AGREEMENT AND PLAN OF MERGER
by and among
R&E GAMING CORP.,
ELSINORE ACQUISITION SUB, INC.
and
ELSINORE CORPORATION
Dated as of September 15, 1997
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER, dated as of September 15,
1997 (the "Agreement"), by and among R&E Gaming Corp., a Delaware corporation
("Gaming"), Elsinore Acquisition Sub, Inc., a Nevada corporation and a wholly
owned subsidiary of Gaming ("EAS"), and Elsinore Corporation, a Nevada
corporation (the "Company").
WHEREAS, the respective Boards of Directors of Gaming, EAS and
the Company have each approved the transactions contemplated by the terms and
conditions set forth in this Agreement;
WHEREAS, in furtherance thereof, upon the terms and subject to
the conditions of this Agreement, (i) EAS would be merged with and into the
Company (the "Elsinore Merger") and (ii) each share of common stock, par value
$.001 per share, of the Company (the "Common Stock"), issued and outstanding
immediately prior to the Effective Time (as defined herein) (the "Shares")
would, except as otherwise expressly provided herein, be converted into the
right to receive the Merger Consideration (as defined herein);
WHEREAS, Gaming and EAS are unwilling to enter into this
Agreement unless Gaming, contemporaneously with the execution and delivery of
this Agreement, enters into an Option and Voting Agreement (the "Elsinore Option
Agreement") with Morgens, Waterfall, Vintiadis & Company, Inc., on behalf of
certain investment accounts (the "Option Seller"), providing for, among other
things, (i) the grant by the Option Seller to Gaming of an option and, under
certain circumstances set forth in the Elsinore Option Agreement, the obligation
of Gaming to purchase all of the Shares owned by the Option Seller and (ii) the
agreement by the Option Seller to cause the Shares owned by it to be present for
quorum purposes at any meeting of the stockholders of the Company (the "Company
Stockholders") called to vote upon the Elsinore Merger, and to vote for the
transactions contemplated by this Agreement and against any Alternative
Transaction (as defined in Section 4.8(b) hereof) and any other action which may
be adverse to the transactions contemplated in this Agreement; and the Board of
Directors of the Company (the "Board") has approved the execution and delivery
of the Elsinore Option Agreement which is being executed contemporaneously with
the execution hereof;
WHEREAS, on or prior to the date hereof Gaming has entered
into an Agreement and Plan of Merger (the "Riviera Merger Agreement"), by and
among Gaming, Riviera Acquisition Sub, Inc., a Nevada corporation and a wholly
owned subsidiary of Gaming ("RAS"), and Riviera Holdings Corporation, a Nevada
corporation ("Riviera"), which provides for, among other things, the merger of
RAS with and into Riviera (the "Riviera Merger"); and
WHEREAS, the Board has determined that the Elsinore Merger and
the consideration to be received by the holders of the Shares are fair to, and
in the best interests of, the Company and the Company Stockholders.
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NOW, THEREFORE, in consideration of the foregoing premises,
the mutual representations, warranties and covenants contained herein, and for
other good and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, the parties hereto, intending to be legally bound, agree as
follows:
ARTICLE I
THE MERGER
Section 1.1 The Elsinore Merger. At the Effective Time and
upon the terms and subject to the conditions of this Agreement, and in
accordance with the applicable provisions of Nevada law, EAS shall be merged
with and into the Company, whereupon the separate existence of EAS shall cease
and the Company shall continue as the surviving corporation of the Elsinore
Merger (the "Surviving Corporation"), and shall be a wholly owned subsidiary of
Gaming.
Section 1.2 Effective Time; Closing. Unless this Agreement
shall have been terminated pursuant to Section 6.1 hereof, as soon as
practicable after the satisfaction or (if permissible) waiver of the conditions
set forth in Article V of this Agreement, the Company will file articles of
merger with the Secretary of State of the State of Nevada in accordance with the
provisions of Section 92A.005 et seq. of the Nevada Revised Statutes (the
"Nevada Merger Law") and make all other filings or recordings required by law in
connection with the Elsinore Merger. The Elsinore Merger shall become effective
at such time (the "Effective Time") as the articles of merger are filed with the
Secretary of State of the State of Nevada in accordance with the provisions of
Chapter 92A of the Nevada Revised Statutes, or such later date as set forth in
such filing, but in no event later than April 1, 1998, unless extended as
provided in Section 6.1(c) hereof. Prior to such filing, but no later than 30
days after the satisfaction or (if permissible) waiver of the conditions set
forth in Article V of this Agreement, a closing (the "Closing") shall be held at
the offices of Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP, 000 Xxxxx Xxxxx Xxxxxx,
Xxx Xxxxxxx, Xxxxxxxxxx 00000, or such other place as the parties to this
Agreement shall agree, for the purpose of confirming the satisfaction or waiver
of the conditions set forth in this Agreement. The date on which the Closing
occurs shall be referred to herein as the "Closing Date."
Section 1.3 Effects of the Elsinore Merger. The Elsinore
Merger shall have the effects set forth in the Nevada Merger Law. Without
limiting the generality of the foregoing, and subject thereto, at the Effective
Time, except as otherwise provided herein, all of the property, rights,
privileges, powers and franchises of a public as well as of a private nature,
and the title to any real estate vested by deed or otherwise in the Company and
EAS shall vest in the Surviving Corporation, and all debts, liabilities and
duties of the Company and EAS shall become the debts, liabilities and duties of
the Surviving Corporation.
Section 1.4 Articles of Incorporation and Bylaws. (a) The
Articles of Incorporation of EAS in effect immediately prior to the Effective
Time, attached hereto as Exhibit A,
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shall be the Articles of Incorporation of the Surviving Corporation (the
"Surviving Corporation Articles of Incorporation"), until amended in accordance
with Nevada law, except that Article I thereof shall be amended to read in its
entirety as follows: "The name of the corporation shall be Elsinore
Corporation."
(b) The Bylaws of EAS in effect at the Effective Time shall,
attached hereto as Exhibit B, shall be the Bylaws of the Surviving Corporation
(the "Surviving Corporation Bylaws"), until amended in accordance with Nevada
law and the Surviving Corporation Articles of Incorporation.
Section 1.5 Directors. The directors of the Company at the
Effective Time, and, subject to the requirements of Gaming Laws (as defined
herein), any additional individuals designated by Gaming at or prior to the
Effective Time, shall be the initial directors of the Surviving Corporation,
each to hold office in accordance with the Surviving Corporation Articles of
Incorporation and the Surviving Corporation Bylaws and until his or her
successor is duly elected and qualified.
Section 1.6 Officers. The officers of the Company at the
Effective Time, and, subject to the requirements of Gaming Laws, any additional
individuals designated by Gaming at or prior to the Effective Time, shall be the
initial officers of the Surviving Corporation from and after the Effective Time,
each to hold office in accordance with the Surviving Corporation Articles of
Incorporation and the Surviving Corporation Bylaws and until his or her
successor is duly appointed and qualified.
Section 1.7 Consideration for the Merger. At the Effective
Time, by virtue of the Elsinore Merger and without any action on the part of
Gaming, EAS, the Company or the holder of any of the following securities:
(a) Each Share (other than (i) Shares to be cancelled pursuant
to Section 1.7(c) hereof, (ii) the Dissenting Shares (as defined below) and
(iii) as specified in Section 1.9 hereof) shall be converted into and represent
the right to receive the Merger Consideration (as defined herein). From and
after the Effective Time, all Shares shall no longer be outstanding and shall
automatically be cancelled and retired and shall cease to exist, and each holder
of a certificate representing any of the Shares (a "Certificate") shall cease to
have any rights with respect thereto, except the right to receive the Merger
Consideration payable to the holder thereof, without interest, upon surrender of
such Certificate in the manner provided in Section 1.8 hereof. As used herein,
"Merger Consideration" means the amount of $3.16 in cash per Share, plus an
amount of additional consideration (the "Additional Consideration") equal to the
daily portion of the accrual on $3.16 at 9.43% compounded annually, accruing
from June 1, 1997 to the date immediately preceding the Effective Time;
provided, that the Merger Consideration paid to the Option Seller shall be
reduced by the amount of Additional Consideration paid to the Option Seller
pursuant to Section 1.2(b) of the Elsinore Option Agreement. It being understood
that, assuming consummation of the Elsinore Merger, the proviso in the preceding
sentence shall have the effect of causing the consideration per Share to be
received hereunder and under the
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Elsinore Option Agreement by the Option Seller from Gaming on account of the
Shares owned by the Option Seller to be equal to the consideration per Share
received by the Company Stockholders (other than the Option Seller) hereunder on
account of the Shares owned by Company Stockholders (other than the Option
Seller). Each of Gaming and EAS represents and warrants that the Merger
Consideration to be received hereunder by the Option Seller for each Share owned
by the Option Seller and any other consideration paid by Gaming or EAS to the
Option Seller for such Shares (but excluding consideration paid under the
Elsinore Option Agreement) shall be equal to the Merger Consideration received
by the other holders of Shares.
(b) Notwithstanding anything in this Agreement to the
contrary, any issued and outstanding shares of Common Stock held by a person (a
"Dissenting Stockholder") who objects to the Merger and complies with all the
provisions of Nevada law concerning the right of holders of Common Stock to
dissent from the Merger and obtain payment of the fair value of such Dissenting
Stockholder's shares of Common Stock ("Dissenting Shares") shall not be
converted as described in Section 1.7(a) hereof but shall become the right to
receive such consideration as may be determined to be due to such Dissenting
Stockholder pursuant to the laws of the State of Nevada. If, after the Effective
Time, such Dissenting Stockholder withdraws his demand for payment or fails to
perfect or otherwise loses his dissenters' rights, in any case pursuant to the
Nevada Merger Law, his shares of Common Stock shall be deemed to be converted as
of the Effective Time into the right to receive the Merger Consideration,
without interest. The Company shall give Gaming and EAS (i) prompt notice of any
demands for payment pursuant to dissenters' rights with respect to shares of
Common Stock received by the Company and (ii) the opportunity to participate in
and direct all negotiations and proceedings with respect to any such demands.
The Company shall not, without the prior written consent of Gaming and EAS, make
any payment with respect to, or settle, offer to settle or otherwise negotiate,
any such demands.
(c) Each Share owned by Gaming, EAS or their stockholders or
affiliates (the "Xxxxxxx Shares"), or which is held in the treasury of the
Company or any of its subsidiaries, shall be cancelled and retired and shall
cease to exist, and no payment of any consideration shall be made with respect
thereto.
(d) Each share of capital stock of EAS issued and outstanding
immediately prior to the Effective Time shall be converted into and shall become
one validly issued, fully paid and nonassessable share of common stock, par
value $.001 per share, of the Surviving Corporation.
Section 1.8 Exchange of Shares. (a) At or prior to the
Effective Time, Gaming shall designate a bank or trust company reasonably
acceptable to the Company to serve as exchange agent (the "Exchange Agent") for
the Shares. As soon as reasonably practicable after the Effective Time, Gaming
shall deposit, or shall cause to be deposited, with the Exchange Agent for the
benefit of the holders of Certificates, cash or immediately available funds in
United States dollars in an amount that equals the aggregate Merger
Consideration. Such funds (the "Payment Fund") shall be invested by the Exchange
Agent as directed by Gaming in obligations of or obligations guaranteed by the
United States of America, in commercial paper
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obligations rated A-1 or P-1 or better by Xxxxx'x Investor Services, Inc. or
Standard & Poor's Corporation, respectively, or in certificates of deposit, bank
repurchase agreements, or bankers acceptances of commercial banks with capital
exceeding $500 million; provided, however, that in the event that the Payment
Fund shall realize a loss on such investment, Gaming shall promptly thereafter
deposit in the Payment Fund cash in an amount sufficient to enable the Payment
Fund to satisfy all remaining obligations originally contemplated to be paid out
of the Payment Fund.
(b) Promptly after the Effective Time, the Surviving
Corporation shall instruct the Exchange Agent to mail to each record holder of
outstanding Certificates as of the Effective Time, a form of 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 Exchange Agent) and instructions for use in effecting the
surrender of the Certificates for payment therefor. Upon surrender to the
Exchange Agent of a Certificate, together with such letter of transmittal duly
executed, the holder of such Certificate shall be entitled to receive in
exchange therefor the amount of cash that such holder has the right to receive
under this Article I, and such Certificate shall forthwith be cancelled. If
payment (or any portion thereof) 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 shall be properly endorsed or
otherwise in proper form for transfer and that the person requesting such
payment shall pay to the Exchange Agent any transfer or other taxes required by
reason of the payment to a person other than the registered holder of the
Certificate surrendered or such person shall establish to the satisfaction of
the Exchange Agent that such tax has been paid or is not applicable. Until
surrendered in accordance with the provisions of this Section 1.8, each
Certificate (other than Certificates representing (i) Shares to be cancelled
pursuant to Section 1.7(c) hereof, (ii) the Dissenting Shares and (iii) Shares
specified in Section 1.9 hereof) shall represent, for all purposes, the right to
receive the Merger Consideration multiplied by the number of Shares previously
evidenced by such Certificate, without any interest thereon.
(c) All cash paid upon the surrender of the Certificates in
accordance with the terms of this Article I shall be deemed to have been paid in
full satisfaction of all rights pertaining to the Shares theretofore represented
by such Certificates, and there shall be no further registration of transfers on
the stock transfer books of the Surviving Corporation of the Shares which were
outstanding immediately prior to the Effective Time. If, after the Effective
Time, Certificates are presented to the Surviving Corporation for any reason,
they shall be cancelled and exchanged as provided in this Article I, except as
otherwise provided by Nevada law.
(d) At any time following the date six months after the
Effective Time, the Surviving Corporation shall be entitled to require the
Exchange Agent to deliver to it any funds (including any interest received with
respect thereto) that have been made available to the Exchange Agent and that
have not been disbursed to holders of Certificates and, thereafter, such holders
shall be entitled to look to the Surviving Corporation (subject to abandoned
property, escheat or other similar laws) only as general creditors thereof with
respect to the Merger
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Consideration payable upon surrender of their Certificates. Notwithstanding the
foregoing, neither the Surviving Corporation nor the Exchange Agent shall be
liable to any holder of a Certificate for the Merger Consideration delivered to
a public official pursuant to any applicable abandoned property, escheat or
similar law.
Section 1.9 Company Plans.
(a) At the Effective Time, each Share held in trust for the
benefit of participants in the Four Queens' Employees' Retirement/Savings Plan
and Trust, as in effect on the date hereof (the "Company Plan"), shall be
cancelled, and the Surviving Corporation shall pay into the trust with respect
to each such cancelled Share an amount in cash equal to the product of (i) the
number of such Shares held in trust, and (ii) the Merger Consideration per
Share.
(b) At the Effective Time, the warrants issued by the Company
to Riviera shall be cancelled and Riviera shall receive an amount equal to
$2,441,250.
Section 1.10 Stockholders' Meeting. The Company, acting
through the Board, shall, in accordance with applicable law, the Company
Articles of Incorporation and the Restated and Amended Bylaws of the Company
(the "Company Bylaws"), as soon as practicable following the date hereof:
(a) duly call, give notice of, convene and hold an annual or
special meeting of the Company Stockholders (the "Stockholders' Meeting") for
the purpose of approving and adopting this Agreement and the transactions
contemplated hereby;
(b) subject to the fiduciary duties of the Board under
applicable law, recommend that the Company Stockholders vote in favor of
approving and adopting this Agreement and the transactions contemplated hereby;
and
(c) subject to the fiduciary duties of the Board under
applicable law, use its reasonable best efforts to obtain the necessary
approvals by the Company Stockholders of this Agreement and the transactions
contemplated hereby.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Gaming as follows:
Section 2.1 Organization and Qualification; Subsidiaries. (a)
Each of the Company and its subsidiaries is a corporation duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
incorporation, and has all requisite corporate power and authority to own, lease
and operate its properties and to carry on its business as now
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being conducted, except where the failure to be so organized, existing and in
good standing or to have such power and authority would not, individually or in
the aggregate, have a Company Material Adverse Effect (as defined herein). When
used in this Agreement, the term "Company Material Adverse Effect" means any
change or effect (i) that would be materially adverse to the business, results
of operations, conditions (financial or otherwise) or prospects of the Company
and its subsidiaries, taken as a whole, or (ii) that would impair the ability of
the Company to consummate the transactions contemplated hereby.
(b) Each of the Company and its subsidiaries is duly qualified
or licensed (excluding gaming and liquor licenses, which are covered by Section
2.5 hereof) and in good standing to do business in each jurisdiction in which
the property owned, leased or operated by it or the nature of the business
conducted by it makes such qualification or licensing necessary, and to perform
all of its obligations under any contract under which the Company or any of its
subsidiaries (a) has or may acquire any rights, (b) has or may become subject to
any obligation or liability or (c) is or may, or any of the assets used or owned
by it are or may, become bound, except where the failure to be so duly qualified
or licensed and in good standing or to effect such performance would not,
individually or in the aggregate, have a Company Material Adverse Effect.
(c) The Company has heretofore furnished or made available to
Gaming complete and correct copies of the Company Articles of Incorporation and
the Company Bylaws and the equivalent organizational documents of each of its
subsidiaries, each as amended to the date hereof. The Company Articles of
Incorporation, the Company Bylaws and equivalent organizational documents are in
full force and effect. The Company is not in violation of any of the provisions
of the Company Articles of Incorporation or the Company Bylaws, and no
subsidiary of the Company is in violation of any of the provisions of such
subsidiary's equivalent organizational documents. The organizational documents
of the subsidiaries of the Company do not contain any provision limiting or
otherwise restricting the ability of the Company to control such subsidiaries.
(d) The Company has heretofore furnished or made available to
Gaming a complete and correct list of the subsidiaries of the Company, which
list sets forth the amount of capital stock of or other equity interests in such
subsidiaries owned by the Company, directly or indirectly.
Section 2.2 Capitalization of the Company and its
Subsidiaries. The authorized capital stock of the Company consists of (i)
100,000,000 shares of Common Stock of which, as of July 31, 1997, 4,929,313
Shares were issued and outstanding. All outstanding shares of capital stock of
the Company have been validly issued, and are fully paid, nonassessable and free
of preemptive rights. Except as set forth on Schedule 2.2 hereof, as of July 31,
1997, there are outstanding (i) no shares of capital stock or other voting
securities of the Company, (ii) no securities of the Company convertible into or
exchangeable for shares of capital stock or voting securities of the Company,
(iii) no options, subscriptions, warrants, convertible securities, calls or
other rights to acquire from the Company, and no obligation of the Company to
issue, deliver
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or sell any capital stock, voting securities or securities convertible into or
exchangeable for capital stock or voting securities of the Company, and (iv) no
equity equivalents, performance shares, interests in the ownership or earnings
of the Company or other similar rights issued by the Company (collectively,
"Company Securities"). Except as set forth on Schedule 2.2 hereto, there are no
outstanding obligations of the Company or any of its subsidiaries to repurchase,
redeem or otherwise acquire any Company Securities. Except as set forth on
Schedule 2.2 hereto, each of the outstanding shares of capital stock of each of
the Company's subsidiaries is duly authorized, validly issued, fully paid and
nonassessable and is directly or indirectly owned by the Company, free and clear
of all security interests, liens, claims, pledges, charges, voting agreements or
other encumbrances of any nature whatsoever (collectively, "Liens"). Except as
set forth on Schedule 2.2 hereto, there are no existing options, calls or
commitments of any character relating to the issued or unissued capital stock or
other equity securities of any subsidiary of the Company.
