Compensation of Executive Officers and Other Matters
Executive Compensation
WHERE YOU CAN FIND MORE INFORMATION
The following table provides information about the compensation during our fiscal year ending April 29, 2007 of our formerAND INCORPORATION BY REFERENCEWe file annual, quarterly and current Principal Executive Officer,reports, proxy statements and other information with the SEC. You may read and copy any public offering document we file, including a copy of this proxy statement. Additionally, the SEC maintains an internet site that contains reports, proxies and information statements and other information regarding electronic filers and these documents are available to the public from the SEC's web site at http://www.sec.gov. In addition, our current Principal Financial Officer plus our three most highly compensated executive officers as of the end of fiscal 2007. This groupwebsite is referredwww.nevadagold.com.
The SEC allows us to “incorporate by reference” in this proxy statement as the Named Executive Officers.
NAME AND PRINCIPAL POSITION | | FISCAL YEAR ENDING APRIL 29, 2007 YEAR (1) | | SALARY $ | | BONUS $ | | OPTION AWARDS ($) (2) (5) | | ALL OTHER COMPENSATION (3)(4) $ | | TOTAL PAY $ |
| Robert B. Sturges (4) | | 2007 | | 146,769 | | -- | | 112,167 | | 152,148 | | 411,084 |
| CEO | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| John Arnesen | | 2007 | | 319,000 | | -- | | 90,370 | | 9,000 | | 418,370 |
President and Chief Operating Officer | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| James J. Kohn | | 2007 | | 107,692 | | -- | | 19,474 | | 18,453 | | 145,619 |
Sr. Vice President and Chief Financial Officer | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| Elgin D. McClain | | 2007 | | 166,923 | | -- | | -- | | -- | | 166,923 |
| VP — Development | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| Donald A. Brennan | | 2007 | | 151,358 | | -- | | -- | | 3,745 | | 155,103 |
| VP — Development | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| H. Thomas Winn (5) | | 2007 | | 333,846 | | -- | | 199,587 | | 576,096 | | 1,109,529 |
| Former CEO and Chairman | | | | | | | | | | | | |
_______________________
(1) | Compensation data for fiscal 2007 includes the period May 1, 2006 through April 29, 2007. |
(2) | The amounts in this column reflect the compensation costs recognized for financial statement reporting purposes for the fiscal year ended April 29, 2007, in accordance with SFAS No. 123(R) of awards pursuant to the Incentive Plan and thus include amounts from awards granted in and prior to fiscal year 2007. Assumptions used in the calculation of this amount for fiscal year ended April 29, 2007 are included in Footnote 10 to the Company’s audited financial statements for the fiscal year end April 29, 2007, included in the Company’s Form 10-K filed with the Securities and Exchange Commission on July 30, 2007. |
(3) | Consists of car allowances and relocation reimbursement for each Named Executive Officer. |
(4) | Mr. Sturges’ other compensation includes $132,740 of consulting fees paid prior to his employment as CEO on October 12, 20006. |
(5) | On June 27, 2007, Mr. Winn entered into a Separation Agreement & Release (the “Agreement”) with the Company. In return for executing the Agreement, he will continue to receive compensation equal to the base compensation to which he would have been entitled for 18 months. In addition, the Company will reimburse him for his benefits under COBRA during the same period and the Company awarded him a non-qualified stock option to purchase 200,000 shares of the Company’s common stock at the closing price as of July 6, 2007 ($2.01). The option will vest at a rate of 25% per year for four years and will expire five years from the date of grant. At April 29, 2007, the Company recorded a severance accrual of $775,683 regarding Mr. Winn. The accrual consisted of $199,597 for the option grant plus $576,096 other compensation. |
Grantsinformation we file with the SEC. This means that we are disclosing important information to you by referring to other documents. The information incorporated by reference is an important part of Plan-Based Awards
The table below sets forththis proxy statement, and information concerning each grant of an award made to a Named Executive Officer in 2007 underthat we file later with the Company's equity plans:
Name | | Grant Date | | All Other Option
Awards: Number
of Securities
Underlying
| | Exercise Price of
Option Awards
| | Grant Date Fair
Value of Stock
and Option
Awards
| |
| | | | | | | | | | | | | |
| Robert B. Sturges | | | 10/12/06 | | | 100,000 | | $ | 4.87 | | $ | 487,000 | |
| | | | | | | | | | | | | | |
| James J. Kohn | | | 12/21/06 | | | 26,000 | | $ | 3.79 | | $ | 98,540 | |
| | | | | | | | | | | | | | |
| Ernest E. East | | | 01/08/07 | | | 30,000 | | $ | 3.24 | | $ | 97,200 | |
| | | | | | | | | | | | | | |
| H. Thomas Winn* | | | 07/06/07 | | | 200,000 | | $ | 2.01 | | $ | 402,000 | |
* Includes an option award dated July 6, 2007 to purchase 200,000 of common stockSEC will automatically update and supersede this information. We incorporate by reference certain sections of the Company pursuant to Mr. Winn's separation agreement. The Company accrued $199,597 relating todocuments listed below (unless the option grant forinformation is deemed furnished and not filed) and any future filings made with the Fiscal Year Ending April 29, 2007.
Outstanding Equity Awards at Fiscal Year-End
The table below presents information on the outstanding equity awards held by the Named Executive Officers as of April 29, 2007.
| | | | | | | Number of Securities Underlying Unexercised Options at Fiscal Year End (#) | | | | | | Value of Unexercised In-the- Monthly Options at Fiscal Year End ($) |
Name | | Shares Acquired on Exercise (#) | | Value Realized ($) | | Exercisable | | Unexercicable | | Option Exercise Price ($) | | Option Expiration Date | | Exercisable | | Unexercisable |
| Robert B. Sturges | | - | | - | | 40,000 | | 60,000 | | 4.87 | | 10/12/16 | | - | | - |
| | | | | | | | | | | | | | | | | |
| John A. Arnesen | | - | | - | | 40,000 | | 60,000 | | 10.79 | | 08/31/10 | | - | | - |
| | | | | | | | | | | | | | | | | |
| Elgin D. McClain | | - | | - | | 25,000 | | - | | 11.40 | | 09/09/09 | | - | | - |
| | | | | | | | | | | | | | | | | |
| Donald A. Brennan | | - | | - | | 30,000 | | - | | 6.30 | | 03/31/08 | | - | | - |
| | | | | | | 30,000 | | - | | 14.19 | | 02/26/09 | | - | | - |
| | | | | | | 10,000 | | - | | 11.40 | | 09/09/09 | | - | | - |
| | | | | | | | | | | | | | | | | |
| James J. Kohn | | - | | - | | 7,500 | | 18,500 | | 3.79 | | 10/23/11 | | - | | - |
| | | | | | | | | | | | | | | | | |
| H. Thomas Winn* | | - | | - | | 80,000 | | - | | 6.30 | | 03/31/08 | | - | | - |
| | | | | | | 115,000 | | - | | 10.59 | | 09/24/08 | | - | | - |
| | | | | | | 30,000 | | - | | 11.40 | | 09/09/09 | | - | | - |
| | | | | | | | | 200,000 | | 2.01 | | 07/06/12 | | | | |
_______________________
The valuesSEC under Sections 13(a), 13(c), 14 or 15(d) of the unexercised options above are based onExchange Act after the difference between the exercise priceinitial filing date of the options and the fair market value of our common stock at end of the fiscal year ended April 29, 2007, which was $3.03 per share.
*Includes an option award dated July 6, 2007 to purchase 200,000 shares of common stock of the Company pursuant to Mr. Winn’s separation agreement.
Report of the Compensation Committee of the Board on Executive Compensation
Overview and Philosophy
There are three key elements in the Company’s executive compensation program, all determined by individual and corporate performance:
· | Annual incentive compensation; and |
· | Long-term incentive compensation. |
The Company’s executive compensation program is designed to enable it to attract, retain and motivate the highest quality of management talent available. Furthermore, the Compensation Committee believes that the value of the program should reflect, in large part, the value created for stockholders. The key objectives of the program are as follows:
· | To offer fair and competitive annual base salaries consistent with similarly situated companies of the same size in the gaming industry; |
· | To reward executives for corporate and individual performance through annual incentive and deferred compensation programs; and |
| To encourage long-term performance through the use of long-term incentives such as stock options that align the interests of employees and stockholders. |
Annual Base Salaries
Annually, the Compensation Committee establishes the base salaries to be paid to the Company’s executive officers during the fiscal year, subject to the approval of the Board. In setting base salaries, the Compensation Committee takes into account several factors including, but not limited to, the executive’s experience, responsibilities, management abilities and job performance, as well as the performance of the Company as a whole, and current market conditions and competitive salaries of executives with similarly situated companies of the same size in the gaming industry.
Payment of annual bonuses to our executive officers is discretionary. For the fiscal year ended April 29, 2007, no bonuses were paid under the Company’s incentive compensation plan.
Long-term Incentive Compensation
The Compensation Committee believes that employee stock ownership is a significant incentive in building stockholder wealth and aligning the interests of employees and stockholders. Stock options will only have value if the Company’s stock price increases. The Board adopted the 1999 Stock Option Plan (“1999 Option Plan”) which was approved by shareholders at the 1999 Annual Meeting of Shareholders and amended at the 2002 Annual Meeting of Shareholders and the 2004 Annual Meeting of Shareholders. The 1999 Option Plan authorizes the Compensation Committee to award stock options to executive officers and other key employees at exercise prices, vesting schedules and on other terms established by the Compensation Committee.
Compensation of the Chief Executive Officer
Mr. Robert B. Sturges was elected to the position of Chief Executive Officer on October 10, 2006. For the fiscal year ended April 29, 2007, Mr. Sturges’ base salary was $315,000 which was increased to $350,000 on April 30, 2007. In fiscal year 2007, Mr. Sturges was not paid a bonus.
The Compensation Committee established the annual base salary and other terms of Mr. Sturges’ compensation based on Mr. Sturges’ past performance record, his status in the gaming industry and his experience and leadership abilities. The Compensation Committee concluded that Mr. Sturges’ compensation, including stock option grants, significantly benefits the Company and its shareholders by securing Mr. Sturges’ services for the future and thereby motivating him to continue his focus on the long-term strategic growth and profitability of the Company.
Policy Concerning Tax Deductibility
Section 162(m) of the Internal Revenue Code of 1986, as amended, generally limits the annual corporate federal tax deduction for compensation paid to executive officers named in thethis proxy statement to $1,000,000, unless the compensation qualifies as “performance based” and has been approved in advance by a vote of its stockholders. The Company is not currently compensating any executive officers at levels that would cause this annual limitation on corporate federal tax deductions to apply and has no current plans to do so. Accordingly, the Compensation Committee has not adopted a formal policy concerning the application of the Section 162(m) limitation on tax deductions. If it appears that any executive officer will likely be approaching the $1,000,000 compensation limitation in the near future, the Compensation Committee will review whether such payments should be structured as to qualify as deductible performance-based compensation.
Respectfully submitted,
Wayne H. White, Chair
Francis M. Ricci
Joseph A. Juliano
John M. Gallaway
Employment Contracts, Termination of Employment and Change-In-ControlArrangements
Mr. Robert B. Sturges has an employment agreement with the Company entered into on November 27, 2006. The Agreement continues until November 1, 2009 unless terminated earlier as provided in the Agreement. The initial base salary is $315,000 plus housing in the Company’s furnished corporate apartment in Houston for 12 months and a monthly flight allowance of $1,200 for airline tickets until November 1, 2007. In addition Mr. Sturges receives a monthly auto allowance of $750. On April 30, 2007, Mr. Sturges’ compensation was increased to $350,000.
Mr. Sturges was eligible for a performance bonus equal to up to 25% of his annual salary for the fiscal year 2007 and for each of fiscal years 2008 and 2009 is eligible for yearly bonuses equal to 50% of his annual salary for achieving reasonable goals related to profitability established in the first 30 days of the fiscal year by the Board of Directors and/or the Compensation Committee. Mr. Sturges was granted an option to purchase 100,000 shares of common stock of the Company, at an exercise price of $4.87 per share on October 12, 2006, the date he became a full-time employee, under the terms of an agreement reached with the Board of Directors on October 10, 2006. Of that grant 40,000 shares immediately vested and the remaining 60,000 shares vest at a rate of 30,000 per year on November 1, 2007 and 2008 provided that Mr. Sturges’ employment has not terminated.
Under the Agreement, the Company may terminate the employment of Mr. Sturges at any time during the first year by giving him 60 days notice and paying him a lump sum amount equal to six months base salary, accrued vacation and pro-rated performance bonuses, if any. In addition, Mr. Sturges has the right to voluntarily terminate his employment on November 1, 2007 by providing written notice to the Company no later than September 1, 2007. In such an event he would not receive any severance compensation. In the event of a Change of Control of the Company, Mr. Sturges may terminate his employment and receive in a lump sum an amount equal to the unpaid balance of his salary, performance bonus, vacation and fringe benefits. In addition all stock options granted but not yet vested would immediately become fully vested.
The Company may terminate Mr. Sturges’ employment for “cause” at any time and he would be entitled only to his salary and benefits through the effective date of the termination.
Mr. John Arnesen's agreement is effective August 31, 2005, and he began his employment with the Company on October 17, 2005. The initial term of the agreement is from August 31, 2005 through August 31, 2010. Under the agreement, if the Company fails to give notice of intent not to renew the agreement by August 31, 2009, the agreement automatically renews for an additional five-year term. Mr. Arnesen's initial base salary is $325,000.
Mr. Arnesen also receives a monthly auto allowance of $750.00 and will participate in an annual bonus program to be developed that will provide the opportunity for an annual bonus based upon achievement of financial and strategic goals to be established each year. The bonus potential ranges from 40% of his then-current annual salary for achieving 95% of the target plan to 100% of his then-current salary if 125% of the target plan is achieved. Mr. Arnesen was granted an option to purchase 100,000 shares of common stock in the Company, at an exercise price of $10.79 per share, equal to the fair market value of the stock determined as ofbefore the date of the
agreement. Of that grant, 20,000 shares immediately vestedspecial meeting:Financial Statements of Nevada Gold & Casinos and the remaining 80,000 shares vest at a rate of 20,000 per year on each anniversary dateIC-BH reported in Item 15 of the agreement, if Mr. Arnesen is still employed on such date. The options expire on the fifth anniversary date of the Employment Agreement and are subject to the terms and conditions of the Company's stock option plan. If the agreement reaches a second term, Mr. Arnesen will be granted an option to purchase an additional 100,000 shares with an exercise price equal to the fair market value of the stock determined as of the date of the grant. The options during the second term vest at a rate of 20% on the date of the grant and 20% on each annual anniversary of the second term, if Mr. Arnesen is still employed on such date.
Mr. James J. Kohn's employment agreement was effective October 23, 2006, and he began his employment with the Company on the same date. The initial term of the agreement is from October, 23 2006 through October 23, 2009. Mr. Kohn’s initial base salary is $215,000 which was increased to $239,000 on April 30, 2007.
Mr. Kohn also receives a monthly auto allowance of $750.00 and will participate in an annual bonus program to be developed that will provide the opportunity for an annual bonus based upon achievement of financial and strategic goals to be established each year. Mr. Kohn shall be entitled to receive 25% of his then-current annual salary, if the target plan’s strategic plans have been achieved and 25% of his then-current annual salary if the target plan’s financial goals have been achieved. Mr. Kohn was granted an option to purchase 26,000 shares of common stock in the Company, at an exercise price of $3.79 per share, equal to the fair market value of the stock determined as of the date of the grant. Of that grant, 7,500 shares immediately vested, 8,500 shares vest at the commencement of Mr. Kohn’s second year of employment and the remaining 10,000 shares vest at the commencement of Mr. Kohn’s third year of employment with the Company. The options expire on the fifth anniversary date of the Mr. Kohn’s Employment Agreement and are subject to the terms and conditions of the Company's stock option plan. Mr. Kohn will also receive certain benefits related to his relocation, including reimbursement of the consequential costs of selling his current home and moving to his new home, as well as receiving temporary housing for a period of six months.
