Exhibit 10.2
TRANSFER OF OWNERSHIP AGREEMENT
This Transfer of Ownership Agreement is made this 24th day of July, 2001
(this "AGREEMENT"), by and among ARGOSY GAMING COMPANY, a Delaware corporation
("ARGOSY"), EMPRESS CASINO JOLIET CORPORATION, an Illinois corporation
("EMPRESS"), and the ILLINOIS GAMING BOARD, a board established within the
Illinois Department of Revenue (the "BOARD").
WHEREAS, the Board is authorized to regulate riverboat gambling in
Illinois pursuant to the Illinois Riverboat Gambling Act, 230 ILCS 10/1 et seq.,
and the rules promulgated thereunder (collectively, the "ACT");
WHEREAS, Xxxxx Gaming Company, a wholly-owned subsidiary of Argosy, is
the holder of an Owner's License (as defined below) for a riverboat gambling
operation in Alton, Illinois (the "ALTON CASINO");
WHEREAS, Empress, a wholly-owned subsidiary of Horseshoe Gaming Holding
Corp. ("HORSESHOE"), is the holder of an Owner's License for a riverboat
gambling operation in Joliet, Illinois (the "EMPRESS CASINO");
WHEREAS, on April 12, 2001, Argosy and Horseshoe entered into an
Agreement and Plan of Merger (the "MERGER AGREEMENT"), a copy of which has been
delivered to the Board, pursuant to which Argosy, through a wholly-owned
subsidiary, agreed to merge with Empress so that Empress shall become a
wholly-owned subsidiary of Argosy (the "MERGER"), subject to the terms and
conditions set forth in the Merger Agreement, including approval of the Merger
by all appropriate regulatory authorities;
WHEREAS, following the Merger, Argosy, through its subsidiaries, will own
the Alton Casino and the Empress Casino;
WHEREAS, Argosy has sought approval from the Board for the Merger;
WHEREAS, Illinois Public Act 91-40, adopted in 1999, amended certain
portions of the Act (the "AMENDMENTS") by, among other amendments, deleting
Section 7(a)(7) (the "SECTION 7(A)(7) DELETION"), which previously provided
that, "[a] person, firm or corporation is ineligible to receive an owner's
license if... the person, firm or corporation owns more than a 10% ownership
interest in any entity holding an owner's license issued under [the] Act";
WHEREAS, on October 8, 1999, a lawsuit (Case No. 99 MR 793) was filed in
the Circuit Court of the Nineteenth Judicial Circuit, Lake County, Illinois (the
"LAWSUIT"), challenging the constitutionality of certain provisions of Public
Act 91-40;
WHEREAS, if the Lawsuit is successful, all or certain portions of the
Amendments could be ruled invalid;
WHEREAS, the Board has expressed concern over approving the Merger in
light of the Lawsuit and the possibility that the Section 7(a)(7) Deletion may
be reinstated due to all or part of Public Act 91-40 being found invalid;
WHEREAS, Argosy, Empress and the Board desire to minimize disruption and
diminution in value of the Empress Casino if the Section 7(a)(7) Deletion is
reinstated;
WHEREAS, the Board desires that Argosy and Empress prepare for the
contingency that the Section 7(a)(7) Deletion may be reinstated and Argosy has
agreed to voluntarily transfer into trust the Trust Property (as defined below),
relating to the Empress Casino in the event that the Section 7(a)(7) Deletion is
reinstated;
WHEREAS, Argosy's transfer of the Trust Property into trust and the
administration of the Trust Property shall be governed by the terms and
provisions of the Trust Agreement (as defined below) entered into on the date
hereof by Argosy and the Trustee (as defined below), with the approval of the
Board; and
WHEREAS, the Empress Casino shall be operated during the period the Trust
Property is held in trust in accordance with the terms and provisions of this
Agreement and the Management Agreement (as defined below) to be entered into
between Argosy and Empress in accordance with the terms of this Agreement;
NOW, THEREFORE, IN CONSIDERATION OF THE FOREGOING PREMISES, THE MUTUAL
AGREEMENTS AND COVENANTS HEREINAFTER CONTAINED AND FOR OTHER GOOD AND VALUABLE
CONSIDERATION, THE RECEIPT AND SUFFICIENCY OF WHICH IS HEREBY ACKNOWLEDGED, THE
PARTIES AGREE AS FOLLOWS:
1. DEFINITIONS.
The following terms shall have the following meanings when used in this
Agreement:
"AGENT" shall mean Xxxxx Fargo Bank, National Association, in its
capacity as administrative agent under the Credit Agreement or any successor
thereto.
"ARGOSY CERTIFICATE" shall mean a certificate in substantially the form
attached to the Trust Agreement as EXHIBIT C thereto, signed by an authorized
officer of Argosy, which shall be issued only with the prior approval of the
Board, directing the Trustee to take a particular action.
"ARGOSY ILLINOIS CORPORATION" shall mean Argosy Illinois Corporation, an
Illinois corporation and wholly-owned subsidiary of Argosy.
"AUDITOR" shall mean Empress's independent auditor or such other
independent public accountant selected by the Board to determine the Trust
Period Profits, as directed by the Board from time to time.
"BOARD CERTIFICATE" shall mean a certificate in substantially the form
attached to the Trust Agreement as EXHIBIT B thereto, signed by the
Administrator of the Board directing the Trustee to take a particular action.
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"COMPACT" shall mean the tribal-state Compact entered into between the
Tribe and the State of Wisconsin as the same may from time to time be amended or
such other Compact as may be substituted therefor.