Section 2.3 Power and Authority. The Company has the requisite
corporate power and authority to execute and deliver this Agreement and, subject
to approval of this Agreement by the Company Stockholders, to consummate the
transactions contemplated by this Agreement. The execution and delivery of this
Agreement by the Company and the consummation by the Company of the transactions
contemplated by this Agreement have been duly authorized by all necessary
corporate action on the part of the Company, subject, in the case of this
Agreement, to approval of this Agreement by the Company Stockholders. This
Agreement has been duly executed and delivered by the Company and, assuming this
Agreement constitutes a valid and binding obligation of Gaming and EAS,
constitutes the valid and binding obligation of the Company, enforceable against
the Company in accordance with its terms, except as such enforcement may be
limited by bankruptcy, insolvency, moratorium, or other similar laws affecting
or relating to the enforcement of creditors' rights generally (collectively, the
"Bankruptcy Exceptions") and subject to general principles of equity.
Section 2.4 Approval of Options. The Company has taken all
action necessary to authorize and approve the grant of options to acquire Shares
pursuant to the Elsinore Option Agreement and the sale of such Shares upon the
exercise of such options.
Section 2.5 Compliance. (a) Except as set forth in Schedule
2.5(a), since February 28, 1997, the Company, its subsidiaries and affiliates
and their respective officers or directors or, to the best knowledge of the
Company, their respective agents or employees (if any), have been and are in
compliance with all applicable laws and regulations of foreign, Federal, state
and local governmental authorities applicable to the businesses conducted by any
of the Company and its subsidiaries (including without limitation 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 casino, liquor related
activities and gaming activities and operations, including, without limitation,
the Nevada Gaming Control Act, as amended (the "Nevada Act"), and the Indian
Gaming Regulatory Act (the "Indian Gaming Act") and the rules and regulations
promulgated thereunder, or applicable to the properties owned or leased and used
by the Company or its
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subsidiaries (collectively, "Gaming Laws")), and neither the Company, nor, to
the best knowledge of the Company, any of its subsidiaries or affiliates, is
aware of any claim of violation, or of any actual violation, of any such laws
and regulations, by the Company or any of its subsidiaries, except where such
failure or violation (whether actual or claimed) would not have a Company
Material Adverse Effect. None of the Company or its subsidiaries, any employee,
officer, director or stockholder or, to the best knowledge of the Company or
affiliate, thereof, has received any written claim, demand, notice, complaint,
court order or administrative order from any governmental authority since
February 28, 1997, asserting that a license of it or them, as applicable, under
any Gaming Laws should be revoked or suspended.
(b) Except as set forth in Schedule 2.5(b), since February 28,
1997, each of the Company and its subsidiaries has and currently possesses, and
is current on all fees with regard to, all franchises, certificates, licenses,
permits and other authorizations from any governmental authorities and all
patents, trademarks, service marks, trade names, copyrights, licenses and other
rights that are necessary to each of the Company and its subsidiaries for the
present ownership, maintenance and operation of its business, properties and
assets (including, without limitation, all gaming and liquor licenses), except
where the failure to possess such franchises, certificates, licenses, permits,
and other authorizations, patents, trademarks, service marks, trade names,
copyrights, licenses and other rights (other than those required to be obtained
by the Nevada Gaming Commission (the "Gaming Commission"), the Nevada State
Gaming Control Board (the "Control Board"), the Xxxxx County Liquor and Gaming
Licensing Board (the "CCB"), the City of Las Vegas ("Las Vegas") and the
National Indian Gaming Commission (the "Indian Gaming Commission") (the Gaming
Commission, the Control Board, the CCB, Las Vegas and the Indian Gaming
Commission are collectively referred to as the "Gaming Authorities"), including
approvals under the Gaming Laws) would not have a Company Material Adverse
Effect; and none of the Company and its subsidiaries is in violation of any
thereof, except where such violation would not have a Company Material Adverse
Effect.
(c) Since February 28, 1997, neither the Company nor any of
its subsidiaries is in violation of, or has violated (with or without notice or
lapse of time), any applicable provisions of (i) any laws, rules, statutes,
orders, ordinances or regulations, or (ii) any note, bond, mortgage, indenture,
contract, agreement, lease, license, permit, franchise, or other instrument or
obligations to which the Company or any of its subsidiaries is a party or by
which the Company or any of its subsidiaries or its or any of their respective
properties are bound or affected, which, individually or in the aggregate, would
have a Company Material Adverse Effect.
(d) Except as set forth in Schedule 2.5(d), since February 28,
1997: (i) the Company and each of its subsidiaries is, and has been, in full
compliance with all of the terms and requirements of each award, decision,
injunction, judgment, order, ruling, subpoena, or verdict (each, an "Order")
entered, issued, made, or rendered by any court, administrative agency, or other
governmental entity, officer or authority or by any arbitrator to which it, or
any of the assets owned or used by it, is or has been subject, and (ii) no event
has occurred or circumstance exists that may constitute or result in (with or
without notice or lapse of time) a
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violation of or failure to comply with any term or requirement of any Order to
which the Company or its subsidiaries, or any of the assets owned or used by the
Company or its subsidiaries, is subject except where such non-compliance,
violation or failure to comply would not have a Company Material Adverse Effect.
(e) Neither the Company nor any of its subsidiaries has
received, at any time since February 28, 1997, any notice or other communication
(whether oral or written) regarding any actual, alleged, possible, or potential
violation of, or failure to comply with, any term or requirement of any Order to
which the Company or its subsidiaries, or any of the assets owned or used by the
Company or its subsidiaries, is or has been subject and which would have a
Company Material Adverse Effect.
(f) No investigation or review by any government entity,
officer or authority with respect to the Company or its subsidiaries is pending
or, to the knowledge of the Company, threatened, nor, to the knowledge of the
Company, has any government entity, officer or authority indicated an intention
to conduct the same, other than, in each case, those which would not have a
Company Material Adverse Effect.
Section 2.6 Non-Contravention; Required Filings and Consents.
(a) Except as set forth in Schedule 2.6 hereto and as contemplated by Section
2.6(b), the execution, delivery and performance by the Company of this Agreement
and the consummation of the transactions contemplated hereby (including, without
limitation, the Elsinore Option Agreement and the Elsinore Merger) do not and
will not (i) contravene or conflict with the Company Articles of Incorporation
or the Company Bylaws or the equivalent organizational documents of any of its
subsidiaries or any resolution adopted by the Board or the Company Stockholders
or the board of directors or stockholders of any of the Company's subsidiaries,
(ii) contravene or conflict with or constitute a violation of any provision of
any law, regulation, judgment, injunction, order or decree binding upon or
applicable to the Company, any of its subsidiaries or any of their respective
properties, (iii) contravene, conflict with, or result in a violation of any of
the terms or requirements of, or give any governmental entity, official or
authority right to revoke, withdraw, suspend, cancel, terminate or modify, any
authorization that is held by the Company or any of its subsidiaries, or that
otherwise relates to the business of, or any of the assets owned by, the Company
or any of its subsidiaries, (iv) conflict with, or result in the breach or
termination of any provision of or constitute a default (with or without the
giving of notice or the lapse of time or both) under, or give rise to any right
of termination, cancellation, or loss of any benefit to which the Company or any
of its subsidiaries is entitled under any provision of any agreement, contract,
license or other instrument binding upon the Company, any of its subsidiaries or
any of their respective properties, or allow the acceleration of the performance
of, any obligation of the Company or any of its subsidiaries under any
indenture, mortgage, deed of trust, lease, license, contract, instrument or
other agreement to which the Company or any of its subsidiaries is a party or by
which the Company or any of its subsidiaries or any of their respective assets
or properties is subject or bound, or (v) result in the creation or imposition
of any Lien on any asset of the Company or any of its subsidiaries, except in
the case of clauses (i), (ii), (iii) and (iv) for any such contraventions,
conflicts, violations, breaches, terminations,
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defaults, cancellations, losses, accelerations and Liens which would not,
individually or in the aggregate, have a Company Material Adverse Effect or be
reasonably expected to prevent the consummation by the Company of the
transactions contemplated by this Agreement.
(b) The execution, delivery and performance by the Company of
this Agreement and the consummation of the transactions contemplated hereby
(including, without limitation, the Elsinore Option Agreement, the Escrow
Agreement and the Elsinore Merger) by the Company require no action by or in
respect of, or filing with, any governmental entity, official or authority
(either domestic or foreign) other than (i) the filing of articles of merger in
accordance with the Nevada Merger Law, (ii) compliance with any applicable
requirements of the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as
amended (the "HSR Act"), (iii) compliance with any applicable requirements of
the Securities Exchange Act of 1934, as amended, and the rules and regulations
promulgated thereunder (the "Exchange Act"), and state securities, takeover and
Blue Sky laws, (iv) obtaining all necessary gaming approvals, including those
required by the Gaming Authorities, including approvals under the Gaming Laws,
and (v) such additional actions or filings which, if not taken or made, would
not, individually or in the aggregate, have a Company Material Adverse Effect or
be reasonably expected to prevent the consummation by the Company of the
transactions contemplated by this Agreement.
Section 2.7 SEC Reports. (a) The Company has filed all
required forms, reports and documents with the Securities and Exchange
Commission (the "SEC") since February 28, 1997. The Company has made available
to Gaming, in the form filed with the SEC, the Company's (i) Quarterly Reports
on Form 10-Q filed by the Company with the SEC since February 28, 1997 and (ii)
all Current Reports on Form 8-K and registration statements filed by the Company
with the SEC since February 28, 1997 (collectively and as amended as required,
the "SEC Reports"). As of their respective dates, the SEC Reports complied in
all material respects with all applicable requirements of the Securities Act of
1933, as amended, and the rules and regulations promulgated thereunder (the
"Securities Act"), and the Exchange Act, each as in effect on the dates such SEC
Reports were filed. As of their respective dates, none of the SEC Reports,
including, without limitation, any financial statements or schedules included
therein, contained any untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading. No subsidiary of the Company is required, as of the date hereof,
to file any form, report, or other document with the SEC under Section 12 of the
Exchange Act. The audited consolidated financial statements and unaudited
consolidated interim financial statements of the Company included in the SEC
Reports fairly present in all material respects, in conformity with GAAP (as
defined in Section 7.12 of this Agreement) applied on a consistent basis (except
as may be indicated in the notes thereto), the consolidated financial position
of the Company and its consolidated subsidiaries as of the dates thereof and
their consolidated results of operations and cash flows for the periods then
ended (subject to normal year-end adjustments in the case of any unaudited
interim financial statements). The Company has heretofore made available or
promptly will make available to Gaming a complete and correct copy of any
amendments or modifications, which are required to be filed with the SEC but
have not yet been filed with the SEC, to the SEC Reports.
11
(b) Except as set forth in Schedule 2.7(b) hereto, the Company
and its subsidiaries have no liabilities of any nature (whether accrued,
absolute, contingent or otherwise), except for (i) liabilities set forth in the
audited balance sheet of the Company dated March 31, 1997 or on the notes
thereto, contained in the Company's Quarterly Report on Form 10-Q for the
quarterly period ended Xxxxx 00, 0000, (xx) liabilities incurred in the ordinary
course of business consistent with past practice since March 31, 1997 and (iii)
liabilities which would not, individually or in the aggregate, have a Company
Material Adverse Effect.
Section 2.8 Absence of Certain Changes. Except as set forth in
Schedule 2.8 hereto, since February 28, 1997, the Company and its subsidiaries
have conducted their respective businesses only in the ordinary course, and
there has not been (i) any declaration, setting aside or payment of any dividend
or other distribution with respect to its capital stock, (ii) any incurrence,
assumption or guarantees by the Company or any of its subsidiaries of any
indebtedness for borrowed money other than in the ordinary course of business,
(iii) any making of any loan, advance or capital contributions to, or
investments in, any other person, (iv) any split, combination or
reclassification of any of its capital stock or any issuance or the
authorization of any issuance of any other securities in respect of, in lieu of
or in substitution for shares of its capital stock, (v) (x) any granting by the
Company or any of its subsidiaries to any officer of the Company or any of its
subsidiaries of any increase in compensation, except in the ordinary course of
business (including in connection with promotions) consistent with past practice
or as was required under employment agreements in effect as of the date of the
most recent audited financial statements included in the SEC Reports filed and
publicly available prior to the date of this Agreement, (y) any granting by the
Company or any of its subsidiaries to any such officer of any increase in
severance or termination pay, except as part of a standard employment package to
any person promoted or hired, or as was required under employment, severance or
termination agreements in effect as of the date of the most recent audited
financial statements included in the SEC Reports filed or (z) except termination
arrangements in the ordinary course of business consistent with past practice
with employees other than any executive officer of the Company, any entry by the
Company or any of its subsidiaries into any employment, severance or termination
agreement with any such officer, (vi) any damage, destruction or loss (other
than a decline of revenue or net income), whether or not covered by insurance,
that would be expected to have a Company Material Adverse Effect, (vii) any
transaction or commitment made, or any contract or agreement entered into, by
the Company or any of its subsidiaries relating to any of their assets or
business (including the acquisition or disposition of any assets) or any
relinquishment by the Company or any of its subsidiaries or any contract or
other right, in either case, material to the Company and its subsidiaries, taken
as a whole, other than transactions and commitments in the ordinary course of
business and those contemplated by this Agreement, (viii) any change in
accounting methods, principles or practices by the Company materially affecting
its assets, liabilities or business, except insofar as may have been required by
a change in generally accepted accounting principles or (ix) any other change
(other than a decline of revenue or net income) which would have a Company
Material Adverse Effect.
12
Section 2.9 Proxy Statement. The proxy or information
statement or similar materials distributed to the Company's Stockholders in
connection with the Elsinore Merger, including any amendments or supplements
thereto (the "Proxy Statement"), shall not, at the time filed with the SEC, at
the time mailed to the Company Stockholders, at the time of the Stockholders'
Meeting or at the Effective Time, contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they are made, not misleading. Notwithstanding the foregoing, the
Company makes no representation or warranty with respect to any information
provided by Gaming specifically for use in the Proxy Statement. The Proxy
Statement will comply as to form in all material respects with the provisions of
the Exchange Act.
Section 2.10 No Brokers. The Company has not employed any
broker, finder or financial advisor or incurred any liability for any brokerage
fees, commissions, finders' or financial advisory fees in connection with the
transactions contemplated hereby.
Section 2.11 Absence of Litigation. Except as disclosed in
Schedule 2.11 hereto, since February 28, 1997, there has not been any action,
suit, claim, investigation or proceeding pending against, or to the knowledge of
the Company, threatened against, the Company or any of its subsidiaries or any
of their respective properties or the Board before any court or arbitrator or
any administrative, regulatory or governmental body, or any agency or official
which, individually or in the aggregate, would have a Company Material Adverse
Effect. Except as disclosed in Schedule 2.11 hereto, since February 28, 1997,
there has not been any action, suit, claim, investigation or proceeding pending
against, or to the knowledge of the Company, threatened against, the Company or
any of its subsidiaries or any of their respective properties or the Board
before any court or arbitrator or any administrative, regulatory or governmental
body, or any agency or official which (i) challenges or seeks to prevent,
enjoin, alter or delay the Elsinore Merger or any of the other transactions
contemplated hereby or (ii) alleges any criminal action or inaction. Except as
disclosed in Schedule 2.11 hereto, since February 28, 1997, neither the Company
nor any of its subsidiaries nor any of their respective properties has been
subject to any order, writ, judgment, injunction, decree, determination or award
having, or which would have a Company Material Adverse Effect or which would
prevent or delay the consummation of the transactions contemplated hereby.
Section 2.12 Taxes. Except as set forth in Schedule 2.12
hereto, (a) the Company and its subsidiaries have filed, been included in or
sent, all material returns, material declarations and reports and information
returns and statements required to be filed or sent by or relating to any of
them relating to any Taxes (as defined herein) with respect to any material
income, properties or operations of the Company or any of its subsidiaries
(collectively, "Returns"); (b) as of the time of filing, the Returns correctly
reflected in all material respects the facts regarding the income, business,
assets, operations, activities and status of the Company and its subsidiaries
and any other material information required to be shown therein; (c) the Company
and its subsidiaries have timely paid or made provision for all material Taxes
that have been shown as due and payable on the Returns that have been filed; (d)
the Company and its
13
subsidiaries have made or will make provision for all material Taxes payable for
any periods that end before the Effective Time for which no Returns have yet
been filed and for any periods that begin before the Effective Time and end
after the Effective Time to the extent such Taxes are attributable to the
portion of any such period ending at the Effective Time; (e) the charges,
accruals and reserves for Taxes reflected on the books of the Company and its
subsidiaries are adequate under generally accepted accounting principles to
cover the Tax liabilities accruing or payable by the Company and its
subsidiaries; (f) neither the Company nor any of its subsidiaries is delinquent
in the payment of any material Taxes or has requested any extension of time
within which to file or send any material Return (other than extensions granted
to the Company for the filing of its Returns as set forth in Schedule 2.12),
which Return has not since been filed or sent; (g) no material deficiency for
any Taxes has been proposed, asserted or assessed in writing against the Company
or any of its subsidiaries other than those Taxes being contested in good faith
by appropriate proceedings and set forth in Schedule 2.12 (which shall set forth
the nature of the proceeding, the type of return, the deficiencies proposed,
asserted or assessed and the amount thereof, and the taxable year in question);
(h) neither the Company nor any of its subsidiaries has granted any extension of
the limitation period applicable to any material Tax claims other than those
Taxes being contested in good faith by appropriate proceedings; and (i) neither
the Company nor any of its subsidiaries is subject to liability for Taxes of any
person (other than the Company or its subsidiaries).
For purposes of this Agreement, "Tax" or "Taxes" means all
Federal, state, local and foreign taxes, and other assessments of a similar
nature (whether imposed directly or through withholding), including any
interest, additions to tax, or penalties applicable thereto, imposed by any Tax
Authority (as defined herein). "Tax Authority" means the Internal Revenue
Service and any other domestic or foreign governmental authority responsible for
the administration of any Taxes.
Section 2.13 Employee Benefits. (a) Schedule 2.13(a) hereto
contains a true and complete list of each bonus, deferred compensation,
incentive compensation, stock purchase, stock option, severance or termination
pay, hospitalization or other medical, dental, life, disability or other
insurance, supplemental unemployment benefits, profit-sharing, pension, savings
or retirement plan, program, agreement or arrangement, and each other employee
benefit plan, program, agreement or arrangement, sponsored, maintained or
contributed to or required to be contributed to by the Company or by any trade
or business, whether or not incorporated (an "ERISA Affiliate"), that together
with the Company would be deemed a "single employer" within the meaning of
section 4001 of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), for the benefit of any employee or terminated employee of the Company
or any ERISA Affiliate (the "Plans"). Schedule 2.13(a) hereto identifies each of
the Plans that is an "employee benefit plan," as that term is defined in section
3(3) of ERISA (the "ERISA Plans"). Neither the Company nor any ERISA Affiliate
has ever maintained, administered, contributed to or had any contingent
liability with respect to any employee pension benefit plan subject to Title IV
of ERISA or Section 412 of the Code (as defined herein), other than the
multiemployer plans (as defined in Section 3(37)(A) of ERISA) which are
identified on Schedule 2.13(a) hereto.