Mr. Ernest E. East has an employment agreement with the Company which expires on January 8, 2009. Mr. East’s initial base salary was $215,000, which was increased to $239,000 on April 30, 2007. Mr. East also receives a monthly auto allowance of $750.00 and will participate in an annual bonus program to be developed that will provide the opportunity for an annual bonus based upon achievement of financial and strategic goals to be established each year. Mr. East shall be entitled to receive 25% of his then-current annual salary, if the target plans have been achieved and 25% of his then-current annual salary if the target plan’s financial goals have been achieved. Mr. East was granted an option to purchase 30,000 shares of common stock in the Company, at an exercise price of $3.24 per share, equal to the fair market value of the stock determined as of the date of the agreement. Of that grant 10,000 shares immediately vested, 10,000 shares vest at the commencement of Mr. East’s second year of employment and the remaining 10,000 shares vest at the commencement of Mr. East’s third year of employment with the Company. The options expire on the fifth anniversary date of the Mr. East’s Employment Agreement and are subject to the terms and conditions of the Company’s stock option plan. Mr. East also received certain benefits related to his relocation, including a $7,500 relocation payment and as well as receiving temporary housing for a period of three months.
Mr. Arnesen’s, Mr. East’s and Mr. Kohn’s agreements provide for termination by the Company without Cause or by the executive in the event of a Change of Control. In either case, the executive will be paid the total salary, annual bonus, vacation and fringe benefits remaining during the term. In addition, any stock options granted but not vested immediately become vested. If the Company terminates the executive’s employment for Cause, the agreement provides for a payment of only salary, vacation, and fringe benefits through the date of termination, and any unvested stock options are forfeited. Finally, all agreements contain provisions protecting the Company’s confidential information and precluding the executive from competing with the Company for a period of one year following the termination of his employment.
Code of Ethics
We have adopted a Code of Ethics that applies to directors, officers and employees, including our principal executive officer, principal financial officer and principal accounting officer. Our Code of Ethics is posted on our website at http://www.nevadagold.com, under Investor Relations - Investor Info. Changes to and waivers granted with respect to this Code of Ethics related to officers identified above, and other executive officers and directors of the Company that are required to be disclosed pursuant to applicable rules and regulations of the Securities and Exchange Commission will also be posted on our website and a CurrentAnnual Report on Form 8-K will be filed within 4 business days of the change or waiver.
Section 16(a) Beneficial Ownership Reporting Compliance
Under Section 16(a) of the Exchange Act, the Company’s directors, executive officers and any persons holding ten percent or more of the Company’s common stock are required to report their ownership of common stock and any changes in that ownership to the SEC and to furnish the Company with copies of such reports. Specific due dates for these reports have been established and the Company is required to report in this Proxy Statement any failure to file on a timely basis by such persons. Based solely upon a review of copies of reports filed with the SEC during the fiscal year ended April 29, 2007, all persons subject to the reporting requirements of Section 16(a) filed all required reports on a timely basis, except as set forth below. A Form 5 and three Forms 4 were filed late by Mr. H. Thomas Winn, a form 4 was filed late by Mr. Francis M. Ricci, a Form 4 and a Form 5 were filed late by Aaminex Capital Corporation, two Forms 4 were filed late by Clay County Holdings, Inc., a Form 4 was filed late by John M. Gallaway, a Form 3 was filed late by Robert B. Sturges, a Form 3 and Form 4 were filed late by James J. Kohn and a Form 5 was filed late by Paul J. Burkett.
Report of the Audit Committee of The Board Of Directors
The following Audit Committee report does not constitute soliciting material and shall not be deemed filed or incorporated by reference into any other Company filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, except to the extent the Company specifically incorporates this Audit Committee report by reference therein.
The Audit Committee engages and supervises the Company’s independent auditors and oversees the Company’s financial reporting process on behalf of the Board. Management has the primary responsibility for the preparation of financial statements and the reporting process, including the systems of internal controls. In fulfilling its oversight responsibilities, the Audit Committee reviewed the audited financial statements in the Company’s annual report on Form 10-K for the fiscal year ended April 29, 2007 with management, including a discussion(electronically filed as an exhibit to this proxy statement);
Financial Statements of Nevada Gold & Casinos and IC-BH reported in Item 1 of the quality of the accounting principles, the reasonableness of significant judgments made by management and the clarity of disclosures in the financial statements.
The Audit Committee reviewed with Pannell Kerr Forster of Texas, P.C. (“PKF”) the Company’s independent public accounting firm, which is responsible for expressing an opinion on the conformity of the Company’s audited financial statements with accounting principles generally accepted in the United States of America, their judgment as to the quality of the Company’s accounting principles and the other matters required to be discussed with the Audit Committee under the auditing standards generally accepted in the United States of America, including the matters required by the Codification of Statements on Auditing Standards No. 61. In addition, the Audit Committee has discussed with PKF their independence from management and the Company, including the written disclosure and the letter regarding its independence as required by Independence Standards Board Standard No. 1, Independence Discussions with the Audit Committees.
The Audit Committee discussed with PKF the overall scope and plans for their audit. The Audit Committee meets with PKF, with and without management present, to discuss the results of their examinations, their evaluations or the Company’s internal controls, and the overall quality of the Company’s financial reporting.
Based on the reviews and discussions referred to above, the Audit Committee recommended to the Board that the audited financial statements be included in the annual report on Form 10-K for the fiscal year ended April 29, 2007, for filing with the Securities and Exchange Commission.
Audit Committee of the Board of Directors
Francis M. Ricci, Chair
Wayne H. White
John M. Gallaway
PROPOSAL TWO
INCREASE IN AUTHORIZED SHARES
INTRODUCTION
The Company is proposing to amend its Articles of Incorporation to increase the authorized number of shares of common stock, twelve cents ($0.12) par value per share, from 25,000,000 to 50,000,000. Currently, the Company has the authority to issue an aggregate of Thirty Million (30,000,000) shares of capital stock consisting of 25,000,000 shares of common stock and 5,000,000 shares of preferred stock. The Company is requesting its shareholders to approve the proposed increase in the number of authorized shares of common stock only. Under the proposed amendment the authorized number of shares of preferred stock will not change.
For the reasons set forth below, the Board of Directors believes that the best interest of the Company and its shareholders will be served if the Company’s Articles of Incorporation are amended to increase the authorized number of shares of common stock, $0.12 par value per share, from 25,000,000 to 50,000,000 shares. The Board of Directors has unanimously approved and recommends a vote “FOR” the Increase in Authorized Shares Proposal.
AMENDMENT TO ARTICLES OF INCORPORATION TO INCREASE THE AUTHORIZED SHARES OF COMMON STOCK
The Board of Directors has approved for submission to the shareholders a proposal relating to the amendment of Article Four of the Articles of Incorporation of the Company to increase the number of authorized shares of common stock, par value $0.12 per share, from 25,000,000 to 50,000,000. The additional 25,000,000 shares of common stock, which will be authorized if this proposal is approved, will increase the number of authorized, unissued and unreserved shares of common stock of the Company. As of August 23, 2007 there were 12,939,130 shares of common stock outstanding. No shares of preferred stock are outstanding. The newly authorized shares would, if and when issued, have the same rights and privileges as the shares of common stock presently outstanding. The holders of common stock have no preemptive rights to acquire any of the Company’s common stock under the existing Articles of Incorporation and will not have any such rights if this proposal is approved.
The Board of Directors believes that it is desirable to have the additional authorized shares of common stock available for stock dividends or splits, stock options, future financing and acquisition transactions, or other general corporate purposes as well as to enable the Company to take advantage of favorable opportunities which may arise in the future. The additional shares of common stock would be available for issuance without further action by the shareholders and without the accompanying delay and expense involved in calling a special meeting of shareholders, except as may otherwise be required by law. The issuance of any additional shares of common stock may result in a dilution of the voting power of the shareholders, as well as their respective equity interests in the Company. At the date of this Proxy Statement, the Company has no arrangements, commitments or plans with respect to the sale or issuance of any of the additional shares of common stock as to which authorization is sought.
In addition, the Board could use the authorized but unissued shares of common stock to create impediments to a takeover or a change of control of the Company. Under certain circumstances, such shares could be used to create voting impediments or to frustrate persons seeking to effect a takeover or otherwise gain control of the Company. For example, the Company might seek to frustrate a takeover attempt by making a private sale of a large block of shares to a third party who was opposed to such an attempt. The increase in authorized stock might also be considered as having the effect of discouraging an attempt by a third party to acquire control of the Company, through the acquisition of a substantial number of shares, since the issuance of any shares could be used to dilute the stock ownership of shares of the Company’s voting stock held by such third party. Accordingly, an effect of the increase in the number of authorized shares of common stock may be to deter a future takeover attempt. The Board is not presently aware of any plans to acquire control of the Company and has not proposed the amendment to the Articles of Incorporation as an anti-takeover measure.
The proposed amendment to the Company’s Articles of Incorporation would cause the first two paragraphs of Article Four thereof to be amended only with respect to the number of shares of common stock authorized to be issued. The remainder of Article Four would not be amended and would remain the same. If the proposed amendment is approved the paragraphs regarding the Company’s common stock would read as follows:
The Corporation shall have the authority to issue an aggregate of Fifty Five Million (55,000,000) shares of capital stock. The authorized shares of the Company are divided into two classes, common stock and preferred stock.
Fifty million (50,000,000) shares of common stock are authorized having a par value of twelve cents ($0.12) per share and will be voting stock.
VOTE REQUIRED FOR APPROVAL
Approval of the Amendment to Article Four requires the affirmative vote of the holders of a majority of the shares of common stock entitled to vote on such matter. Unless otherwise specified, all properly executed proxies received by the Company will be voted in favor of the approval of the amendment.
THE BOARD OF DIRECTORS HAS APPROVED AND UNANIMOUSLY RECOMMENDS THAT YOU VOTE “FOR” THE PROPOSED AMENDMENT TO ARTICLE FOUR OF THE COMPANY’S ARTICLES OF INCORPORATION.
PROPOSAL THREE
APPOINTMENT OF PANNELL KERR FORSTER OF TEXAS, P.C.
AS INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Board of Directors has appointed, and recommends the approval of the appointment of, Pannell Kerr Forster of Texas, P.C. (“PKF”) as the Company’s independent public accounting firm for the fiscal year ending April 27, 2008. PKF served as the Company’s independent public accounting firm for the fiscal year ended April 29, 2007. Representatives of PKF are expected to be present at the Annual Meeting and will be given the opportunity to make a statement, if they desire to do so, and to respond to appropriate questions.
Unless shareholders specify otherwise in the proxy, proxies solicited by the Board of Directors will be voted by the persons named in the proxy at the Annual Meeting to ratify the selection of PKF as the Company’s independent public accounting firm for fiscal 2008. The affirmative vote of a majority of the votes cast at the Annual Meeting will be required for ratification. Although the appointment of an independent public accounting firm is not required to be submitted to a vote of shareholders, the Board of Directors recommended that the appointment be submitted to our shareholders for approval. If our shareholders do not approve the appointment of PKF, the Board of Directors will consider the appointment of another independent public accounting firm.
Independent Registered Public Accounting Firm’s Fees
PKF billed the Company as set forth in the table below for professional services rendered for the audit of the Company’s annual financial statements for the years ended April 29, 2007 and April 30, 2006 and for the review of the Company’s quarterly financial statements included in the Company’s Quarterly ReportsReport on Form 10-Q for the quarter ended October 28, 2007 (electronically filed as an exhibit to this proxy statement); and
Exhibits filed to the Current Report on Form 8-K, filed on November 14, 2007.
We make available, free of charge through our website (www.nevadagold.com), our annual reports on Form 10-K, quarterly reports on Form l0-Q, current reports on Form 8-K and 2006 and for work on other SEC filings. PKF did not provide any non-audit services for the Company during 2007amendments to those reports filed or 2006.
Description | | Fiscal 2007 | | Fiscal 2006 | |
| Audit Fees | | $ | 251,013 | | $ | 286,227 | |
Audit Committee Preapproval Policy
The Audit Committee has adopted a policy that all audit, reviewfurnished pursuant to Section 13(a) or attest engagements and permissible non-audit services, including the fees and terms thereof, to be performed by the independent registered public accounting firm (subject to, and in compliance with, the de minimis exception for non-audit services described in Section 10A(i)(1)(B)15(d) of the Securities Exchange Act. No non-audit services were performed by PKF pursuantAct of 1934, as soon as reasonably practicable after such documents are electronically filed with or furnished to the de minimis exception in 2006.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE FOR THE RATIFICATION OF THE APPOINTMENT OF PKF AS INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR THE COMPANY FOR 2008.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
We have entered into indemnity agreements with certain officers and directors which provide, among other things, that we will indemnify such officer or director,SEC. These reports can be found under the circumstances“Investor Relations” section of our website. We will provide to any stockholder without charge, upon the written or oral request of that stockholder, a copy of any and to the extent provided for in the agreements, for expenses, damages, judgments, fines and settlements he or she may be required to pay in actions or proceedings which he or she is or may be made a party to by reason of his or her position as a director, officer or other agentall information of the Company, and otherwiseinformation incorporated by reference to the full extent permitted underthis proxy statement. Such requests should be addressed to Investor Relations, Nevada law and our bylaws.
Notes Receivable - Affiliates
Clay County Holdings,Gold & Casinos, Inc.
At April 29, 2007, we had a note receivable (the “Note”) of $1,741,621 from Clay County Holdings, Inc. ("CCH"). The Note bears interest at 12% per annum. The Note was modified effective April 30, 2006, 50 Briar Hollow Lane, Suite 500W, Houston, Texas 77027.Exhibits to provide for a maturity date of April 30, 2009. As part of the modification, no principal or interest payments were due until July 31, 2007, at which time principal payments of $150,000, plus accrued interest, were due on a quarterly basis, with additional payments due at the time any payments were receiveddocuments incorporated by CCH on a note receivable it holds from Restaurant Connections International. The Note is additionally secured by a pledge of the net equity of common stock of the Company owned by CCH. The stock is subject to margin calls. At the time of the extension of credit to CCH, CCH was the largest shareholder of the Company, beneficially owning approximately 16% of our outstanding stock and the President of CCH is the son-in-law of H. Thomas Winn who resigned as Chairman of the Company effective July 6, 2007.
CCH failed to make the principal payments, plus accrued interest due on July 31, 2007reference in the amount of $521,037. The Company hasthis prospectus will not be sent, CCH a Notice of Default. Under the terms of the Note, CCH has until September 10, 2007 to cure the Default or the entire principal amount plus accrued interest shall become due at the option of the Company.
Service Interactive, Inc.
At April 29, 2007, we had a note receivable of $1,779,445 from Service Interactive, Inc. ("SI"). The note bears interest of 12% per annum. The note was modified effective April 30, 2006 to provide for a maturity date of April 30, 2009. As part of the modification, no principal or interest payments were due until July 31, 2007, at which time principal payments of $150,000, plus accrued interest, were due on a quarterly basis, with additional payments due at the time any payments were received by CCH on a note receivable it holds from Restaurant Connections International. The note is additionally secured by a pledge of net equity of common stock of the Company owned by CCH. The stock is subject to margin calls. At the time of the extension of credit by us to SI, SI was related party because we had the option to acquire common stock of SI and a former director was involvedunless those exhibits have been specifically referenced in SI at that time.
SI failed to make the principal payments, plus accrued interest due on July 31, 2007 in the amount of $527,924. The Company has sent SI a Notice of Default. Under the terms of the Note SI has until September 10, 2007 to cure the Default or the entire principal amount plus accrued interest shall become due at the option of the Company.
