AGREEMENT AND PLAN OF MERGER
dated as of October 5, 1999 among
ISLE OF CAPRI CASINOS, INC.,
ISLE MERGER CORP. AND
LADY LUCK GAMING CORPORATION
TABLE OF CONTENTS PAGE --------
ARTICLE I
THE MERGER
Section 1.1. THE MERGER.................................................. I-1
Section 1.2. EFFECTIVE TIME OF THE MERGER................................ I-1
Section 1.3. CLOSING..................................................... I-1
Section 1.4. EFFECT OF THE
MERGER........................................ I-1
CERTIFICATE OF INCORPORATION AND BYLAWS OF THE SURVIVING
Section 1.5. CORPORATION............................................... I-2
Section 1.6. DIRECTORS AND OFFICERS OF THE SURVIVING CORPORATION......... I-2
Section 1.7. SUBSIDIARIES OF THE SURVIVING
CORPORATION................... I-2
ARTICLE II
EFFECT OF THE MERGER ON SECURITIES OF THE CONSTITUENT CORPORATIONS
Section 2.1. CONVERSION OF
SECURITIES.................................... I-2
Section 2.2. EXCHANGE OF CERTIFICATES.................................... I-3
Section 2.3. ACCELERATION AND PAYMENT FOR LADY LUCK OPTIONS.............. I-4
Section 2.4. DISSENTING SHARES........................................... I-4
Section 2.5. LADY LUCK PREFERRED STOCK................................... I-5
Section 2.6. LADY LUCK DEBT SECURITIES................................... I-5
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF LADY LUCK
Section 3.1. ORGANIZATION OF LADY LUCK AND ITS SUBSIDIARIES.............. I-5
Section 3.2. CAPITALIZATION.............................................. I-6
Section 3.3. AUTHORITY; NO CONFLICT; REQUIRED FILINGS AND CONSENTS....... I-7
Section 3.4. PUBLIC FILINGS; FINANCIAL
STATEMENTS........................ I-8
Section 3.5. NO UNDISCLOSED LIABILITIES.................................. I-9
Section 3.6. ABSENCE OF CERTAIN CHANGES OR
EVENTS........................ I-9
Section 3.7. TAXES....................................................... I-9
Section 3.8. REAL PROPERTY, TITLE AND RELATED MATTERS.................... I-10
Section 3.9. TITLE TO PERSONAL PROPERTY; LIENS........................... I-11
Section 3.10. INTELLECTUAL PROPERTY....................................... I-12
Section 3.11. AGREEMENTS, CONTRACTS AND COMMITMENTS....................... I-12
Section 3.12. LITIGATION.................................................. I-13
Section 3.13. ENVIRONMENTAL MATTERS....................................... I-13
Section 3.14. EMPLOYEE BENEFIT PLANS...................................... I-13
Section 3.15. COMPLIANCE.................................................. I-15
Section 3.16. LABOR MATTERS............................................... I-16
Section 3.17. INSURANCE................................................... I-16
Section 3.18. INFORMATION IN PROXY STATEMENT.............................. I-16
Section 3.19. STATE TAKEOVER STATUTE...................................... I-17
Section 3.20. VOTING REQUIREMENTS......................................... I-17
Section 3.21. YEAR
2000................................................... I-17
Section 3.22. OPINION OF FINANCIAL ADVISOR................................ I-17
Section 3.23. BROKERS..................................................... I-17 I-i PAGE
--------
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER AND MERGER SUB
Section 4.1. ORGANIZATION OF BUYER AND MERGER SUB........................ I-18
Section 4.2. CAPITALIZATION OF MERGER SUB................................ I-18
Section 4.3. AUTHORITY; NO CONFLICT; REQUIRED FILINGS AND CONSENTS....... I-18
Section 4.4. BROKERS..................................................... I-19
Section 4.5. OWNERSHIP OF SECURITIES..................................... I-19
Section 4.6. PROXY STATEMENT............................................. I-19
Section 4.7. LITIGATION.................................................. I-19
Section 4.8. FINANCING................................................... I-20
ARTICLE VCOVENANTS
Section 5.1. CONDUCT OF BUSINESS OF LADY LUCK............................ I-20
Section 5.2. COOPERATION; NOTICE; CURE................................... I-23
Section 5.3. NO SOLICITATION............................................. I-23
Section 5.4. PROXY STATEMENT............................................. I-24
Section 5.5. SPECIAL MEETING............................................. I-24
Section 5.6. ACCESS TO INFORMATION....................................... I-24
Section 5.7. GOVERNMENTAL APPROVALS...................................... I-24
Section 5.8. PUBLICITY................................................... I-25
Section 5.9. INDEMNIFICATION............................................. I-25
Section 5.10. STOCKHOLDER LITIGATION...................................... I-26