14
(b) With respect to each Plan, the Company has heretofore
delivered or made available to Gaming true and complete copies of each of the
following documents (to the extent applicable):
(i) a copy thereof;
(ii) a copy of the most recent annual report
and actuarial report, if required under ERISA, and the most recent report
prepared with respect thereto in accordance with Statement of Financial
Accounting Standards No. 87, Employer's Accounting for Pensions;
(iii) a copy of the most recent actuarial
report prepared with respect thereto in accordance with Statement of Financial
Accounting Standards No. 106, Employer's Accounting for Non-Pension
Postretirement Benefits;
(iv) a copy of the most recent Summary Plan
Description;
(v) if the Plan is funded through a trust or
any third party
funding vehicle, a copy of the trust or other funding agreement and the
latest financial statements thereof; and
(vi) the most recent determination letter
received from the
Internal Revenue Service with respect to each Plan intended to qualify
under section 401(a) of the Internal Revenue Code of 1986, as amended
(the "Code").
(c) Neither the Company nor any ERISA Affiliate has incurred
any liability under Title IV of ERISA, including any "withdrawal liability"
(within the meaning of Section 4201 of ERISA) with respect to any benefit plan,
and, to the knowledge of the Company, no condition exists that presents a
material risk to the Company or any ERISA Affiliate of incurring a material
liability under such Title.
(d) Neither the Company nor any ERISA Affiliate, nor, to the
knowledge of the Company, any ERISA Plan, any trust created thereunder, nor any
trustee or administrator thereof has engaged in a transaction in connection with
which the Company or any ERISA Affiliate, any ERISA Plan, any such trust, or any
trustee or administrator thereof, or any party dealing with any ERISA Plan or
any such trust would be subject to either a civil penalty assessed pursuant to
section 409 or 502(i) of ERISA or a Tax imposed pursuant to section 4975 or 4976
of the Code, except for such penalties and Taxes which would not, individually
or in the aggregate, have a Company Material Adverse Effect.
(e) All contributions required to be made with respect to any
ERISA Plan (whether pursuant to the terms of any ERISA Plan or otherwise) on or
prior to the Effective Time have been timely made.
15
(f) To the knowledge of the Company, each Plan has been
operated and administered in all material respects in accordance with its terms
and applicable law, including but not limited to ERISA and the Code except where
such noncompliance would not be expected to have a Company Material Adverse
Effect.
(g) Each ERISA Plan intended to be "qualified" within the
meaning of section 401(a) of the Code has been drafted with the intention to be
so qualified and has received a favorable determination letter from the Internal
Revenue Service on or before the date hereof.
(h) To the Company's knowledge, except as reasonably estimated
and as set forth in Schedule 2.13(h), no amounts payable under the Plans as a
result of the consummation of the transactions contemplated by this Agreement
will fail to be deductible for federal income tax purposes by application of
section 280G of the Code.
(i) Except as set forth on Schedule 2.13(i) hereto, no Plan
provides benefits, including without limitation death or medical benefits
(whether or not insured), with respect to current or former employees of the
Company or any ERISA Affiliate beyond their retirement or other termination of
service (other than (i) coverage mandated by applicable law or (ii) death
benefits or retirement benefits under any "employee pension plan," as that term
is defined in section 3(2) of ERISA).
(j) Except as provided in Schedule 2.13(j) hereto, the
consummation of the transactions contemplated by this Agreement will not (i)
entitle any current or former employee or officer of the Company or any ERISA
Affiliate to severance pay, unemployment compensation or any other payment, or
(ii) accelerate the time of payment or vesting, or increase the amount of
compensation due any such employee or officer.
(k) There are no pending or, to the knowledge of the Company,
threatened claims by or on behalf of any Plan, by any employee or beneficiary
covered under any such Plan, or otherwise involving any such Plan (other than
routine claims for benefits).
(l) The Company has reserved the right to amend or terminate
any Plan which is a welfare benefit plan, as that term is defined in section
3(l) of ERISA.
Section 2.14 Intellectual Property. Except as disclosed in the
SEC Reports filed prior to the date of this Agreement or as set forth in
Schedule 2.14 hereto, the Company and each of its subsidiaries owns, or is
licensed or has the right to use (in each case, free and clear of any Liens),
all Intellectual Property (as defined below) used in or necessary for the
conduct of its business substantially as currently conducted, to the knowledge
of the Company, the use of any Intellectual Property by the Company and its
subsidiaries does not infringe on or otherwise violate the rights of any person;
and, to the knowledge of the Company, no person is challenging, infringing on or
otherwise violating any right of the Company or any of its subsidiaries with
respect to any Intellectual Property owned by and/or licensed to the Company and
its subsidiaries, except in each case for such infringements or failures to own
or be licensed
16
as would not, individually or in the aggregate, have a Company Material Adverse
Effect. For purposes of this Agreement, "Intellectual Property" shall mean
trademarks, service marks, brand names, certification marks, trade dress,
assumed names, trade names and other indications of origin, the goodwill
associated with the foregoing and any registration in any jurisdiction of, and
applications in any jurisdiction to register, the foregoing, including any
extension, modification or renewal of any such registration or application;
inventions, discoveries and ideas, whether patentable or not in any
jurisdiction; patents, applications for patents (including, without limitation,
divisions, continuations, continuations in part and renewal applications), and
any renewals, extensions or reissues thereof, in any jurisdiction; nonpublic
information, trade secrets and confidential information and rights in any
jurisdiction to limit the use or disclosure thereof by any person; writings and
other works, whether copyrightable or not in any jurisdiction; registrations or
applications for registration of copyrights in any jurisdiction, and any
renewals or extensions thereof; and any similar intellectual property or
proprietary rights.
Section 2.15 Material Contracts. Except as set forth in
Schedule 2.15 hereto, there are no (i) agreements of the Company or any of its
subsidiaries containing an unexpired covenant not to compete or similar
restriction applying to the Company or any of its subsidiaries, (ii) interest
rate, currency or commodity hedging, swap or similar derivative transactions to
which the Company or any of its subsidiaries is a party nor (iii) other
contracts or amendments thereto that would be required to be filed and have not
been filed as an exhibit to a Form 10-K filed by the Company with the SEC as of
the date of this Agreement (collectively, the "Material Contracts"). Assuming
each Material Contract constitutes a valid and binding obligation of each other
party thereto, each Material Contract is a valid and binding obligation of the
Company or a subsidiary of the Company, as the case may be. To the Company's
knowledge, each Material Contract is a valid and binding obligation of each
other party thereto, and each such Material Contract is in full force and effect
and is enforceable by the Company or its subsidiaries in accordance with its
terms, except as enforcement may be limited by the Bankruptcy Exceptions and
subject to the general principles of equity. There are no existing defaults (or
circumstances or events that, with the giving of notice or lapse of time or both
would become defaults) of the Company or any of its subsidiaries (or, to the
knowledge of the Company, any other party thereto) under any of the Material
Contracts except for defaults that would not, individually or in the aggregate,
have a Company Material Adverse Effect.
Section 2.16 Insurance. The Company and its subsidiaries have
obtained and maintained in full force and effect insurance with responsible and
reputable insurance companies or associations in such amounts, on such terms and
covering such risks, including fire and other risks insured against by extended
coverage, as is consistent with industry practice for companies (i) engaged in
similar businesses and (ii) of at least similar size, to that of the Company and
its subsidiaries, and the Company and each of its subsidiaries have maintained
in full force and effect public liability insurance, insurance against claims
for personal injury or death or property damage occurring in connection with any
of the activities of the Company or its subsidiaries or any of any properties
owned, occupied or controlled by the Company or its subsidiaries, in such amount
as reasonably deemed necessary by the Company or its subsidiaries. Schedule 2.16
hereto sets forth a complete and correct list of all material insurance policies
(including a brief
17
summary of the nature and terms thereof and any amounts paid or payable to the
Company or any of its subsidiaries thereunder) providing coverage in favor of
the Company or any of its subsidiaries or any of their respective properties.
Each such policy is in full force and effect, no notice of termination,
cancellation or reservation of rights has been received with respect to any such
policy, there is no default with respect to any provision contained in any such
policy, and there has not been any failure to give any notice or present any
claim under any such policy in a timely fashion or in the manner or detail
required by any such policy, except for any such failures to be in full force
and effect, any such terminations, cancellations, reservations or defaults, or
any such failures to give notice or present claims which, individually or in the
aggregate, would have a Company Material Adverse Effect.
Section 2.17 Labor Matters. (a) Except as set forth in
Schedule 2.17(a) hereto, neither the Company nor any of its subsidiaries is a
party to any collective bargaining or other labor union contract applicable to
persons employed by the Company or any of its subsidiaries, no collective
bargaining agreement is being negotiated by the Company or any of its
subsidiaries and the Company has no knowledge of any material activities or
proceedings (i) involving any unorganized employees of the Company or its
subsidiaries seeking to certify a collective bargaining unit or (ii) of any
labor union to organize any of the employees of the Company or its subsidiaries.
There is no labor dispute, strike or work stoppage against the Company or any of
its subsidiaries pending or, to the Company's knowledge, threatened which may
interfere with the respective business activities of the Company or any of its
subsidiaries, except where such dispute, strike or work stoppage would not have
a Company Material Adverse Effect.
(b) Except as set forth in Schedule 2.17(b) hereto, the
Company and each of its subsidiaries have paid in full, or fully accrued for in
their financial statements, all wages, salaries, commissions, bonuses, severance
payments, vacation payments, holiday pay, sick pay, pay in lieu of compensatory
time and other compensation due or to become due to all current and former
employees of the Company and each Subsidiary for all services performed by any
of them on or prior to the date hereof. The Company and its subsidiaries are in
compliance with all applicable federal, state, local and foreign laws, rules and
regulations relating to the employment of labor, including without limitation,
laws, rules and regulations relating to payment of wages, employment and
employment practices, terms and conditions of employment, hours, immigration,
discrimination, child labor, occupational health and safety, collective
bargaining and the payment and withholding of Taxes and other sums required by
governmental authorities.
Section 2.18 Real Property. Schedule 2.18 hereto identifies
all real property owned, leased or used by the Company or its subsidiaries in
the conduct of its business. Except as set forth in Schedule 2.18, the Company
and each of its subsidiaries have good and marketable title to all of their
properties and assets, free and clear of all Liens, except for those disclosed
in the financial statements and except Liens for taxes not yet due and payable
and such Liens or other imperfections of title, if any, as do not materially
detract from the value of or interfere with the present use of the property
affected thereby or which, individually or in the aggregate, would not have a
Company Material Adverse Effect; and all leases pursuant to which
18
the Company or any of its subsidiaries lease from others real or personal
property are in good standing, valid and effective in accordance with their
respective terms, and there is not, to the knowledge of the Company, under any
of such leases, any existing material default or event of default (or event
which with notice or lapse of time, or both, would constitute a material default
and in respect of which the Company or such subsidiary has not taken adequate
steps to prevent such a default from occurring) except where the lack of such
good standing, validity and effectiveness, or the existence of such default or
event, would not have a Company Material Adverse Effect.
Section 2.19 Bankruptcy. The plan of reorganization of the
Company, which became effective on February 28, 1997, has been confirmed by the
appropriate court, and the confirmation order issued by such court (the
"Confirmation Order") has been entered. All motions for rehearing or
reconsideration of the Confirmation Order have been denied or withdrawn. The
time allowed for appeals of the Confirmation Order has expired without any
appeal having been taken or, if the confirmation order has been appealed, no
stay is in effect. The Company has not defaulted and has fully complied with the
Confirmation Order.
Section 2.20 Environmental Matters. (a) Except as set forth on
Schedule 2.20 (i) the Company and its subsidiaries are in compliance with all
Environmental Laws (as defined herein), except where the failure to be in
compliance would not have a Company Material Adverse Effect, and (ii) to the
best knowledge of the Company, there are not, with respect to the Company or any
of its subsidiaries, any past violations of Environmental Laws, releases of any
material into the environment, actions, activities, circumstances, conditions,
events, incidents, contractual obligations or other legal requirements that may
give rise to any liability, cost or expense under any Environmental Laws, which
liabilities, costs or expenses, either individually or in the aggregate, would
have a Company Material Adverse Effect.
(b) As used in this Section 2.20, the term "Environmental
Laws" means the applicable common law and all applicable Federal, state, local
and foreign laws relating to pollution or protection of human health or the
environment (including, without limitation, ambient air, surface water,
groundwater, land surface or subsurface strata), including, without limitation,
laws relating to emissions, discharges, releases or threatened releases of, or
exposure to, chemicals, pollutants, contaminants, asbestos-containing materials
or industrial, toxic or hazardous substances or wastes into the environment, as
well as all applicable authorizations or codes, decrees, injunctions, judgments,
licenses, orders, permits or regulations in effect thereunder.
Section 2.21 Representations Complete.
None of the representations or warranties made by the Company herein or in any
Schedule or Exhibit hereto contains or will contain at the Effective Time any
untrue statement of a material fact, or omits or will omit at the Effective Time
any material fact required or necessary in order to make the statements
contained herein or therein, in light of the circumstances under which they are
made, not misleading.
19
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF GAMING AND EAS
Each of Gaming and EAS represents and warrants to the Company
as follows:
Section 3.1 Organization; Power and Authority. Each of Gaming
and EAS is a corporation duly organized, validly existing and in good standing
under the laws of the jurisdiction of its incorporation, and has all requisite
corporate power and authority to execute and deliver this Agreement, to perform
its obligations hereunder and to consummate the transactions contemplated
hereby, except where the failure to be so organized, existing and in good
standing or to have such power and authority would not, individually or in the
aggregate, have a Gaming Material Adverse Effect (as defined herein). When used
in this Agreement, the term "Gaming Material Adverse Effect" means any change or
effect (i) that would be materially adverse to the business, results of
operations, conditions (financial or otherwise) or prospects of Gaming and EAS
and their subsidiaries, taken as a whole, or (ii) that would impair the ability
of Gaming and EAS to consummate the transactions contemplated hereby. Each of
Gaming and EAS has the requisite corporate power and authority to execute and
deliver this Agreement and consummate the transactions contemplated hereby. The
execution, delivery and performance of this Agreement and the consummation of
the transactions contemplated hereby have been duly and validly authorized by
all necessary corporate action on the part of each of Gaming and EAS and by the
sole stockholder of each of Gaming and EAS, and no other corporate proceedings
on the part of Gaming or EAS are necessary to authorize this Agreement or to
consummate the transactions so contemplated. This Agreement has been duly and
validly executed and delivered by each of Gaming and EAS and, assuming this
Agreement constitutes a valid and binding agreement of the other parties hereto,
constitutes a legal, valid and binding agreement of each of Gaming and EAS,
enforceable against each of Gaming and EAS in accordance with its terms, except
as such enforcement may be limited by the Bankruptcy Exceptions and subject to
the general principles of equity.
Section 3.2 Non-Contravention; Required Filings and Consents.
(a) Except as set forth on Schedule 3.2(a) hereto, the execution, delivery and
performance by each of Gaming and EAS of this Agreement and the consummation of
the transactions contemplated hereby (including, without limitation, the
Elsinore Option Agreement, the Escrow Agreement and the Elsinore Merger) do not
and will not: (i) contravene or conflict with the Certificate of Incorporation
or Bylaws of Gaming or the equivalent organizational documents of EAS, or any
resolution adopted by the board of directors or stockholders of Gaming or EAS,
(ii) assuming that all consents, authorizations and approvals contemplated by
subsection (b) below have been obtained and all filings described therein have
been made, contravene or conflict with or constitute a violation of any
provision of any law, regulation, judgment, injunction, order or decree binding
upon or applicable to Gaming or to EAS or any of their respective properties,
(iii) contravene, conflict with, or result in a violation of any of the terms or
requirements of, or give any governmental entity, official or authority right to
revoke, withdraw, suspend, cancel, terminate or modify, any authorization that
is held by Gaming or EAS or that otherwise relates
20
to the business of, or any of the assets owned by Gaming or EAS, (iv) conflict
with, or result in the breach or termination of any provision of or constitute a
default (with or without the giving of notice or the lapse of time or both)
under, or give rise to any right of termination, cancellation, or loss of any
benefit to which either Gaming or EAS is entitled under any provision of any
agreement, contract, license or other instrument binding upon either Gaming or
EAS, or allow the acceleration of the performance of, any obligation of either
Gaming or EAS under any other agreement to which Gaming or EAS is a party or by
which Gaming or EAS is subject or bound, or (v) result in the creation or
imposition of any Lien on any asset of Gaming or EAS, except in the case of
clauses (ii), (iii) and (iv) for any such contraventions, conflicts, violations,
breaches, terminations, defaults, cancellations, losses, accelerations and Liens
which would not individually or in the aggregate have a Gaming Material Adverse
Effect or be reasonably expected to prevent the consummation by Gaming or by EAS
of the transactions contemplated by this Agreement.
(b) The execution, delivery and performance by Gaming and by
EAS of this Agreement and the consummation of the transactions contemplated
hereby (including the Elsinore Option Agreement, the Escrow Agreement and the
Elsinore Merger) by Gaming and by EAS require no action by or in respect of, or
filing with, any governmental entity, official or authority (either domestic or
foreign), other than: (i) the filing of Articles of Merger in accordance with
the Nevada Merger Law; (ii) compliance with any applicable requirements of the
HSR Act; (iii) compliance with any applicable requirements of the Exchange Act
and state securities, takeover and Blue Sky laws; (iv) obtaining all necessary
gaming approvals, including those required by the Gaming Authorities, including,
without limitation, approvals under the Gaming Laws, if any; and (v) such
additional actions or filings which, if not taken or made, would not
individually or in the aggregate have a Gaming Material Adverse Effect or be
reasonably expected to prevent the consummation by Gaming or by EAS of the
transactions contemplated by this Agreement.
Section 3.3 Absence of Litigation. Since February 28, 1997,
there has not been any action, suit, claim, investigation or proceeding pending
against, or to the knowledge of Gaming or EAS, threatened against, Gaming or EAS
or any of their subsidiaries or any of their respective properties, or their
respective boards of directors, before any court or arbitrator or any
administrative, regulatory or governmental body, or any agency or official
which, individually or in the aggregate, would have a Gaming Material Adverse
Effect. Since February 28, 1997, neither Gaming nor EAS nor any of their
subsidiaries nor any of their respective properties has been subject to any
order, writ, judgment, injunction, decree, determination or award having, or
which would have, a Gaming Material Adverse Effect or which would prevent or
delay the consummation of the transactions contemplated hereby.
Section 3.4 Proxy Statement. None of the information provided
by Gaming specifically for use in the Proxy Statement shall, at the time filed
with the SEC, at the time mailed to the Company Stockholders, at the time of the
Stockholders' Meeting or at the Effective Time, contain any untrue statement of
a material fact or omit to state any material fact required
21
to be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they are made, not misleading.
Section 3.5 No Prior Activities. Since the date of its
incorporation, neither Gaming nor EAS has engaged in any activities other than
in connection with or as contemplated by this Agreement, the Riviera Merger or
in connection with arranging any financing required to consummate the
transactions contemplated hereby.
Section 3.6 No Brokers. Except for Jefferies & Co., Inc.
(whose fee will be paid by Gaming), neither Gaming nor EAS has employed any
broker or finder, nor has it incurred any liability for any brokerage fees,
commissions or finders' fees in connection with the transactions contemplated by
this Agreement.