Note Payable - Affiliate
Sunrise Land and Mineral Corporation
At April 29, 2007, we owed Sunrise Land and Mineral Corporation (“Sunrise”) the principal amount of $70,611. We have a 50% ownership interest in Sunrise and as of July 29, 2007 the amount owed to Sunrise had increased to the principal amount of $270,611.
this prospectus.STOCKHOLDERS SHARING AN ADDRESS
Stockholders sharing an address with another stockholder may receive only one set of proxy materials at that address unless they have provided contrary instructions. Any such stockholder who wishes to receive a separate set of proxy materials now or in the future may write or call the CompanyNevada Gold & Casinos to request a separate copy of these materials from:
Investor Relations,
3040 Post Oak Boulevard
Nevada Gold & Casinos, Inc., 50 Briar Hollow Lane, Suite 675
500W, Houston, Texas 77056
(713) 621-2245
77027.Similarly, stockholders sharing an address with another stockholder who have received multiple copies of the Company’sNevada Gold & Casinos’ proxy materials may write or call the above address and phone number to request delivery of a single copy of these materials.
If you would like to receive separate copies of Nevada Gold & Casinos’ proxy statement or annual report in the future, or if you are receiving multiple copies and would like to receive only one copy for your household, you should contact your bank, broker, or other nominee record holder, or you may contact Nevada Gold & Casinos at the address and telephone number set forth above.
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STOCKHOLDER PROPOSALS
Under the rules of the SEC, if a stockholder wants us to include a proposal in our proxy statement for presentation at the 2008 annual meeting, the proposal must be submitted to us in writing and be received by us at our principal executive offices at Nevada Gold & Casinos, Inc, 50 Briar Hollow Lane, Suite 500W, Houston, Texas 77027, Attention: Investor Relations, by April 28, 2008.
Under our bylaws, and as permitted by the rules of the SEC, a stockholder must follow certain procedures to nominate a person for election as a director or to introduce an item of business at an annual meeting. These procedures provide that a nomination or proposal to be considered at an annual meeting must generally be submitted in writing to the corporate secretary so that it is received no earlier than the close of business on the 120th day, and no later than the close of business on the 90th day, before the first anniversary of the date of the prior year’s annual meeting of stockholders. Stockholders intending to submit a proposal or nomination for next year’s annual meeting should review our bylaws, which contain the deadlines and other requirements with respect to advance notice of stockholder proposals and director nominations. Stockholders may obtain a copy of the bylaws from us upon request, or may access them directly from our website,www.nevadagold.com.
OTHER MATTERS
BUSINESSThe Boardboard of directors knows of no other matters that will be preparedpresented for consideration at the Annual Meeting.special meeting. If any other matters are properly brought before the Annual Meeting,special meeting or with respect to any matters incidental to the conduct of the special meeting, it is the intention of the persons named in the accompanying proxy intend to vote on thosesuch matters in their discretion in accordance with their best judgment.
By Order of the Board of Directors
/s/ ERNEST/s/ Ernest E. EAST
ERNESTEastErnest E. EAST, East
Senior Vice President, General Counsel and Secretary
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WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING, PLEASE COMPLETE, SIGN, DATE, AND PROMPTLY RETURN THE ACCOMPANYING PROXY IN THE ENCLOSED ENVELOPE. YOU MAY REVOKE YOUR PROXY AT ANY TIME PRIOR TO THE ANNUAL MEETING. IF YOU DECIDE TO ATTEND THE ANNUAL MEETING AND WISH TO CHANGE YOUR PROXY VOTE, YOU MAY DO SO AUTOMATICALLY BY VOTING IN PERSON AT THE MEETING.
THANK YOU FOR YOUR ATTENTION TO THIS MATTER. YOUR PROMPT RESPONSE WILL GREATLY FACILITATE ARRANGEMENTS FOR THE ANNUAL MEETING.
UNIT PURCHASE AGREEMENT
dated as of November 13, 2007
PROXY
by and among
NEVADA GOLD & CASINOS, INC.,
BLACKHAWK GOLD, LTD.,
CASINO AMERICA OF COLORADO, INC.
and
ISLE OF CAPRI CASINOS, INC.
i
TABLE OF SHAREHOLDERSCONTENTS
EXHIBITS
Exhibit A Form of Stockholder Support Agreement
Exhibit B Form of Deposit Escrow Agreement
Exhibit C Form of Mutual and General Release
ii
OCTOBER 15, 2007
THIS PROXY IS SOLICITED ON BEHALFTABLE OF THE BOARD OF DIRECTORS OFCONTENTS
UNIT PURCHASE AGREEMENT
This UNIT PURCHASE AGREEMENT, dated as of November 13, 2007, is entered into by and among NEVADA GOLD & CASINOS, INC.
, a Nevada corporation (“Parent”), BLACKHAWK GOLD, LTD., a Nevada corporation (“Seller”), and CASINO AMERICA OF COLORADO, INC., a Colorado corporation (“Purchaser”) and ISLE OF CAPRI CASINOS, INC., a Delaware corporation (“Isle of Capri”).WHEREAS, the Ownership Interest (as such term is defined in the Company Operating Agreement) of Seller in Isle of Capri Black Hawk, L.L.C., a Colorado limited liability company (the “Company”) is currently 43% (the “Ownership Interest”);
WHEREAS, subject to the terms and conditions set forth herein, Seller desires to sell, assign and transfer to Purchaser, and Purchaser desires to purchase and take assignment and delivery from Seller of, all of Seller's issued and outstanding Units, free and clear of all Liens, representing Seller's entire Ownership Interest; and
WHEREAS, Louise H. Rogers, a stockholder of Parent, has expressed to Parent and Seller her desire to vote for, adopt and approve this Agreement and the transactions contemplated hereby, and has committed to deliver to Purchaser a written agreement to support and vote for the transactions contemplated hereby, in the form ofExhibit A hereto (each, a “Stockholder Support Agreement”), by 5:00 PM, Central time, on or before November 23, 2007; and the Wynfield Funds, stockholders of Parent, have executed and delivered to Purchaser a Stockholder Support Agreement pursuant to which such parties have agreed, among other things, to support and vote for the transactions contemplated hereby.
NOW, THEREFORE, in consideration of the premises and mutual covenants, agreements and provisions herein contained, the parties hereto agree as follows:
ARTICLE 1
Definitions; Interpretation1.1Definitions. The following terms have the following meanings when used herein:
“Additional Fee” has the meaning set forth inSection 10.2(b).
“Affiliate” means any Person controlling, controlled by or under common control with another “Person”; for purposes of this definition only, “control” shall mean the ownership, directly or indirectly, of 50% or more of the outstanding common stock or other equity interests of a Person.
“Affiliated Group” means an affiliated group (within the meaning of Code Section 1504(a)), or any analogous combined, consolidated, or unitary group defined under the provisions of state, local or foreign Law.
“Agreement” means this Unit Purchase Agreement, including all Schedules and Exhibits hereto, as it may be amended from time to time in accordance with its terms.
“Alternative Acquisition” has the meaning set forth inSection 5.3(a).
“Alternative Acquisition Proposal” has the meaning set forth inSection 5.3(a).
“Business Day” means a day other than (a) any Saturday or Sunday or (b) any other day on which commercial banks in Chicago, Illinois are generally closed for business.
“Change of Control Transaction” means any transaction or series of transactions (excluding the transactions described in this Agreement), the consummation of which results in a change of Control of the Company or its business. “Change of Control Transaction” includes (i) a merger or consolidation of the Company with or into another entity, (ii) the sale, transfer or other disposition or all or substantially all of the assets of the Company and (iii) the sale, transfer or other disposition by Purchaser, or the issuance by Company, of membership interests in the Company sufficient to permit the transferee(s), upon admission as a member, to exercise control of the Company.
“Cap” has the meaning set forth inSection 7.4(a).
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“Closing Date” and “Closing” refer to the date, time, and place for the closing of the transactions described in this Agreement and the closing referred to inSection 2.1.
“Code” means the Internal Revenue Code of 1986, as amended.
“Company” has the meaning set forth in the recitals.
“Company Operating Agreement” means that certain Second Amended and Restated Limited Liability Company Agreement of the Company, dated April 22, 2003, as amended from time to time.
“Contracts” means any and all contracts, agreements, loans, notes, bonds, mortgages, indentures, leases, subleases, purchase orders, arrangements, commitments, licenses, permits, concessions, franchises, bids, sales orders or other instruments.
“Control of the Company” shall mean possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of the Company, whether through the ownership of membership interests, by contract or otherwise. The holders of a majority in interest of the Company's membership interests, acting in concert to exercise a controlling influence over the management of policies of the Company pursuant to the Company Operating Agreement or other arrangement, shall be presume to have Control of the Company in the absence of proof to the contrary.
“Deposit Amount” means $2,000,000.
“Deposit Escrow Agreement” means that certain Deposit Escrow Agreement, substantially in the form ofExhibit B hereto, to be executed and delivered on or before the date of funding of the Deposit Amount, by and among Purchaser, Seller and Escrow Agent.
“Escrow Agent” means the escrow agent named in the Deposit Escrow Agreement on the date of its execution and delivery by the parties, who shall be chosen by Purchaser and be reasonably acceptable to Seller.
“Exchange Act” means the Securities Exchange Act of 1934, as amended.
“Governmental Authority” means any U.S. federal, state, provincial or municipal entity, any foreign government and any political subdivision or other executive, legislative, administrative, judicial, quasi-judicial or other governmental department, commission, court, board, bureau, agency or instrumentality, domestic or foreign.
“Indemnification Offsets” has the meaning set forth inSection 7.8(a).
“Indemnified Person” means the Person or Persons entitled to, or claiming a right to, indemnification underArticle 7.
“Indemnifying Person” means the Person or Persons claimed by the Indemnified Person to be obligated to provide indemnification underArticle 7.
“Judicial Action” has the meaning set forth inSection 12.11.
“Law” means any federal, state, county, provincial, local or foreign statute, law (including common law), rule, regulation, ordinance, order or code of any Governmental Authority or quasi-governmental entity.
“Lender Agreement” means the written agreement of Louise H. Rogers, Parent's (and its Affiliates') lender, consenting to the transactions contemplated by this Agreement, agreeing to a payoff amount, the payment of which will, without further conditions, result in the immediate and concurrent release and discharge of such lender's Lien on Seller's Units.
“Liens” means any pledge, mortgage, charge, claim, title imperfection, defect or objection, security interest, conditional and installment sales agreement, encumbrance, easement, encroachment, or third party right or restriction, of any kind.
“Loss” or “Losses” means any and all damages, losses, actions, proceedings, causes of action, obligations, liabilities, claims, encumbrances, penalties, demands, assessments, judgments, costs and expenses, including court costs, reasonable attorneys' and consultants' fees, and costs of litigation, investigation,
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enforcement, or settlement but shall exclude any interest with respect thereto unless awarded by a court of competent jurisdiction. Losses shall not include punitive damages, other than punitive damages payable to any third party in connection with a third party claim.
“Material Adverse Change” means any event, change, condition or circumstance that, individually or in the aggregate, is materially adverse to, or could reasonably be expected to have a material adverse change or effect upon, the Company (including its business, assets, operations, results of operations, or financial condition), except for any event, change, condition or circumstance to the extent directly attributable to or resulting from (a) changes to the industry or markets in which the Company operates that are not unique to the Company, in each case that do not have a disproportionate effect on the Company, (b) compliance with the terms of this Agreement, (c) changes in Law enacted after the date hereof that do not have a disproportionate effect on the Company, or (d) the smoking ban effected within the State of Colorado expected to take effect on January 1, 2008.
“Mutual and General Release” means that mutual and general release to be executed by Seller, Parent and Purchaser on the Closing Date, in substantially the same form asExhibit C.
“Outside Date” has the meaning set forth inSection 10.1(b).
“Ownership Interest” has the meaning set forth in the recitals.
“Parent” has the meaning set forth in the preamble.
“Parent Board” means the Board of Directors of Parent.
“Person” means any individual, corporation, partnership, joint venture, limited liability company, trust, unincorporated organization or other business entity or government or any agency or political subdivision thereof.
“Pre-Closing Tax Period” means (a) any Tax period ending on or before the close of business on the Closing Date and (b) in the case of any Tax period which includes, but does not end on, the Closing Date, the portion of such period up to and including the Closing Date.
“Proxy Statement” has the meaning set forth inSection 5.5(a).
“Purchase Price” has the meaning set forth inSection 2.5.
“Purchaser” has the meaning set forth in the preamble.
“Purchaser Indemnified Parties” has the meaning set forth inSection 7.2.
“SEC Clearance Date” means the earlier of (a) the date on which the SEC notifies Parent and/or Seller that it will not review the Proxy Statement and (b) the date on which the SEC notifies Parent and/or Seller that it has no further comments on the Proxy Statement.
“Securities Act” means the Securities Act of 1933, as amended.
“Seller” has the meaning set forth in the preamble.
“Seller Board” means the Board of Directors of Seller.
“Seller Indemnified Parties” has the meaning set forth inSection 7.3.
“Stockholder Approval” has the meaning set forth inSection 3.1(c).
“Stockholders Meeting” has the meaning set forth inSection 5.4(a).
“Stockholder Support Agreement” has the meaning set forth in the recitals.
“Superior Proposal” has the meaning set forth inSection 5.3(e).
“Tax” or “Taxes” means any (a) federal, state, local or foreign income, gross receipts, franchise, estimated, alternative minimum, gaming, add-on minimum, sales, use, transfer, registration, value added, excise, natural resources, severance, stamp, occupation, premium, windfall profit, environmental, customs, duties, real property, personal property, capital stock, social security, unemployment, disability, payroll,
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license, employee or other withholding, or other tax, of any kind whatsoever, whether computed on a separate or consolidated, unitary or combined basis or in any other manner, including any interest, penalties or additions to tax or additional amounts in respect of the foregoing; (b) liability of the Company for the payment of any amounts of the type described inclause (a) arising as a result of being (or ceasing to be) a member of any Affiliated Group (or being included (or required to be included) in any Tax Return relating thereto); and (c) liability of the Company for the payment of any amounts of the type described inclause (a) as a result of any express or implied obligation to indemnify or otherwise assume or succeed to the liability of any other person.
“Tax Authority” shall mean any domestic, foreign, federal, national, state, county or municipal or other local government, any subdivision, agency, commission or authority thereof, or any quasi-governmental body exercising Tax regulatory authority.
“Tax Return” or “Tax Returns” means all returns, declarations, reports, statements, and other documents (including any related or supporting schedules, statements, or information returns) required to be filed in respect of Taxes, including amendments to any of the foregoing.
“Termination Fee” has the meaning set forth inSection 10.2(b).
“Title and Authorization Warranty” means a representation or warranty inSections 3.1, 3.2, 4.1, or 4.2.
“Transfer Taxes” has the meaning set forth inSection 6.7.
“Units” has the meaning set forth inSection 2.4.
1.2Interpretation. The headings preceding the text of Articles and Sections included in this Agreement and the headings to Schedules attached to this Agreement are for convenience only and shall not be deemed part of this Agreement or be given any effect in interpreting this Agreement. The use of the masculine, feminine or neuter gender or the singular or plural form of words herein shall not limit any provision of this Agreement. The use of the terms “including” or “include” shall in all cases herein mean “including, without limitation” or “include, without limitation,” respectively. Reference to this Agreement means this Agreement, as amended or modified and in effect from time to time in accordance with the terms hereof. Underscored references to Articles, Sections, paragraphs, clauses, Exhibits or Schedules shall refer to those portions of this Agreement. The use of the terms “hereunder,” “hereof,” “hereto” and words of similar import shall refer to this Agreement as a whole and not to any particular Article, Section, paragraph or clause of, or Exhibit or Schedule to, this Agreement.