Section 5.11. EMPLOYEE BENEFITS........................................... I-26
Section 5.12. OTHER AGREEMENTS............................................ I-26
Section 5.13. MISS MARQUETTE LOANS........................................ I-26
Section 5.14. FURTHER ASSURANCES AND ACTIONS.............................. I-26
Section 5.15. PENDING ACQUISITIONS........................................ I-27
Section 5.16. ALLOCATION OF FUNDS......................................... I-27
ARTICLE VI
CONDITIONS TO MERGER
CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE
Section 6.1. MERGER.................................................... I-27
Section 6.2. ADDITIONAL CONDITIONS TO OBLIGATIONS OF LADY LUCK........... I-28
Section 6.3. ADDITIONAL CONDITIONS TO OBLIGATIONS OF BUYER............... I-28
ARTICLE VII
TERMINATION AND AMENDMENT
Section 7.1. TERMINATION................................................. I-29
Section 7.2. EFFECT OF TERMINATION....................................... I-31
Section 7.3. FEES AND EXPENSES........................................... I-31
Section 7.4. AMENDMENT................................................... I-32
Section 7.5. EXTENSION; WAIVER........................................... I-32
ARTICLE VIIIMISCELLANEOUS
NONSURVIVAL OF REPRESENTATIONS, WARRANTIES, COVENANTS AND
Section 8.1. AGREEMENTS................................................ I-32
Section 8.2. NOTICES..................................................... I-32
Section 8.3. INTERPRETATION.............................................. I-33 I-ii PAGE --------
Section 8.4. COUNTERPARTS................................................ I-33
Section 8.5. ENTIRE AGREEMENT; NO THIRD PARTY BENEFICIARIES.............. I-33
Section 8.6. GOVERNING LAW............................................... I-34
Section 8.7. ASSIGNMENT.................................................. I-34
Section 8.8. SEVERABILITY; ENFORCEMENT................................... I-34
Section 8.9. SPECIFIC PERFORMANCE........................................ I-34
INDEX OF DEFINED TERMS
The following terms have the respective meanings specified in the indicated
Sections of the Agreement:
TERM AGREEMENT SECTION
- ---- -----------------
Acquisition Proposal........................................ 5.3(a)Agreement................................................... Recitals
best knowledge.............................................. Article IIIBuyer....................................................... Recitals
Buyer Disclosure Schedule................................... Article IV
Buyer Material Adverse Effect............................... 4.1
Certificate of Merger....................................... 1.2CIBC........................................................ 4.4Closing..................................................... 1.3
Closing Date................................................ 1.3Code........................................................ 2.2(f)
Confidentiality Agreement................................... 5.6DGCL........................................................ 1.1
Dissenting Shares........................................... 2.4
Due Diligence Period........................................ 6.3
Effective Time.............................................. 1.2Encumbrances................................................ 3.8(b)
Environmental Law........................................... 3.13(b)ERISA....................................................... 3.14(a)
ERISA Affiliate............................................. 3.14(a)
Exchange Act................................................ 3.3(c)
Exchange Agent.............................................. 2.2(a)
Exchange Fund............................................... 2.2(a)
foreign person.............................................. 3.7(i)GAAP........................................................ 3.4(b)Gemini...................................................... 5.1(n)
Gemini Trademark Assets..................................... 5.1(n)
Governmental Approvals...................................... 5.7(a)
Governmental Entity......................................... 3.3(c)GSMC........................................................ 3.7(e)
Hazardous Substance......................................... 3.13(c)
HSR Act..................................................... 3.3(c)IMPS........................................................ 5.1(n)
include, includes or including.............................. 8.3Indebtedness................................................ 3.11(a)
Indemnified Parties......................................... 5.9(a)
IRS......................................................... 3.7(c) I-iii
TERM AGREEMENT SECTION