Section 3.7 Capitalization of Gaming. On the Closing Date and
at the Effective Time, Gaming will have cash or immediately available funds in
an amount not less than the sum of (i) the aggregate amount of Merger
Consideration to be paid hereunder, (ii) the aggregate amount to be paid at the
Effective Time pursuant to Section 1.9 hereof and (iii) an amount equal to $3.16
multiplied by the number of Dissenting Shares.
Section 3.8 Representations Complete. None of the
representations or warranties made by either Gaming or EAS herein or in any
Exhibit hereto contains or will contain at the Effective Time any untrue
statement of a material fact, or omits or will omit at the Effective Time any
material fact necessary in order to make the statements contained herein, in
light of the circumstances under which they are made, not misleading.
ARTICLE IV
COVENANTS
Section 4.1 Conduct of Business of the Company. Except as
otherwise expressly provided in this Agreement, during the period from the date
hereof to the Effective Time, the Company and its subsidiaries will each conduct
their respective operations according to its ordinary course of business, and
the Company and its subsidiaries will each use its reasonable best efforts to
preserve intact its business organization, to keep available the services of its
officers and employees and to maintain existing relationships with licensors,
licensees, suppliers, contractors, distributors, and others having business
relationships with it. Without limiting the generality of the foregoing, and
except as otherwise expressly provided in this Agreement, or as set forth in
Schedule 4.1 hereto, prior to the Effective Time, neither the Company nor any of
its subsidiaries will, without the prior written consent of Gaming:
(a) amend its Articles of Incorporation or Bylaws or other
comparable organizational documents;
22
(b) authorize for issuance, issue, pledge, sell, deliver or
agree or commit to issue, sell or deliver (whether through the issuance or
granting of options, warrants, commitments, subscriptions, rights to purchase or
otherwise) or otherwise encumber, any capital stock of any class or any other
securities or equity equivalents (including, without limitation, stock
appreciation rights), except as required by the Company Plan, warrants or other
securities listed on Schedule 2.2, as such are in effect as of the date hereof,
or amend any of the terms of any such securities or agreements outstanding as of
the date hereof;
(c) split, combine or reclassify any shares of its capital
stock, declare, set aside or pay any dividend or other distribution (whether in
cash, stock, or property or any combination thereof) in respect of its capital
stock, or, redeem, repurchase or otherwise acquire any of its securities or any
securities of its subsidiaries;
(d) (i) except as set forth in Schedule 4.1(d)(i) hereto or in
the ordinary course of business, create or incur any indebtedness for borrowed
money or issue any debt securities or assume, guarantee or endorse the
obligations of any other person, (ii) make any loans, advances or capital
contributions to, or investments in, any other person, (iii) pledge or otherwise
encumber any shares of capital stock of the Company or any of its subsidiaries,
or (iv) mortgage or pledge any of its assets, tangible or intangible, or create
or suffer to exist any Lien thereupon;
(e) enter into any transaction, other than in the ordinary
course of business, or make any investment, except for expenditures and
transactions in an aggregate amount not to exceed by more than $350,000 the
aggregate amount of expenditures and transactions set forth in the capital
expenditures plan provided to Gaming by the Company on September 5, 1997.
(f) enter into, adopt or (except as may be required by law or
by the terms of any such arrangement) amend or terminate any bonus,
profit-sharing, compensation, severance, termination, stock option, pension,
retirement, deferred compensation, employment or other employee benefit
agreement, trust, plan, fund or other arrangement for the benefit or welfare of
any director, officer or employee, or increase in any manner the compensation or
benefits of any director, officer or employee, or grant any benefit or
termination or severance pay to any director, officer or employee not required
by any plan or arrangement as in effect as of the date hereof (including,
without limitation, the granting of stock options) or by law;
(g) acquire, sell, lease or dispose of, or encumber any assets
outside the ordinary course of business or any assets which in the aggregate are
material to the Company and its subsidiaries, taken as a whole, or enter into
any contract, agreement, commitment or transaction outside the ordinary course
of business;
(h) change any of the accounting principles or practices used
by the Company, except as may be required as a result of a change in law, SEC
guidelines or GAAP;
23
(i) (i) acquire (including, without limitation, by merger,
consolidation, or acquisition of stock or assets) any corporation, partnership
or other business organization or division thereof; (ii) authorize any new
capital expenditure or expenditures, except for expenditures and transactions in
an aggregate amount not to exceed by more than $350,000 the aggregate amount of
expenditures and transactions set forth in the capital expenditures plan
provided to Gaming by the Company on September 5, 1997, (iii) settle any
litigation for amounts in excess of $100,000 individually or $500,000 in the
aggregate; or (iv) enter into or amend any contract, agreement, commitment or
arrangement with respect to any of the foregoing;
(j) make any Tax election or settle or compromise any Tax
liability, other than in the ordinary course of business;
(k) pay, discharge or satisfy any claims, liabilities or
obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge or satisfaction in the ordinary
course of business consistent with past practice or in accordance with their
terms, of liabilities set forth in Schedule 2.8 hereto or reflected or reserved
against in the financial statements (or the notes thereto) of the Company and
its subsidiaries or incurred in the ordinary course of business consistent with
past practice;
(l) terminate, modify, amend or waive compliance with any
provision of any Material Contract or fail to take any action necessary to
preserve the benefits of any such Material Contract to the Company or any of its
subsidiaries;
(m) fail to comply with any laws, ordinances or other
governmental regulations applicable to the Company or any of its subsidiaries,
including, but not limited to, the Gaming Laws and any regulations promulgated
thereunder, that may have a Company Material Adverse Effect; or
(n) take, or agree in writing or otherwise to take, any of the
actions described in this Section 4.1.
Section 4.2 Proxy Statement. (a) The Company shall, as
promptly as practicable following the date hereof, prepare and file the Proxy
Statement with the SEC under the Exchange Act. Gaming and EAS shall use their
respective best efforts to cooperate with the Company in the preparation of the
Proxy Statement. As soon as practicable following completion of review of the
Proxy Statement by the SEC, the Company shall mail the Proxy Statement to its
stockholders who are entitled to vote at the Stockholders' Meeting. Subject to
the fiduciary obligations of the Board under applicable law, the Proxy Statement
shall contain the recommendation of the Board that the Company Stockholders
approve this Agreement and the transactions contemplated hereby.
24
(b) The Company shall use its reasonable best efforts to
promptly obtain and furnish the information required to be included in the Proxy
Statement and to respond promptly to any comments from, or requests made by the
SEC with respect to the Proxy Statement. The Company shall promptly notify
Gaming of the receipt of comments from, or any requests by, the SEC with respect
to the Proxy Statement, and shall promptly supply Gaming with copies of all
correspondence between the Company (or its representatives) and the SEC (or its
staff) relating thereto. The Company agrees to correct any information provided
by it for use in the Proxy Statement which shall have become, or is, false or
misleading; provided, however, that the Company shall first use its reasonable
best efforts to consult with Gaming about the form and substance of each such
correction.
Section 4.3 Access to Information. (a) Subject to applicable
law and the agreements set forth in Section 4.3(b), between the date hereof and
the Effective Time, the Company will give Gaming and its counsel, financial
advisors, auditors and other authorized representatives reasonable access
(during regular business hours upon reasonable notice) to all employees, offices
and other facilities and to all books and records of the Company and its
subsidiaries, will permit Gaming and its counsel, financial advisors, auditors
and other authorized representatives to make such inspections Gaming may
reasonably require, and will cause the Company's officers and those of its
subsidiaries to furnish Gaming or its representatives with such financial and
operating data and other information with respect to the business and properties
of the Company and any of its subsidiaries as Gaming may from time to time
reasonably request. No investigation pursuant to this Section 4.3 shall affect
any representations or warranties of the Company herein or the conditions to the
obligations of Gaming or EAS hereunder.
(b) The parties hereto each agree that the provisions of the
Confidentiality Agreement, dated as of May 5, 1997 and attached hereto as
Exhibit C (the "Confidentiality Agreement"), between the Company and Xx. Xxxxx
X. Xxxxxxx shall apply to and be binding on Gaming and EAS, and that the terms
of the Confidentiality Agreement are incorporated herein by reference.
Section 4.4 Reasonable Best Efforts. Subject to the terms and
conditions contained herein, each of the parties hereto agrees to use its
reasonable best efforts to take, or cause to be taken, all actions, and to do,
or cause to be done, all things reasonably necessary, proper or advisable under
all applicable laws and regulations to consummate and make effective the
transactions contemplated by this Agreement. Without limiting the generality of
the foregoing, the parties hereto shall cooperate with one another (i) in the
preparation and filing of any required filings under the HSR Act, the Gaming
Laws and the other laws referred to in Sections 2.5 and 3.2 hereof, (ii) in
determining whether action by or in respect of, or filing with, any governmental
body, agency, official or authority is required, proper or advisable, or any
actions, consents, waivers or approvals are required to be obtained from parties
to any contracts in connection with the transactions contemplated by this
Agreement, (iii) in seeking to obtain any such actions, consents and waivers and
in making any such filings, and (iv) in seeking to lift any order, decree or
ruling restraining, enjoining or otherwise prohibiting the
25
Elsinore Merger. If at any time after the Effective Time any further action is
necessary or desirable to carry out the purposes of this Agreement, the proper
officers and directors of each party hereto shall take all such necessary
action.
Section 4.5 Public Announcements. Each of the parties hereto
agrees that it will not issue any press release or otherwise make any public
statement with respect to this Agreement or the transactions contemplated hereby
without the prior consent of the other party, which consent shall not be
unreasonably withheld or delayed; provided, however, that such disclosure can be
made without obtaining such prior consent if (i) the disclosure is required by
law, and (ii) the party making such disclosure has first used its reasonable
best efforts to consult with the other party about the form and substance of
such disclosure.
Section 4.6 Indemnification; Insurance. (a) From and after the
Effective Time, the Surviving Corporation shall indemnify and hold harmless each
person who is, or has been at any time prior to the date hereof or who becomes
prior to the Effective Time, an officer, director or employee of the Company or
any of its subsidiaries (collectively, the "Indemnified Parties" and
individually, an "Indemnified Party") against all losses, liabilities, expenses
(including attorneys' fees), claims or damages in connection with any claim,
suit, action, proceeding or investigation based in whole or in part upon the
fact that such Indemnified Party is or was a director, officer or employee of
the Company or any of its subsidiaries and arising out of acts or omissions
occurring prior to and including the Effective Time (including but not limited
to the transactions contemplated by this Agreement) to the fullest extent
permitted by Nevada law, for a period of not less than six years following the
Effective Time; provided, that in the event any claim or claims are asserted or
made within such six-year period, all rights to indemnification in respect of
any such claim or claims shall continue until final disposition of any and all
such claims.
(b) The provisions of the Surviving Corporation Articles of
Incorporation with respect to indemnification and exculpation shall not be
amended, repealed or otherwise modified for a period of six years after the
Effective Time in any manner that would adversely affect the rights thereunder
of individuals who at the Effective Time are or were current or former directors
or officers of the Company in respect of actions or omissions occurring at or
prior to the Effective Time (including, without limitation, the transactions
contemplated by this Agreement), unless such modification is required by law.
(c) Prior to the Closing Date, the Company shall obtain a tail
insurance policy (the "Company D & O Liability Insurance Tail") covering the
directors and officers for acts or failures to act prior to the Effective Time,
and having substantially the same coverage and deductibles as the Company's
directors' and officers' liability insurance policy as in effect on July 1,
1997.
(d) From and after the Effective Time, no Indemnified Party
shall be liable to Gaming, EAS or the Surviving Corporation (or anyone claiming
rights through any of them, including Xxxxx X. Xxxxxxx) for breach of any of the
representations, warranties, covenants or
26
agreements contained in this Agreement. It is the express understanding of the
parties that the sole remedy of Gaming and EAS under this Agreement (or anyone
claiming rights under this Agreement through Gaming or EAS) in the event of a
breach or alleged breach by the Company of its representations, warranties,
covenants or agreements), shall be to refuse to consummate the Elsinore Merger,
subject, however, to Gaming's rights under Article VI hereof.
(e) This Section 4.6 is intended to benefit the Indemnified
Parties and their respective heirs, executors and personal representatives, and
shall be binding on the successors and assigns of the Company and the Surviving
Corporation.
Section 4.7 Notification of Certain Matters. The Company shall
give prompt notice to Gaming and EAS, and Gaming and EAS shall give prompt
notice to the Company, upon becoming aware of: (i) the occurrence or
non-occurrence, of any event the occurrence, or non-occurrence of which would
cause any representation or warranty contained in this Agreement to be untrue or
inaccurate, and (ii) any failure of the Company or Gaming and EAS, as the case
may be, to comply with or satisfy any covenant, condition or agreement to be
complied with or satisfied by it hereunder; provided, that the delivery of any
notice pursuant to this Section 4.7 shall not limit or otherwise affect the
remedies available hereunder to the party receiving such notice.
Section 4.8 No Solicitation. (a) The Company and its
subsidiaries and affiliates will not, and the Company and its subsidiaries and
affiliates will use their reasonable best efforts to ensure that their
respective officers, directors, employees, investment bankers, attorneys,
accountants and other agents do not, directly or indirectly: (i) initiate,
solicit or encourage, or take any action to facilitate the making of, any offer
or proposal which constitutes or is reasonably likely to lead to any Alternative
Transaction (as defined below) with respect to the Company or any of its
subsidiaries or an inquiry with respect thereto, or, (ii) in the event of an
unsolicited Alternative Transaction for the Company or any of its subsidiaries,
engage in negotiations or discussions with, or provide any information or data
to any person relating to any Alternative Transaction, subject to the Board's
good faith determination, after consulting with outside legal counsel to the
Company, that the failure to engage in such negotiations or discussions or
provide such information would likely result in a breach of the Board's
fiduciary duties under applicable law if such Alternative Transaction would
provide the Company Stockholders with a purchase price per Share that is higher
(the amount of such excess in the purchase price per Share is hereinafter
referred to as the "Spread") than the Merger Consideration to be received by the
Company Stockholders. The Company shall notify Gaming and EAS orally and in
writing of any such inquiries, offers or proposals (including, without
limitation, the terms and conditions thereof and the identity of the person
making such), within twenty four hours of the receipt thereof. The Company
shall, and shall cause its subsidiaries and affiliates, and their respective
officers, directors, employees, investment bankers, attorneys, accountants and
other agents to, immediately cease and cause to be terminated all existing
discussions and negotiations, if any, with any parties conducted heretofore with
respect to any Alternative Transaction relating to the Company or any of its
subsidiaries. Notwithstanding anything to the contrary, nothing contained in
this Section 4.8 shall prohibit the Company or the
27
Board from communicating to the Company Stockholders a position as required by
Rules 14d-9 and 14a-2 promulgated under the Exchange Act.
(b) As used in this Agreement, "Alternative Transaction" shall
mean any tender or exchange offer for the Common Stock or for the equivalent
securities of any of the Company's subsidiaries, any proposal for a merger,
consolidation or other business combination involving any such person, any
proposal or offer to acquire in any manner a ten percent or more equity interest
in, or ten percent or more of the business or assets of, such person, any
proposal or offer with respect to any recapitalization or restructuring with
respect to such person or any proposal or offer with respect to any other
transaction similar to any of the foregoing with respect to such person or any
subsidiary of such person; provided, however, that, as used in this Agreement,
the term "Alternative Transaction" shall not apply to any transaction of the
type described in this subsection (b) involving Gaming, EAS or their affiliates.
Section 4.9 Compliance with Gaming Laws. None of Gaming, EAS
or their officers, directors or shareholder will attempt to influence, direct or
cause the direction of the management or policies of the Company pending receipt
of all required approvals of the Gaming Authorities, pursuant to the Gaming
Laws, for the transactions contemplated by this Agreement and the Elsinore
Option Agreement.
ARTICLE V
CONDITIONS TO CONSUMMATION OF THE MERGER
Section 5.1 Conditions to each Party's Obligation to Effect
the Elsinore Merger. The respective obligation of each party to effect the
Elsinore Merger is subject to the satisfaction or waiver on or prior to the
Effective Time of the following conditions:
(a) Any waiting period applicable to the consummation of the
Elsinore Merger under the HSR Act shall have expired or been terminated, and no
action shall have been instituted by the Department of Justice or Federal Trade
Commission challenging or seeking to enjoin the consummation of this
transaction, which action shall have not been withdrawn or terminated.
(b) At the Stockholders' Meeting, this Agreement shall have
been approved and adopted by the affirmative vote of the holders of not less
than a majority of the Shares, excluding the Xxxxxxx Shares.
(c) There shall not have been any statute, rule, regulation,
judgment, order or injunction promulgated, entered, enforced, enacted or issued
applicable to the Elsinore Merger by any governmental entity which, directly or
indirectly, (i) prohibits the consummation of the Elsinore Merger or the
transactions contemplated by the Elsinore Option Agreement, (ii) prohibits or
materially limits the ownership or operation by the Company, or any of its
28
respective subsidiaries of a material portion of the business or assets of the
Company and its subsidiaries, taken as a whole, or seeks to compel the Company
or Gaming or EAS to dispose of or hold separate any material portion of the
business or assets of the Company or Gaming or EAS and its subsidiaries, taken
as a whole, as a result of the Elsinore Merger or any of the other transactions
contemplated by this Agreement, or (iii) prohibits Gaming or EAS from
effectively controlling in any material respect the business or operations of
the Company, taken as a whole; provided, that the parties hereto shall have used
their reasonable best efforts to cause any such statute, rule, regulation,
judgment, order or injunction to be repealed, vacated or lifted.
(d) The Riviera Merger shall have become effective.
(e) Other than the filing of the articles of merger in
accordance with the Nevada Merger Law, all licenses, permits, registrations,
authorizations, consents, waivers, orders or other approvals required to be
obtained, and all filings, notices or declarations required to be made, prior to
the Effective Time, by Gaming, EAS, Xx. Xxxxx X. Xxxxxxx, the Company or any of
its subsidiaries in order to consummate the Riviera Merger and the transactions
contemplated by this Agreement, and in order to permit the Company and its
subsidiaries to conduct their respective businesses in the jurisdictions
regulated by the Gaming Authorities after the Effective Time in the same manner
as conducted by the Company and its subsidiaries immediately prior to the
Effective Time shall have been obtained or made.
Section 5.2 Conditions to Obligations of Gaming and EAS to
Effect the Elsinore Merger. The obligations of Gaming and EAS to effect the
Elsinore Merger shall be subject to the satisfaction at or prior to the
Effective Time of the following additional conditions:
(a) The Company shall have performed in all material respects
all of its obligations under this Agreement required to be performed by it at or
prior to the Closing Date and the representations and warranties of the Company
contained in this Agreement shall be true and correct in all respects as of the
date of this Agreement and at and as of the Closing Date as if made at and as of
such time, except (i) for changes specifically permitted by this Agreement and
(ii) that those representations and warranties which address matters as of a
particular date shall remain true and correct as of such particular date.
(b) Neither the consummation nor the performance of any of the
transactions contemplated in this Agreement will, directly or indirectly (with
or without notice or lapse of time), materially contravene, or conflict with, or
result in a material violation of, or cause Gaming or EAS or any affiliate of
Gaming or EAS to suffer any material adverse consequence under, (a) any
applicable legal requirement or Order or (b) any legal requirement or Order that
has been published, introduced, or otherwise proposed by or before any
governmental entity.