ARTICLE 2
Closing; Purchase and Sale
2.1Closing Date. The Closing hereunder shall take place at the office of Mayer Brown LLP, 71 South Wacker Drive, Chicago, Illinois 60606, at 10:00 a.m. Chicago time on the second Business Day following satisfaction or written waiver of all conditions set forth inArticles 8 and9 of this Agreement, or at such other place, time or date as Seller and Purchaser may agree. The Closing may occur and deliveries be effected by facsimile or mail.
2.2Deliveries by Seller. At the Closing, Seller shall deliver to Purchaser:
(a) certificates evidencing the Units, which certificates shall be duly endorsed in blank;
(b) a certificate, dated as of the Closing Date, of the secretary of Seller certifying resolutions of the board of directors of Seller approving and authorizing the execution, delivery and performance of this Agreement and the consummation of the transactions contemplated hereby and thereby, in form and substance reasonably satisfactory to Purchaser;
(c) a certificate, dated as of the Closing Date, of an executive officer of Seller certifying as to compliance by Seller withSections 9.1 and9.2;
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(d) an affidavit stating that Seller is not a “foreign person” as defined in the Federal Foreign Investment in Real Property Tax Act of 1980 and the 1984 Tax Reform Act, in form and substance reasonably satisfactory to Purchaser;
(e) the Mutual and General Release duly executed by Parent and Seller; and
(f) any other items reasonably requested by Purchaser in order to consummate the transactions contemplated hereby under the terms hereof or required to be delivered by Seller under the terms and provisions of this Agreement.
2.3Deliveries by Purchaser. At the Closing, Purchaser shall deliver to Seller:
(a) the Purchase Price payable to Seller at the Closing pursuant toSection 2.5;
(b) a certificate, dated as of the Closing Date, of the secretary of Purchaser certifying resolutions of the board of directors of Purchaser approving and authorizing the execution, delivery and performance of this Agreement and the consummation of the transactions contemplated hereby and thereby, in form and substance reasonably satisfactory to Seller;
(c) a certificate, dated as of the Closing Date, of an executive officer of Purchaser certifying as to compliance by Purchaser withSections 8.1 and8.2;
(d) the Mutual and General Release duly executed by Purchaser and the Company; and
(e) any other items reasonably requested by Seller in order to consummate the transactions contemplated hereby under the terms hereof or required to be delivered by Purchaser under the terms and provisions of this Agreement.
2.4Agreement to Purchase and Sell Units. Subject to the terms and conditions contained herein, at the Closing, Seller shall sell, transfer, convey, assign and deliver to Purchaser, and Purchaser shall purchase and accept from Seller, all of the issued and outstanding units representing Seller's entire Ownership Interest in the Company (the “Units”), free and clear of all Liens.
2.5Payment of Purchase Price. Subject to the terms and conditions hereof, at the Closing, in consideration for the Units, Purchaser shall pay to Seller in cash, by wire transfer of immediately available funds to such account as Seller may direct prior to the Closing Date, an amount equal to $64,600,000,minus the Deposit Amount (the “Purchase Price”). At Purchaser's option, a portion of the Purchase Price sufficient to remove the Lien on Seller's Units held by Parent's (and its Affiliates') lender shall be paid at Closing directly to Louise H. Rogers as lender (or to such other party as may be required, in the judgment of Purchaser, to discharge any Lien on Seller's Units).
2.6Deposit Amount. At or prior to 5:00 PM, Central time, on November 16, 2007, Purchaser shall deliver to the Escrow Agent, pursuant to the terms of the Deposit Escrow Agreement, the Deposit Amount in immediately available funds to be held by the Escrow Agent in an interest bearing account reasonably acceptable to Purchaser and Seller, and to be released in accordance with the Deposit Escrow Agreement.
ARTICLE 3
Representations and Warranties of Parent and Seller
Parent and Seller hereby jointly and severally represent and warrant to Purchaser, as of the date hereof and as of the Closing Date, as follows:
3.1Authority of Parent and Seller.
(a)
(i) Parent is a corporation validly existing and in good standing under the laws of Nevada, and has all requisite power and authority to enter into this Agreement and to carry out the transactions contemplated herein. The execution, delivery and performance of this Agreement by Parent has been duly authorized by all necessary corporate action on the part of Parent, other than the receipt of the Stockholder Approval. This Agreement has been duly and validly
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executed and delivered by Parent and constitutes the legal, valid and binding obligation of Parent, enforceable against Parent in accordance with its terms, except as may be limited by (A) applicable bankruptcy, insolvency, moratorium, reorganization or similar Laws from time to time in effect which affect creditors' rights generally or (B) legal and equitable limitations on the availability of specific remedies.
(ii) Seller is a corporation validly existing and in good standing under the laws of Nevada, and has all requisite power and authority to enter into this Agreement and to carry out the transactions contemplated herein. The execution, delivery and performance of this Agreement by Seller has been duly authorized by all necessary corporate action on the part of Seller. This Agreement has been duly and validly executed and delivered by Seller and constitutes the legal, valid and binding obligation of Seller, enforceable against Seller in accordance with its terms, except as may be limited by (A) applicable bankruptcy, insolvency, moratorium, reorganization or similar Laws from time to time in effect which affect creditors' rights generally or (B) legal and equitable limitations on the availability of specific remedies.
(b)
(i) The Parent Board, at a meeting duly called and held prior to execution of this Agreement, duly and unanimously adopted resolutions (A) approving and declaring advisable this Agreement and the Deposit Escrow Agreement, (B) determining that the terms of the transactions contemplated hereby are fair toand in the best interests of Parent and its stockholders, (C) recommending that Parent's stockholders approve and adopt this Agreement and (D) adopting this Agreement and the Deposit Escrow Agreement.
(ii) The Seller Board, at a meeting duly called and held prior to execution of this Agreement (or by written consent in lieu thereof), duly and unanimously adopted resolutions (A) approving and declaring advisable this Agreement and the Deposit Escrow Agreement, (B) determining that the terms of the transactions contemplated hereby are fair to and in the best interests of Seller and its stockholder, (C) recommending that Seller's stockholder approve and adopt this Agreement and (D) adopting this Agreement and the Deposit Escrow Agreement.
(c)
(i) The only vote of holders of any class or series of Parent's authorized capital stock necessary to approve and adopt this Agreement is the approval and adoption of this Agreement by the holders of a majority of the outstanding shares of Parent's common stock (the “Stockholder Approval”).
(ii) The sole stockholder of Seller has approved and adopted this Agreement by written consent.
3.2Ownership. 430 Units are issued and outstanding and owned beneficially and of record by Seller, free and clear of all Liens, except for those Liens set forth onSchedule 3.2. Each such Unit is duly authorized, validly issued, fully paid and nonassessable. Such Units represent Seller's and its Affiliates' entire interest in the Company of any kind or nature whatsoever. There are no outstanding options, rights, warrants, Contracts or commitments for the issuance or sale of, or any securities convertible into or exchangeable for, any of Seller's Units, and there is no agreement or arrangement not yet fully performed which would result in the creation of any of the foregoing. Seller owns and has good and valid title to the Units, and at the Closing shall transfer to Purchaser good and valid title to the Units free and clear of all Liens. There are no stock appreciation rights, phantom stock rights, carried interests or other similar rights or interests with respect to any of the Units, and there are no voting trusts, voting proxies, shareholder agreements or any other similar understanding or agreement with respect to any of the Units. Either (i) Seller has obtained each third party's written agreement listed onSchedule 3.2 to release any and all such Liens at Closing, and has delivered to Purchaser true and correct copies of such agreements, or (ii) Seller has reached an agreement in principle with each such third party on the terms of a Lender Agreement, has delivered to Purchaser all current drafts and term sheets relating thereto and shall obtain such agreement from each third party and deliver the same to Purchaser on or before 5:00 PM, Central time, on November 23, 2007. As of November 12, 2007, the
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aggregate outstanding principal balance of the credit facility secured by the Lien set forth onSchedule 3.2 is $54,350,000, and if such credit facility is paid in full, Parent’s senior lender will be required to release such Lien. Neither Seller nor Parent has received any notice that it is in material breach or violation of any terms or obligations under any Contract or agreement affecting or relating to the Units that has not been cured. Simultaneously with the transfer of the Units to Purchaser at Closing, Purchaser shall acquire the Units free and clear of all Liens.
3.3Litigation. Except as set forth onSchedule 3.3, there is no demand, claim, suit, action, arbitration, grievance (other than union grievances in the ordinary course of business) or legal, administrative, other proceeding or investigation by a Governmental Authority pending or, to Seller’s knowledge, threatened against Parent or Seller which, if adversely determined, would impair Seller’s or Parent’s ability to consummate the transactions under this Agreement. Neither Seller nor Parent is subject to any judgment, order or decree of any court or other Governmental Authority related to the Units or that may reasonably affect Seller’s or Parent’s performance of its obligations hereunder.
3.4Consents and Approvals. The execution and delivery of this Agreement by each of Parent and Seller does not, and the consummation of the transactions contemplated hereby and performance by each of Parent and Seller of its obligations hereunder, assuming the receipt of the Stockholder Approval, will not: (a) violate or conflict with, (b) result in a breach of, (c) constitute a default under (whether with or without the passage of time, the giving of notice or both), (d) give any third party the right to modify, terminate or accelerate any obligation under, (e) result in a violation of, or (f) require any authorization, consent, approval, exemption or other action of or by or notice or declaration to, or filing with, any third party or any court or administrative or Governmental Authority in connection with any term, condition or provision of (i) the charter, by-laws or analogous organizational document of Parent or Seller, as applicable, (ii) any Contract to which Parent or Seller is a party or by which any of their properties are bound or (iii) any Law applicable to Parent or Seller (other than as may be required by the Colorado Limited Gaming Authority and pursuant to municipal, local and state Laws such as those regulating liquor sales).
3.5Brokers, Etc. Except as set forth onSchedule 3.5 (the payment of which fees shall be the sole responsibility of Parent and Seller), no broker or investment banker acting on behalf of Parent or Seller or under the authority of Parent or Seller is or will be entitled to any broker’s or finder’s fee or any other commission or similar fee directly or indirectly from Parent or Seller in connection with any of the transactions contemplated herein.
3.6Stockholder Support Agreements. To the best knowledge of Parent and Seller, after having made due inquiry, the Persons executing the Stockholder Support Agreements (a) delivered to Purchaser on or prior to the date hereof and (b) to be delivered to Purchaser on or before November 23, 2007, are the beneficial holders of at least 17% of the outstanding shares of common stock of Parent.
ARTICLE 4
Representations and Warranties of Isle of Capri and Purchaser
Isle of Capri and Purchaser jointly and severally represent and warrant to Seller as follows:
4.1Authority of Purchaser. Each of Isle of Capri and Purchaser is a corporation duly organized, validly existing and in good standing under the laws of its state of incorporation, with all requisite corporate power and authority to own, lease and operate its properties and to carry on its business as now being conducted. Each of Isle of Capri and Purchaser has all requisite corporate power to enter into this Agreement and to carry out its obligations under this Agreement. The execution, delivery and performance of this Agreement by Isle of Capri and Purchaser has been duly authorized by all necessary corporate action. This Agreement has been duly and validly executed and delivered by each of Isle of Capri and Purchaser and constitutes the legal, valid and binding obligation of Isle of Capri and Purchaser enforceable against each of them in accordance with its terms, except as may be limited by (a) applicable bankruptcy, insolvency, moratorium, reorganization or similar Laws from time to time in effect that affect creditors’ rights generally or (b) legal and equitable limitations on the availability of specific remedies.
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4.2Consents and Approvals. The execution and delivery of this Agreement by Isle of Capri and Purchaser does not, and the consummation of the transactions contemplated hereby and performance by Isle of Capri and Purchaser of their respective obligations hereunder will not, (a) violate or conflict with, (b) result in a breach of, (c) constitute a default under (whether with or without the passage of time, the giving of notice or both), (d) give any third party the right to modify, terminate or accelerate any obligation under, or (e) require any authorization, consent, approval, exemption or other action of or by or notice or declaration to, or filing with, any third party or any court or administrative or Governmental Authority in connection with any term, condition or provision of (i) the charter, by-laws or analogous organizational document of Isle of Capri or Purchaser, (ii) any Contract to which Isle of Capri or Purchaser is a party or by which any of their respective properties are bound or (iii) any Law applicable to Isle of Capri or Purchaser (other than as may be required by the Colorado Limited Gaming Authority and pursuant to municipal, local and state Laws such as those regulating liquor sales).
4.3Change of Control Transaction. Within the 12-month period prior to the date of this Agreement, neither Purchaser nor the Company has directly or indirectly engaged in any discussions with, or solicited or received any offer from, any Person (other than Parent, Seller and their representatives) regarding a Change in Control Transaction.
4.4Litigation. Except as set forth onSchedule 4.3, there is no demand, claim, suit, action, arbitration, grievance (other than union grievances in the ordinary course of business) or legal, administrative, other proceeding or investigation by a Governmental Authority pending or, to Isle of Capri’s and Purchaser’s knowledge, threatened against Isle of Capri or Purchaser which, if adversely determined, would impair Isle of Capri’s or Purchaser’s ability to consummate the transactions under this Agreement. Neither Isle of Capri nor Purchaser is subject to any judgment, order or decree of any court or other Governmental Authority related to the purchase of the Units or that may reasonably affect Isle of Capri’s or Purchaser’s performance of its obligations hereunder.
4.5Brokers, Etc. No broker or investment banker acting on behalf of Purchaser or under the authority of Purchaser is or will be entitled to any broker’s or finder’s fee or any other commission or similar fee directly or indirectly from Purchaser in connection with any of the transactions contemplated herein.
ARTICLE 5
Pre-Closing Covenants
5.1Regulatory Approvals; Third Party Consents.
(a) On the terms and subject to the conditions of this Agreement, each party shall use commercially reasonable efforts to cause the Closing to occur, including taking all commercially reasonable actions necessary (i) to comply promptly with all legal requirements that may be imposed on it or any of its Affiliates with respect to the Closing and (ii) to obtain each necessary consent of, and filing with, a Governmental Authority, which if not obtained or made is reasonably likely to have a material adverse effect on the ability of the parties to consummate the transactions contemplated by this Agreement.
(b) In furtherance and not limitation of the provisions ofSection 5.1(a), Seller and Purchaser shall cooperate with the other with respect to obtaining any necessary consent from any Governmental Authority. In particular, Seller and Purchaser, or persons nominated thereby, will promptly provide drafts to the other party, allow reasonably adequate time for comment by the other party and agree promptly to the contents of all notifications, filings, submissions, further documentation and evidence to be submitted to all relevant Governmental Authorities. Seller and Purchaser shall, in each case where permitted by the relevant Governmental Authority, allow individuals nominated by each of the other parties to attend all meetings with Governmental Authorities and, where appropriate, to make oral submissions at such meetings. Purchaser and Seller shall (i) furnish to the other such necessary information (which shall be true, correct and complete in all material respects) and reasonable assistance as the other may require in connection with its preparation of any notification, filing, submission or further documentation or evidence that is necessary in obtaining the necessary consents and (ii) promptly disclose to the other all correspondence received from or sent to any
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relevant Governmental Authority in connection herewith and shall keep the other fully informed of any other related communication in whatever form with any of the relevant Governmental Authorities. Purchaser and Seller comply promptly with any inquiry or request for additional information from any relevant Governmental Authority in connection herewith and shall promptly provide any supplemental information requested in connection with the notifications, filings and/or submissions made hereunder for the purposes of obtaining the necessary consents.
(c) Parent shall use commercially reasonable efforts to obtain the Stockholder Approval as promptly as practicable after the date hereof, including in accordance withSection 5.5.