- ---- -----------------
knowledge................................................... Article III
Lady Luck................................................... Recitals
Lady Luck Balance Sheet..................................... 3.4(b)
Lady Luck Common Stock...................................... 2.1(a)
Lady Luck Disclosure Schedule............................... Article III
Lady Luck Employee Plans.................................... 3.14(a)
Lady Luck Gaming Laws....................................... 3.15(b)
Lady Luck Interim Financial Statements...................... 3.4(b)
Lady Luck Las Vegas Agreement............................... 5.1(n)
Lady Luck Material Contracts................................ 3.11(a)
Lady Luck Material Adverse Effect........................... 3.1
Lady Luck Notes............................................. 5.1(p)
Lady Luck Option............................................ 2.3
Lady Luck Option Plan....................................... 2.3
Lady Luck Permits........................................... 3.15(a)
Lady Luck Preferred Stock................................... 3.2(a)
Lady Luck Series A Preferred Stock.......................... 2.1(c)
Lady Luck Series A Preferred Stock Redemption Amount........ 2.5
Lady Luck SEC Reports....................................... 3.4(a)
Lady Luck Special Meeting................................... 5.5
Lady Luck Stockholder Approval.............................. 3.20
Lady Luck Welfare Plan...................................... 3.14(g)
Las Vegas Hotel............................................. 5.1(n)
Leased Real Property........................................ 3.8(b)Liens....................................................... 3.1
made available.............................................. 8.3Merger...................................................... Recitals
Merger Consideration........................................ 2.1(a)
Merger Sub.................................................. Recitals
Merger Sub Common Stock..................................... 4.2
Miss Marquette Agreement.................................... 5.1(d)
Miss Marquette Credit Agreement............................. 5.13
Multiemployer Plan.......................................... 3.14(e)
Nevada Approval............................................. 6.1(c)
Notifying Party............................................. 5.7(a)
Onyx Partners............................................... 3.23
Outside Date................................................ 7.1(b)
Owned Real Property......................................... 3.8(b)PBGC........................................................ 3.14(f)
Permitted Encumbrances...................................... 3.8(b)
Physical Inspection and Review.............................. 6.3(d)
prohibited transactions..................................... 3.14(c)
Proxy Statement............................................. 5.4(a)
Redemption Agent............................................ 2.5SEC......................................................... 3.3(c)
Securities Act.............................................. 3.4(a) Services.................................................... 3.21
single employer............................................. 3.14(a)Sodak....................................................... 3.7(e)
strategic alliances......................................... 3.11(a) I-iv
TERM AGREEMENT SECTION
- ---- -----------------
Stockholder Support Agreement............................... RecitalsSubsidiary.................................................. 3.1
Superior Proposal........................................... 5.3(a)
Surviving Corporation....................................... 1.1
Tax or Taxes................................................ 3.7(a)
Terminating Buyer Breach.................................... 7.1(h)
Terminating Lady Luck Breach................................ 7.1(g)
the date of this Agreement, the date hereof................. 8.3
Third Party................................................. 5.3(a)Tompkins.................................................... 5.1(m)
Voting Debt................................................. 3.2(b)
Wasserstein Perella......................................... 3.22
without limitation.......................................... 8.3
Year 2000 Ready............................................. 3.21 I-v
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER (the "Agreement"), dated as of October 5, 1999,
by and among ISLE OF CAPRI CASINOS, INC., a Delaware corporation ("Buyer"), ISLE
MERGER CORP., a Delaware corporation and a wholly owned subsidiary of Buyer
("Merger Sub"), and LADY LUCK GAMING CORPORATION, a Delaware corporation ("LadyLuck").