(c) The Option Seller shall have entered into the Elsinore
Option Agreement concurrent with the execution of this Agreement, and the
Elsinore Option Agreement shall be in full force and effect and the Option
Seller shall have complied in all respects with the terms thereof;
29
(d) Xx. Xxxxx X. Xxxxxxx shall not have become deceased or
Disabled (as defined herein). As used herein, "Disabled" means Xx. Xxxxx X.
Xxxxxxx'x incapacity due to physical or mental illness, injury or disease, which
incapacity renders him unable to perform the requisite duties of the chief
executive officer of Gaming for a consecutive period of 90 days or more. Any
question as to the existence, extent or potentiality of Xx. Xxxxx X. Xxxxxxx'x
disability upon which Gaming and the Option Seller cannot agree shall be
determined by a qualified, independent physician selected by the Company and
approved by Gaming and the disputing Option Sellers (whose approval shall not be
unreasonably withheld or delayed). The determination of such physician shall be
final and conclusive for all purposes of this Agreement.
(e) Gaming shall have received such documents as Gaming or EAS
may reasonably request for the purpose of (i) evidencing the accuracy at any
time on or prior to the Closing Date of any of the Company's representations and
warranties, (ii) evidencing the performance by the Company of, or the compliance
by the Company with, any covenant or obligation required to be performed or
complied with by the Company, (iii) evidencing the satisfaction of any condition
referred to in Sections 5.1 and 5.2 hereof or (iv) otherwise facilitating the
consummation or performance of any of the transactions contemplated hereby.
(f) The cost to the Company (net of any amounts paid by third
parties) of the Company D&O Liability Insurance Tail obtained pursuant to
Section 4.6(c) hereof shall not exceed the aggregate of $150,000.
Section 5.3 Conditions to Obligations of the Company to Effect
the Elsinore Merger. The obligations of the Company to effect the Elsinore
Merger shall be subject to the satisfaction at or prior to the Effective Time of
the following additional conditions:
(a) Gaming and EAS shall have performed in all material
respects all of its obligations under this Agreement required to be performed by
it at or prior to the Effective Time and the representations and warranties of
Gaming and EAS contained in this Agreement shall be true and correct in all
respects as of the date of this Agreement and at and as of the Effective Time as
if made at and as of such time, except (i) for changes specifically permitted by
this Agreement and (ii) that those representations and warranties which address
matters as of a particular date shall remain true and correct as of such
particular date.
(b) At the Closing Date, Gaming shall have in cash or
immediately available funds, an amount equal to the sum of (i) the aggregate
amount of Merger Consideration to be paid hereunder, (ii) the aggregate amount
to be paid at the Effective Time pursuant to Section 1.9 hereof and (iii) an
amount equal to $3.16 multiplied by the number of Dissenting Shares.
(c) The Company shall have received such documents as the
Company may reasonably request for the purpose of (i) evidencing the accuracy of
any of Gaming's and EAS' representations and warranties, (ii) evidencing the
performance by Gaming and EAS of, or the compliance by Gaming and EAS with, any
covenant or obligation required to be performed or
30
complied with by Gaming and EAS, (iv) evidencing the satisfaction of any
condition referred to in Sections 5.1 and 5.3 hereof or (v) otherwise
facilitating the consummation or performance of any of the transactions
contemplated hereby.
ARTICLE VI
TERMINATION; AMENDMENT; WAIVER
Section 6.1 Termination. This Agreement may be terminated and
the Elsinore Merger may be abandoned at any time prior to the Effective Time,
notwithstanding approval thereof by the Company Stockholders:
(a) by mutual written consent of Gaming and EAS, on the one
hand, and the Company, on the other hand;
(b) by Gaming and EAS, on the one hand, or the Company, on the
other hand, if any court or governmental authority of competent jurisdiction
shall have issued an order, decree or ruling or taken any other action
restraining, enjoining or otherwise prohibiting the Elsinore Merger and such
order, decree, ruling or other action shall have become final and nonappealable;
provided, that Gaming and the Company shall have used their reasonable best
efforts to have such injunction lifted;
(c) by Gaming and EAS, on the one hand, or the Company, on the
other hand, at any time after April 1, 1998, (the "Termination Date") if the
Elsinore Merger shall not have occurred by such date; provided, that if the
Elsinore Merger has not occurred solely by virtue of the fact that the required
approvals of one or more of the Gaming Authorities have not been obtained and
the Gaming Authorities have not informed Xx. Xxxxx X. Xxxxxxx, Gaming or the
Company that a review of the applications for such approvals is scheduled by the
appropriate Gaming Authorities for a later date, then the Termination Date shall
be extended until such approvals have been granted or denied, except that under
no circumstances shall such extension continue after June 1, 1998; and,
provided, further, that the right to terminate this Agreement under this
subparagraph (c) shall not be available to any party whose failure to fulfill
any obligation under this Agreement has been the principal cause of the failure
of the Elsinore Merger to have occurred by such date;
(d) by Gaming and EAS if (i) there shall have been a breach of
any representation or warranty of the Company contained herein which would have
a Company Material Adverse Effect or prevent the consummation of the Elsinore
Merger or the transactions contemplated hereby, which shall not have been cured
on or prior to ten business days following notice from Gaming of such breach,
(ii) there shall have been a breach of any covenant or agreement of the Company
contained herein which would have a Company Material Adverse Effect or prevent
the consummation of the Elsinore Merger or the transactions contemplated hereby,
which shall not have been cured on or prior to ten business days following
notice of
31
such breach, (iii) the Board shall have withdrawn or modified, in a manner
materially adverse to Gaming, its approval or recommendation of this Agreement,
the Elsinore Merger or the transactions contemplated hereby or shall have
recommended, or the Company shall have entered into an agreement providing for,
an Alternative Transaction, or the Board shall have resolved to do any of the
foregoing, (iv) the Stockholders Meeting shall have been held and the vote
described in Section 5.1(b) shall not have been obtained, (v) Xx. Xxxxx X.
Xxxxxxx shall have become deceased or Disabled or (vi) the Riviera Merger
Agreement shall have been terminated; or
(e) by the Company if (i) there shall have been a breach of
any representation or warranty of Gaming contained herein which would have a
Gaming Material Adverse Effect or prevent the consummation of the Elsinore
Merger or the transactions contemplated hereby, which shall not have been cured
on or prior to ten business days following notice from the Company of such
breach, (ii) there shall have been a breach of any covenant or agreement of
Gaming contained herein which would have a Gaming Material Adverse Effect or
prevent the consummation of the Elsinore Merger or the transactions contemplated
hereby, which shall not have been cured on or prior to ten business days
following notice of such breach, (iii) the Board determines, in good faith after
consulting with outside legal counsel to the Company, that it is required, in
the exercise of its fiduciary duties under applicable law, to enter into a
definitive agreement with respect to an Alternative Transaction or (iv) the
Stockholders Meeting shall have been held and the vote described in Section
5.1(b) shall not have been obtained.
(f) by the Company if the Closing has not occurred within 30
days after receipt of required approvals of the Gaming Authorities; provided,
however, that all of the conditions to Gaming's obligation to effect the
Elsinore Merger contained in Sections 5.1 and 5.2 hereof shall have been
satisfied or waived by Gaming.
Section 6.2 Effect of Termination; Termination Fee. (a) In the
event of the termination and abandonment of this Agreement pursuant to Section
6.1, this Agreement shall forthwith become void and have no effect, without any
liability on the part of any party hereto, other than pursuant to the provisions
set forth in Section 6.2(b), Section 6.2(c) and Section 6.3 hereof.
(b) In the event this Agreement is terminated pursuant to
Sections 6.1(d)(iii), 6.1(d)(iv), 6.1(e)(iii) or 6.1(e)(iv) hereof, the Company
shall pay to Gaming immediately upon the closing of an Alternative Transaction
an aggregate amount equal to three percent of the consideration for the equity
of the Company which is received by the Company or its stockholders in the
Alternative Transaction valued at the higher of the value of the consideration
on the date of (i) the execution of the definitive agreement with respect to an
Alternative Transaction and (ii) the closing of the Alternative Transaction (the
"Termination Fee").
(c) In the event (A) this Agreement is terminated (except
pursuant to a NonPayment Termination Event (as defined herein)) or (B) the
Elsinore Merger does not occur in accordance with the terms of this Agreement on
or before April 2, 1998 (or if the Termination
32
Date is extended as provided in Section 6.1(c) hereof, June 2, 1998) for any
reason other than the occurrence of a Non-Payment Termination Event, then the
Company shall be entitled to receive from Gaming and/or EAS, no later than five
business days from the date of such termination, on behalf of the Company
Stockholders other than the Option Seller (i) an amount equal to $178,776, plus
interest in an amount equal to 9.43% per annum on $893,878.68 from June 1, 1997,
through the date immediately preceding the execution date hereof, and (ii) an
amount equal to $230.94 multiplied by the number of days in the period beginning
on the execution date hereof and ending on the date immediately preceding the
earlier to occur of (x) the termination of this Agreement (except pursuant to a
Non-Payment Termination Event) or (y) the Termination Date, as extended pursuant
to Section 6.1(c) hereof, if applicable; provided, that the Company shall be
entitled to receive the payment described in this Section 6.2(c) if the Option
Seller is entitled to retain the payments made to it pursuant to Section 1.2(b)
of the Elsinore Option Agreement, and, further, provided, that the Company shall
not be entitled to such compensation if this Agreement is not consummated as a
result of a breach by the Company. For purposes of this Agreement, a
"Non-Payment Termination Event" shall mean the termination of this Agreement
pursuant to Sections 6.1(a), 6.1(b), 6.1(c) (because of the failure to satisfy
Sections 5.1(a), 5.1(c), 5.1(d), 5.2(c), or 5.2(f)), 6.1(d), 6.1(e)(iii) or
6.1(e)(iv) hereof. In addition, in the event that this Agreement is terminated
pursuant to Section 6.1(c) because of the failure of Gaming, RAS or Xx. Xxxxx X.
Xxxxxxx to obtain the required approvals of the Gaming Authorities, then such
event shall constitute a Non-Payment Termination Event unless Xx. Xxxxx X.
Xxxxxxx is in breach of his representation and covenant contained in Section
6.2(d) hereof.
(d) The ability of Gaming and EAS to terminate their
obligations without triggering the right of the Company to receive the
consideration described in Section 6.2(c) hereof is predicated upon the accuracy
of the following representation and performance by Xx. Xxxxx X. Xxxxxxx of the
following agreement: (A) Xx. Xxxxx X. Xxxxxxx has represented that prior to the
execution of this Agreement, he has discussed in detail with his Nevada counsel
his background and knows of no reason why he should not be able to obtain all
necessary Gaming Authorities approvals prior to April 1, 1998; and (B) Xx. Xxxxx
X. Xxxxxxx has agreed that he will pursue vigorously and will give complete and
prompt attention requests of Gaming Authorities for information and will do
nothing which might delay receipt of all necessary Gaming Authorities approvals.
Section 6.3 Fees and Expenses. Except as set forth herein,
each party shall bear its own expenses and costs in connection with this
Agreement and the transactions contemplated hereby. In the event this Agreement
is terminated pursuant to Sections 6.1(d), 6.1(e)(iii) or 6.1(e)(iv) hereof, and
as a condition to such termination, the Company shall, immediately upon (i) the
execution of a definitive agreement with respect to an Alternative Transaction,
or (ii) the approval or recommendation by the Board, directly or indirectly, of
such an Alternative Transaction, reimburse Gaming, EAS and Xx. Xxxxx X. Xxxxxxx
the documented out-of-pocket expenses (the "Expenses") of Gaming, EAS and Xx.
Xxxxx X. Xxxxxxx, incurred from April 15, 1997, in connection with (i) the
transactions contemplated by this Agreement.
33
ARTICLE VII
MISCELLANEOUS
Section 7.1 Survival. Subject to the following sentence, the
representations, warranties, covenants and agreements contained herein shall not
survive beyond the Effective Time. The covenants and agreements contained herein
which by their terms contemplate performance after the Effective Time (including
by the Surviving Corporation after the Elsinore Merger) shall survive the
Effective Time. In addition, Sections 6.2 and 6.3 hereof shall survive
termination of this Agreement. The representation and warranty made in Section
2.4 hereof shall survive indefinitely.
Section 7.2 Entire Agreement; Assignment. This Agreement
(including the Schedules and Exhibits hereto) (i) shall constitute the entire
agreement among the parties hereto with respect to the subject matter hereof,
and supersedes all other prior agreements and understandings, both written and
oral, among the parties with respect to the subject matter hereof and (ii) shall
not be assigned by operation of law or otherwise and any purported assignment
shall be null and void, except that Gaming and EAS may assign this Agreement to
any of their affiliates without the prior written consent of the Company;
provided, that (i) no such assignment shall relieve Gaming and EAS of their
obligations hereunder if such assignee does not perform such obligations, and
(ii) such assignment will not result in any delay in (x) the consummation of the
transactions contemplated hereby by more than one month as determined by the
Company's counsel or (y) the ability to satisfy the condition contained in
Section 5.1(e) hereof by more than one month as determined by the Company's
counsel.
Section 7.3 Amendment. This Agreement may be amended by action
taken by the Company, Gaming and EAS at any time before or after adoption of the
Elsinore Merger by the Company Stockholders but, after any such approval, no
amendment shall be made which decreases the Merger Consideration or changes the
form thereof or which adversely affects the rights of the Company Stockholders
hereunder without the approval of the Company Stockholders. This Agreement may
not be amended except by an instrument in writing signed on behalf of each of
the parties hereto.
Section 7.4 Extension or Waiver. At any time prior to the
Effective Time, the Company, on the one hand, and Gaming, on the other hand, may
(i) extend the time for the performance of any of the obligations or other acts
of the other party, (ii) waive any inaccuracies in the representations and
warranties of the other party contained herein or in any document, certificate
or writing delivered pursuant hereto, or (iii), subject to applicable law, waive
compliance by the other party with any of the agreements or conditions contained
herein. Any agreement on the part of any party hereto to any such extension or
waiver shall be valid only if set forth in an instrument in writing signed on
behalf of such party. The failure of any party hereto to assert any of its
rights hereunder shall not constitute a waiver of such rights.
34
Section 7.5 Notices. All notices, requests, claims, demands
and other communications hereunder shall be in writing and shall be given (and
shall be deemed to have been duly given upon receipt) by delivery in person, by
overnight courier with receipt requested, by facsimile transmission (with
receipt confirmed by automatic transmission report) or two business days after
being sent by registered or certified mail (postage prepaid, return receipt
requested), to the other party as follows:
if to Gaming:
X.X. Xxx 0000
Xxxxxx Xxxxx Xx, XX 00000
Fax: (000) 000-0000
Attention: Xx. Xxxxx X. Xxxxxxx
with a copy to:
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
000 Xxxxx Xxxxx Xxxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Fax: (000) 000-0000
Attention: Xxxxx X. XxXxxxxx, Esq.
if to the Company:
000 Xxxxxxx Xxxxxx
Xxx Xxxxx, Xxxxxx 00000
Fax: (000) 000-0000
Attention: Xx. Xxxxxxx X. Xxxxx
with a copy to:
Xxxxxx & Silver, Ltd.
0000 Xxxxxx Xxxxxx Xxxxxxx
00xx Xxxxx
Xxx Xxxxx, Xxxxxx 00000
Fax: (000) 000-0000
Attention: Xxxxxx X. Xxxxxx, Esq.
35
- and -
Xxxxxx Xxxxxxxx Xxxxxx & Xxxxxxx
0000 Xxxxxx Xxxxxx Xxxxxxx
0xx Xxxxx
Xxx Xxxxx, XX 00000
Fax: (000) 000-0000
Attention: Xxxxxx X. Xxxxxxxx, Esq.
or to such other address as the party to whom notice is given may have
previously furnished to the other party in writing in the manner set forth
above.
Section 7.6 Governing Law. This Agreement shall be
governed by and construed in accordance with the laws of the State of Nevada,
without regard to the principles of conflicts of law thereof. Each of the
parties hereto hereby irrevocably and unconditionally consents to submit to
jurisdiction of the courts of the State of Nevada and of the United States of
America located in the State of Nevada for any litigation arising out of or
relating to this Agreement and the transactions contemplated hereby.
Section 7.7 Parties in Interest. This Agreement
shall be binding upon and shall inure solely to the benefit of each party hereto
and its successors and permitted assigns, and, except as set forth in Section
4.6, nothing in this Agreement, express or implied, is intended to or shall
confer upon any other person any rights, benefits or remedies of any nature
whatsoever under or by reason of this Agreement, provided, that the Option
Seller is an intended beneficiary of the representation and warranty contained
in Section 2.4 hereof.
Section 7.8 Subsequent Actions. If, at any time
after the Effective Time, the Surviving Corporation shall consider or be advised
that any deeds, bills of sale, assignments, assurances or any other actions or
things are necessary or desirable to vest, perfect or confirm of record or
otherwise in the Surviving Corporation its right, title or interest in, to or
under any of the rights, properties or assets of the Company or EAS acquired or
to be acquired by the Surviving Corporation as a result of or in connection with
the Elsinore Merger, or otherwise to carry out this Agreement, the officers and
directors of the Surviving Corporation shall be authorized to execute and
deliver, in the name and on behalf of the Company or EAS, all such deeds, bills
of sale, assignments, assumption agreements and assurances, and to take and do,
in the name and on behalf of each of such corporations or otherwise, all such
other actions and things as may be necessary or desirable to vest, perfect or
confirm any and all right, title and interest in, to and under such rights,
properties or assets of the Surviving Corporation or otherwise to carry out this
Agreement.
Section 7.9 Remedies. The parties hereto agree that
irreparable damage would occur in the event any provision of this Agreement was
not performed in accordance with the terms hereof and that the parties shall be
entitled to specific performance of the terms hereof, in addition to any other
remedy at law or in equity.
36
Section 7.10 Severability. The provisions of this
Agreement shall be deemed severable, and the invalidity or unenforceability of
any provision shall not affect the validity and enforceability of the other
provisions hereof. If any provision of this Agreement, or the application
thereof to any person or entity or any circumstance, is invalid or unenforce-
able, (a) a suitable and equitable provision shall be substituted therefor in
order to carry out, so far as may be valid and enforceable, the intent and
purpose of such invalid and unenforceable provision and (b) the remainder of
this Agreement and the application of such provision to other persons, entities
or circumstances shall not be affected by such invalidity or unenforceability.
Section 7.11 Descriptive Headings. The descriptive
headings herein are inserted for convenience of reference only and are not
intended to be part of or to affect the meaning or interpretation of this
Agreement.
Section 7.12 Certain Definitions. For purposes of
this Agreement, the term:
(a) "affiliate" of a person means a person that
directly or indirectly, through one or more intermediaries, controls, is
controlled by, or is under common control with, the first mentioned person;
(b) "control" (including the terms "controlled by"
and "under common control with") means the possession, directly or indirectly or
as trustee or executor, of the power to direct or cause the direction of the
management policies of a person, whether through the ownership of stock, as
trustee or executor, by contract or credit arrangement or otherwise;
(c) "GAAP" means United States generally accepted
accounting principles set forth in the opinions and pronouncements of the
Accounting Principles Board of the American Institute of Certified Public
Accountants and statements and pronouncements of the Financial Accounting
Standards Board or in such other statements by such other entity as approved by
a significant segment of the accounting profession in the United States as in
effect on the date hereof.