"CREDIT AGREEMENT" shall mean that certain Second Amended and Restated
Credit Agreement, to be dated as of July 31, 2001, among Argosy, the other
borrowers named therein, the lenders named therein and the Agent, as amended,
supplemented, modified, restated or replaced from time to time.
"DIRECTORS LIST" shall mean the list attached to the Trust Agreement as
EXHIBIT E.
"EMPRESS CERTIFICATE" shall mean a certificate in substantially the form
attached to the Trust Agreement as EXHIBIT D thereto, signed by either the
President, Secretary or Assistant Secretary of Empress, which shall be issued to
the Board and the Trustee, directing the Trustee to take a particular action.
"LENDERS" shall mean the lenders party to the Credit Agreement from time
to time.
"LOAN DOCUMENTS" shall have the meaning ascribed thereto in the Credit
Agreement.
"MANAGEMENT AGREEMENT" shall mean the management agreement to be entered
into between the Manager and Empress for the management of the operation of the
Empress Casino while the Trust Property is held in trust by the Trustee under
the Trust Agreement, which shall be in the form attached hereto as EXHIBIT A.
"MANAGER" shall mean Argosy Illinois Corporation or another subsidiary of
Argosy approved by the Board, as manager under the Management Agreement. The
Manager may be replaced in accordance with the provisions of SECTIONS 5.4 and
5.5 of this Agreement.
"NII-JII" shall have the meaning ascribed thereto in SECTION 8.8 hereof.
"NII-JII NOTES" shall mean Nii-Jii's 12% notes due ten years from the
date of issuance thereof in an aggregate principal amount of at least
$30,000,000.
"NII-JII SENIOR NOTES" shall mean the senior secured notes of the
Menominee Kenosha Gaming Authority due eight years from the date of issuance
thereof in an aggregate principal amount of at least $150,000,000.
"OBLIGATIONS" shall have the meaning ascribed thereto in the Credit
Agreement.
"OPERATOR AGREEMENT" shall mean that certain Operator Agreement, dated as
of December 14, 2000, between Nii-Jii Entertainment, LLC and Argosy of Kenosha
Co.
"OPTION" shall mean the Option to Purchase, dated as of May 6, 1998,
among Nii-Jii, Dairyland Greyhound Park, Inc., Dairyland Marketing Services,
Inc. and Rime Management Group, Inc., as amended by the First Amendment to
Option to Purchase, dated December 5, 2000.
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"OWNER'S LICENSE" shall mean an Illinois riverboat gambling owner's
license, issued in accordance with the Act.
"REVERSE TRIGGER EVENT" shall mean the occurrence, after the occurrence
of a Trigger Event, of (a) a final, non-appealable judicial ruling, (b) a
legislative amendment to the Act or (c) a corporate restructuring by Argosy as
provided in SECTION 4.6 of this Agreement, if, and only to the extent that, in
any such case, upon the termination of the trust under the Trust Agreement and
the transfer of the Trust Property back to Argosy, as determined by the Board
(without prejudice and subject to judicial review of such determination, if
any), such termination and transfer would not cause a violation of the Act as
then applicable after giving effect to such ruling, amendment or restructuring.
"SALE" shall mean the sale (or distribution in accordance with SECTION
4.6 of this Agreement) of some or all of the Trust Property to a party or
parties other than Argosy, all subject to the approval of the Board and Argosy
if, and only to the extent that, Empress's holding of the Owner's License
relating to the Empress Casino following such sale (or distribution in
accordance with SECTION 4.6 of this Agreement) would not cause a violation of
the Act.
"SUPPLIER'S LICENSE" shall mean an Illinois riverboat gambling supplier's
license, issued in accordance with the Act.
"TRIBE" shall have the meaning ascribed thereto in SECTION 8.8 hereof.
"TRIGGER EVENT" shall mean the occurrence of a final, non-appealable
judicial ruling after the exhaustion of all petitions for rehearing, certiorari
and/or stay, resulting in all or part of Public Act 91-40 being found invalid
and causing the reinstatement of the Section 7(a)(7) Deletion.
"TRUSTEE" shall mean LaSalle Bank National Association, a national
banking association, as trustee under the Trust Agreement, or any successor
trustee selected and appointed in accordance with the provisions of the Trust
Agreement.
"TRUST AGREEMENT" shall mean that certain Trust Agreement, dated of even
date herewith, between Argosy and the Trustee, attached hereto as EXHIBIT B.
"TRUST PERIOD PROFITS" shall mean income before extraordinary items of
Empress for the period of time the Trust Property is held in trust by the
Trustee under the Trust Agreement, to be calculated by Empress in accordance
with generally accepted accounting principles, subject to review by the Auditor
at the direction of the Board. For purposes of calculating income before
extraordinary items of Empress, Argosy shall determine, subject to the Board's
approval, within thirty (30) days of a Trigger Event the percentage of Argosy's
outstanding third party debt and income and other tax expenses attributable to
Empress.
"TRUST PROPERTY" shall mean all of the shares of Empress owned by Argosy.
2. APPROVAL OF MERGER.
2.1. APPROVAL OF MERGER. The Board has given final approval of
the Merger
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on the date hereof, subject to the terms and conditions of this Agreement.
2.2. EXECUTION BY EMPRESS. Within one (1) business day following
the Merger, Argosy shall cause this Agreement to be executed by Empress.
3. EXECUTION OF TRUST AGREEMENT AND MANAGEMENT AGREEMENT.
3.1. EXECUTION OF TRUST AGREEMENT. On the date hereof, Argosy and
the Trustee, with the approval of the Board, have executed the Trust Agreement.
3.2. EXECUTION OF MANAGEMENT AGREEMENT. Within one (1) business
day following the occurrence of a Trigger Event, Argosy and Empress shall
execute the Management Agreement. The Management Agreement shall only be amended
from the form attached hereto as EXHIBIT A by written agreement of Argosy and
Empress with the prior approval of the Board.