WHEREAS, the Board of Directors of Lady Luck has determined that the merger
of Merger Sub with and into Lady Luck, upon the terms and subject to the
conditions set forth in this Agreement (the "Merger"), is fair to, and in the
best interests of, Lady Luck and its stockholders;
WHEREAS, the Boards of Directors of Buyer and Merger Sub have determined
that the Merger is in the best interests of Buyer and Merger Sub and their
respective stockholders;
WHEREAS, the Boards of Directors of Buyer, Merger Sub and Lady Luck have
each approved and adopted this Agreement and approved the Merger and the other
transactions contemplated hereby; and
WHEREAS, concurrently with the execution and delivery of this Agreement and
as a condition and inducement to each of Buyer's and Merger Sub's willingness to
enter into this Agreement, the principal stockholder of Lady Luck will enter
into a Stockholder Support Agreement with Buyer, dated as of the date of this
Agreement in the form attached hereto as EXHIBIT A (the "Stockholder Support
Agreement"), pursuant to which such stockholder will agree, among other things,
to vote all voting securities of Lady Luck owned by him beneficially or of
record in favor of approval of the transactions contemplated by this Agreement;
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth below, the
parties agree as follows: ARTICLE I
THE MERGER
Section 1.1. THE MERGER. Upon the terms and subject to the provisions of
this Agreement and in accordance with Section 251 of the Delaware General
Corporation Law (the "DGCL"), at the Effective Time (as defined in SECTION 1.2),
Merger Sub shall be merged with and into Lady Luck. As a result of the Merger,
the separate corporate existence of Merger Sub shall cease and Lady Luck shall
continue as the surviving corporation (the "Surviving Corporation").
Section 1.2. EFFECTIVE TIME OF THE MERGER. Subject to the provisions of
this Agreement (including SECTION 7.1 hereof), a certificate of merger with
respect to the Merger in appropriate form (the "Certificate of Merger") shall be
duly prepared, executed and acknowledged and thereafter delivered to the
Secretary of State of the State of Delaware for filing, as provided in the DGCL,
as early as practicable on the Closing Date (as defined in SECTION 1.3). The
Merger shall become effective at the later of the date of filing of the
Certificate of Merger or at such time within 90 days of the date of filing as is
specified in the Certificate of Merger (the "Effective Time").
Section 1.3. CLOSING. The closing of the Merger (the "Closing") will take
place at such time and place to be agreed upon by the parties hereto, on a date
to be specified by Buyer and Lady Luck, which shall be no later than the third
business day after satisfaction or, if permissible, waiver of the conditions set
forth in ARTICLE VI (the "Closing Date") and no earlier than January 4, 2000,
unless another date is agreed to by Buyer and Lady Luck.
Section 1.4. EFFECT OF THE MERGER. Upon becoming effective, the Merger
shall have the effects set forth in the DGCL. Without limiting the generality of
the foregoing, and subject thereto, at the Effective Time, all properties,
rights, privileges, powers and franchises of Merger Sub and Lady Luck shall vest
in the Surviving Corporation, and all debts, liabilities and duties of Merger
Sub and Lady Luck shall become the debts, liabilities and duties of the
Surviving Corporation.
Section 1.5. CERTIFICATE OF INCORPORATION AND BYLAWS OF THE SURVIVING
CORPORATION. At the Effective Time, the Certificate of Incorporation and Bylaws
of the Surviving Corporation shall be amended to be substantially identical to
the Certificate of Incorporation and Bylaws, respectively, of Merger Sub as in
effect immediately prior to the Effective Time, in each case until duly amended
in accordance with applicable law; provided the name of the Surviving
Corporation as set forth in its Certificate of Incorporation shall be changed to
a new name to be determined by Merger Sub prior to the Effective Time.
Section 1.6. DIRECTORS AND OFFICERS OF THE SURVIVING CORPORATION. The
directors of Merger Sub immediately prior to the Effective Time shall be the
initial directors of the Surviving Corporation, each to hold office in
accordance with the Certificate of Incorporation and Bylaws of the Surviving
Corporation. The directors of Lady Luck immediately prior to the Effective Time
shall each have resigned as of the Effective Time. The officers of Merger Sub
immediately prior to the Effective Time shall be the initial officers of the
Surviving Corporation, each to hold office in accordance with the Certificate of
Incorporation and Bylaws of the Surviving Corporation.