(d) "person" means an individual, corporation,
partnership, association, trust, unincorporated organization, other entity or
group (as defined in Section 13(d)(3) of the Exchange Act); and
(e) "subsidiary" or "subsidiaries" of any person
means any corporation, partnership, joint venture or other legal entity of which
such person (either alone or through or together with any other subsidiary),
owns, directly or indirectly, fifty percent or more of the stock or other equity
interests, the holder of which is generally entitled to vote for the election of
the board of directors or other governing body of such corporation, partnership,
joint venture or other legal entity.
37
Section 7.13 Counterparts. This Agreement may be
executed in two or more counterparts, each of which shall be deemed to be an
original, but all of which shall constitute one and the same Agreement.
IN WITNESS WHEREOF, each of the parties hereto has
caused this Agreement to be executed by its duly authorized officers as of the
date first above written.
R&E GAMING CORP.
By:
Name:
Title:
ELSINORE ACQUISITION SUB, INC.
By:
Name:
Title:
ELSINORE CORPORATION
By:
Name:
Title:
39
Exhibit A
CERTIFICATE OF AMENDMENT OF ARTICLES OF INCORPORATION
OF
ELSINORE ACQUISITION SUB, INC.
Pursuant to ss. 78.385 of the Neveda Revised Statutes (the
"NRS"), the undersigned, being at least two-thirds of the Board of Directors of
Elsinore Acquisition Sub, Inc., a Nevada corporation (the "Corporation"), does
hereby declare and state as follows:
1. That the Articles of Incorporation of the Corporation
were duly filed with the Nevada Secretary of State on
July 1, 1997.
2. That this amendment was approved by unanimous written
consent of the holders of all of the outstanding
shares of capital stock of the Corporation.
3. That the Articles of Incorporation of the Corporation
are hereby amended in their entirety, as follows:
AMENDED AND RESTATED
ARTICLES OF INCORPORATION
OF
ELSINORE ACQUISITION SUB, INC.
ARTICLE 1
NAME
The name of the Corporation is Elsinore Acquisition Sub, Inc.
ARTICLE 2
INITIAL RESIDENT AGENT AND REGISTERED OFFICE
The name of the initial resident agent of the Corporation is
The Corporation Trust Company of Nevada, a corporate resident of the State of
Nevada, whose business address is Xxx Xxxx Xxxxx Xxxxxx, Xxxx, Xxxxxx 00000.
ARTICLE 3
CAPITAL STOCK
Section 3.1. Authorized Shares. The aggregate number of shares
of capital stock that the Corporation shall have the authority to issue is 1,000
shares of common stock with a par value of $.001 per share (the "Common Stock").
Section 3.2. Assessment of Shares. The capital stock of the
Corporation, after the amount of the subscription price has been paid, shall not
be subject to pay the debts of the Corporation, and no capital stock issued as
fully paid up shall ever be assessable or assessed.
Section 3.3. Denial of Preemptive Rights. No stockholder of
the Corporation shall have any preemptive or other right, by reason of his
status as a stockholder, to acquire any unissued shares, treasury shares, or
securities convertible into shares of the capital stock of the Corporation. This
denial of preemptive rights shall, and is intended to, negate any rights which
would otherwise be given to stockholders pursuant to NRS xx.xx. 78.265, 78.267
or any successor statute.
ARTICLE 4
DIRECTORS
Section 4.1. Style of Governing Board. The
members of the governing board of the Corporation shall be styled Directors.
Section 4.2. Initial Board of Directors.
The initial Board of Directors shall consist of one member.
2
Section 4.3. Names and Addresses. The name and address of the
person who is to serve as Director until the first annual meeting of the
stockholders, or until his successor shall have been elected and qualified, is
as follows:
Name Address
Xxxxx X. Xxxxxxx c/o Skadden, Arps, Slate,
Xxxxxxx & Xxxx LLP
000 X. Xxxxx Xxxxxx
Xxx Xxxxxxx, XX 00000
Attention: Xxxxx X. XxXxxxxx
Section 4.4. Increase or Decrease of Directors.
The number of Directors of the Corporation may be increased or decreased from
time to time as shall be provided in the bylaws of the Corporation.
ARTICLE 5
LIABILITY OF DIRECTORS AND OFFICERS
Section 5.1 Limitation of Person Liability. No director of
officer of the Corporation shall be liable to the Corporation or its
stockholders for damages for breach of fiduciary duty as a director or officer.
This provision shall not eliminate or limit the liability of a director or
officer of the Corporation for acts or omissions which involve intentional
misconduct, fraud or a knowing violation of law or the payment of distributions
in violation of NRS ss. 78.300. If the NRS are hereafter amended or interpreted
to eliminate or limit further the personal liability of directors or officers,
then the liability of directors or officers shall be eliminated or limited to
the full extent then so permitted.
Section 5.2 Payment of Expenses. In addition to any other
rights of indemnification permitted by the law of the State of Nevada as may be
provided for by the Corporation, in its bylaws or by agreement, the reasonable
expenses of officers and directors incurred in defending a civil or criminal
action, suit or proceeding, involving alleged acts or omissions of such officer
or director in his or her capacity as an officer or director of the Corporation,
must be paid, by the Corporation or through insurance purchased and maintained
by the Corporation or through other financial arrangements made by the
Corporation, as they are incurred and in advance of the final disposition of the
action, suit or proceeding, upon receipt of an undertaking by or on behalf of
the director or officer to repay the amount if
3
it is ultimately determined by a court of competent jurisdiction that he or she
is not entitled to be indemnified by the Corporation.
Section 5.3 Repeal And Conflicts. Any repeal or modification
of this Section 5 approved by the stockholders of the Corporation shall be
prospective only. In the event of any conflict between this Article 5 and any
other Article of the Corporation's Articles of Incorporation, the terms and
provisions of this Article 5 shall control.
ARTICLE 6
COMPLIANCE WITH GAMING CONTROL ACT
All of the directors of the Corporation shall be subject to,
and the composition of the Board of Directors of the Corporation shall be in
compliance with, the requirements and qualifications imposed by the Nevada
Gaming Control Act (Nevada Revised Statutes ss. 463.010 et seq., as amended from
time to time), or any successor provision of Nevada law, and the regulations
promulgated thereunder, and the rules and regulations of any governmental agency
responsible for the licensing and regulation of gaming operations, including
without limitation, the Nevada State Gaming Control Board, the Nevada State
Gaming commission and the Xxxxx County Liquor and Gaming Licensing Board.
4
ARTICLE 7
MISCELLANEOUS
The corporation shall not be governed by the provisions of
Nevada Revised Statutes Sections 78.378 to 78.3793, inclusive, or Sections
78.411 to 78.444, inclusive.
The Corporation reserves the right to amend, alter, change or
repeal any provision contained in this Certificate of Incorporation, in the
manner now or hereafter prescribed by statute, and all rights conferred upon
stockholders herein are granted subject to this reservation.
5
IN WITNESS WHEREOF, I have executed these Amended and Restated Articles
of Incorporation of the Corporation as of September , 1997.
-------------------------
Xxxxx X. Xxxxxxx
President, Secretary & Treasurer
[insert jurat]
Exhibit B
BYLAWS
OF
ELSINORE ACQUISITION SUB, INC.
ARTICLE I
IDENTIFICATION
Section 1.1 Name. The name of the corporation is Elsinore
Acquisition Sub, Inc.
Section 1.2 Registered Office and Resident Agent. The address
of the registered office of the corporation is Xxx Xxxx Xxxxx Xxxxxx, Xxxx
Xxxxxx 00000; and the name of the resident agent at this address is The
Corporation Trust Company of Nevada.
Section 1.3 Fiscal Year. The fiscal year of the corporation
shall begin on the 1st day of January in each year and end on the 31st day of
December next following.
ARTICLE II
STOCK
Section 2.1 Issuance of Shares. Shares of stock may be issued
for labor, services, personal property, real estate or leases thereof or for
money from time to time by the Board of Directors. Treasury shares may be
disposed of by the corporation for such consideration as aforesaid from time to
time by the Board of Directors.
Section 2.2 Payment of Shares. The consideration for the
issuance of shares may be paid, in whole or in part, in money, in other
property, as aforesaid, or in labor or services actually performed for the
corporation. When payment of the consideration for which shares are to be issued
shall have been received by the corporation such shares shall be deemed to be
fully paid and non-assessable. Future services shall not constitute payment or
part payment for shares of the corporation. In the absence of fraud in the
transaction, the judgment of the
Board of Directors as to the value of the consideration received for shares
shall be conclusive. No certificate shall be issued for any share until the
share is fully paid.
Section 2.3 Certificates Representing Shares. Each holder of
the shares of stock of the corporation shall be entitled to a certificate signed
by the President or a Vice President and the Secretary or an Assistant Secretary
of the corporation, certifying the number of shares owned by him in the
corporation.
Section 2.4 Transfer of Stock. The corporation shall register a
transfer of a stock certificate presented to it for transfer if;
(a) Endorsement. The certificate is properly endorsed by the
registered holder or by his duly authorized attorney;
(b) Witnessing. The endorsement or endorsements are
witnessed by one witness unless this requirement is waived by the Secretary of
the corporation;
(c) Adverse Claims. The corporation has no notice of any
adverse claims or has discharged any duty to inquire into any such claims;
(d) Collection of Taxes. There has been compliance
with any
applicable law relating to the collection of taxes.
ARTICLE III
THE STOCKHOLDERS
Section 3.1 Place of Meetings. Meetings of the stockholders of
the corporation may be held at its registered office in the State of Nevada or
at any other place within or without the State of Nevada as may be designated in
the notice thereof.
Section 3.2 Annual Meetings. Unless the stockholders shall
have executed and delivered a written consent electing at least one-fourth of
the directors annually, the annual meeting of the stockholders shall be held
each year at the principal office of the corporation at the hour of 10:00
o'clock A.M. on the anniversary date of the incorporation of this corporation,
if this day shall fall on a
2
normal business day, and if not, then on the first following normal business
day. Failure to hold the annual meeting at the designated time shall not work a
forfeiture or dissolution of the corporation.
Section 3.3 Special Meetings. Special meetings of the
stockholders may be called by the President, the Board of Directors, or by the
Secretary at the written request (stating the purpose or purposes for which the
meeting is called) of the holders of not less than one-tenth of all the shares
entitled to vote at the meeting.
Section 3.4 Notice of Meetings; Waiver. Written notice stating
the place, day, and hour of the meeting and, in case of a special meeting the
purpose or purposes for which the meeting is called, shall be delivered not less
than ten (10) nor more than sixty (60) days before the date of the meeting,
either personally or by mail, by or at the direction of the President, the
Secretary, or the officer or persons calling the meeting, to each registered
holder entitled to vote at such meeting. If mailed, such notice shall be deemed
to be delivered when deposited in the United States mail addressed to the
registered holder at his address as it appears on the stock transfer books of
the corporation, with postage on it prepaid. Waiver by a stockholder in writing
of notice of a stockholders' meeting shall constitute a waiver of notice of the
meeting, whether executed and/or delivered before or after such meeting.
Section 3.5 Quorum. A majority of the shares entitled to vote,
represented in person or by proxy, shall constitute a quorum at a meeting of the
stockholders. The stockholders present at a duly organized meeting may continue
to do business until adjournment, notwithstanding the withdrawal of enough
stockholders to leave less than a quorum. The act of a majority of the shares
entitled to vote at a meeting at which a quorum is present shall be the act of
the stockholders, unless a greater number is required by applicable law.
Section 3.6 Proxies. A stockholder may vote either in person
or by proxy executed in writing by the stockholder or by his duly authorized
attorney-in-fact. No proxy shall be valid after six months from the date of its
creation, unless otherwise provided in the proxy.
Section 3.7 Action Without A Meeting. Any action that may be
taken at a meeting of the stockholders, or of a committee, may be taken without
a meeting if a consent in writing, setting forth the actions taken, shall be
signed by the stockholders, or the members of the committee, holding at least a
majority of the
3
voting power, unless a greater proportion of voting power is required for such
an action at a meeting, as the case may be.
ARTICLE IV
THE BOARD OF DIRECTORS
Section 4.1 Number and Qualifications. The business and
affairs of the corporation shall be managed by a Board of one (1) or more
Directors. The number of directors may be increased or decreased from time to
time and at any time by the stockholders, or Board of Directors.
Section 4.2 Election. Members of the initial Board of
Directors shall hold office until the first annual meeting of stockholders and
until their successors shall have been elected and qualified. At the first
annual meeting of stockholders and at each annual meeting thereafter, the
stockholders shall elect directors to hold office until the next succeeding
annual meeting. Each director shall hold office for the term for which he is
elected and until his successor shall be elected and qualified. Notwithstanding
anything herein to the contrary, any director may be removed from office at any
time by the vote or written consent of stockholders representing not less than
two-thirds of the issued and outstanding stock entitled to vote.
Section 4.3 Vacancies. Any vacancy occurring in the Board of
Directors may be filled by the affirmative vote of the majority of the remaining
directors, though less than a quorum of the Board of Directors, and by the
affirmative vote of the majority of the stockholders entitled to vote for the
election of directors. A director elected to fill a vacancy shall be elected for
the unexpired term of his predecessor in office, subject to removal as
aforesaid.
Section 4.4 Place of Meeting. The Board of Directors, annual,
regular or special, may be held either within or without the State of Nevada.
Section 4.5 Annual Meetings. Immediately after the annual
meeting of the stockholders, the Board of Directors may meet each year for the
purpose of organization, election of officers, and consideration of any other
business that may properly be brought before the meeting. No notice of any kind
to either old or new members of the Board of Directors for this annual meeting
shall be necessary.
4
Section 4.6 Other Meetings. Other meetings of the Board of
Directors may he held upon notice by letter, telegram, facsimile, cable, or
radiogram, delivered for transmission not later than during the third day
immediately preceding the day for the meeting, or by telephone, or radiophone
received not later than during the second day preceding the day for the meeting,
upon the call of the President or Secretary of the corporation at any place
within or without the State of Nevada. Notice of any meeting of the Board of
Directors may be waived in writing signed by the person or persons entitled to
the notice, whether before or after the time of the meeting. Neither the
business to be transacted at, nor the purpose of, any meeting of the Board of
Directors need be specified in the notice or waiver of notice of the meeting.
Section 4.7 Quorum. A majority of the number of directors
holding office shall constitute a quorum for the transaction of business. The
act of the majority of the directors present at a meeting at which a quorum has
been achieved shall be the act of the Board of Directors unless the act of a
greater number is required by applicable law.
Section 4.8 Action Without A Meeting. Any action that may be
taken at a meeting of the directors, or of a committee, may be taken without a
meeting if a consent in writing, setting forth the actions taken, shall be
signed by all of the directors, or all of the members of the committee, as the
case may be.
ARTICLE V
THE OFFICERS
Section 5.1 Officers. The officers of the corporation shall
consist of a President, Secretary and Treasurer, and may also include a Chairman
of the Board, one or more Vice Presidents, Assistant Secretaries, Assistant
Treasurers, or such other officers or assistant officers or agents as may be
provided herein, or otherwise deemed necessary, from time to time by the Board
of Directors. Officers need not be directors of the corporation. Each officer so
elected shall hold office until his successor is elected and qualified, but
shall be subject to removal at any time by the vote or written consent of a
majority of the directors. No person shall be prohibited from concurrently
holding more than one office or from being the sole officer of the corporation.
5
Section 5.2 Vacancies. Whenever any vacancies shall occur in
any office by death, resignation, increase in the number of offices of the
corporation, or otherwise; the same shall be filled by the Board of Directors,
and the officer so elected shall hold office until his successor is elected and
qualified, subject to removal as aforesaid.
Section 5.3 The Chairman of the Board of Directors. The
Chairman of the Board of Directors shall preside at all meetings of the
directors, discharge all duties incumbent upon the presiding officer, and
perform such other duties as the Board of Directors may prescribe.
Section 5.4 The President. The President shall have active
executive management of the operations of the corporation, subject, however, to
the control of the Board of Directors. He shall preside at all meetings of
stockholders, discharge all the duties incumbent upon a presiding officer, and
perform such other duties as these Bylaws provide or the Board of Directors may
prescribe. The President shall have full authority to execute powers in behalf
of the corporation, to vote stock owned by it in any other corporation, and to
execute powers of attorney appointing other corporations, partnerships, or
individuals the agent of the corporation.
Section 5.5 The Vice President. The Vice President shall
perform all duties incumbent upon the President during the absence or disability
of the President, and shall perform such other duties as these Bylaws provide or
the Board of Directors may prescribe.
Section 5.6 The Secretary. The Secretary shall attend all
meetings of the stockholders and of the Board of Directors, and shall keep a
true and complete record of the proceedings of these meetings. He shall be
custodian of the records of the corporation. He shall attend to the giving of
all notices and shall perform such other duties as these Bylaws may provide or
the Board of Directors may prescribe.
Section 5.7 The Treasurer. The Treasurer shall keep correct
and complete records of account, showing accurately at all times the financial
condition of the corporation. He shall be the legal custodian of all moneys,
notes, securities, and other valuables that may from time to time come into the
possession of the corporation. He shall immediately deposit all funds of the
corporation coming into his hands in some reliable bank or other depositary to
be designated by the Board of Directors, and shall keep this bank account in the
name of the corporation. He shall furnish at meetings of the Board of Directors,
or whenever requested, a
6
statement of the financial condition of the corporation, and shall perform such
other duties as these Bylaws may provide or the Board of Directors may
prescribe. The Treasurer may be required to furnish bond in such amount as shall
be determined by the Board of Directors.
Section 5.8 Transfer of Authority. In case of the absence of
any officer of the corporation, or for any other reason that the Board of
Directors may deem sufficient, the Board of Directors may transfer the powers or
duties of that officer to any other officer or to any director or employee of
the corporation, provided a majority of the full Board of Directors concurs.
ARTICLE VI
NEGOTIABLE INSTRUMENTS, DEEDS, AND CONTRACTS
Section 6.1 Negotiable Instruments, Deeds, and Contracts. All
checks, drafts, notes bonds, bills of exchange, and orders for the payment of
money of the corporation; all deeds, mortgages, and other written contracts and
agreements to which the corporation shall be a party; and all assignments or
endorsements of stock certificates, registered bonds, or other securities owed
by the corporation shall, unless otherwise required by law, or otherwise
authorized by the Board of Directors as hereinafter set forth, be signed by the
President or by anyone of the following officers: Vice President, Secretary, or
Treasurer. The Board of Directors may designate one or more persons, officers or
employees of the corporation, who may, in the name of the corporation and in
lieu of, or in addition to, those persons hereinabove named, sign such
instruments; and may authorize the use of facsimile signatures of any of such
persons. Any shares of stock issued by any other corporation and owned or
controlled by the corporation may be voted at any stockholders' meeting of the
other corporation by the President of the corporation, if he be present; or, in
his absence, by the Secretary of the corporation and, in the event both the
President and Secretary shall be absent, then by such person as the President of
the corporation shall, by duly executed proxy, designate to represent the
corporation at such stockholders meeting.
7
ARTICLE VII
INDEMNIFICATION
Section 7.1 Indemnification of Agents of the Corporation: Purchase
of Liability Insurance.
