Statutory Approvals whose unavailability would not (i)
have a Parent Material Adverse Effect, or (ii) result in Parent or its
subsidiaries failing to meet the standards for licensing, suitability or
character under any Gaming Laws relating to the conduct of Parent's or the
Company's business which (after taking into account the anticipated impact of
such failure to so meet such standards on other authorities) would reasonably
be expected to have a Parent Material Adverse Effect (after giving effect to
the Merger).
(c) the Financing Arrangement shall have been consummated and
Parent shall have received not less than $_______________ in proceeds
therefrom on or before the Outside Date (as hereinafter defined).
(d) shareholders of the Company owning not more than five percent
(5%) in the aggregate of the Common Stock shall have exercised dissenter's
rights pursuant to Article 15 of the Virginia Act.
ARTICLE VII
TERMINATION
Section 7.01. Termination. This Agreement may be terminated and the
Merger may be abandoned at any time prior to the Effective Time
(notwithstanding any approval of this Agreement by the shareholders of the
Company):
(i) by mutual written consent of the Company and
Parent;
(ii) by either the Company or Parent, if the Merger has
not been consummated by __________________, 2001 (the "Outside
Date"), provided that such date shall automatically be extended
until _________________, if, on
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______________, 2001, all of the conditions to the Closing set
forth in Article VI shall then be satisfied (other than conditions
with respect to actions the respective parties will take at the
Closing) except that any approval or consent under any Gaming Law,
the absence of which would cause a failure of a condition set
forth in Section 6.02 or 6.03 has not been received, and provided
further that the right to terminate this Agreement under this
clause (ii) shall not be available to any party whose failure to
fulfill any of its obligations under this Agreement has been the
cause of or resulted in the failure to consummate the Merger by
such date;
(iii) by either the Company or Parent if any judgment,
injunction, order or decree of a court or governmental agency or
authority of competent jurisdiction shall restrain or prohibit the
consummation of the Merger, and such judgment, injunction, order
or decree shall become final and nonappealable and was not entered
at the request of the terminating party;
(iv) by either the Company or Parent, if (x) there has
been a breach by the other party of any representation or warranty
contained in this Agreement which would reasonably be expected to
have a Company Material Adverse Effect or a Parent Material
Adverse Effect, as applicable, or prevent or delay the
consummation of the Merger beyond the Outside Date, and which has
not been cured in all material respects within 30 days after
written notice of such breach by the terminating party, or (y)
there has been a breach of any of the covenants or agreements set
forth in this Agreement on the part of the other party, which
would reasonably be expected to have a Parent Material Adverse
Effect or a Company Material Adverse Effect, as applicable, or
prevent or delay the consummation of the Merger beyond the Outside
Date, and which breach is not curable or, if curable, is not cured
within 30 days after written notice of such breach is given by the
terminating party to the other party;
(v) by the Company if, prior to receipt of the Company
Shareholders' Approval, the Company receives a Superior Proposal,
resolves to accept such Superior Proposal, and shall have given
Parent two days' prior written notice of its intention to
terminate pursuant to this provision; provided, however, that such
termination shall not be effective until such time as the payment
required by Section 5.09(b) shall have been received by Parent;
(vi) by the Parent, if the board of directors of the
Company shall have failed to recommend, or shall have withdrawn,
modified or amended in any material respect its approval or
recommendation of the Merger or shall have resolved to do any of
the foregoing, or shall have recommended another Acquisition
Proposal or if the Board of Directors of the Company shall have
resolved to accept a Superior Proposal or shall have recommended
to the shareholders of the Company that they tender their shares
in a tender or an exchange offer commenced by a third party
(excluding any affiliate of Parent or any group of which any
affiliate of Parent is a member); or
(vii) by Parent or the Company if the shareholders of the
Company fail to approve the Merger at a duly held meeting of
shareholders called for such purpose (including any adjournment or
postponement thereof);
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ARTICLE VIII
MISCELLANEOUS
Section 8.01. Effect of Termination. In the event of termination of this
Agreement by either Parent or the Company pursuant to Section 7.01, this
Agreement shall forthwith become void and there shall be no liability or
further obligation on the part of the Company, Parent, Merger Subsidiary or
their respective officers or directors (except as set forth in this Section
8.01, in the second sentence of Section 5.04 and in Section 5.09, all of which
shall survive the termination). Nothing in this Section 8.01 shall relieve any
party from liability for any breach of any representation, warranty, covenant
or agreement of such party contained in this Agreement.