Section 1.7. SUBSIDIARIES OF THE SURVIVING CORPORATION. The Surviving
Corporation may distribute shares of stock of the Subsidiaries of the Surviving
Corporation to the Buyer, or undertake similar transactions having the effect of
reorganizing the corporate structure of Buyer and its Subsidiaries, from time to
time after the Effective Time. ARTICLE II
EFFECT OF THE MERGER ON SECURITIES OF THE CONSTITUENT CORPORATIONS
Section 2.1. CONVERSION OF SECURITIES. At the Effective Time, by virtue of
the Merger and without any action on the part of any of the parties hereto or
the holders of any of the following:
(a) LADY LUCK COMMON STOCK. Each share of common stock, par value
$0.006 per share, of Lady Luck ("Lady Luck Common Stock") issued and
outstanding immediately prior to the Effective Time (other than shares to be
canceled and retired in accordance with SECTION 2.1(b) and any Dissenting
Shares (as defined in SECTION 2.4), together with all rights in respect
thereto, shall be converted, subject to SECTION 2.1(e), into the right to
receive from the Surviving Corporation a net amount of $12.00 in cash (the
"Merger Consideration"). As of the Effective Time, all shares of Lady Luck
Common Stock upon which the Merger Consideration is payable pursuant to this
SECTION 2.1(a) shall no longer be outstanding and shall automatically be
canceled and retired and shall cease to exist, and each holder of a
certificate representing any such shares shall cease to have any ownership
or other rights with respect thereto, except the right to receive the Merger
Consideration in exchange for such shares upon the surrender of such
certificate in accordance with SECTION 2.2.
(b) CANCELLATION OF TREASURY STOCK AND BUYER-OWNED STOCK. All shares of
Lady Luck Common Stock that are owned by Lady Luck as treasury stock and any
shares of Lady Luck Common Stock owned by Buyer or any wholly-owned
Subsidiary (as defined in SECTION 3.1) of Buyer shall be canceled and
retired and shall cease to exist, and no consideration shall be delivered in
exchange therefor.
(c) CAPITAL STOCK OF MERGER SUB. Each issued and outstanding share of
the common stock, par value $.01 per share, of Merger Sub shall be converted
into and become one fully paid and nonassessable share of common stock, par
value $.01 per share, of the Surviving Corporation.
(d) ADJUSTMENTS TO MERGER CONSIDERATION. The Merger Consideration shall
be adjusted to reflect fully the effect of any stock split, reverse split,
stock dividend (including any dividend or distribution of securities
convertible into Lady Luck Common Stock, as applicable), reorganization,
recapitalization or any other like change with respect to Lady Luck Common
Stock occurring after the date hereof and prior to the Effective Time. I-2
Section 2.2. EXCHANGE OF CERTIFICATES.
(a) EXCHANGE AGENT. At or prior to the Effective Time, Buyer shall
deposit with a bank or trust company designated by Buyer and reasonably
acceptable to Lady Luck (the "Exchange Agent"), for the benefit of the
holders of shares of Lady Luck Common Stock outstanding immediately prior to
the Effective Time, for exchange in accordance with this SECTION 2.2,
through the Exchange Agent, cash in an aggregate amount sufficient to pay
the Merger Consideration (the cash so deposited being hereinafter referred
to as the "Exchange Fund"). Any interest, dividends or other income earned
on the investment of cash or other property held in the Exchange Fund shall
be for the account of and payable to Buyer.
(b) EXCHANGE PROCEDURES. Promptly after the Effective Time, Buyer will
instruct the Exchange Agent to mail to each holder of record of Lady Luck
Common Stock (i) a letter of transmittal (which shall specify that delivery
shall be effected, and risk of loss and title to a Certificate shall pass,
only upon proper delivery of the Certificate to the Exchange Agent and shall
be in such form and have such other provisions as Buyer may reasonably
specify), and (ii) instructions to effect the surrender of the Certificate
in exchange for the Merger Consideration. Upon surrender of a Certificate
for cancellation to the Exchange Agent together with such letter of
transmittal, duly executed, and such other customary documents as may be
required pursuant to such instructions, the holder of such Certificate shall
be entitled to receive in exchange therefor cash in an amount equal to the
Merger Consideration multiplied by the number of shares represented by such
Certificate, and the Certificate so registered shall forthwith be canceled.