3.3. AGREEMENT TO TRANSFER TRUST PROPERTY AND ACT AS MANAGER.
Within one (1) business day following the occurrence of a Trigger Event, Argosy
shall or shall cause the Agent to transfer the Trust Property to the Trustee in
accordance with the terms of this Agreement and the Trust Agreement; provided,
that the Trust Property shall remain subject to the lien and security interest
in effect prior to such transfer in favor of the Agent, for the benefit of
itself and the Lenders, securing the Obligations. Immediately upon such a
transfer, the Manager shall commence its duties as Manager, in accordance with
and subject to the terms of this Agreement and the Management Agreement.
Following such transfer, Empress shall remain fully liable for all of its
obligations under the Credit Agreement and related documents to the same extent
as immediately prior to such transfer.
4. OPERATION OF TRUST.
4.1. QUALIFICATIONS OF TRUSTEE. The Trustee is a national banking
association with trust powers pursuant to Illinois law.
4.2. COMPENSATION OF THE TRUSTEE. Empress shall promptly pay to
the Trustee when due its compensation for acting as Trustee, as set forth in the
Trust Agreement. Such compensation shall be paid out of the operating profits of
Empress.
4.3. TRANSFER OF TRUST PROPERTY. Within one (1) business day
following the occurrence of a Trigger Event, Argosy shall or shall cause the
Agent to transfer, or cause to be transferred, the Trust Property to the Trustee
and the Trustee shall accept such Trust Property and hold it in trust, subject
to the terms and conditions and for the use and purposes set forth in this
Agreement and the Trust Agreement and to the lien and security interest in favor
of the Agent, for the benefit of itself and the Lenders, securing the
Obligations. The Trustee shall enter into such documentation as shall reasonably
be required by the Agent to evidence the continuing existence of such lien
following such transfer.
4.4. VOTING RIGHT. Following the transfer of the Trust Property
to the Trustee, the Trustee shall have the power to exercise the voting rights
which accompany the Trust Property (the "VOTING RIGHTS"), but shall exercise the
Voting Rights only in accordance with one
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of the following methods:
4.4.1. If the board of directors of Empress determines that
a proposed action requires approval of the shareholders of Empress (through an
exercise of the Voting Rights), the board of directors of Empress shall request
that the Board first approve such action. If the Board approves such action, the
Board shall execute and forward to the Trustee a Board Certificate, accompanied
by certified resolutions of the Board. The Trustee shall exercise the Voting
Rights in accordance with the Board Certificate by approving the action. If the
Board does not approve such action, it shall not send a Board Certificate to the
Trustee and the Trustee shall not exercise the Voting Rights.
4.4.2. In the event that all of Empress's board of director
positions are simultaneously vacant (whether due to the death, resignation or
removal of the directors or otherwise), any of the President, Secretary or
Assistant Secretary of Empress shall issue an Empress Certificate to the
Trustee, with a copy to the Board, directing the Trustee to exercise the Voting
Rights to elect one or more directors (which number shall be equal to the number
of directors serving on the board prior to the vacancies, as specified in the
Empress Certificate). The Trustee shall then exercise the Voting Rights by
voting in favor of the first one or more, as applicable, individuals listed (in
the order so listed) on the Directors List to become the new member(s) of the
board of directors of Empress.
4.5. NEGOTIATIONS FOR SALE. While the Trust Property is in trust
under the Trust Agreement, Argosy shall use its best efforts to actively pursue
a Sale at fair market value. The following provisions shall apply to the process
of negotiating a Sale:
4.5.1. Argosy shall use its best efforts to effectuate a
Sale first to a multi-property gaming company which has sufficient financial
resources to finance the transaction; and, if such efforts are not successful,
second, to another gaming company or to any other interested and qualified
party;
4.5.2. Argosy may provide some or all of the financing for
a Sale, where appropriate and desired, on commercially reasonable terms;
provided, however, that the terms of such financing shall not allow for a pledge
of the Empress Owner's License or the shares of Empress such that the Owner's
License or the shares of Empress will revert back to Argosy or any affiliate
thereof in the event of a default by the acquirer under any financing documents;
and
4.5.3. Any Sale shall be subject to a Reverse Trigger Event
prior to the closing, thereby terminating the Sale; provided, however, that once
Argosy has entered into a binding contract for a Sale, Argosy may not terminate
such Sale by effectuating a public offering or a spinoff as provided in SECTION
4.6 below.
4.6. PUBLIC OFFERING OR SPIN-OFF. If Argosy has used its best
efforts to effectuate a Sale of the sort contemplated by SECTION 4.5 above, but
has not been successful, Argosy may, subject to the terms of the Credit
Agreement, arrange one of the following transactions, in compliance with
applicable securities laws: (a) offer some or all of the shares of Empress
directly or indirectly to the public in an initial public offering; (b)
distribute some or all of the shares of Empress to the shareholders of Argosy in
a spin-off; or (c) some combination of
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the preceding options (a) and (b). Any such transaction shall comply with the
definition of a Sale for the purposes of this Agreement and shall be subject to
the prior approval of the Board. Following receipt of such Board approval,
Argosy shall issue an Argosy Certificate directing the Trustee to transfer the
Trust Property to the parties acquiring the rights to the Trust Property
pursuant to such initial public offering and/or spin-off.