(a) The corporation shall indemnify any person who was or
is a party or is threatened to be made a party to any threatened, pending, or
completed action, suit, or proceeding, whether civil, criminal, administrative,
or investigative, expect an action by or in the right of the corporation, by
reason of the fact that he or she is or was a director, officer, employee, or
agent of the corporation, or is or was serving at the request of the corporation
as a director, officer, employee, or agent of another corporation, partnership,
joint venture, limited liability company, trust, or other enterprise, against
expenses, including attorney fees, judgments, fines, and amounts paid in
settlement, actually and reasonably incurred by him or her in connection with
the action, suit, or proceeding, if he or she acted in good faith and in a
manner which he or she reasonably believed to be in or not opposed to the best
interests of the corporation, and with respect to any criminal action or
proceeding, had no reasonable cause to believe his or her conduct was unlawful.
The termination of any action, suit, or proceeding by judgment, order,
settlement, conviction, or upon a plea of nolo contendere or its equivalent does
not, of itself, create a presumption that the person did not act in good faith
and in a manner which he or she reasonably believed to be in or not opposed to
the best interests of the corporation, and that, with respect to any criminal
action or proceeding, he or she had reasonable cause to believe that his or her
conduct was unlawful.
(b) The corporation shall indemnify any person who was or
is a party or is threatened to be made a party to any threatened, pending, or
completed action or suit by or in the right of the corporation to procure a
judgment in its favor by reason of the fact that he or she is or was a director,
officer, employee, or agent of the corporation, or is or was serving at the
request of the corporation as a director, officer, employee, or agent of another
corporation, partnership, joint venture, limited liability company, trust, or
other enterprise, against expenses, including amounts paid in settlement and
attorney fees, actually and reasonably incurred by him or her in connection with
the defense or settlement of the action or suit, if he or she acted in good
faith and in a manner which he or she reasonably believed to be in or not
opposed to the best interests of the corporation. However, indemnification shall
not be made for any claim, issue, or matter
8
as to which such a person has been adjudged by a court of competent
jurisdiction, after exhaustion of all appeals therefrom, to be liable to the
corporation or for amounts paid in settlement to the corporation, unless and
only to the extent that the court in which the action or suit was brought or
other court of competent jurisdiction determines upon application that in view
of all the circumstances of the case, the person is fairly and reasonably
entitled to indemnity for such expenses as the court deems proper.
(c) To the extent that a director, officer, employee,
or agent
of the corporation has been successful on the merits or otherwise in defense of
any action, suit, or proceeding referred to in subsection (a) or (b), or in
defense of any claim, issue, or matter therein, he or she shall be indemnified
by the corporation against expenses, including attorney fees, actually and
reasonably incurred by him or her in connection with the defense.
(d) Any indemnification under subsection (a) or (b),
unless
ordered by a court or advanced pursuant to subsection (e), shall be made by the
corporation only as authorized in the specific case upon a determination that
indemnification of the director, officer, employee, or agent is proper in the
circumstances. The determination shall be made: (i) by the stockholders; (ii) by
the Board of Directors by a majority vote of a quorum consisting of directors
who were not parties to the action, suit, or proceeding; or (iii) if a majority
vote of a quorum consisting of directors who were not parties to the action,
suit or proceeding cannot be obtained, by independent legal counsel in a written
opinion.
(e) The expenses of officers and directors incurred in
defending a civil or criminal action, suit, or proceeding shall be paid by the
corporation as they are incurred and in advance of the final disposition of the
action, suit, or proceeding, upon receipt of an undertaking by or on behalf of
the director or officer to repay the amount if it is ultimately determined by a
court of competent jurisdiction that he or she is not entitled to be indemnified
by the corporation. The provisions of this subsection (e) do not affect any
rights to advancement of expenses to which corporate personnel other than
directors or officers may be entitled under any contract or otherwise by law.
(f) The indemnification and advancement of expenses
authorized in or ordered by a court pursuant to this ARTICLE VII (i) does not
exclude any other rights to which a person seeking indemnification or
advancement of expenses may be entitled under the Articles of Incorporation, the
Bylaws, or any agreement, vote of stockholders or disinterested directors or
otherwise, for either an
9
action in his or her official capacity or an action in another capacity while
holding his or her office, except that indemnification, unless ordered by a
court pursuant to subsection (b) or for the advancement of expenses made
pursuant to subsection (e), shall not be made to or on behalf of any director or
officer if a final adjudication establishes that his or her acts or omissions
involved intentional misconduct, fraud, or a knowing violation of the law and
were material to the cause of action and (ii) continues for a person who has
ceased to be a director, officer, employee, or agent and inures to the benefit
of the heirs, executors, and administrators of such a person.
(g) The corporation may purchase and maintain insurance or
make other financial arrangements on behalf of any person who is or was a
director, officer, employee, or agent of the corporation, or is or was serving
at the request of the corporation as a director, officer, employee, or agent of
another corporation, partnership, joint venture, limited liability company,
trust, or other enterprise, for any liability asserted against him or her and
liability and expenses incurred by him or her in his or her capacity as a
director, officer, employee, or agent, or arising out of his or her status as
such, whether or not the corporation has the authority to indemnify him or her
against such liability and expenses. The other financial arrangements made by
the corporation may include any now or hereafter permitted by applicable law.
(h) In the event that the laws of the State of Nevada
shall
hereafter permit or authorize indemnification by the corporation of the
directors, officers, employees, or agents of the corporation for any reason or
purpose or in any manner not otherwise provided for in this ARTICLE VII, then
such directors, officers, employees, and agents shall be entitled to such
indemnification by making written demand therefor upon the corporation, it being
the intention of this ARTICLE VII at all times to provide the must comprehensive
indemnification coverage to the corporation's directors, officers, employees,
and agents as may now or hereafter be permitted by the laws of the State of
Nevada.
(i) The foregoing indemnification provisions shall
inure to the
benefit of all present and future directors, officers, employees, and agents of
the corporation and all persons now or hereafter serving at the request of the
corporation as directors, officers, employees, or agents of another corporation,
partnership, joint venture, limited liability company, trust, or other
enterprise and their heirs, executors, and administrators, and shall be
applicable to all acts or omissions to act of any such persons, whether such
acts or omissions to act are alleged to have or actually occurred prior to or
subsequent to the adoption of this ARTICLE VII.
10
(j) Any insurance or other financial arrangement made
on
behalf of a person pursuant to this Section may be provided by the corporation
or any other person approved by the Board of Directors, even if all or part of
the other person's stock or other securities is owned by the corporation. In the
absence of fraud:
(1) the decision of the Board of Directors as to the propriety of the terms and
conditions of any insurance or other financial arrangement made pursuant to this
Section and the choice of the person to provide the insurance or other financial
arrangement is conclusive; and
(2) the insurance or other financial arrangement:
(i) is not void or voidable; and
(ii) does not subject any director approving it
to personal liability for his action,
even if a director approving the insurance or other financial
arrangement is a beneficiary of the insurance or other financial arrangement.
Section 7.2 Vested Rights. Neither the amendment nor repeal of
this ARTICLE VII, nor the adoption of any provision of the Articles of
Incorporation or the Bylaws or of any statute inconsistent with this ARTICLE
VII, shall adversely affect any right or protection of a director, officer,
employee, or agent of the corporation existing at the time of such amendment,
repeal, or adoption of such inconsistent provision.
11
ARTICLE VIII
AMENDMENTS
Section 8.1 The power to alter, amend or repeal these Bylaws,
or adopt new Bylaws, is vested in the Board of Directors, but the affirmative
vote of a majority of the Board of Directors holding office shall be necessary
to effect any such action.
12
I hereby certify that the foregoing Bylaws are a true and correct copy
of the Bylaws of the corporation as adopted as of September , 1997.
Xxxxx X. Xxxxxxx, Secretary
Exhibit C
CONFIDENTIALITY AGREEMENT
May 5, 1997
Xx. Xxxxx Xxxxxxx
c/x Xxxxxxxxx & Company, Inc.
Attention: M. Xxxxx Xxxxxxx
Managing Director, Corporate Finance
00000 Xxxxx Xxxxxx Xxxxxxxxx, Xxxxx Xxxxx
Xxx Xxxxxxx, XX 00000
Re: Elsinore Corporation
Gentlemen:
We understand that you are considering a possible negotiated
acquisition transaction (the "Transaction") with Elsinore Corporation. In
connection with the foregoing, Elsinore Corporation or its subsidiaries (the
"Company") may furnish to you, either orally, in writing, or by inspection,
certain information, material and documents (collectively, "Proprietary
Information") regarding the Company and its business, assets, financial
condition, operations and prospects, which may be helpful in evaluating the
Transaction. As a condition to our furnishing you with Proprietary Information,
you hereby agree as follows:
1. All Proprietary Information heretofore or hereafter
furnished to you by the Company shall be deemed confidential and shall be kept
in strict confidence under appropriate safeguards. The term Proprietary
Information, as used herein, does not include any information which (i) as shown
by written records, was lawfully in your possession prior to any disclosure by
the Company, provided that the source of such information was, to the best of
your knowledge, not bound by confidentiality obligations in respect thereof, or
(ii) is generally available to the public other than as a result of disclosure
by your employees, you agents, your representatives or others acting on your
behalf.
2. Except as otherwise provided herein or without the
Company's prior written consent, you will not, directly or indirectly: (i)
disclose or reveal any
Xx. Xxxxx Xxxxxxx
May 5, 1997
Page 2
Proprietary Information to any persons, firms or entities except to a limited
group of your attorneys or professional advisors, including Xxxxxxxxx & Company,
Inc., who are actively and directly participating in the evaluation of the
Transaction (collectively, the "Representatives"), each of whom shall be
informed by you of the confidential nature of the Proprietary Information and
provided with a copy of this letter agreement and agree in writing to observe
the same terms and conditions set forth herein as if specifically named a party
hereto; (ii) use the Proprietary Information for any purpose other than in
connection with the Transaction; and (iii) except as may be required by law or
judicial process or as requested by any governmental, regulatory or
self-regulatory organization, disclose to any person or entity the terms,
conditions or other facts with respect to the Transaction (including the
existence and status thereof) or that Proprietary Information has been made
available to you. In any event, you shall be responsible for any disclosure of
the Proprietary Information by your Representatives other than pursuant to the
terms and subject to the conditions of this letter agreement.
3. Upon written notice from the Company, you will deliver
promptly to the Company all written or tangible material containing or
reflecting any Information contained in the Proprietary Information (whether
prepared by the Company or otherwise), without retaining any copies, summaries,
analyses or extracts thereof. All documents, memoranda, notes and other writings
whatsoever prepared by you or your representatives based on the information
contained in the Proprietary Information shall be destroyed, and such
destruction shall be certified in writing to the Company by you or your
representatives supervising such destruction.
4. Notwithstanding any provisions of this letter agreement to
the contrary, in the event that you are requested or required in a judicial,
administrative or governmental proceeding to disclose any Proprietary
Information, you will provide the Company with prompt notice of such request so
that the Company may, at its sole cost and expense, seek an appropriate
protective order or waive your compliance with the confidentiality provisions of
this letter agreement. If as a result of any such request or requirement, you
are, in the opinion of your counsel, compelled to disclose Proprietary
Information to any tribunal or else stand liable for contempt or other censure
or penalty, you may disclose such Proprietary Information to such tribunal
without liability hereunder provided that you comply with the notice provisions
of this Section 4.
Xx. Xxxxx Xxxxxxx
May 5, 1997
Page 3
5. Except as may be specifically provided hereafter in a
definitive written agreement providing for the Transaction (a "Transaction
Agreement"), the Company shall not be deemed to make or have made any
representation or warranty, express or implied, as to the accuracy or
completeness of any Proprietary Information which the Company furnishes to you,
and the Company shall have no liability to you or any of your Representatives
resulting from the use of any Proprietary Information by you or your
representatives.
6. Until the earliest of (i) the execution by you of a
Transaction Agreement or (ii) two years from the date of this letter agreement,
you agree not to initiate or maintain contact (except for those contacts made in
the ordinary course of business) with any officer, director or employee or agent
of the Company or its subsidiaries regarding its business, operations, prospects
or finances, except with the express written permission of the Company. You
further agree that for a period of one year from the date hereof you will not
hire any of the employees of the Company or its subsidiaries with whom you had
contact during the period of your investigation of the Company unless such
employee is terminated by the Company.
7. You hereby acknowledge that you are aware (and that your
Representatives who are apprised of this matter have been advised) that the
United States securities laws prohibit you, the Representatives and any person
or entity who has received material non-public information about the Company
from purchasing or selling securities of the Company.
8. Without prejudice to any rights and remedies otherwise
available to the Company, the Company shall be entitled to equitable relief by
way of injunction if you breach any provision of this letter agreement. No
failure or delay by the Company or the representatives 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 hereunder. If any
party employs legal counsel to enforce any of the provisions of this letter
agreement or if any action at law or equity is instituted in connection with or
arising from this letter agreement, by any party against the other(s), the
prevailing party(ies) shall be entitled to receive its/their costs, expenses and
attorneys' fees.
Xx. Xxxxx Xxxxxxx
May 5, 1997
Page 4
9. You also understand and agree that no contract or agreement
providing for a transaction with the Company shall be deemed to exist between
you and the Company unless and until a Transaction Agreement has been executed
and delivered, and you hereby waive, in advance, any claims (including, without
limitation, breach of contract) in connection with a possible transaction with
the Company unless and until you shall have entered into a Transaction
Agreement. You also agree that unless and until a Transaction Agreement between
the Company and you has been executed and delivered, the Company has no legal
obligation of any kind whatsoever with respect to any such transaction by virtue
of this letter agreement or any other written or oral expression with respect to
such transaction except, in the case of this letter agreement, for the matters
specifically agreed to herein. For purposes of this paragraph, the term
"Transaction Agreement" does not include an executed letter of intent or any
other preliminary written agreement, nor does it include any written or verbal
acceptance of an offer or bid on your part.
10. This letter agreement shall be binding upon your
successors and assigns and shall inure to the benefit of, and be enforceable by,
the Company's successors and assigns.
11. The provisions of this letter agreement shall be severable
in the event that any of the provisions hereof are held by a court of competent
jurisdiction to be invalid, void or otherwise unenforceable, and the remaining
provisions shall remain enforceable to the fullest extent permitted by law.
12. This letter agreement shall be construed (both as to
validity and performance) and enforced in accordance with, and governed by, the
laws of the State of Nevada applying to agreements made and to be performed
wholly within such jurisdiction.
13. This letter agreement contains the entire agreement
between you and the Company concerning the confidentiality of the Proprietary
Information. This letter agreement may be waived, amended or modified only by an
instrument in writing signed by the party against which such waiver, amendment
or modification is sought to be enforced, and such written instrument shall set
forth specifically the provisions of this letter agreement that are to be so
waived, amended or modified.
Xx. Xxxxx Xxxxxxx
May 5, 1997
Page 5
14. This letter agreement may be executed in any number of
counterparts and each of such counterparts shall for all purposes be deemed an
original, and all such counterparts shall together constitute but one and the
same instrument.
Please indicate your agreement with the foregoing by executing
the accompanying copy of this letter agreement and returning it, whereupon it
shall constitute a binding agreement between us as of the date first above
written.
Very truly yours,
ELSINORE CORPORATION
Xxxxxxx X. Xxxxx
President
Agreed to and accepted:
------------------------
Xxxxx X. Xxxxxxx
SCHEDULE 2.2
Capitalization of the Company and its Subsidiaries
1. The Riviera Warrants.
2. Pursuant to the First Amended Plan of Reorganization of the Company
filed May 28, 1996 in the United States Bankruptcy Court for the
District of Nevada ("Plan"), certain creditors of the Company shall be
issued 70,687 shares of common stock.
3. The Company presently has outstanding 4,929,313 shares of common
stock.
2
SCHEDULE 2.5(a)
Compliance
1. The New Jersey Casino Service Industry License held by Four Queens,
Inc. is currently in effect, however, it will expire on September 30,
1997.
2. Olympia Gaming Corporation has not renewed its gaming license
issued by the State of Washington.
SCHEDULE 2.5(b)
Intellectual Property;
Licenses
1. The New Jersey Casino Service Industry License held by Four Queens,
Inc. is currently in effect, however, it will expire on September 30, 1997.
2. Olympia Gaming Corporation has not renewed its gaming license
issued by the State of Washington.
3. See Schedule 2.14 for list of patent and trademark filings.
4
SCHEDULE 2.5(d)
Compliance with Orders
None
Schedule 2.6
Non-contravention; Required Filings and Consents
1. The Amended and Restated Note Agreement dated as of
March 3, 1997 for $3,855,739.39 First Mortgage Notes Due 2000 of Elsinore
Corporation Guaranteed by Eagle Gaming, Inc.; Elsub Management Corporation; Four
Queens, Inc.; Elsinore Tahoe, Inc.; Four Queens Experience Corporation; Olympia
Gaming Corporation; Palm Springs East Limited Partnership; and Pinnacle Gaming
Corporation (formerly ELSUB II, Inc.) contains a provision allowing the Holder
of Notes to accelerate the indebtedness due in the event of a change in control
and conditions mergers, sales or consolidations of the Company and its
subsidiaries.
2. The Amended and Restated Indenture dated as of March 3,
1997 between the Company, the Guarantors (as set forth therein) and First Trust
National Association contains a provision whereby in the event of a change in
control, the Holders of the Securities shall have the right to require the
Company to repurchase the notes and which conditions mergers, sales or
consolidations of the Company and its subsidiaries.
3. In the event of a merger or consolidation, the holder of
the Riviera Warrants is entitled to payment of the amount by which the price per
share to be paid for the Company's common stock in the merger or consolidation
exceeds the exercise price of the Warrants.
6
Schedule 2.7(b)
SEC Reports; Liabilities
None.
Schedule 2.8
Changes
Indebtedness Incurred by the Company
The Company guaranteed a lease by and between PDS Financial Corporation - Nevada
and Four Queens, Inc. pursuant to that certain $505,206.30 Security Equipment
Lease Financing dated May 1, 1997, as amended, for certain equipment described
therein. (See Schedule 2.15).
Indebtedness Extended by the Company
The Company loaned approximately $40,000 to the Company's employees during the
interim period when the Company changed 401(k) plans so that the employees would
not be penalized during the interim period. The loans were issued to five
employees to assist the employees with the purchase of their primary residences.
Additionally, two employees took service distributions in 1997 as permitted
under the 401(k) plans. The Company was reimbursed by Xxxxxxx Xxxxx, the Plan
Administrator and Trustee in August,
1997.
Employment/Severance/Termination Agreements
1. Termination Fee Agreement dated as of May 5, 1997 by
and between the Company and Xxxxxxx X. Fremont.
2. Termination Fee Agreement dated as of May 5, 1997 by
and between Four Queens, Inc., a Nevada corporation and Xxxx X. Xxxxxxx.
3. Termination Fee Agreement dated as of May 5, 1997 by
and between the Four Queens, Inc., a Nevada corporation and Xxxxxx Xxxxxxxxx.
4. Termination Fee Agreement dated as of May 5, 1997 by
and between the Four Queens, Inc., a Nevada corporation and Xxxxxx X. Xxxxx.
5. Loan-Out of Services Agreement dated as of August 12,
1996, by and between Four Queens, Inc. and Riviera Gaming Management Elsinore,
Inc., as Manager, pursuant to which the Manager agreed to lend the services
three of the Manager's employees (Xxxxxx Xxxxx, Xxxx Xxxxxxx and Xxxxxxx
Xxxxxxxxx) to assist with the management of the Four Queens Hotel & Casino and
Four Queens agreed to reimburse the Manager for the services provided.