In the event of a transfer of ownership of shares of Lady Luck Common Stock
which is not registered in the transfer records of Lady Luck as of the
Effective Time, the Merger Consideration may be issued and paid in
accordance with this ARTICLE II to a transferee if the Certificate
evidencing such shares of Lady Luck Common Stock is presented to the
Exchange Agent, accompanied by all documents required to evidence and effect
such transfer pursuant to this SECTION 2.2(b) and by evidence that any
applicable stock transfer taxes have been paid. Until so surrendered, each
outstanding Certificate that prior to the Effective Time represented shares
of Lady Luck Common Stock (other than Certificates representing Dissenting
Shares) will be deemed from and after the Effective Time for all corporate
purposes (other than the payment of dividends and subject to SECTION
2.1(e)), to evidence the right to receive the Merger Consideration without
interest. No interest will be paid or will accrue on the cash payable upon
the surrender of any Certificate.
(c) TRANSFERS OF OWNERSHIP. At the Effective Time, the stock transfer
books of Lady Luck shall be closed, and there shall be no further
registration of transfers of Lady Luck Common Stock thereafter on the
records of Lady Luck.
(d) TERMINATION OF EXCHANGE FUND. Any portion of the Exchange Fund
which remains undistributed to the former stockholders of Lady Luck as of
the date which is twelve months after the Effective Time shall be delivered
to Buyer, upon demand, and thereafter such former stockholders of Lady Luck
who have not theretofore complied with this SECTION 2.2 shall be entitled to
look only to Buyer for payment of the Merger Consideration to which they are
entitled pursuant hereto.
(e) NO LIABILITY. None of Buyer, Merger Sub, Lady Luck or the Exchange
Agent shall be liable to any holder of Lady Luck Common Stock for any Merger
Consideration delivered to a public official pursuant to any applicable
abandoned property, escheat or similar law. If any Certificates shall not
have been surrendered immediately prior to the date on which the Merger
Consideration or any dividends or distributions with respect to Lady Luck
Common Stock in respect of such Certificate would otherwise escheat to or
become the property of any Governmental Entity, any such Merger
Consideration, dividends or distributions in respect of such Certificate
shall, to the extent permitted by applicable law, become the property of the Surviving I-3
Corporation, free and clear of all claims or interest of any person
previously entitled thereto on such date prior to the time such escheat laws
become applicable.
(f) WITHHOLDING RIGHTS. Buyer or the Exchange Agent shall be entitled
to deduct and withhold from the Merger Consideration otherwise payable
pursuant to this Agreement to any holder of Certificates which prior to the
Effective Time represented shares of Lady Luck Common Stock such amounts as
Buyer or the Exchange Agent is required to deduct and withhold with respect
to the making of such payment under the Internal Revenue Code of 1986, as
amended (the "Code"), or any provision of state, local or foreign tax law.
To the extent that amounts are so withheld by Buyer or the Exchange Agent
and remitted to the proper authority, such withheld amounts thereafter shall
be treated for all purposes of this Agreement as having been paid to the
holder of the shares of Lady Luck Common Stock in respect of which such
deduction and withholding was made by Buyer or the Exchange Agent.
(g) LOST, STOLEN OR DESTROYED CERTIFICATES. In the event any
Certificates shall have been lost, stolen or destroyed, the Exchange Agent
shall pay in exchange for such lost, stolen or destroyed Certificates, upon
the making of an affidavit of that fact by the holder thereof such Merger
Consideration as may be required pursuant to SECTION 2.2; provided, however,
that Buyer may, in its discretion, and as a condition precedent to the
issuance thereof, require the owner of such lost, stolen or destroyed
Certificates to deliver a bond in such sum as it may reasonably direct as
indemnity against any claim that may be made against Buyer, the Surviving
Corporation or the Exchange Agent with respect to the Certificates alleged
to have been lost, stolen or destroyed.