4.7. CONSUMMATION OF SALE. Upon the negotiation of the terms of a
Sale with a potential acquirer, Argosy shall submit the terms of the Sale to the
Board for its approval of such Sale and such potential acquirer (accompanied by
all relevant documents and other information reasonably requested by the Board,
including, without limitation, information regarding the potential acquirer), in
accordance with the Act. In the event the Board approves such Sale, Argosy shall
issue an Argosy Certificate directing the Trustee, upon the closing of the Sale,
to transfer the Trust Property (or the portion thereof being sold) to the
acquirer in accordance with the terms of any such contract for sale and to
direct the net proceeds of such Sale, after paying any amount owing to the
Trustee under the Trust Agreement, and any balance of the Trust Property not
sold, to be delivered to the Agent for application to, and in the case of any
balance of the Trust Property as continuing collateral for, the Obligations
pursuant to the terms of the Credit Agreement and the Loan Documents. The Trust
Agreement and the Management Agreement shall thereafter be terminated in
accordance with SECTIONS 4.9 and 5.6 of this Agreement.
4.8. OCCURRENCE OF A REVERSE TRIGGER EVENT. Upon the occurrence
of a Reverse Trigger Event, Argosy shall issue an Argosy Certificate directing
the Trustee to, not later than the following business day, transfer the Trust
Property to the Agent or, with the written consent of the Agent, to Argosy or an
assignee of Argosy to which Argosy's rights under this Agreement are assigned
(in accordance with SECTION 9.2 of this Agreement). The Trust Agreement and the
Management Agreement shall thereafter be terminated in accordance with SECTIONS
4.9 and 5.6 of this Agreement.
4.9. TERMINATION OF TRUST AGREEMENT. The Trust Agreement shall
automatically terminate on the first to occur of the following: (a) the transfer
of the Trust Property to the Agent or to Argosy or a permitted assignee of
Argosy, as the case may be, following the occurrence of a Reverse Trigger Event
in accordance with SECTION 4.8 above; (b) a Sale approved by the Board
(including a Sale described in SECTION 4.6 hereof); and (c) a relinquishment by
Empress and reversion to the Board of the Owner's License relating to the
Empress Casino in accordance with SECTION 6 hereof. In no event, however, shall
the Trust Agreement terminate until all of the Trust Property has been
transferred out of the trust under the Trust Agreement, following the occurrence
of one of the events described in subsections (a) through (c) above, in
accordance with the terms of this Agreement and all outstanding fees and
expenses of the Trustee have been paid in full pursuant to the terms of the
Trust Agreement. Such termination shall be confirmed in writing by the Trustee,
Argosy and the Board.
5. OPERATION OF MANAGEMENT AGREEMENT.
5.1. MANAGEMENT AGREEMENT. The Management Agreement provides that
the Manager shall operate and manage the Empress Casino while the Trust Property
is held in trust under the Trust Agreement. The Manager shall at all times
manage the Empress Casino in a
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manner which does not diminish the fair market value of the Empress Casino or
the opportunities for a Sale at such fair market value.
5.2. COMPENSATION OF MANAGER. Empress shall promptly pay to
Argosy Illinois Corporation, or the then current Manager, when due the Manager's
fee for acting as Manager, pursuant to the terms of the Management Agreement.
5.3. LICENSING OF MANAGER. The Board, pursuant to its regulatory
authority and the resolutions of the Board approving the execution of this
Agreement, waives the application of the definition of a "SUPPLIER" for the
purposes of permitting the Manager to serve as Manager under the Management
Agreement; provided, however, that the Manager shall at all times during the
term of the Management Agreement maintain the eligibility and suitability
requirements of an "Owner" set forth in Section 7 of the Act (with the exception
of Section 7(a)(7) of the Act).
5.4. REMOVAL OF MANAGER. The Management Agreement shall provide
that Empress shall remove Argosy Illinois Corporation as Manager under the
Management Agreement at the direction of the Board, with reasonable advance
notice to Argosy Illinois Corporation in writing and a reasonable opportunity to
cure, upon a determination by the Board or Empress that Argosy Illinois
Corporation has acted with negligence or wilful misconduct with respect to a
material duty or obligation under the Management Agreement or has been derelict
in the performance of its material duties and obligations under the Management
Agreement.
5.5. REPLACEMENT MANAGER. In the event that Argosy Illinois
Corporation is removed as Manager in accordance with SECTION 5.4 hereof or
resigns as Manager in accordance with the provisions of the Management
Agreement, any replacement manager shall be selected by Empress and approved in
advance by the Board. The replacement manager shall: (a) be a person or entity
experienced and skilled in riverboat gaming management; and (b) execute a
confidentiality agreement pursuant to which it shall covenant to keep
confidential Argosy's and Argosy Illinois Corporation's proprietary information
(including, without limitation, information concerning Argosy's and Argosy
Illinois Corporation's strategies, business plans, documents, information
technology, techniques, programs, business practices and other Argosy's and
Argosy Illinois Corporation's information relating to the Empress Casino and the
gaming industry in general) and other confidential information, trade secrets
and/or intellectual property rights of Argosy and Argosy Illinois Corporation.
5.6. TERMINATION OF MANAGEMENT AGREEMENT. The Management
Agreement shall terminate automatically on the earliest to occur of the
following: (a) the transfer of the Trust Property to Argosy following the
occurrence of a Reverse Trigger Event in accordance with SECTION 4.8 of this
Agreement; (b) the removal of Argosy Illinois Corporation as Manager in
accordance with SECTION 5.4 hereof; (c) a Sale (including a Sale described in
SECTION 4.6 of this Agreement); (d) a relinquishment by Empress and reversion to
the Board of the Owner's License relating to the Empress Casino in accordance
with SECTION 6 hereof; and (e) the resignation of the Manager as provided in the
Management Agreement. Such termination shall be confirmed in writing by Argosy
Illinois Corporation, the Board and Empress.