5.2Notification Requirements. Promptly upon obtaining knowledge of such development, each party will give written notice to the other parties hereto of any material adverse development causing a breach of any of such party’s representations and warranties contained in this Agreement.
5.3Exclusivity; No Solicitation.
(a) Each of Parent and Seller agrees that it and its Affiliates shall not (and each of Parent and Seller will not permit any of its or any of its Affiliates’ officers, directors, employees or any investment banker, financial advisor, attorney, accountant or other agent or representative retained by it or any of its Affiliates to), directly or indirectly, (i) solicit, encourage, initiate, engage in discussions or negotiate with any Person, other than Purchaser, or take any other action intended or designed to facilitate any inquiry or effort of any Person, other than Purchaser, relating to any possible business combination with Parent or Seller or any possible acquisition of Seller, Seller’s Units or Parent (whether by way of merger, purchase of capital stock, purchase of assets or otherwise) or any material portion of Seller’s or Parent’s outstanding capital stock or assets (with any such efforts by any such Person, including a firm proposal to make such an acquisition, to be referred to as an “Alternative Acquisition”), (ii) provide information with respect to Seller, Seller’s Units or Parent to any Person, other than Purchaser, relating to a possible Alternative Acquisition by any Person, other than Purchaser, (iii) enter into an agreement with any Person, other than Purchaser, providing for a possible Alternative Acquisition, or (iv) make or authorize any statement, recommendation or solicitation in support of any possible Alternative Acquisition by any Person, other than by Purchaser. Notwithstanding the foregoing and subject toSection 5.4, the Parent Board may, to the extent required by its fiduciary obligations under Nevada law, as determined in good faith by the Parent Board after consultation with independent legal counsel, in response to a proposal for an Alternative Acquisition (“Alternative Acquisition Proposal”) that the Parent Board determines, in good faith after consultation with independent legal counsel and (to the extent the comparative value to shareholders of an Alternative Acquisition Proposal is not apparent on the face of such proposal) an independent financial advisor, is or is reasonably likely to result in a Superior Proposal, that was not solicited by Parent or Seller and that is not accompanied by or did not otherwise result from a breach of thisSection 5.3(a) and subject to providing prior written notice of its decision to take such action to Purchaser, participate in discussions and negotiations with such Person and its representatives to the extent required by the fiduciary duties of the Parent Board regarding such Alternative Acquisition Proposal. Each of Parent and Seller shall, and shall cause its Affiliates and representatives to, cease immediately all discussions and negotiations that may have occurred prior to the date of this Agreement regarding any proposal that constitutes, or may reasonably be expected to lead to, an Alternative Acquisition. For purposes of thisSection 5.3, the term “Person” shall include any “group” as defined in Section 13(d)(3) of the Exchange Act. Without limiting the foregoing, it is understood that any violation of the restrictions set forth in thisSection 5.3 by any director, officer or employee of Parent or Seller or any of their Affiliates or subsidiaries or any investment banker, financial advisor, attorney, accountant or other agent or representative of Parent or Seller or any Affiliate or subsidiary shall be deemed to be a breach of thisSection 5.3 by Parent and Seller.
(b)
(i) Neither the Seller Board nor any committee thereof shall (A) withdraw or modify, or propose to withdraw or modify, in a manner adverse to Purchaser, the approval or
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recommendation by the Seller Board or any such committee of this Agreement, (B) approve or cause or permit Seller to enter into any letter of intent, agreement in principle, definitive agreement or similar agreement constituting or relating to, or which is intended to or is reasonably likely to lead to any Alternative Acquisition Proposal, (C) approve or recommend, or propose to approve or recommend, any Alternative Acquisition Proposal or (D) agree or resolve to take actions set forth inclauses (A),(B) or(C) of this sentence.
(ii) Neither the Parent Board nor any committee thereof shall (A) withdraw or modify, or propose to withdraw or modify, in a manner adverse to Purchaser, the approval or recommendation by the Parent Board or any such committee of this Agreement, (B) approve or cause or permit Parent or Seller to enter into any letter of intent, agreement in principle, definitive agreement or similar agreement constituting or relating to, or which is intended to or is reasonably likely to lead to any Alternative Acquisition Proposal, (C) approve or recommend, or propose to approve or recommend, any Alternative Acquisition Proposal or (D) agree or resolve to take actions set forth inclauses (A),(B) or(C).
(iii) Notwithstanding clauses (i) and (ii) above, if, prior to the date of the Stockholder Approval, the Parent Board receives a Superior Proposal and the Parent Board determines, in good faith after consultation with independent legal counsel, that it is necessary to do so in order to comply with its fiduciary obligations under Nevada law, the Parent Board may, during such period and only (x) in response to a Superior Proposal that was unsolicited and (y) in circumstances where there has not occurred a breach ofSection 5.3(a), withdraw or modify its approval or recommendation of this Agreement and, in connection therewith, approve or recommend such Superior Proposal;provided, that the Parent Board may not so withdraw or modify its approval or recommendation of this Agreement, or approve or recommend such Superior Proposal, after the date that Stockholder Approval is obtained. Except as set forth in thisSection 5.3(b)(iii), in no event shall the Parent Board or any committee thereof withdraw or modify, or propose to withdraw or modify its position with respect to this Agreement or adopt, approve or recommend, or propose to adopt, approve or recommend any Alternative Acquisition Proposal.
(c) Parent and Seller promptly, and in any event within 24 hours, shall advise Purchaser orally and in writing of any Alternative Acquisition Proposal or any inquiry with respect to or that could lead to any Alternative Acquisition Proposal, the identity of the Person making any such Alternative Acquisition Proposal or inquiry and the material terms of any such Alternative Acquisition Proposal or inquiry. Parent and Seller shall (i) keep Purchaser reasonably informed of the status, including any change to the details, of any such Alternative Acquisition Proposal or inquiry and (ii) provide to Purchaser as soon as practicable after receipt or delivery thereof with copies of all material correspondence and other written material sent or provided to Parent or Seller from any third party in connection with any Alternative Acquisition Proposal or sent or provided by Parent or Seller to any third party in connection with any Alternative Acquisition Proposal.
(d) For purposes of this Agreement, “Superior Proposal” means any proposal made by a third party to acquire (i) Parent, (ii) Seller or (iii) any or all of the Seller’s Units, that is on terms which the Parent Board determines in its good faith judgment (after consultation with independent legal counsel and, to the extent the comparative value to shareholders of an Alternative Acquisition Proposal is not apparent on the face of such proposal, a financial adviser of nationally recognized reputation) to be superior for the stockholders of Parent, from a financial point of view, to the transactions contemplated by this Agreement, taking into account all the terms and conditions of such proposal and this Agreement (including any proposal by Purchaser to amend the terms of this Agreement) and taking into account the likelihood of consummation in light of all financial, regulatory, legal and other aspects of such proposal (including any antitrust or competition law approvals or non-objections).
(e) Nothing in thisSection 5.3 shall be construed to permit Parent or Seller to enter into any agreement with respect to or which facilitates an Alternative Acquisition Proposal during the term of
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this Agreement, other than a confidentiality agreement with respect to the exchange of information which (i) does not limit the obligations of Parent and Seller under this Agreement, includingSection 5.2 (other than market standard protection of the potential acquiror’s confidential information), and (ii) Purchaser has received and approved in advance, which approval shall not be unreasonably withheld or delayed.
(f) For the avoidance of doubt, in no event shall any proposed or actual acquisition of, or merger involving, Parent or Seller constitute any basis for Parent or Seller not complying with its obligations under this Agreement, and Parent and Seller shall so stipulate in any agreement relating to any such acquisition or merger.
(g) Nothing in this Agreement shall be construed as limiting the respective rights and obligations of Purchaser and Seller under the Company Operating Agreement, prior to the consummation of the transactions under this Agreement.
5.4Stockholders Meeting.
(a) Parent will take all action necessary in accordance with applicable Law and its certificate of incorporation and bylaws to convene as promptly as practicable and in no event later than 35 days after the SEC Clearance Date a meeting of its stockholders for purposes of obtaining the Stockholder Approval in favor of approval and adoption of this Agreement and the transactions contemplated hereby (the “Stockholders Meeting”).
(b) Subject to the Parent Board’s fiduciary duty to stockholders: (i) Parent, through the Parent Board, shall recommend approval of the matters submitted to its stockholders, and shall not withdraw, modify or amend such recommendation; and (ii) Parent shall proceed with the Stockholders Meeting for purposes of approving the sale of the Units to Purchaser pursuant to this Agreement, regardless of the existence of any Alternative Acquisition Proposal.
(c) In the event that the stockholders of Parent fail to approve this Agreement at the Stockholders Meeting (or any adjournment or postponement thereof), the parties shall negotiate in good faith for at least 20 days to attempt to revise the terms of this Agreement to allow the acquisition of the Units on terms they regard as likely to be approved by such stockholders;provided, that the foregoing shall not be construed as requiring Purchaser to agree to any terms that are less advantageous to Purchaser than those set forth in this Agreement.
5.5Proxy Statement.
(a) Parent shall promptly prepare and shall file with the SEC as soon as practicable and in no event later than November 30, 2007, a proxy statement that complies with the requirements of the Exchange Act with respect to the meeting of the stockholders of Parent for the purpose of approving the transactions contemplated hereby (the “Proxy Statement”). Purchaser shall provide all information, which shall be true, correct and complete in all material respects, required by Parent in connection with the Proxy Statement. Parent will cause the Proxy Statement to comply as to form in all material respects with the applicable provisions of the Securities Act, the Exchange Act and the rules and regulations thereunder.
(b) Parent will use its commercially reasonable efforts to cause the Proxy Statement to be mailed to its stockholders as promptly as practicable after the date hereof.
(c) Parent and Seller shall (i) afford Purchaser an opportunity to review and comment on the Proxy Statement prior to submission thereof to the SEC (which review and comment shall be done promptly); (ii) transmit to Purchaser copies of all correspondence between the Parent or Seller, on the one hand, and the SEC staff, on the other hand, relating to the Proxy Statement and the Stockholders Meeting; and (iii) otherwise keep Purchaser and Isle of Capri fully apprised of Parent’s and Seller’s efforts to cause the Stockholders Meeting to be conducted as promptly as practicable.
5.6Public Announcements. Purchaser and Parent shall consult with each other before issuing, and provide each other the opportunity to review and comment upon, any press release or other public statements
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with respect to this Agreement and the transactions contemplated hereby and shall not issue any such press release or make any such public statement prior to such consultation, except as may be required by applicable Law, court process or by obligations pursuant to any listing agreement with any national securities exchange. The parties’ obligations under thisSection 5.6 shall terminate at Closing.
5.7Liens. Neither Parent nor Seller shall permit the Seller’s Units to become subject to any lien, claim or encumbrance (other than those in effect on the date hereof and set forth onSchedule 3.2). Neither Parent nor Seller shall permit the modification of any documentation relating to the Liens set forth onSchedule 3.2 without the prior written consent of Purchaser, other than by the execution and delivery of the Lender Agreement.
ARTICLE 6
Tax Matters
6.1Filing of Tax Returns. Purchaser shall be responsible for preparing and filing, or causing to be filed, all Tax Returns for the Company for all taxable years, whether ending before or after the Closing Date.
6.2Proration of Taxes. For the year in which the Closing occurs, Profits or Losses (as defined in the Company Operating Agreement) will be allocated in accordance with the first two sentences of Section 5.5 of the Company Operating Agreement.
6.3Tax Contests. Notwithstanding anything to the contrary contained in this Agreement, in no event shall Purchaser cause, suffer or permit the Company to file an amended tax return, settle an audit by the Internal Revenue Service (the “IRS”) or other Governmental Authority, or take any other action with respect to a tax period during which Seller owned the Ownership Interest, if as a result thereof Seller may incur a liability to the IRS or other Governmental Authority or to the Company or Purchaser (each a “Tax Liability Event”), unless and until Purchaser has complied with the provisions of thisSection 6.3. If the Company intends to file such an amended tax return, receives notice of an audit of the Company by the IRS or other Governmental Authority, or otherwise obtains knowledge of a fact, circumstance or event that is likely to result in a Tax Liability Event, Purchaser shall provide or cause the Company to provide Seller with prompt written notice thereof, together with all documents and other information reasonably requested by Seller in order to assess the nature and extent of the potential Tax Liability Event. Purchaser shall, and shall cause the Company to, comply with the provisions of Section 10.9 of the Company Operating Agreement and, without limiting the generality of the foregoing, confer on a regular basis with, and obtain the prior written consent of (which consent shall not be unreasonably withheld or delayed), Seller, prior to taking any action which is reasonably likely to result in a Tax Liability Event.
6.4Cooperation. After Closing, Purchaser and Seller, upon reasonable written notice, shall furnish or cause to be furnished to each other, as promptly as practicable, such information and assistance (to the extent within the control of such party) relating to the Company as is reasonably requested for the filing of all Tax Returns, and making of an election related to Taxes, the preparation for any audit by any Tax Authority, and the prosecution or defense of any claim, suit or proceeding related to any Tax Return.
6.5Tax Treatment of Transaction. Purchaser and Seller agree that the transaction contemplated by this Agreement shall be treated for U.S. federal income tax purposes as provided in Revenue Ruling 99-6, and all provisions of this Agreement shall be interpreted accordingly therewith;provided, however, that in Purchaser’s sole discretion (and so long as there is no adverse tax consequence to Seller), Purchaser may instead cause the Company to pay the Purchase Price to Seller at the Closing, whereupon the transaction contemplated by this Agreement shall be treated for U.S. federal income tax purposes as a payment to Seller in liquidation of Seller’s interest in the Company, and all provisions of this Agreement shall be interpreted accordingly therewith.
6.6Transfer Taxes and Fees. All transfer, documentary, sales, use, stamp, registration and other such Taxes, and all conveyance fees, recording charges and other fees and charges (including any penalties and interest) incurred in connection with consummation of the transactions contemplated by this Agreement (“Transfer Taxes”) shall be paid 50% by Seller and 50% by Purchaser when due and Seller will file all necessary Tax Returns and other documentation with respect to all such Transfer Taxes, the expenses, fees and
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charges of such filings to be paid 50% by Seller and 50% by Purchaser, and, if required by applicable Law, Purchaser will, and will cause its Affiliates to, join in the execution of any such Tax Returns and other documentation. Seller and Purchaser shall cooperate with each other and use their reasonable best efforts to minimize any such Transfer Taxes.
6.7Tax Distributions. Purchaser agrees to (a) to cause the Company to continue to make Tax distributions (as defined in the Company Operating Agreement) to Seller in accordance with Section 6.5(a) of the Company Operating Agreement to the extent relating to the period prior to the Closing and (b) otherwise to comply with its obligations to Seller under the Company Operating Agreement (but not Section 6.5 of the Company Operating Agreement other than clause (a) thereof) to the extent relating to the period prior to the Closing. Accordingly, Seller hereby acknowledges and agrees that Purchaser shall not cause the Company to distribute any Excess Cash Flow (as such term is defined in the Company Operating Agreement) from and after the date hereof. The provisions of thisSection 6.7 shall survive the Closing. In the event that this Agreement is terminated without the Closing having occurred, the obligation (if any) of the Company to make distributions of Excess Cash Flow under Section 6.5 of the Company Operating Agreement shall be reinstated as set forth therein with respect to the period from and after the date of termination of this Agreement.
ARTICLE 7
Survival and Indemnification
7.1Survival. The representations and warranties contained herein shall survive the Closing for a period of two years, except that the Title and Authorization Warranties shall survive forever. Neither Isle of Capri or Purchaser, on the one hand, nor Parent or Seller, on the other hand, shall have any liability with respect to claims first asserted in connection with any representation or warranty after the survival period specified therefor in this Section 7.1. If any claim for indemnification hereunder, which has been previously asserted on a timely basis pursuant to the terms of this Agreement, is still pending at the expiration of the applicable survival period, such claim shall nonetheless continue to be subject to the indemnification provisions of this Agreement until resolved.