Section 2.3. ACCELERATION AND PAYMENT FOR LADY LUCK OPTIONS. Following the
execution of this Agreement, the Board of Directors of Lady Luck (or, if
appropriate, any committee administering the Lady Luck Stock Option Plan (as
defined below)) shall adopt such resolutions or use its best efforts to take
such other actions as are required to provide that each then outstanding stock
option to purchase shares of Lady Luck Common Stock (a "Lady Luck Option")
heretofore granted under any stock option or other stock-based incentive plan,
program or arrangement of Lady Luck, including the 1993 Stock Option Plan and
the 1996 Director Stock Option Plan (collectively, the "Lady Luck Option Plan")
shall be accelerated and canceled immediately prior to the Effective Time in
exchange for payment of an amount of cash equal to the product of (x) the number
of shares of Lady Luck Common Stock subject to such Lady Luck Option immediately
prior to the consummation of the Merger and (y) the excess, if any, of the
Merger Consideration over the per share exercise price of such Lady Luck Option;
provided, however, that such excess shall not be less than zero. Notwithstanding
anything in this SECTION 2.3 to the contrary, with respect to any Lady Luck
Option granted under the Lady Luck Stock Option Plan having a per share exercise
price that is greater than the Merger Consideration, whether or not vested and
exercisable, the Board of Directors of Lady Luck (or, if appropriate, any
committee administering the Lady Luck Stock Option Plan), shall adopt such
resolutions or use its best efforts to take such other actions as are required
to provide that each such Lady Luck Option shall be accelerated and, if not
exercised before the Effective Time, shall be canceled as of the Effective Time
and shall have no further force or effect as of the Effective Time, without
regard to the fact that the holder of such Lady Luck Option shall have received
no payment for the Lady Luck Option.
Section 2.4. DISSENTING SHARES. Notwithstanding SECTION 2.1, all shares of
Lady Luck Common Stock issued and outstanding immediately prior to the Effective
Time and held by a holder who has not voted in favor of the Merger or consented
thereto in writing and who has demanded appraisal for such shares of Lady Luck
Common Stock in accordance with the DGCL (collectively, the "Dissenting Shares")
shall not be converted into a right to receive the Merger Consideration, unless
such holder fails to perfect or withdraws or otherwise loses such holder's right
to appraisal. If after the Effective Time such holder fails to perfect or
withdraws or loses such holder's right to appraisal, such shares of Lady Luck
Common Stock shall be treated as if they had been converted as of the Effective
Time into a right to receive the Merger Consideration without interest thereon.
Lady Luck shall give Buyer I-4
prompt notice of any demands received by Lady Luck for appraisal of shares of
Lady Luck Common Stock, and Buyer shall have the right to participate in all
negotiations and proceedings with respect to such demands. Lady Luck shall not,
except with the prior written consent of Buyer, make any payment with respect
to, or settle or offer to settle, any such demands.
Section 2.5. LADY LUCK PREFERRED STOCK. Each share of Series A Mandatory
Cumulative Redeemable Preferred Stock, par value $25.00 per share, of Lady Luck
("Lady Luck Series A Preferred Stock") issued and outstanding immediately prior
to the Effective Time, shall be redeemed in connection with the transactions
contemplated hereby immediately prior to the Effective Time pursuant to its
terms at its liquidation preference. Immediately prior to the Effective Time,
Buyer shall deposit with a bank or trust company designated by Lady Luck and
reasonably acceptable to Buyer (the "Redemption Agent") for the benefit of the
holders of shares of Lady Luck Series A Preferred Stock outstanding immediately
prior to the Effective Time, for redemption by Lady Luck through the Redemption
Agent, cash in an aggregate amount sufficient to redeem all outstanding shares
of Lady Luck Series A Preferred Stock at the liquidation preference as of such
date (the "Lady Luck Series A Preferred Stock Redemption Amount"). Lady Luck
shall call the Lady Luck Series A Preferred Stock for redemption pursuant to its
terms at the Lady Luck Series A Preferred Stock Redemption Price at the
direction of Buyer and conditioned upon closing of the Merger. Any interest,
dividends or other income earned on the investment of cash or other property
held in the Exchange Fund shall be for the account of and payable to Buyer.