6. RELINQUISHMENT AND REVERSION OF LICENSE; TRUST PERIOD
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PROFITS.
6.1. RELINQUISHMENT AND REVERSION OF LICENSE. If no Sale
(including a Sale described in SECTION 4.6 of this Agreement) or Reverse Trigger
Event (in accordance with SECTION 4.8 of this Agreement) has occurred within one
(1) year after the Trust Property has been placed in trust pursuant to the Trust
Agreement, Empress shall immediately relinquish its interest in the Owner's
License for the operation of the Empress Casino and the Owner's License shall
immediately revert to the Board. Such one (1) year time period shall be extended
an additional six (6) months, to a period of eighteen (18) months (or longer in
the Board's sole discretion), if the only impediment to a Sale is one or both of
the following: (a) the Board has not expressly disapproved such Sale presented
to the Board and Board approval necessary to accomplish such Sale is pending; or
(b) the Board needs additional time to complete its investigation and licensing
of the prospective acquirer.
6.2. PAYMENT OF TRUST PERIOD PROFITS AND RETURN OF TRUST
PROPERTY. Empress shall pay (and Argosy shall use its best efforts to cause
Empress to pay) an amount equal to ninety percent (90%) of the Trust Period
Profits to the Board within ten (10) days of Empress's relinquishment of the
Owner's License for the operation of the Empress Casino in accordance with
SECTION 6.1 above. The Board shall immediately thereafter transfer such Trust
Period Profits to the Illinois Gaming Fund established pursuant to the Act.
Immediately upon receipt of such Trust Period Profits by the Board, Argosy shall
issue an Argosy Certificate directing the Trustee to transfer the Trust Property
back to Argosy within one (1) business day. Within sixty (60) days of Empress's
relinquishment of the Owner's License for the operation of the Empress Casino in
accordance with SECTION 6.1 above, Argosy shall cause the Auditor to issue a
written report setting forth its calculation of the Trust Period Profits. Argosy
shall pay all reasonable costs associated with such Auditor's report. If the
Auditor's calculation of the Trust Period Profits differs from the amount of
Trust Period Profits used by Empress as a basis for determining the amount of
the ninety percent (90%) payment to the Board, then, within ten (10) days of the
issuance of the Auditor's report, Empress shall pay to the Board the amount of
any shortfall or the Board shall cause to be paid to Empress the amount of the
overpayment, as applicable. The Trust Agreement and the Management Agreement
shall thereafter be terminated in accordance with SECTIONS 4.9 and 5.6 of this
Agreement.
7. COOPERATION BY EMPRESS.
7.1. COOPERATION BY EMPRESS. Empress shall cooperate in all ways
reasonably necessary to assist the Board, the Trustee and Argosy in
accomplishing the responsibilities, duties and actions contemplated by this
Agreement, the Management Agreement and the Trust Agreement.
7.2. OPERATION OF THE EMPRESS CASINO. Empress shall at all times
while the Trust Property is in trust under the Trust Agreement operate the
Empress Casino at the direction of the Manager, in accordance with the terms of
the Management Agreement and in a manner which does not diminish the fair market
value of the Empress Casino or the opportunities for a Sale at such fair market
value. While the Trust Property is in trust under the Trust Agreement, Empress
shall continue to pay all taxes, debts, liabilities, fees, charges, accounts
payable, salaries, wages and similar costs of operating the Empress Casino in
the manner it is normally
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operated, at the direction of the Manager and in accordance with the terms of
the Management Agreement, and will pay any and all costs and fees due or owing
to the Trustee under the Trust Agreement.
8. REPRESENTATIONS, WARRANTIES AND COVENANTS.
8.1. ARGOSY AUTHORITY. As of the date of this Agreement, Argosy
represents and warrants to the Board (which representations and warranties are
being relied upon by the Board without any independent investigation) as
follows:
8.1.1. Argosy is a corporation, duly organized, validly
existing and in good standing under the laws of the State of Delaware. Argosy
has full corporate power and authority to enter into and perform this Agreement
and the Trust Agreement and to carry on its businesses as such businesses are
now being conducted. The execution and delivery by Argosy of this Agreement and
the Trust Agreement and the performance by Argosy of its obligations hereunder
and thereunder and the consummation of the transactions contemplated hereby and
thereby have been duly authorized and approved by all requisite corporate
action. This Agreement and the Trust Agreement have been duly executed and
delivered by a duly authorized officer of Argosy, and constitute valid and
legally binding obligations of Argosy, enforceable against Argosy in accordance
with their respective terms (except to the extent that enforcement may be
affected by laws relating to bankruptcy, reorganization, insolvency and
creditors' rights and by the availability of injunctive relief, specific
performance and other equitable remedies).
8.1.2. Except as already obtained or secured, no consent,
waiver, authorization, order or approval of, or filing or registration with, any
governmental authority or other person or entity, or under or with respect to
any contract, lease, agreement, purchase order, sales order or other instrument,
is required for or in connection with the execution and delivery by Argosy of
this Agreement or the Trust Agreement and the consummation by Argosy of the
transactions contemplated hereby or thereby.