7.2Indemnification by Parent and Seller. Subject toSection 7.4, Parent and Seller shall jointly and severally indemnify Isle of Capri and Purchaser, its officers, directors, Affiliates, successors and assigns, including the Company, after the Closing (the “Purchaser Indemnified Parties”), and hold the Purchaser Indemnified Parties harmless from and against any and all Losses any Purchaser Indemnified Party suffers as a result of or in connection with any of the following:
(a) any breach of or any inaccuracy in any representation or warranty made by Parent or Seller in this Agreement or any document delivered by Seller at the Closing (in all cases ignoring, for purposes of determining the inaccuracy or breach thereof, and the amount of Losses relating thereto, any qualification as to materiality contained in any such representation or warranty); or
(b) any breach of or failure by Parent or Seller to perform any covenant or obligation of Parent or Seller set out in this Agreement or any document delivered by Parent or Seller at the Closing.
7.3Indemnification by Isle of Capri and Purchaser. Isle of Capri and Purchaser shall jointly and severally indemnify Parent and Seller, its officers, directors, Affiliates, successors and assigns and Parent, its officers, directors, Affiliates, successors and assigns (the “Seller Indemnified Parties”) and hold the Seller Indemnified Parties harmless from and against, any and all Losses any Seller Indemnified Party suffers as a result of or in connection with any of the following:
(a) any breach of or any inaccuracy in any representation or warranty made by Isle of Capri or Purchaser in this Agreement or any document delivered by Isle of Capri or Purchaser at the Closing;
(b) any breach of or failure by Isle of Capri or Purchaser to perform any covenant or obligation of Isle of Capri or Purchaser set out in this Agreement or any document delivered by Isle of Capri or Purchaser at the Closing; or
(c) any failure on the part of the Company to file, or any inaccuracy in the information contained in, any state or federal income Tax return or notification of the Company, but only to the extent of
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Tax distributions to which Seller would have been entitled had any such income Tax return or notification been filed, or contained accurate information, as required by Law.
7.4Limitations on Liability. Notwithstanding any other provision of this Agreement:
(a) The maximum liability of Parent and Seller (in the aggregate) underSection 7.2 shall be equal to the Purchase Price (the “Cap”). The limitations set forth in thisSection 7.4(a) shall not apply with respect to any breach of or inaccuracy in any Title and Authorization Warranty.
(b) The maximum liability of Isle of Capri and Purchaser (in the aggregate) underSection 7.3 shall be equal to the Cap. The limitations set forth in thisSection 7.4(b) shall not apply with respect to any breach of or inaccuracy in any Title and Authorization Warranty.
(c) Notwithstanding anything to the contrary contained in this Agreement, in no event shall any party be liable for punitive damages even if such party has been apprised of the possibility of such damages.
7.5Claims by Parties. As promptly as is reasonably practicable after becoming aware of any fact, event or condition in respect of which indemnity may be sought under this Agreement (but excluding a third party claim the procedure for which is described inSection 7.6), the Indemnified Person shall give notice of the same to the Indemnifying Person, which notice shall specify the fact, event or condition alleged to constitute the basis for such claim, the representations, warranties, covenants and obligations alleged to have been breached and the amount that the Indemnified Person seeks hereunder from the Indemnifying Person, together with such information as may be necessary for the Indemnifying Person to determine that the limitations inSection 7.4 have been satisfied or do not apply;provided that no failure to give or delay in giving such notice by the Indemnified Person shall affect the indemnity obligations of the Indemnifying Party except (i) as otherwise provided inSection 7.1 or (ii) to the extent that the Indemnifying Party was actually prejudiced as a result of such failure or delay.
7.6Notice of Third Party Claims; Assumption of Defense. The Indemnified Person shall give notice as promptly as is reasonably practicable, but in any event no later than five Business Days after receiving notice thereof, to the Indemnifying Person of the assertion of any claim, or the commencement of any suit, action or proceeding, by any Person not a party hereto in respect of which indemnity may be sought under this Agreement (which notice shall specify in reasonable detail the nature and amount of such claim and contain copies of all material pleadings and correspondence of outside legal counsel evidencing such claim);provided that no failure to give or delay in giving such notice by the Indemnified Person shall affect the indemnity obligations of the Indemnifying Party except (i) as otherwise provided inSection 7.1 or (ii) to the extent that the Indemnifying Party was actually prejudiced as a result of such failure or delay. The Indemnifying Person may, at its own expense, (a) participate in the defense of any such claim, suit, action or proceeding and (b) upon notice to the Indemnified Person, at any time during the course of any such claim, suit, action or proceeding, assume the defense thereof with counsel of its own choice, and in the event of such assumption, shall have the exclusive right, subject toclause (a) ofSection 7.7, to settle or compromise such claim, suit, action or proceeding;provided that the Indemnifying Party shall only have the right to assume the defense of such claim, suit, action or proceeding if the Indemnifying Party (i) first acknowledges (which acknowledgement may take the form of a joint defense agreement) in writing its obligation to indemnify the Indemnified Party for any Losses relating thereto, (ii) the claim, suit, action or proceeding does not seek to impose any injunctive order on the Indemnified Party and does not involve any criminal or quasi-criminal allegation and (iii) the claim, suit, action or proceeding does not involve any customer or employee of the Indemnified Party. If the Indemnifying Person assumes such defense, the Indemnified Person shall have the right (but not the duty) to participate in the defense thereof and to employ counsel, at its own expense, separate from the counsel employed by the Indemnifying Person, unless there exists a conflict of interest between the Indemnifying Party and the Indemnified Party, in which case the Indemnifying Party shall pay such expenses. Whether or not the Indemnifying Person chooses to defend or prosecute any such claim, suit, action or proceeding, all of the parties hereto shall cooperate in the defense or prosecution thereof.
7.7Settlement or Compromise. Any settlement or compromise made or caused to be made by the Indemnified Person (unless the Indemnifying Person has the exclusive right to settle or compromise under
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Section 7.6(b)) or the Indemnifying Person, as the case may be, of any such claim, suit, action or proceeding of the kind referred to inSection 7.6 shall also be binding upon the Indemnifying Person or the Indemnified Person, as the case may be;provided that (a) no obligation or restriction (other than the payment of money damages with respect to which indemnification is provided under thisArticle 7) shall be imposed on the Indemnified Person as a result of such settlement or compromise without its prior written consent, which consent shall not be unreasonably withheld, and (b) the Indemnified Person will not compromise or settle any claim, suit, action or proceeding without the prior written consent of the Indemnifying Party, which consent shall not be unreasonably withheld or delayed.
7.8Net Losses; Subrogation.
(a) Notwithstanding anything contained herein to the contrary, the amount of any Losses incurred or suffered by an Indemnified Person shall be calculated after giving effect to (i) any insurance proceeds received by the Indemnified Person (or any of its Affiliates) with respect to such Losses (net of any reasonable third-party costs incurred in connection with such recovery and any rate increase to the extent directly resulting therefrom), (ii) any tax savings realized by an Indemnified Person or its Affiliates as a result of such Losses and (iii) any recoveries obtained by the Indemnified Person (or any of its Affiliates) from any other third party (collectively, the “Indemnification Offsets”). Each Indemnified Person shall exercise commercially reasonable efforts to obtain such Indemnification Offsets and shall provide a written certification to the Indemnifying Person regarding such efforts, as well as the Indemnification Offset actually received or expected to be received. If any Indemnification Offsets are received by an Indemnified Person (or any of its Affiliates) with respect to any Losses after an Indemnified Person receives payment with respect thereto from an Indemnifying Person, the Indemnified Person (or such Affiliate) shall, within 10 Business Days of receiving the same, pay to the Indemnifying Person the amount of such Indemnification Offsets (up to the amount of the Indemnifying Person’s payment).
(b) Upon making any payment to an Indemnified Person in respect of any Losses, the Indemnifying Person shall, to the extent of such payment, be subrogated to all rights of the Indemnified Person (and its Affiliates) against any third party (other than customers, and employees of the Indemnified Party) in respect of the Losses to which such payment relates. Such Indemnified Person (and its Affiliates) and Indemnifying Person shall execute upon request all instruments reasonably necessary to evidence or further perfect such subrogation rights.
(c) The rights and obligations of the parties under thisSection 7.8 shall survive the payment by the Indemnifying Persons of any amounts for which they are responsible under thisArticle 7.
7.9Certain Waivers. Each of Parent and Seller hereby agrees (and shall cause each of its Affiliates, and its and their respective officers, directors, agents, and employees, to agree) that it shall not (and shall cause its Affiliates, and its and their respective officers, directors, agents, and employees, not to) make any claim for indemnification against Purchaser or the Company relating in any way to the fact that Seller or any such Person is or was a shareholder, member, director, manager, officer, employee or agent of the Company or is or was serving at the request of the Company as a partner, manager, trustee, director, officer, employee or agent of another entity (whether such claim is for judgments, damages, penalties, fines, costs, amounts paid in settlement, losses, expenses or otherwise and whether such claim is pursuant to any statute, charter document, bylaw, agreement or otherwise) with respect to any action, suit, proceeding, complaint, claim or demand brought by any of the Purchaser Indemnified Parties against Parent or Seller pursuant to this Agreement or applicable law or otherwise, and each of Parent and Seller (on its own behalf and on behalf of its Affiliates) hereby acknowledges and agrees that it shall not have any claim or right to contribution or indemnity from the Company or any of its employees with respect to any amounts paid by it pursuant to this Agreement or otherwise. Notwithstanding the foregoing, in no event shall thisSection 7.9 operate to limit or preclude the assertion of any claims for indemnification by Parent or Seller underSection 7.3.
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ARTICLE 8
Conditions Precedent to the Obligations of Seller
The obligations of Seller to consummate the transactions contemplated by this Agreement shall be subject to fulfillment at or prior to Closing of the following conditions (any one or more of which may be waived in writing in whole or in part by Seller):
8.1Compliance with Agreements and Covenants. Purchaser shall in all material respects have performed and complied with all of its covenants and obligations contained in this Agreement to be performed and complied with by it on or prior to the Closing Date.
8.2Representations and Warranties True. The representations and warranties of Purchaser contained herein shall have been accurate, true and correct in all material respects on and as of the date hereof, and shall also be accurate, true and correct in all material respects on and as of the Closing Date with the same force and effect as though made by Purchaser on and as of the Closing Date.
8.3Stockholder Approval. Parent shall have obtained the Stockholder Approval.
8.4No Court Order. No court order shall have been entered in any action or proceeding instituted by any Person which enjoins, restrains, or prohibits this Agreement or the complete consummation of the transactions as contemplated by this Agreement; and no action or proceeding shall be pending by any Person which seeks to enjoin, restrain, or prohibit this Agreement or the complete consummation of the transactions as contemplated by this Agreement, or seeks any material damages or payments from Seller as a result of such consummation.
8.5Regulatory Approvals. All necessary approvals or consents required to be obtained by Seller from the Colorado Limited Gaming Authority with respect to the purchase and sale of Seller’s Units (and no other transaction, related or unrelated thereto) shall have been obtained.
ARTICLE 9
Conditions Precedent to the Obligations of Purchaser
The obligations of Purchaser to consummate the transactions contemplated by this Agreement shall be subject to fulfillment at or prior to the Closing of the following conditions (any one or more of which may be waived in writing in whole or in part by Purchaser):
9.1Compliance with Agreements and Covenants. Parent and Seller shall have in all material respects performed and complied with all of its covenants and obligations contained in this Agreement to be performed and complied with by it on or prior to the Closing Date.
9.2Representations and Warranties True. The representations and warranties of Parent and Seller contained herein shall have been accurate, true and correct in all material respects on and as of the date hereof, and, except to the extent that any such representation or warranty is made solely as of the date hereof or as of another date earlier than the Closing Date, shall also be accurate, true and correct in all material respects on and as of the Closing Date with the same force and effect as though made by Seller on and as of the Closing Date.
9.3No Court Order. No court order shall have been entered in any action or proceeding instituted by any party which enjoins, restrains, or prohibits this Agreement or the complete consummation of the transactions as contemplated by this Agreement; and no action or proceeding shall be pending by any Person which seeks to enjoin, restrain, or prohibit this Agreement or the complete consummation of the transactions as contemplated by this Agreement, or seeks any material damages or payments from Purchaser or the Company as a result of such consummation.
9.4No Material Adverse Change. Since the date hereof, a Material Adverse Change shall not have occurred.
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9.5Regulatory Approvals. All necessary approvals or consents required to be obtained by Purchaser from the Colorado Limited Gaming Authority with respect to the purchase and sale of Seller’s Units (and no other transaction, related or unrelated thereto) shall have been obtained.
ARTICLE 10
Termination
10.1Termination. This Agreement may be terminated at any time prior to the Closing:
(a) upon the mutual agreement of Seller and Purchaser;
(b) by either Seller or Purchaser if:
(i) the Closing has not occurred on or before April 15, 2008 (the “Outside Date”),provided that the Outside Date shall be June 15, 2008 if any approval or consent of the Colorado Limited Gaming Control Commission is required to consummate the transactions contemplated hereby (including in the event of an assignment by Purchaser of its rights under this Agreement to an Affiliate pursuant toSection 12.9), unless such failure is the result of a breach of this Agreement by the party seeking to terminate this Agreement; or
(ii) after the thirtieth day following the date of the Stockholders Meeting (including adjournments and postponements), if the Stockholder Approval shall not have been obtained;
(c) by Purchaser, upon written notice from Purchaser to Seller if:
(i) (A) any of the conditions precedent set forth inArticle 9 shall have become incapable of fulfillment (and shall not have been waived by Purchaser) or (B) there has been a breach by or inaccuracy of Parent or Seller of any representation, warranty or covenant in this Agreement, which breach or inaccuracy is either not capable of being cured or has continued without cure for a period of 15 days following receipt by Parent or Seller from Purchaser of such notice; or
(ii) the Parent Board or any committee thereof withdraws or modifies in a manner adverse to Purchaser its approval or recommendation of this Agreement or fails to recommend to Parent’s stockholders that they give Stockholder Approval, or shall have recommended an Alternative Acquisition Proposal, or the Parent Board or any committee thereof resolves to take any of the foregoing actions; or
(iii) the Parent Board fails to reaffirm publicly and unconditionally its recommendation to Parent’s stockholders that they give Stockholder Approval within 10 Business Days of Purchaser’s written request to do so (which request may be made at any time following public disclosure of an Alternative Acquisition Proposal), which public reaffirmation must also include the unconditional rejection of such Alternative Acquisition Proposal; or
(iv) the Parent and Seller fail to deliver to Purchaser on or before 5:00 PM, Central time, on November 23, 2007, both (i) a duly executed copy of the Lender Agreement, in form and substance reasonably satisfactory Purchaser, and (ii) a Stockholder Support Agreement executed by Louise H. Rogers in the form attached hereto asExhibit A; provided, that Purchaser’s termination right pursuant to this clause (iv) shall expire unless notice of termination is delivered by Purchaser prior to 5:00 PM Central time on November 28, 2007;
(d) by Seller, upon written notice from Seller to Purchaser, if
(i) (A) any of the conditions precedent set forth inSections 8.1,8.2,8.4 or8.5 shall have become incapable of fulfillment (and shall not have been waived by Seller) or (B) if there has been a breach by or inaccuracy of Purchaser of any representation, warranty or covenant in this Agreement, which breach or inaccuracy is either not capable of being cured or has continued without cure for a period of 15 days following receipt by Purchaser from Seller of such notice; or
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(ii) prior to the date of Stockholder Approval, (A) the Parent Board shall have recommended an Alternative Acquisition Proposal, (B) on the same day as such notice Parent or Seller enters into a definitive agreement for an Alternative Acquisition proposal that is a Superior Proposal, and (C) Parent and Seller have complied with each of its obligations set forth in this Agreement in all respects; provided, that Seller shall have no right to terminate this Agreement pursuant to thisSection 10.1(d)(ii) after Stockholder Approval.