Changed Accounting Methods
The Company changed its accounting method after the Plan of Reorganization was
confirmed to reflect "fresh start" reporting, whereby the reorganization value
is allocated to the Company's assets following the methodology prescribed in
APBO No. 16.
Corporate Status
The Company filed Articles of Dissolution with the Nevada Secretary of State in
order to dissolve two of the Company's subsidiaries: Elsinore-Missouri Gaming,
Inc., a Nevada corporation and Mojave Gaming, Inc., a Nevada corporation.
Issuance of Securities
The Riviera Warrants.
Leases
First Amendment to Lease, made effective as of May 14, 1997, between the
Company, Xxxxxx Company, and Four Queens, Inc.
SCHEDULE 2.11
Litigation
Xxxx Xx. X000000 - Xxxxxxx Xxxxxx v. Elsinore Corporation and Four Queens, Inc.
This matter was stayed by the bankruptcy proceeding. No proof of claim was
filed.
Case No. C119073 - In the Matter of Proceedings to Compel Custodian of Records
to appear as witnesses in the State of Arizona. A subpoena was served on Xx
Xxxxxx in June, 1992 on behalf of Four Queens requesting all documents relating
to Xxxxxxx X. Xxxxxxxx for a grand jury investigation.
Case No. A370692 - Maliki S. Elshaied v. Four Queens, Inc. A former employee
filed a petition for judicial review. Four Queens' labor counsel filed a notice
of intent to participate on June 17, 1997.
Case No. A366865 - Xxxxx Xxxxx v. Four Queens, Inc. The complaint, which was
filed on November 22, 1996, alleges plaintiff was hit by a vehicle and pieces
of a falling wall when a valet hit a wall and rail. Damages in excess of
$10,000 were requested in the complaint. The Company has asserted that the
claim arose post-petition but pre-effective date and that the plaintiff should
have filed an administrative claim.
Case No. A348749 - Xxxxxxx Xxxxxxxx III v. Four Queens, Inc. This matter was
stayed by the bankruptcy proceeding. The amount of the claim (which is
classified as a Class 10 claim) will be liquidated in the state court.
Case No. A348176 - Xxxxxxxx v. Four Queens, Inc. This matter was stayed by the
bankruptcy proceeding. The amount of the claim (which is classified as a Class
10 claim) will be liquidated in the state court.
Case No. CV-S-92-00662 - Xxxxxx-Xxxx v. Elsinore. The complaint alleges
RICO violations.
Case Nos. CV-S-94-01126 and CV-S-94-01137 - Xxxxxx x. Xxxxxx'x World, Inc., et
al., and Xxxxx x. Xxxxxx'x World, Inc., et al. filed against various casino and
gaming companies alleging RICO violations. This matter was stayed by the
bankruptcy. No proof of claim was filed.
Case Nos. 89-2413 and 89-2143 Xxxxxxx v. Elsinore Share Associates and Hotel
Employees and Restaurant Employees International Union Local 54 v. Elsinore
Share Associates. These complaints allege WARN Act violations as well as other
claims for damages.
SCHEDULE 2.12
Taxes
1. The Company and its subsidiaries have received an extension to
September 15, 1997 on the filing of its Elsinore Corporation and Subsidiaries
Federal Income Tax Return.
2. The Company is in receipt of a letter dated May 29, 1997, from
Xxxxxx X. Xxxxxxx, Director, Department of Finance and Business Services, City
of Las Vegas, Nevada addressed to Four Queens Hotel & Casino claiming an
underpayment of room taxes to the City for the period of January 1, 1995 through
March 31, 1997 in the amount of $60,160.59. The Company is contending that this
claim is barred by the Company's bankruptcy filing on October 31, 1995.
10
Schedule 2.13(a)
Employee Benefits
Employee Benefit Programs
1. Four Queens
Medical Insurance (with Dental and Vision), Group No. 190100;
Account Xx. 000000; X.X.X. Xx. Xx. 00000; Group Xx. 00000
Xxxxxxxxxxxxx - X.X.X. Xx. 00000
Administered by Silver State Medical Administrators
2. Four Queens
Life/Accidental Death and Dismemberment, Policy No. GLUC-11G7
Administered by Mutual of Omaha
3. Four Queens Employees' 401(k) Retirement/Savings Plan and Trust
Administered by Xxxxxxx Xxxxx
4. Four Queens, Inc. Premium Only Plan
Administered by Four Queens, Inc.
Union Contract Trusts
The Company contributes to the following Union Contract Trusts:
1. Construction Industry and Carpenters Joint Pension Trust for Southern
Nevada
2. Carpenters' Joint Apprenticeship Committee Fund
3. Southern Nevada Operating Engineers Apprenticeship and Training Trust
Fund (not due until 9/98)
4. International Brotherhood of Painters and Allied Trades Union and
Industry Pension Fund No. 159, AFL-CIO
The Four Queens contributes to the following Union Contract Trust:
1. Central Pension Fund of the International Union of Operating Engineers
and Participating Employees
2. Hotel Employees and Restaurant Employees International Union Welfare
Fund
Termination/Severance Agreements
See Schedule 2.8.
Schedule 2.13(h)
Payments Non-Deductible
None
12
Schedule 2.13(i)
Benefits Beyond Termination
Name Pay Period Ending 7/29/97 Payments to be Made Severance Ends
X. Xxxx $4,139.42 6 9/19/97
X. XxXxxxx $2,000.00 7 10/7/97
X. Xxx $1,383.80 6 9/22/97
X. Xxxxxx $2,030.29 12 12/11/97
W. English $1,195.28 6 9/18/97
X. Xxxxxx $1,096.00 4 8/22/97
X. Xxxxxx $918.40 7 11/4/97
X. Xxxxxx $918.40 7 11/4/97
X. Xxxxxx $1,038.46 1 8/12/97
In some cases, the last payment is not for the full amount; the payment will be
for the amount owing (i.e., a former-employee could be owed for 40 hours or for
20 hours).
Schedule 2.13(j)
Severance or Unemployment Compensation;
Acceleration of Vesting
None
14
Schedule 2.14
Intellectual Property
1. Patent file - Multiple Action Blackjack Patent, No. 5,154,429
2. Patent file - Multiple Action Blackjack Patent, No. 5,257,789
3. Trademark file - Reel Winners Club Reg. No. 1,305,392
4. Trademark file - Two Reeler & Design Reg. No. 1,465,030
5. Trademark file - For the Games People Play Reg. No. 1,705,535
6. Trademark file - For the Games People Play Reg. No. 1,705,662
7. Trademark file - Club 55 Reg. No. 1,710,860
8. Trademark file - Multiple Action Reg. No. 1,738,726
9. Trademark file - Triple Play Reg. No. 1,908,004
10. Trademark file - Trifecta Serial No. 74/322,375
11. Trademark file - Multiple Action Logo Reg. No. 1,842,109
12. Trademark file - Four Queens Reg. No. 1,851,742
13. Trademark file - Four Queens Logo Reg. No. 1,875,617
14. Trademark file - 4 Queens Reg. No. 1,851,743
15. Trademark file - 4 Queens Logo Reg. No. 1,854,918
16. Trademark file - Doubleheader Logo Serial No. 74/527,959
17. Nevada State Trademark file - For the Games People Play Hotel Services
18. Nevada State Trademark file - For the Games People Play Casino Services
19. Canadian Patent File - Gaming Table Reg. No. 73408
20. Canadian Trademark File - Four Queens No. 847,726
21. Canadian Trademark File - Multiple Action Serial No. 725,077
22. Australian Patent File - Multiple Action Serial No. 649,368
23.Australian Patent File - Multiple Action Blackjack Logo Serial No. 649,369
Schedule 2.15
Material Contracts
1. Master Lease Agreement (the "Lease Agreement") dated May 1, 1997
as amended August 1, 1997 by and between PDS Financial Corporation - Nevada, a
Nevada corporation ("PDS") and Four Queens, Inc., a Nevada corporation ("Four
Queens") provides that Four Queens shall not assign the agreement without the
prior written consent of PDS; provided, however, that PDS shall consent to an
assignment to Xxxxx Xxxxxxx or an entity controlled by Xxxxx Xxxxxxx. Lease
Agreement P. 14.2. The Lease Agreement wa guaranteed by the Company.
2. Agreement dated April 28, 1992 by and between Four Queens, Inc., a
Nevada corporation ("Four Queens"), Xxxxxx Xxxx, Xxxxxx X. Xxxxxx and Xxxxxxx X.
XxXxxxxxx whereby Four Queens agreed to pay monthly to Hood, Xxxxxx and
XxXxxxxxx 20% of the royalties, fees, money and revenue collected from the
licensing of Multiple Action Blackjack.
3. License Agreement dated March 27, 1992 by and between Four Queens,
Inc., a Nevada corporation as assignee of Xxxxxxx X. XxXxxxxxx and C.A.R.D.,
Inc., a Nevada corporation.
4. License Agreement dated March 27, 1997 by and between Four Queens
Hotel & Casino as assignee of Xxxxxxx X. XxXxxxxxx and C.A.R.D., Inc., a Nevada
corporation.
5. Both the Amended and Restated Articles of Organization of Fremont
Street Experience Limited Liability Company, a Nevada limited liability company
filed with the Secretary of State on November 27, 1995 and the Amended and
Restated Operating Agreement of the Fremont Street Experience Limited Liability
Company, a Nevada limited liability company dated June 6, 1995 provides that a
person may be a substituted member if two-thirds of the then outstanding
Members' Voting Units approve of the transfer of title of the entire hotel or
casino business.
6. The Riviera Warrants.
7. The Plan provided for the Company to enter into a management
agreement, substantially in the form of Exhibit "10" to the supplement to the
Plan (the "Management Agreement"), with the management group designated by the
Bondholders Committee (as defined in the Plan). Since the effective date of the
Plan, Riviera Gaming Management Corp.-Elsinore has been managing the FourQueens
Hotel and Casino substantially in accordance with the terms and conditions set
forth in the Management Agreement. No written management agreement has been
executed by the parties.
8. First Amendment to Lease, made effective as of May 14, 1997,
between the Company, Xxxxxx Company, and Four Queens, Inc.
16
Schedule 2.16
Insurance Policies
Insurance Coverage January 19, 1997 to January 19, 1998:
Agent: Xxxxx & Associates
0000 Xxxxx Xxxxxxx Xxxxxx
0xx Xxxxx
Xxx Xxxxx, Xxxxxx 00000
1. Property Coverage
Fireman's Fund Insurance Company
Policy No. 68 DKF 80352563
INSURED: Elsinore Corporation, a Nevada corporation; Four Queens, Inc.,
a Nevada corporation d/b/a Four Queens Hotel and Casino.
BLANKET LIMIT: $97,920,000 (Including all Real and Personal Property,
Business Interruption, Data Processing, Equipment and
Media, Extra Expense)
SUBLIMITS: $50,000,000 Flood
$50,000,000 Earthquake
$10,700,000 Business Interruption
$1,000,000 Extra Expense
$100,000 EDP Media
$100,000 Accounts Receivable
$1,000,000 Off Premises Power
$500,000 Valuable Papers
DEDUCTIBLES: $25,000 All Perils, Except
$50,000 Flood
$50,000 Earthquake
24 Hours - Business Interruption
$25,000 Extra Expense
$25,000 EDP; Accounts Receivable; Valuable Papers
FORM OF COVERAGE: All Risk of Direct Physical Loss
VALUATION: Replacement Cost & Agreed Amount
LOCATIONS INSURED: Hotel/Casino, Parking Garage, Main Street Storage
2. Boiler & Machinery
(Included within Property Policy)
INSURED: Elsinore Corporation, a Nevada corporation; Four Queens, Inc.,
a Nevada corporation d/b/a Four Queens Hotel and Casino.
CATASTROPHIC LIMIT: $97,920,000
SUBLIMITS: $250,000 Expediting Expense
$250,000 Water Damage Limit
$250,000 Consequential Damage
$250,000 Ammonia Contamination
$250,000 Spoilage
DEDUCTIBLE: $25,000 Per Loss, with 24 Hour Indirect Loss
and Business Interruption
VALUATION: Agreed Amount for Direct Damage Loss Actual Loss Sustained
for Business Interruption Losses/Extra Expense
3. General Liability Coverage
Lexington Insurance Company
Policy No. 2810057
INSURED: Elsinore Corporation, a Nevada corporation; Four Queens, Inc.,
a Nevada corporation d/b/a Four Queens Hotel and Casino.
PER OCCURRENCE: $1,000,000
GENERAL AGGREGATE: $2,000,000
MEDICAL PAYMENTS: Excluded
EMPLOYEE BENEFITS: $1,000,000 Each Claim and Aggregate
for all Claims, subject to a $1,000 Deductible Each Claim
LIQUOR LIABILITY: $1,000,000 Each Occurrence and Aggregate
EMPLOYER'S STOP-GAP
LIABILITY: $1,000,000 Aggregate
INNKEEPER'S LIABILITY: $20,000 Per Guest
$50,000 Aggregate
SAFETY DEPOSIT BOX
LEGAL LIABILITY: $50,000 Per Guest
$500,000 Aggregate
SELF-INSURED
RETENTION LIMIT: $25,000 Per Occurrence
$250,000 Annual Aggregate
(Defense & Expenses within SIR)
4. Automobile Coverage
Northland Insurance Company
Policy No. NG 000 180
INSURED: Elsinore Corporation, a Nevada corporation; Four Queens, Inc.,
a Nevada corporation d/b/a Four Queens Hotel and Casino.
COMBINED BODILY INJURY &
PROPERTY DAMAGE; INCLUDE
NON-OWNED & HIRED: $1,000,000 Each Occurrence
UNINSURED/UNDERINSURED
MOTORISTS: $1,000,000
MEDICAL PAYMENTS: $5,000
COLLISION COVERAGE: Included, w/ $500 deductible on all autos except 1967 Chevy.
COMPREHENSIVE
COVERAGE: Included, w/ $500 deductible on all autos except 1967 Chevy.
HIRED & NON-OWNED
AUTOMOBILE PHYSICAL
DAMAGE: $50,000 Limit any one vehicle, subject to a $500 Deductible
GARAGEKEEPERS
LEGAL LIABILITY: $1,000,000 subject to:
$2,500 Comprehensive Deductible
$2,500 Collision Deductible
5. Crime Coverage
Fidelity & Deposit Company of Maryland
Policy No. CCP 002 67 08
INSURED: Elsinore Corporation, a Nevada corporation; Four Queens, Inc.,
a Nevada corporation d/b/a Four Queens Hotel and Casino.
EMPLOYEE DISHONESTY: $1,000,000
MONEY & SECURITIES
INSIDE & OUTSIDE: $1,000,000
FORGERY & ALTERATIONS: $1,000,000
DEDUCTIBLES: $10,000 Each Occurrence
COVERAGE INCLUDES: Investment Committee Members of the Welfare and Pension Plan
6. Umbrella Liability
Royal Indemnity Company, TIG Insurance, Fireman's Fund
INSURED: Elsinore Corporation, a Nevada corporation; Four Queens, Inc.,
a Nevada corporation d/b/a Four Queens Hotel and Casino.
LIMIT: $50,000,000
RETENTION: $10,000
FIRST LAYER: $10,000,000 in excess of the primary insurance
Royal Insurance Company
Policy No. P HN 202080
SECOND LAYER: $10 Million to $20 Million
TIG Insurance Company
Policy No. XLX 926 2624
THIRD LAYER: $20 Million in excess to $30 Million
Fireman's Fund Insurance Company
Policy No. XXK 000 6793 4802
7. Erisa Compliance Liability
Fidelity Deposit Insurance Company
Policy No. CCP 0033751
EMPLOYEE DISHONESTY: $250,000; no deductible
8. Excess Worker's Compensation Coverage
Frontier Insurance Company
Policy No. FSO 1155
WORKERS COMP: Statutory
EMPLOYER'S LIABILITY: $1,000,000
RETENTION: $275,000 per claim
ESTIMATED PAYROLL: $24,670,979
Schedule 2.17(a)
Labor Matters
Contracts in Effect
Labor Agreement between United Brotherhood of Carpenters and Joiners of America,
Local Union No. 1780, Southern California/Nevada Regional Council of Carpenters
and Four Queens Hotel and Casino for the period January 15, 1997 through January
14, 2000.
Labor Agreement between Four Queens, Inc. d/b/a Four Queens Hotel and Casino and
International Union of Operating Engineers Local No. 501, AFL-CIO for the period
April 1, 1997 through March 31, 2002.
A Collective Bargaining Agreement between the Four Queens Hotel & Casino and the
Local Joint Executive Board of Las Vegas for and on behalf of Culinary Workers
Union, Local No. 226 and Bartenders Union, Local No. 165 for the period
September 1, 1997 through May 31, 1997, at which time the parties agreed to
negotiate wages and health and welfare contributions to conform with other
entity/union contracts.
Contracts Under Negotiation
The Four Queens Hotel and Casino is negotiating a labor agreement with the
International Brotherhood of Painters & Allied Trades, Local Union No. 159,
AFL-CIO for the period September 1, 1997 through August 31, 2002.
Negotiations are being conducted for a new contract with the Professional,
Clerical and Miscellaneous Employees, Teamsters Local Union No. 995. The term
of the present contract extended from April 2, 1983 through April 1, 1987, and
continues thereafter unless either party notifies the other on the anniversary
of the effective date.
18
Schedule 2.17(b)
Payment of Benefits
None
SCHEDULE 2.18
Real Property
Real Property Owned
See attached Fourth Amendment to Preliminary Title Report dated as of
July 6, 1997, prepared by Nevada Title Company.
Real Property Leased
1. See attached Fourth Amendment to Preliminary Title Report dated
as of July 6, 1997, prepared by Nevada Title Company.
2. Standard Industrial/Commercial Single-Tenant Lease (the "Warehouse
Lease") dated May 1, 1993 by and between The Xxxx Family Partnership and Four
Queens Hotel/Casino for real property to be used as a warehouse having APN
020-080-003-025 and located at 000 X. Xxxx Xxxxxx, Xxx Xxxxx, Xxxxxx for a five
(5) year term with three options to renew commencing May 1, 1993 and ending
April 30, 1998. The Warehouse Lease requires the Landlord's consent for an
assignment of the Warehouse Lease, including a change in the control of the
Tenant.
SCHEDULE 2.20
Environmental Matters
None.
SCHEDULE 3.2(a)
Non-Contravention; Required Filings and Consents
Xx. Xxxxx X. Xxxxxxx ("Xx. Xxxxxxx") is the owner of all of the issued
and outstanding capital stock of Gaming. Xx. Xxxxxxx is also the beneficial
owner of approximately 25% of all of the issued and outstanding capital stock of
Full House Resorts, Inc., a Delaware corporation ("FHR") and is the Chairman
of the Board of FHR. Prior to the execution of this Agreement, Xx. Xxxxxxx had
proposed that FHR participate in the transactions contemplated by this Agree-
ment. However, Xx. Xxxxxxx has been advised by FHR that it does not plan to
do so.
FHR has entered into a joint venture Master Agreement, dated December
29, 1995 (the "JV Agreement"), with GTECH/Dreamport Company ("GTECH"), to, among
other things, present certain business opportunities to each other. This
obligation was terminated pursuant to a letter, dated January 27, 1997, from
GTECH to FHR, amending the JV Agreement, a copy of which was provided to the
Company.