8.1.3. Neither the execution and delivery of this Agreement
or the Trust Agreement by Argosy, nor the consummation by Argosy of the
transactions contemplated hereby or thereby, will (i) violate or result in a
material breach of any of the terms, conditions or provisions of Argosy's
certificate of incorporation or bylaws, or any law, permit or order to which
Argosy is a party or by which Argosy is bound, or (ii) violate or result in a
material breach of (or event which with the giving of notice or the passage of
time, or both, would become a default), require a consent under, or give to
others any rights of termination, amendment or acceleration, of, or result in
the creation of any claims on any of the assets or properties of Argosy pursuant
to any contract, agreement, commitment or arrangement (written or oral) to which
Argosy is a party or by which any of such assets or properties is bound or
affected, except in each case where such violation, breach or default does not
and would not have a material adverse effect on any of the businesses,
operations, assets, liabilities, financial condition or prospects of Argosy or
on the consummation of the transactions contemplated hereby and except for the
rights in favor of the Agent and the Lenders arising under the Credit Agreement
and the other Loan Documents following the occurrence of a Trigger Event.
8.1.4. Upon the consummation of the Merger, Argosy will
indirectly be
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the sole owner of all the issued and outstanding equity interests of Empress,
free and clear of all claims other than a lien on the stock of Empress in favor
of the Agent, for the benefit of itself and the Lenders, to secure the
Obligations. Upon the consummation of the Merger, there will be no outstanding
subscriptions, options, warrants, rights (including preemptive rights), calls,
or other agreements, commitments or claims of any character relating to any such
ownership interests in Empress (including relating to the issuance of additional
ownership interests in Empress, or obligating Empress to issue any ownership
interests of any kind). Upon the consummation of the Merger, there will be no
agreements or understandings to which Argosy or Empress is a party with respect
to such ownership or other corporate governance matters, including any
agreements with respect to the ownership, sale or voting of such ownership
interests, except this Agreement and the Trust Agreement.
8.2. EMPRESS AUTHORITY. As of the date of Empress's execution of
this Agreement, Empress represents and warrants to the Board (which
representations and warranties are being relied upon by the Board without any
independent investigation) as follows:
8.2.1. Empress is a corporation, duly organized, validly
existing and in good standing under the laws of the State of Illinois. Empress
has full corporate power and authority to enter into and perform this Agreement
and to carry on its businesses as such businesses are now being conducted. The
execution and delivery by Empress of this Agreement and the performance by
Empress of its obligations hereunder and the consummation of the transactions
contemplated hereby have been duly authorized and approved by all requisite
corporate action. This Agreement has been duly executed and delivered by a duly
authorized officer of Empress, and constitutes a valid and legally binding
obligation of Empress, enforceable against Empress in accordance with its terms
(except to the extent that enforcement may be affected by laws relating to
bankruptcy, reorganization, insolvency and creditors' rights and by the
availability of injunctive relief, specific performance and other equitable
remedies).
8.2.2. Except as already obtained or secured, no consent,
waiver, authorization, order or approval of, or filing or registration with, any
governmental authority or other person or entity, or under or with respect to
any contract, lease, agreement, purchase order, sales order or other instrument,
is required for or in connection with the execution and delivery by Empress of
this Agreement and the consummation by Empress of the transactions contemplated
hereby.
8.2.3. Neither the execution and delivery of this Agreement
by Empress, nor the consummation by Empress of the transactions contemplated
hereby, will (i) violate or result in a material breach of any of the terms,
conditions or provisions of Empress's certificate of incorporation or bylaws, or
any law, permit or order to which Empress is a party or by which Empress is
bound, or (ii) violate or result in a material breach of (or event which with
the giving of notice or the passage of time, or both, would become a default),
require a consent under, or give to others any rights of termination, amendment
or acceleration, of, or result in the creation of any claims on any of the
assets or properties of Empress pursuant to any contract, agreement, commitment
or arrangement (written or oral) to which Empress is a party or by which any of
such assets or properties is bound or affected, except in each case where such
violation, breach or default does not and would not have a material adverse
effect on any of the businesses, operations, assets, liabilities, financial
condition or prospects of Empress or on the
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consummation of the transactions contemplated hereby and except for the rights
in favor of the Agent and the Lenders arising under the Credit Agreement and the
other Loan Documents following the occurrence of a Trigger Event.
8.2.4. Upon the consummation of the Merger, Argosy will
indirectly be the sole owner of all the issued and outstanding equity interests
of Empress, free and clear of all claims other than a lien on the stock of
Empress in favor of the Agent, for the benefit of itself and the Lenders, to
secure the Obligations. Upon the consummation of the Merger, there will be no
outstanding subscriptions, options, warrants, rights (including preemptive
rights), calls, or other similar agreements, commitments or claims of any
character relating to any such ownership interests in Empress (including
relating to the issuance of additional ownership interests in Empress, or
obligating Empress to issue any ownership interests of any kind). Upon the
consummation of the Merger, there will be no agreements or understandings to
which Argosy or Empress is a party with respect to such ownership or other
corporate governance matters, including any agreements with respect to the
ownership, sale or voting of such ownership interests, except this Agreement and
the Trust Agreement.
8.3. EMPRESS ASSETS. Upon the occurrence of a Trigger Event,
Empress shall provide a list of the assets of Empress (the "ASSETS"), which
shall include all of the assets constituting the Empress Casino and the Owner's
License for the Empress Casino. By including an Asset on such list, Empress
warrants that Empress has good and marketable title to such Asset, free and
clear of any and all claims, other than the lien and security interest in favor
of the Agent, for the benefit of itself and the Lenders, to secure the
Obligations, Permitted Liens (as defined in the Credit Agreement) and any claims
noted on such list. The Assets listed on such list shall comprise all of the
assets, including contract rights, whether tangible or intangible, of Empress
necessary to operate the business of the Empress Casino.