10.2Effect of Termination; Fees and Expenses.
(a) In the event of termination of this Agreement by either Seller or Purchaser as provided inSection 10.1, this Agreement shall forthwith become void and have no effect, without any liability or obligation on the part of Seller, Parent or Purchaser, except that (i) thisSection 10.2 will survive, (ii) certain provisions will survive as specified inSection 12.18 or elsewhere in this Agreement and (iii) if this Agreement is terminated by a party because of the breach of the Agreement by another party or because one or more of the conditions to the terminating party’s obligations under this Agreement is not satisfied as a result of another party’s failure to comply with its obligations under this Agreement, the terminating party’s right to pursue all legal remedies shall survive such termination unimpaired.
(b) Parent or Seller shall pay to Purchaser a fee in an amount equal to $700,000(the “Termination Fee”) if this Agreement is terminated, except pursuant toSections 10.1(a),10.1(b)(i) (but only if the Closing fails to occur by the Outside Date despite the Parent and Seller having used commercially reasonable efforts to cause the Closing to occur before the Outside Date and have not otherwise breached this Agreement), 10.1(c)(i)(A) (but only if the conditions which have not been fulfilled or waived are those described inSection 9.3 or9.4,provided that the non-fulfillment of such conditions is not the result of any acts or omissions of Parent or Seller) or10.1(d)(i). Parent or Seller shall pay to Purchaser an additional fee in an amount equal to $1,100,000 (the “Additional Fee”) if within 24 months of any termination of this Agreement Parent or Seller enters into a letter of intent or agreement in principle for, or consummates, an Alternative Acquisition. The Termination Fee due under thisSection 10.2(b) shall be paid by wire transfer of same day funds on the date of termination of this Agreement, and the Additional Fee shall be paid by wire transfer of same day funds on the date of execution of such letter of intent, agreement in principle or definitive agreement or, if earlier, consummation of any such Alternative Acquisition. Concurrently with the payment of, and as a condition to receiving, the Termination Fee or the Additional Fee, as applicable, Purchaser shall execute and deliver to Parent and Seller a general release in form and substance reasonably satisfactory to Parent and Seller;provided, however, a release given in connection with the payment of the Termination Fee will not extinguish Purchaser’s right to receive the Additional Fee in accordance with the terms of this Agreement.
(c) In addition to the other provisions of thisSection 10.2, in the event the Termination Fee or Additional Fee is or becomes payable pursuant toSection 10.2(b), Parent and Seller agree promptly, but in no event later than 10 Business Days following written notice thereof, to pay all reasonable fees and disbursements of counsel incurred by Purchaser in connection with this Agreement.
(d) The right to receive the Termination Fee and the Additional Fee pursuant toSection 10.2(b) and other amounts pursuant toSection 10.2(c) shall be the exclusive remedy of Purchaser under this Agreement, except in the event of any intentional breach by Parent or Seller of any of the representations, warranties or covenants under this Agreement, in which case Purchaser shall also have the right to pursue any other remedies available to Purchaser pursuant to this Agreement, at Law or in equity.
(e) Parent and Seller hereby agree, for themselves and their successors and assigns, that from and after any date that the Termination Fee or the Additional Fee becomes due and payable and is not paid in full, Purchaser shall have the right (notwithstanding the provisions of the Operating Agreement) to cause the Company to withhold all distributions (including Tax distributions and distributions of Excess Cash Flow, as defined in the Company Operating Agreement) from Seller, and instead pay Seller’s portion thereof over to Purchaser, until the amount of Seller’s portion of
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such distributions paid to Purchaser is equal to the amount of any Termination Fee or Additional Fee payable but not paid to Purchaser hereunder, plus interest at the rate of 8% per annum. The remedy set forth in the preceding sentence is in addition to any other remedy that Purchaser may have.
ARTICLE 11
Post-Closing Covenants
11.1Confidentiality.
(a) At all times from and after the Closing Date, Parent and Seller shall keep secret and maintain in confidence, and shall not use for its benefit or for the benefit of others, any confidential or proprietary information relating to the Company, including all intellectual property and files and records, other than any of such information that is in the public domain (unless any of such information is in the public domain in whole or in part due to action or inaction of Parent or Seller). The foregoing shall not prohibit use of such information (i) as is required by Law, (ii) as is necessary to prepare Tax Returns (including Tax Returns of Seller or of any of its Affiliates) or other filings with Governmental Authorities or to defend or object to any reassessment of Taxes, (iii) as is necessary for Parent, Seller or their respective representatives to prepare and disclose, as may be required, accounting statements or (iv) to assert or protect any rights of Seller hereunder or under any applicable Law.
(b) At all times from and after the Closing Date, Isle of Capri and Purchaser shall keep secret and maintain in confidence, and shall not use for its benefit or for the benefit of others, any confidential or proprietary information relating to Seller or any of its Affiliates (other than the Company) other than any of such information that is in the public domain (unless any of such information is in the public domain in whole or in part due to action or inaction of Isle of Capri or Purchaser). The foregoing shall not prohibit use of such information (i) as is required by Law, (ii) as is necessary to prepare Tax Returns (including Tax Returns of Purchaser or of any of its Affiliates) or other filings with Governmental Authorities or to defend or object to any reassessment of Taxes, (iii) as is necessary for Isle of Capri, Purchaser or their respective representatives to prepare and disclose, as may be required, accounting statements or (iv) to assert or protect any rights of Purchaser hereunder or under any applicable Law.
ARTICLE 12
Miscellaneous
12.1Expenses.
(a) Except as otherwise provided in this Agreement, includingSection 10.2, all fees and expenses, including fees and expenses of counsel, financial advisors, and accountants, incurred in connection with this Agreement and the transactions contemplated hereby by Seller and its Affiliates shall be paid by Seller or Parent, and by Purchaser and its Affiliates by Purchaser, whether or not the Closing occurs.
(b) If either party institutes suit to enforce its rights under this Agreement, the party deemed to be the prevailing party shall be entitled to recover, and shall be paid on demand by the other party, all legal fees and expenses incurred by the prevailing party in connection with such suit.
12.2Amendment. This Agreement may be amended by the parties at any time before or after receipt of Stockholder Approval;provided, however, that after receipt of Stockholder Approval, there shall be made no amendment that by Law requires further approval by such stockholders without the further approval of such stockholders. This Agreement may be amended, modified or supplemented only in writing signed by Seller and Purchaser hereunder.
12.3Extension; Waiver. At any time prior to the Closing, the parties may (i) extend the time for the performance of any of the obligations or other acts of the other parties, (ii) waive any inaccuracies in the representations and warranties contained in this Agreement or in any document delivered pursuant to this
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Agreement, or (iii) waive compliance with any of the agreements or conditions contained in this Agreement. Any agreement on the part of a party 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 to this Agreement to assert any of its rights under this Agreement or otherwise shall not constitute a waiver of such rights. The failure of a party to require performance of any provision hereof shall not affect its right at a later time to enforce the same. No such waiver in any one instance shall be deemed a further or continuing waiver of any such term, covenant, representation or warranty in any other instance.
12.4Procedure for Termination, Amendment, Extension or Waiver. A termination of this Agreement pursuant toSection 10.1, an amendment of this Agreement pursuant toSection 12.2 or an extension or waiver pursuant toSection 12.3 shall, in order to be effective, be in writing.
12.5Notices. Any written notice to be given hereunder shall be deemed given: (a) when received if given in person or by courier; (b) on the date of transmission if sent by telecopy (receipt confirmed); (c) three days after being deposited in the U.S. mail, certified or registered mail, postage prepaid; and (d) if sent by an internationally recognized overnight delivery service, the second day following the date given to such overnight delivery service (specified for overnight delivery). All notices shall be addressed as follows:
If to Parent or Seller, addressed as follows:
Nevada Gold & Casinos, Inc.
3040 Post Oak Blvd., Suite 675
Houston, Texas 77056
Attention: Robert Sturges
Facsimile: (713) 296-5070
with a copy (which shall not constitute notice) to:
Nevada Gold & Casinos, Inc.
3040 Post Oak Blvd., Suite 675
Houston, Texas 77056
Attention: Ernest E. East, General Counsel
Facsimile: (713) 296-5070
If to Isle of Capri or Purchaser, addressed as follows:
Isle of Capri Casinos, Inc.
600 Emerson Rd.
Suite 300
St. Louis, MO 63141
Attention: President and Chief Operating Officer
Facsimile: (314) 813-9480
with a copy (which shall not constitute notice) to:
Mayer Brown LLP
71 South Wacker Drive
Chicago, Illinois 60606
Attention: Paul W. Theiss
Facsimile: (312) 706-8218
12.6Counterparts. This Agreement may be executed in counterparts (including by means of telecopied signature pages), each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.
12.7Headings. The headings preceding the text of Articles and Sections of this Agreement and the Schedules and Exhibits hereto are for convenience only and shall not be deemed part of this Agreement.
12.8Applicable Law. This Agreement shall be governed by and construed and enforced in accordance with the internal laws, and not the laws of conflicts, of the State of Colorado.
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12.9Assignment. This Agreement shall be binding upon and inure to the benefit of the parties and their respective successors and permitted assigns. No assignment of either party’s rights or obligations may be made without the written consent of the other party, which consent shall not be unreasonably withheld or delayed;provided, that Purchaser may assign its rights and obligations hereunder to an Affiliate or Affiliates of Purchaser without the written consent of Parent or Seller, and in such event Purchaser shall promptly notify Parent and Seller of such assignment.
12.10No Third Party Beneficiaries. This Agreement is solely for the benefit of the parties hereto and those Persons (or categories of Persons) specifically described herein, and, except as aforesaid, no provision of this Agreement shall be deemed to confer any remedy, claim or right upon any third party.
12.11Forum; Waiver of Jury Trial. Each party agrees that any suit, action or proceeding brought by such party against the other in connection with or arising from this Agreement (“Judicial Action”) shall be brought solely in the courts of the State of Colorado or the United States District Court for the District of Colorado, and each party consents to the jurisdiction and venue of each such court. Each party hereby waives its right to a jury trial in connection with any Judicial Action. Seller will act as agent for service of process on behalf of Parent.
12.12Severability. If any term or other provision of this Agreement is invalid, illegal or incapable of being enforced by any rule or law, or public policy, all other conditions and provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to any party. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in an acceptable manner to the end that transactions contemplated hereby are fulfilled to the extent possible.
12.13Schedules. Information disclosed pursuant to any Schedule hereto shall not be deemed to be disclosed to Purchaser for purposes of any of Seller’s or Parent’s representations or warranties (other than the specific representation and warranty in which such Schedule is referenced), unless and to the extent that the applicability of such disclosure is reasonably apparent based on a plain reading of such disclosure.
12.14Incorporation. The respective Schedules and Exhibits attached hereto and referred to herein are incorporated into and form a part of this Agreement.
12.15Complete Agreement. This Agreement constitutes the complete agreement of the parties with respect to the subject matter hereof and supersede all prior discussions, negotiations and understandings.
12.16Currency. Except as otherwise expressly set forth herein, all references to “dollars” or “$” in this Agreement shall mean United States Dollars.
12.17Further Assurances. Seller, Parent, Isle of Capri and Purchaser each agree that from time to time after the Closing Date, they will execute and deliver, and will cause their respective Affiliates to execute and deliver, such further instruments, and take, and cause their respective Affiliates to take such other actions, as may be reasonably necessary to carry out the purposes and intents of this Agreement.
12.18Survival. All provisions of this Agreement which, by their express terms or based upon a reasonable interpretation of such provisions and the respective rights and obligations of the parties thereunder, are intended to survive the Closing, shall so survive, includingSection 10.2.
12.19Unconditional Guarantee.
(a) Parent hereby unconditionally, absolutely and irrevocably guarantees to Purchaser the complete and timely performance by Seller of all of Seller’s obligations under this Agreement. The obligations of Parent pursuant to thisSection 12.19(a) shall remain in full force and effect without regard to, and shall not be impaired by: (i) any amendment, modification, addition, supplement, extension or acceleration of any part of this Agreement, (ii) any exercise or non-exercise by Purchaser of any right or privilege under this Agreement, or (iii) any bankruptcy, insolvency, reorganization, dissolution, liquidation or other similar proceeding relating to Parent, Seller or any of its Affiliates,
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including any release, limitation or impairment of Parent’s or Seller’s obligations under this Agreement. Parent’s obligations under thisSection 12.19(a) constitute a continuing guaranty and shall continue in full force and effect until such time as all of Seller’s obligations under this Agreement have been fully performed. Notwithstanding the foregoing, in no event may a claim be asserted against Parent under thisSection 12.19(a) if the assertion of such claim would be time barred or otherwise unavailable to Purchaser underSection 7.2.
(b) Isle of Capri hereby unconditionally, absolutely and irrevocably guarantees to Seller the complete and timely performance by Purchaser of all of Purchaser’s obligations under this Agreement. The obligations of Isle of Capri pursuant to thisSection 12.19(b) shall remain in full force and effect without regard to, and shall not be impaired by: (i) any amendment, modification, addition, supplement, extension or acceleration of any part of this Agreement, (ii) any exercise or non-exercise by Seller of any right or privilege under this Agreement, or (iii) any bankruptcy, insolvency, reorganization, dissolution, liquidation or other similar proceeding relating to Isle of Capri, Purchaser or any of its Affiliates, including any release, limitation or impairment of Isle of Capri’s or Purchaser’s obligations under this Agreement. Isle of Capri’s obligations under thisSection 12.19(b) constitute a continuing guaranty and shall continue in full force and effect until such time as all of Purchaser’s obligations under this Agreement have been fully performed. Notwithstanding the foregoing, in no event may a claim be asserted against Isle of Capri under thisSection 12.19(b) if the assertion of such claim would be time barred or otherwise unavailable to Seller underSection 7.3.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their respective duly authorized officers as of the date first above written.
PARENT
NEVADA GOLD & CASINOS, INC.
| By: | /s/ Robert B. Sturges
Name: Robert B. Sturges
Title: CEO |
SELLER
BLACKHAWK GOLD, LTD.
| By: | /s/ Robert B. Sturges
Name: Robert B. Sturges
Title: CEO and President |
PURCHASER
CASINO AMERICA OF COLORADO, INC.
| By: | /s/ Gregory D. Guida
Name: Gregory D. Guida
Title: Senior Vice President |
ISLE OF CAPRI
ISLE OF CAPRI CASINOS, INC.,
| By: | /s/ Gregory D. Guida
Name: Gregory D. Guida
Title: Senior Vice President |
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SCHEDULE 3.2
The Lien in favor of Louise H Rogers, the senior lender to Parent, is evidenced by that certain amended and restated credit facility dated January 19, 2006 and that certain security agreement dated January 19, 2006, each between Louise H. Rogers and Parent.
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SCHEDULE 3.5
Parent and/or Seller has an agreement with Libra Securities pursuant to which Libra Securities will be entitled to a fee upon the closing of the transactions contemplated by this Agreement.
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EXHIBIT A
STOCKHOLDER SUPPORT AGREEMENT
This STOCKHOLDER SUPPORT AGREEMENT (this “Agreement”) is made and entered into as of November 13, 2007 between Casino America of Colorado, Inc., a Colorado corporation (“Purchaser”), on the one hand, and the undersigned shareholderstockholders (each a “Stockholder” and collectively the “Stockholders”) of Nevada Gold & Casinos, Inc., a Nevada corporation (“Guarantor”), on the other hand. Capitalized terms used and not otherwise defined herein shall have the respective meanings set forth in the Purchase Agreement described below.