Section 8.02. Nonsurvival of Representations and Warranties. No
representation, warranty or agreement in this Agreement or in any instrument
delivered pursuant to this Agreement shall survive the Merger, and after
effectiveness of the Merger neither the Company, Parent, Merger Subsidiary nor
any of their respective officers or directors shall have any further
obligation with respect thereto except for the agreements contained in
Articles I, II and VIII and Section 5.11.
Section 8.03. Notices. All notices and other communications hereunder
shall be in writing and shall be considered given if delivered personally,
mailed by registered or certified mail (return receipt requested) or sent via
facsimile to the parties at the following addresses (or at such other address
for a party as shall be specified by like notice):
If to the Company:
Colonial Downs Holdings, Inc.
00000 Xxxxxxxx Xxxxx Xxxxxxx
Xxx Xxxx, Xxxxxxxx 00000
If to Parent or Merger Subsidiary:
---------------------------------------
---------------------------------------
---------------------------------------
---------------------------------------
with a copy to:
Xxxxx & Xxxxxxxxx LLP
3200 National City Center
0000 Xxxx Xxxxx Xxxxxx
Xxxxxxxxx, Xxxx 00000-0000
Tel: 216/000-0000
Fax: 216/000-0000
Attn: Xxxxxx X. Xxxxxxx, Xx.
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Section 8.04. Interpretation. The headings contained in this Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. In this Agreement, unless a contrary
intention appears, (i) the words "herein," "hereof" and "hereunder" and other
words of similar import refer to this Agreement as a whole and not to any
particular Article, Section or other subdivision, (ii) "knowledge" shall mean
actual knowledge of the executive officers of the Company or Parent, as
applicable, and (iii) reference to any Article or Section means such Article
or Section hereof.
Section 8.05. Miscellaneous. This Agreement (including the documents and
instruments referred to herein) shall not be assigned by operation of law or
otherwise except that Merger Subsidiary may assign its obligations under this
Agreement to any other wholly-owned subsidiary of Parent subject to the terms
of this Agreement, in which case such assignee shall become the "Merger
Subsidiary" for all purposes of this Agreement. THIS AGREEMENT SHALL BE
GOVERNED IN ALL RESPECTS, INCLUDING VALIDITY, INTERPRETATION AND EFFECT, BY
THE LAWS OF VIRGINIA WITHOUT GIVING EFFECT TO APPLICABLE CONFLICT OF LAWS
PRINCIPLES.
Section 8.06. Counterparts This Agreement may be executed in two or more
counterparts, each of which shall be considered to be an original, but all of
which shall constitute one and the same agreement.
Section 8.07. Amendments; No Waivers . (a) Any provision of this Agreement
may be amended or waived prior to the Effective Time if, and only if, such
amendment or waiver is in writing and signed, in the case of an amendment, by
the Company, Parent and Merger Subsidiary or, in the case of a waiver, by the
party against whom the waiver is to be effective; however, any waiver or
amendment shall be effective against a party only if the board of directors of
such party approves such waiver or amendment.
(b) No failure or delay by any party in exercising any right, power or
privilege hereunder shall operate as a waiver thereof nor shall any single or
partial exercise thereof preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. The rights and remedies
herein provided shall be cumulative and not exclusive of any rights or
remedies provided by law.
Section 8.08. Entire Agreement. This Agreement and the Confidentiality
Agreement constitute the entire agreement between the parties with respect to
the subject matter hereof and supersede all prior agreements, understandings
and negotiations, both written and oral, between the parties with respect to
the subject matter of this Agreement. No representation, inducement, promise,
understanding, condition or warranty not set forth herein has been made or
relied upon by either party hereto. Neither this Agreement nor any provision
hereof is intended to confer upon any person other than the parties hereto any
rights or remedies hereunder except for Section 5.11, which is intended for
the benefit of the Company's former and present officers, directors, employees
and agents, Articles I and II, which are intended for the benefit of the
Company's shareholders, including holders of Options, and Section 5.06, which
is intended for the benefit of the parties to the agreements or participants
in the plans referred to therein.
Section 8.09. Severability. If any term or other provision of this
Agreement is invalid, illegal or unenforceable, all other provisions of this
Agreement shall 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.
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Section 8.10. Specific Performance. The parties hereto agree that
irreparable damage would occur if any of the provisions of this Agreement were
not to be performed in accordance with the terms hereof and that the parties
shall be entitled to specific performance of the terms hereof in addition to
any other remedies at law or in equity.
[Signature page to follow]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed by their respective authorized officers as of the day and
year first above written.
COLONIAL DOWNS HOLDINGS, INC.
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Name:
---------------------------------
Title:
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GAMECO
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Name:
---------------------------------
Title:
---------------------------------
Merger Subsidiary:
MERGER SUBSIDIARY
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Name:
---------------------------------
Title:
---------------------------------
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