8.4. VACANCY IN EMPRESS DIRECTORS. Empress covenants and agrees
that, upon the occurrence of a Trigger Event, it will use its best efforts to
ensure that the Trustee will not have to exercise Voting Rights to elect any
director of Empress during the time the Trust Property is held in trust under
the Trust Agreement. Empress shall take such other action as may be necessary to
ensure that upon the creation of a vacancy on the board of directors of Empress
(whether due to the death, resignation or removal of a director or directors or
otherwise), the remaining directors may fill any such vacancy without seeking
shareholder approval during the time the Trust Property is in trust under the
Trust Agreement, except as otherwise provided in SECTION 4.4 of this Agreement.
8.5. EMPRESS BUSINESS OPERATIONS. Empress covenants and agrees
that, from and after the date of a Trigger Event until the date on which this
Agreement terminates, it shall conduct its businesses, including, without
limitation, the business of operating the Empress Casino, only in the ordinary
course and consistent with past practice and carry on its business operations
(including the purchase and sale of inventory, the payment of trade payables and
other obligations and the collection of accounts receivable) in accordance with
past practice, and use its best efforts to preserve the Empress Casino and the
goodwill of its customers, suppliers and others having business relationships
with Empress. Empress shall promptly notify the Board, the Trustee and Argosy in
writing of any material adverse development(s) that occur following a Trigger
Event and prior to the termination of this Agreement with respect to the Assets
or the
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business of the Empress Casino.
8.6. NO CHANGES TO EMPRESS.
8.6.1. Empress covenants and agrees, from and after the
date of a Trigger Event until the date on which this Agreement terminates, that
it will not, without the prior written consent of the Board (if such Board
approval is required pursuant to the Act), (i) materially amend its articles of
incorporation or bylaws (except as may be necessary pursuant to SECTION 8.4 of
this Agreement), (ii) issue any stock or other equity interests in Empress,
(iii) make any payment or distribution to its employees, officers or managers
except such amounts as constitute currently effective compensation for services
rendered or reimbursement for reasonable ordinary and necessary out-of-pocket
business expenses, (iv) materially increase the compensation (whether salary,
bonus or otherwise) payable to any employee, (v) place any lien, encumbrance or
claim of any sort whatsoever, or otherwise pledge or place a security interest
on, any of the Assets (whether tangible or intangible) other than the lien and
security interest in favor of the Agent, for the benefit of itself and the
Lenders, to secure the Obligations, (vi) sell, dispose of or otherwise transfer
any of the material Assets (whether tangible or intangible), including any
accounts receivable or inventory, except in the ordinary and usual course of
business consistent with past practice or except as specifically required or
permitted pursuant to the terms of this Agreement, or (vii) declare or pay any
dividends on the shares of Empress; provided, however, that Empress shall be
permitted to distribute funds to Argosy related to principal and interest
payments on Empress's outstanding debt and income and other tax expenses
attributable to Empress as a stand alone entity. Upon a request by the Board,
Argosy agrees to provide within a reasonable time of such request written
evidence of the outstanding debt and income and other tax expenses attributable
to Empress.
8.6.2. Empress covenants and agrees that, from and after
the date of consummation of the Merger until the date on which this Agreement
terminates, it will not, without the prior written consent of the Board, (i)
materially amend its articles of incorporation or bylaws in any manner which is
inconsistent with the terms of this Agreement, or (ii) place any lien,
encumbrance or claim of any sort whatsoever, or otherwise pledge or place a
security interest on, the shares of Empress owned by Argosy, other than in each
case, the lien and security interest in favor of the Agent, for the benefit of
itself and the Lenders, to secure the Obligations.
8.7. EMPRESS COMPLIANCE. Argosy shall use its best efforts to
cause Empress to comply with the covenants set forth in SECTIONS 8.3 through 8.6
above upon the occurrence of a Trigger Event.
8.8. NII-JII OPERATOR AGREEMENT. Argosy represents and warrants
that the Operator Agreement terminates upon the earliest to occur of any of the
following events: (i) the termination of that certain Third Amended and Restated
Gaming Facility Development Construction and Management Agreement, dated August
4, 2000, among Nii-Jii Entertainment, LLC ("Nii-Jii"), the Menominee Indian
Tribe of Wisconsin (the "Tribe") and the Menominee Kenosha Gaming Authority,
(ii) the expiration of the Option, as it may from time to time be extended,
prior to its exercise, (iii) the failure, prior to the issuance of the Nii-Jii
Senior Notes, to obtain an extension to the Compact for a period ending no
earlier than the maturity date of the Nii-Jii Notes, or (iv) the failure of the
closing of the Nii-Jii Senior Notes to occur by September
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30, 2001. Argosy covenants that it will not amend, extend or otherwise renew the
Operator Agreement without the prior written approval of the Board.
9. MISCELLANEOUS.
9.1. BENEFITS OF AGREEMENT. Nothing in this Agreement, expressed
or implied, shall give to any person, other than Argosy, Empress, the Board and
their permitted successors and assigns, any benefit or any legal or equitable
right, remedy, or claim under this Agreement.
9.2. ASSIGNABILITY. Neither Argosy nor Empress shall assign its
rights under this Agreement without the prior written consent of the Board
except that Argosy and/or Empress may pledge and/or collaterally assign their
respective rights hereunder to the Agent, for the benefit of itself and the
Lenders, pursuant to the Loan Documents to secure the Obligations under the
Credit Agreement.
9.3. AMENDMENT; WAIVER. This Agreement may not be amended,
modified, or supplemented, nor may any provisions of this Agreement be waived,
discharged, or revoked, without the prior written consent of Argosy, Empress and
the Board.
9.4. HEADINGS. The various headings of the Sections of this
Agreement are for reference purposes only and shall in no way affect the meaning
or interpretation of this Agreement.
9.5. CONSTRUCTION. While the Board and Argosy have been
represented by counsel and have negotiated and discussed this Agreement in its
entirety, the principal drafter of this Agreement was counsel for Argosy and all
ambiguities in this Agreement shall be construed in the manner most favorable to
the Board.