WITNESSETH:
WHEREAS, pursuant to a Unit Purchase Agreement, dated as of November 13, 2007, by and among Blackhawk Gold, Ltd., a Nevada corporation (“Seller”), Guarantor, Purchaser and Isle of Capri Casinos, Inc. (the “Company”“Purchase Agreement”), Purchaser, Seller, Guarantor and Isle of Capri Casinos, Inc. have agreed to a transaction (the “Transaction”) hereby acknowledges receiptwhereby Purchaser will acquire all issued and outstanding Units of Isle of Capri Black Hawk, L.L.C., a Colorado limited liability company, owned by Seller, a wholly owned subsidiary of Guarantor;
WHEREAS, as a material condition to the willingness of Purchaser to enter into the Purchase Agreement and as an inducement and in consideration therefor, each Stockholder has agreed to enter into this Agreement; and
WHEREAS, each Stockholder is the beneficial owner (within the meaning of Rule 13d-3 of the NoticeExchange Act) of Annual Meetingthat number of Shareholders and appoints James J. Kohn or John Arnesen, and each of them, with full power of substitution, as Proxy or Proxies to vote as specified in this Proxy all the shares of common stock of Guarantor (the “Guarantor Common Stock”) set forth opposite such Stockholder’s name onExhibit A hereto (the “Shares”) (such Shares, together with any New Shares (as defined inSection 1.2), being referred to herein as the Company“Subject Shares”).
NOW, THEREFORE, in consideration of the undersigned atforegoing and the Annual Meetingmutual covenants and agreements herein contained, and intending to be legally bound hereby, the parties hereby agree as follows:
1. Agreement to Retain Subject Shares.
1.1. Prior to the Expiration Date (as defined below), each Stockholder agrees not to: (a) transfer, assign, sell, gift-over, pledge or otherwise dispose of, Shareholdersany or all of the Subject Shares of which such Stockholder is the beneficial owner or in which such Stockholder has any right or interest (“Transfer”), or consent to any of the foregoing; (b) enter into any contract, option or other agreement, arrangement or understanding with respect to any Transfer; (c) grant any proxy, power-of-attorney or other authorization or consent with respect to any of the Subject Shares (other than the proxy contemplated inSection 3 herein) or (d) deposit any of the Subject Shares into a voting trust, or enter into a voting agreement or arrangement with respect to any of the Subject Shares. As used herein, the term “Expiration Date” shall mean the earlier to occur of (x) the Closing or (y) the end of the fifth day following the date of termination of the Purchase Agreement in accordance with the terms thereof.
1.2. “New Shares” means:
(a) any shares of capital stock or voting securities of Guarantor that Stockholder purchases or with respect to which such Stockholder otherwise acquires beneficial ownership (whether through the exercise of any options, warrants or other rights to purchase shares of Company Common Stock or otherwise) after the date of this Agreement and prior to the Expiration Date; and
(b) any shares of capital stock or voting securities of Guarantor that a Stockholder becomes the beneficial owner of as a result of any change in Guarantor Common Stock by reason of a stock dividend, stock split, split-up, recapitalization, reorganization, business combination, consolidation, exchange of shares, or any similar transaction or other change in the capital structure of Guarantor affecting the Guarantor Common Stock.
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2. Agreement to Vote Subject Shares and Take Certain Other Action.
2.1. Prior to the Expiration Date, at every meeting of the stockholders of Guarantor, however called, including the Stockholders Meeting (as defined in the Purchase Agreement), at which any of the following matters is considered or voted upon, and at every adjournment or postponement thereof, and on every action or approval by written consent of the stockholders of Guarantor with respect to any of the following matters, each Stockholder shall vote or give written consent with respect to the Subject Shares:
(a) in favor of the Transaction and the adoption of the Purchase Agreement and the transactions contemplated thereby;
(b) against approval of any proposal made in opposition to or competition with consummation of the Transaction and the Purchase Agreement;
(c) against any Alternative Acquisition from any party other than Purchaser or an Affiliate of Purchaser;
(d) against any proposal that is intended to, or is reasonably likely to, result in the conditions to Purchaser’s or Seller’s obligations under the Purchase Agreement not being fulfilled;
(e) against any extraordinary corporate transaction (other than the Transaction), such as a merger, consolidation, business combination, tender or exchange offer, reorganization, recapitalization, sale or transfer of a material amount of the assets or securities of Guarantor or Seller (other than in connection with the Transaction);
(f) against any amendment of Guarantor’s Certificate of Incorporation or By-laws; and
(g) against any dissolution, liquidation or winding up of Guarantor or Seller.
2.2. Prior to the Expiration Date, each Stockholder, as the holder of the Subject Shares set forth opposite its name onExhibit A hereto, shall be present, in person or by proxy, at all meetings of stockholders of Guarantor, including the Stockholders Meeting, at which any of the matters referred to inSection 2.1 is to be heldvoted upon so that all Subject Shares are counted for the purposes of determining the presence of a quorum at such meetings.
2.3. Between the St. Regis Hotel, 1919 Briar Oaks Lane, Houston, Texas, 77027 on Monday, October 15, 2007 at 10:00 a.m. Central time,date of this Agreement and the Expiration Date, each Stockholder agrees not to, and will not permit any entity under such Stockholder’s direct or indirect control to, (a) solicit proxies or become a “participant” in a “solicitation” (as such terms are defined in Rule 14A under the Exchange Act) with respect to an Opposing Proposal (as defined below), (b) initiate a stockholders’ vote with respect to an Opposing Proposal or (c) become a member of a “group” (as such term is used in Section 13(d) of the Exchange Act) with respect to any voting securities of Guarantor with respect to an Opposing Proposal. For purposes of this Agreement, the term “Opposing Proposal” means any of the actions or proposals described inclauses (b) through(f) ofSection 2.1, along with any proposal or action which would, or could reasonably be expected to, impede, frustrate, prevent, prohibit or discourage any of the transactions contemplated by the Purchase Agreement.
2.4. Prior to the Expiration Date, each Stockholder shall use its best efforts to take, or cause to be taken, all actions, and to do, or cause to be done, and to assist and cooperate with the other parties in doing, all things necessary, proper or advisable to consummate and make effective, in the most expeditious manner practicable, the Transaction and the other transactions contemplated by the Purchase Agreement.
3. Grant of Irrevocable Proxy Coupled with an Interest.
3.1. Solely in the event of a failure by a Stockholder to act in accordance with its obligations as to voting or executing a written consent pursuant toSection 2.1 of this Agreement, each such Stockholder hereby revokes any and all adjournmentsother proxies or postponements thereof. Eitherpowers of attorney in respect of any Subject Shares and agrees that during the period commencing on the date of this Agreement and ending on the Expiration Date, such Stockholder hereby irrevocably appoints Purchaser or any individual designated by Purchaser as such Stockholder’s agent, attorney-in-fact and proxy (with full power of substitution), for and in the name, place and stead of such ProxiesStockholder, to vote (or cause to be voted) the Subject Shares held by such Stockholder, in
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the manner set forth inSection 2.1, at any meeting of the stockholders of Guarantor, however called, including the Stockholders Meeting, or substitutesin connection with any written consent of the stockholders of Guarantor.
3.2. Each Stockholder hereby affirms that the proxy set forth in thisSection 3 is irrevocable (until the Expiration Date), is coupled with an interest, and is granted in consideration of Purchaser entering into the Purchase Agreement.
3.3. The vote of the proxyholder shall havecontrol in any conflict between the vote by the proxyholder of Stockholder’s Subject Shares and maya vote by Stockholder of Stockholder’s Subject Shares.
4. Representations, Warranties and Covenants of Stockholder. Each Stockholder hereby represents, warrants and covenants to Purchaser as follows:
4.1. (a) Such Stockholder is the beneficial owner of the Subject Shares set forth opposite its name onExhibit A hereto; (b) the Subject Shares set forth opposite its name onExhibit A hereto constitute such Stockholder’s entire interest in the outstanding capital stock and voting securities of Guarantor as of the date hereof; (c) the Subject Shares are, and will be, at all times up until the Expiration Date, free and clear of any Liens, options, proxies, voting trusts, agreements, rights, understandings or arrangements, or exercise of any rights of a stockholder in respect of the Subject Shares or other encumbrances, except as otherwise noted onExhibit A; (d) such Stockholder has voting power the power of disposition with respect to all of the powersSubject Shares set forth opposite its name onExhibit A hereto outstanding on the date hereof, and will have voting power and (except as set forth onExhibit A hereto) power of said Proxiesdisposition with respect to all of the Subject Shares acquired by such Stockholder after the date hereof and (e) such Stockholder’s principal residence or place of business is accurately set forth onExhibit A hereto.
4.2. Such Stockholder has full power and legal capacity to execute and deliver this Agreement and to comply with and perform such Stockholder’s obligations hereunder. This Agreement has been duly and validly executed and delivered by such Stockholder and constitutes the valid and binding obligation of such Stockholder, enforceable against such Stockholder in accordance with its terms. The undersigned shareholderexecution and delivery of this Agreement by such Stockholder does not, and the performance of such Stockholder’s obligations hereunder will not, result in any breach of or constitute a default (or an event that with notice or lapse of time or both would become a default) under, or give to others any right to terminate, amend, accelerate or cancel any right or obligation under, or result in the creation of any Lien or encumbrance on any Subject Shares pursuant to, any contract or other instrument or obligation to which Stockholder is a party or by which Stockholder or the Subject Shares are or will be bound or affected.
4.3. Each Stockholder hereby revokesunconditionally and irrevocably instructs Guarantor not to (a) permit the Transfer of, or any Proxygrant of authority to vote with respect to, its Subject Shares, in violation of this Agreement on its books and records by such Stockholder, (b) issue a new certificate representing any such Subject Shares or Proxies heretofore(c) record such vote unless and until such Stockholder shall have complied with the terms of this Agreement.
4.4 Each Stockholder understands and acknowledges that Purchaser is entering into the Purchase Agreement in reliance upon such Stockholder’s execution, delivery and performance under this Agreement.
5. Termination. This Agreement and the proxy granted pursuant to Section 3.1 hereof and all obligations of each Stockholder hereunder and thereunder shall terminate and shall have no further force or effect as of the Expiration Date;provided,however, that any such termination shall not relieve any party of any liability arising as a result of the breach of this Agreement by such party prior to such termination.
6. Binding Effect and Assignment. Neither this Agreement nor any of the rights, interests or obligations under this Agreement shall be assigned, in whole or in part, by operation of law or otherwise by any party without the prior written consent of the other party;provided,however, that Purchaser may assign its rights and obligations hereunder to an Affiliate or Affiliates of Purchaser without the written consent of Stockholder, and any such assignee shall have the full rights and privileges of Purchaser hereunder.
7. Amendment, Modification and Waiver. This Agreement may be amended or modified and any term of this Agreement may be waived if such amendment, modification or waiver is in writing and signed by all
Exhibit A-3
TABLE OF CONTENTS
parties. The failure of any party hereto to exercise any right, power or remedy provided under this Agreement or otherwise available in respect hereof at law or in equity, or to insist upon compliance by any other party hereto with its obligations hereunder, and any custom or practice of the parties at variance with the terms hereof, shall not constitute a waiver by such party of its right to exercise any such or other right, power or remedy or to demand such compliance.
8. Specific Performance; Injunctive Relief. The parties hereto acknowledge that Purchaser will be irreparably harmed and that there will be no adequate remedy at law for a violation of any of the covenants or agreements of each Stockholder set forth herein. Therefore, it is agreed that, in addition to any other remedies that may be available to Purchaser upon any such violation, Purchaser shall have the right to enforce such covenants and agreements by specific performance, injunctive relief or by any other means available to Purchaser at law or in equity and each such Stockholder hereby waives any and all defenses which could exist in its favor in connection with such enforcement and waives any requirement for the security or posting of any bond in connection with such enforcement.
9. Notices. Any written notice to be given hereunder shall be deemed given: (a) when received if given in person or by courier; (b) on the date of transmission if sent by telecopy (receipt confirmed); (c) three days after being deposited in the U.S. mail, certified or registered mail, postage prepaid; and (d) if sent by an internationally recognized overnight delivery service, the second day following the date given to such overnight delivery service (specified for overnight delivery). All notices shall be addressed as follows:
If to any Stockholder, to such Stockholder at the address set forth onExhibit A.
If to Purchaser, addressed as follows:
c/o Isle of Capri Casinos, Inc.
600 Emerson Rd.
Suite 300
St. Louis, MO 63141
Attention: President
Facsimile: 314-813-9480
with a copy (which shall not constitute notice) to:
Mayer Brown LLP
71 South Wacker Drive
Chicago, Illinois 60606
Attention: Paul W. Theiss
Telephone: (312) 701-7359
Facsimile: (312) 706-8218
or to such other address as any party hereto may designate for itself by notice given as herein provided.
10. Expenses. Each party hereto shall pay its own fees and expenses incurred in connection with this Agreement.
11. Governing Law, Counterparts and Headings. This Agreement shall be governed by and construed and enforced in accordance with the internal laws, and not the laws of conflicts, of the State of Colorado. This Agreement may be executed in counterparts (including by means of telecopied signature pages), each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. The preamble and recitals set forth above, and the Exhibits attached hereto, are incorporated in and form a part of this Agreement. The headings preceding the text of Sections of this Agreement and the Exhibits hereto are for convenience only and shall not be deemed part of this Agreement.
12. Entire Agreement, No Third-Party Beneficiaries, Severability and Further Assurances. This Agreement and the Purchase Agreement (a) constitute the entire agreement, and supersede all prior agreements and understandings, both written and oral, among the parties with respect to the subject matter of this Agreement and (b) are not intended to confer upon any Person other than the parties any rights or remedies. In the event that any one or more of the provisions contained in this Agreement shall, for any reason, be held
Exhibit A-4
TABLE OF CONTENTS
to be invalid, illegal or unenforceable in any respect, then to the maximum extent permitted by law, such matters.invalidity, illegality or unenforceability shall not affect any other provision of this Agreement. Each of the parties hereto shall, at the request of the other party, will execute and deliver, and will cause their respective Affiliates to execute and deliver, such further instruments, and take, and cause their respective Affiliates to take such other actions, as may be reasonably necessary to carry out the purposes and intents of this Agreement.
13. Publication. Each Stockholder shall not issue any press release or make any other public statement with respect to this Agreement, the Purchase Agreement, the Transaction or any other transactions contemplated by this Agreement, the Purchase Agreement or the Transaction without the prior written consent of Purchaser (which consent shall not be unreasonably withheld or delayed), except as may be required by Applicable Law.
Exhibit A-5
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED TABLE OF CONTENTS
IN THE MANNER AS DIRECTED HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR ALL NOMINEES FOR DIRECTOR, FOR THE AMENDMENTWITNESS WHEREOF, the parties have caused this Agreement to be executed and delivered as of the date first above written.
CASINO AMERICA OF THE ARTICLESCOLORADO, INC.
By:
Its:
STOCKHOLDERS
Exhibit A-6
THIS PROXY WILL BE VOTED AS DIRECTED. IF NO DIRECTION IS MADE IT WILL BE VOTED “FOR” PROPOSALS ONE, TWO AND THREE. PLEASE MARK, SIGN, DATE AND RETURN THIS CARD USING THE ENCLOSED RETURN ENVELOPE.
SUBJECT SHARES | | For
|
| Stockholder | | Against
| | Abstain
Subject Shares Owned(1) |
1. | Proposal one to elect three Class III
director nominees to hold office until the
2010 Annual Meeting of Shareholders:
| | | [Name]
[Address] | | |
| | | | [Name]
[Address] | | |
| Robert B. Sturges | o | | o | | o |
| William J. Sherlock | o | | o | | o |
| William G. Jayroe | o | | o | | o |
| | | | [Name]
[Address] | | |
| (1) | Subject Shares to include any shares for which such stockholder holds an irrevocable proxy. |
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