9.6. COURT APPROVAL. If the approval of any court or governmental
authority is determined to be necessary to carry out the provisions of this
Agreement, Argosy, Empress and/or the Board shall cooperate and take all action
reasonably necessary to obtain such approval. Argosy shall reimburse the Board
for reasonable out-of-pocket costs and expenses incurred by the Board in
furtherance of this SECTION 9.6 so long as the nature of such costs and expenses
is approved in advance by Argosy, which approval shall not be unreasonably
withheld.
9.7. PERFORMANCE. Argosy may perform any of its obligations or
duties pursuant to this Agreement through one or more subsidiaries, in its
discretion, subject to the prior approval of the Board.
9.8. INVALIDITY. The invalidity of any provision of this
Agreement shall not be deemed to impair or affect in any manner the validity or
enforceability of the remainder of this Agreement.
9.9. NOTICES. All notices required hereunder shall be in writing
and shall be deemed properly served if delivered in person, by facsimile or if
sent by registered or certified mail, with postage prepaid and return receipt
requested, to the following addresses (or to such other addresses as either
party may subsequently designate):
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If to Argosy: Argosy Gaming Company
000 Xxxxx Xxxxxx
Xxxxx, Xxxxxxxx 00000-0000
Attention: General Counsel
Telecopy: (000) 000-0000
With a copy to:
Xxxxx Fargo Bank, National Association
0000 Xxxxxxx Xxxx, Xxxxx 000
Xxxx, Xxxxxx 00000
Attention: Xxxxx Xxxxxx
Telecopy: (000) 000-0000
If to Empress: Empress Casino Joliet Corporation
000 Xxxxx Xxxxxx
Xxxxx, Xxxxxxxx 00000-0000
Attention: General Manager
Telecopy: (000) 000-0000
If to the Board: Illinois Gaming Board
000 Xxxxx XxXxxxx Xxxxxx
Xxxxx 000
Xxxxxxx, Xxxxxxxx 00000
Attention: Administrator
Telecopy: (000) 000-0000
All notices required hereunder shall be deemed received on the date of delivery,
or attempted delivery, if delivered in person, or if sent by facsimile, on the
date such facsimile is sent, or if mailed, on the date which is two (2) days
after the date such notice is deposited in the mail.
9.10. COUNTERPARTS. This Agreement may be executed in
counterparts, each of which when executed and delivered shall be an original and
all of which together will constitute the same Agreement.
9.11. VARIATIONS IN PRONOUNS. All pronouns and any variations
thereof refer to the masculine, feminine, or neuter, singular or plural, as the
identity of the person or persons may require.
9.12. BOARD DISCRETION. At any time the Board is required to give
its approval pursuant to the terms of this Agreement, such approval shall be
given or withheld by the Board in its sole and absolute discretion.
9.13. WAIVERS. No delay on the part of any party in exercising any
right, power, or privilege hereunder shall operate as a waiver thereof, nor
shall any waiver on the part of any party of any right, power, or privilege
hereunder, nor any single or partial exercise of any right, power, or privilege
hereunder preclude any other or further exercise thereof or the exercise of
15
any right, power, or privilege hereunder. The rights and remedies provided
herein are cumulative and are not exclusive of any rights or remedies that any
party may otherwise have at law or in equity.
9.14. GOVERNING LAW. This Agreement shall be governed and
construed in accordance with the laws of Illinois, including the Act, and
nothing herein shall be construed to limit the rights of Argosy, Empress and the
Board to take any action required by law.
9.15. PRIORITY OF THE TRUST AGREEMENT AND MANAGEMENT AGREEMENT.
Notwithstanding anything contained herein to the contrary, upon the execution
and delivery of the Management Agreement and the Trust Agreement, the terms and
provisions of such agreements will supersede any and all provisions of this
Agreement relating to or describing the terms of such agreements.
9.16. REVOCATION OF OWNER'S LICENSE. If any terms, conditions or
obligations contained in this Agreement, the Management Agreement or the Trust
Agreement have not been fully satisfied or performed within the time frame set
forth in such agreement for such performance or satisfaction, then, at such
time, the Board may revoke the Owner's License relating to the Empress Casino or
take such other action(s) the Board deems necessary or appropriate in its sole
discretion.
9.17. REMEDIES CUMULATIVE. Upon the breach or non-performance of
any of the representations, warranties, covenants or conditions contained in
this Agreement, the non-breaching party may pursue any and all remedies
available hereunder, at law, in equity or otherwise, and all such remedies are
cumulative and not alternative.
9.18. TIMING OF AUDITS. Notwithstanding anything to the contrary
contained in this Agreement, the Board may direct the Auditor to perform an
audit relating to the Trust Period Profits at any time while the Trust Property
is in trust under the Trust Agreement, in the Board's sole discretion.
* * * * *
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IN WITNESS WHEREOF, Argosy, Empress and the Board have caused this
Agreement to be executed and delivered as of the date first above written.
ARGOSY GAMING COMPANY
By: /s/ Xxxx X. Xxxxx
--------------------------------
Its: Senior Vice President and CFO
Date:
-------------------------------
EMPRESS CASINO JOLIET CORPORATION
By: /s/ Xxxx X. Xxxxx
--------------------------------
Its: Treasurer
Date:
------------------------------
ILLINOIS GAMING BOARD
By: /s/ Xxxxxx X. Xxxxxx
--------------------------------
Its: Administrator
Date:
------------------------------
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EXHIBIT A
MANAGEMENT AGREEMENT
EXHIBIT B
TRUST AGREEMENT