Section 2.6. LADY LUCK DEBT SECURITIES. Except as otherwise repaid,
redeemed or purchased in connection with the transactions contemplated hereby,
all notes and other debt instruments of Lady Luck that are outstanding at the
Effective Time shall continue to be outstanding subsequent to the Effective Time
as debt instruments of the Surviving Corporation, subject to their respective
terms and provisions.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF LADY LUCK
Lady Luck represents and warrants to Buyer and Merger Sub that the
statements contained in this ARTICLE III are true and correct except as set
forth herein and in the disclosure schedule delivered by Lady Luck to Buyer and
Merger Sub on or before the date of this Agreement (the "Lady Luck Disclosure
Schedule"). Any reference in the Merger Agreement to Lady Luck's "knowledge" or
"best knowledge," or to "the best of Lady Luck's knowledge," or words of similar
import, shall be deemed a reference to the actual knowledge of any of the (i)
corporate officers of Lady Luck or any of its Subsidiaries and (ii) general
managers of any gaming property of Lady Luck or any of its Subsidiaries for all
purposes. The Lady Luck Disclosure Schedule has been prepared based upon the
foregoing definition.
Section 3.1. ORGANIZATION OF LADY LUCK AND ITS SUBSIDIARIES. Each of Lady
Luck and its Subsidiaries (as defined below) is duly organized, validly existing
and in good standing under the laws of the jurisdiction of its organization and
has all requisite corporate, partnership or limited liability company power and
authority to carry on its business as now being conducted. Each of Lady Luck and
its Subsidiaries is duly qualified or licensed to do business and is in good
standing in each jurisdiction in which the property owned, leased or operated by
it or the nature of the business conducted by it makes such qualification or
licensing necessary, except where the failure to be so qualified, licensed or in
good standing would not have a material adverse effect on the business,
properties, condition (financial or otherwise), prospects or results of
operations of Lady Luck and its Subsidiaries, taken as a whole other than any
effect arising out of, or resulting from, general economic conditions in the
United States or conditions generally affecting the gaming industry in the
United States (a "Lady Luck Material Adverse Effect"). Lady Luck has delivered
to Buyer a true and correct copy of the Certificate of Incorporation and Bylaws
of Lady Luck, in each case as amended to the date of this Agreement. I-5
Assuming regulatory compliance by Buyer, the respective organizational documents
of Lady Luck's Subsidiaries do not contain any provision that would limit or
otherwise restrict the ability of Buyer, following the Effective Time, from
owning or operating such Subsidiaries on the same basis as Lady Luck. Except as
set forth on the Lady Luck Disclosure Schedule, all the outstanding shares of
capital stock of, or other equity interests in, each such Subsidiary have been
validly issued and are fully paid and nonassessable and are owned directly or
indirectly by Lady Luck, free and clear of all pledges, claims, liens, charges,
encumbrances and security interests of any kind or nature whatsoever
(collectively, "Liens") and free of any other restriction (including any
restriction on the right to vote, sell or otherwise dispose of such capital
stock or other ownership interests). As used in this Agreement, the word
"Subsidiary" means, with respect to any party, any corporation or other
organization, whether incorporated or unincorporated, of which (i) such party or
any other Subsidiary of such party is a general partner or (ii) at least fifty
percent (50%) of the securities or other interests having by their terms
ordinary voting power to elect a majority of the Board of Directors or others
performing similar functions with respect to such corporation or other
organization is directly or indirectly owned or controlled by such party or by
any one or more of its Subsidiaries, or by such party and one or more of its Subsidiaries.
Section 3.2. CAPITALIZATION.
(a) The authorized capital stock of Lady Luck consists of 75,000,000
shares of Lady Luck Common Stock, $0.006 par value per share, and 4,000,000
shares of preferred stock, $25.00 par value per share ("Lady Luck Preferred
Stock"). As of the date hereof, (i) 4,881,003 shares of Lady Luck Common
Stock were issued and outstanding, all of which are validly issued, fully
paid and nonassessable, (ii) no shares of Lady Luck Common Stock were held
in the treasury of Lady Luck or by Subsidiaries of Lady Luck, and
(iii) 433,638 shares of Lady Luck Series A Preferred Stock were the only
Lady Luck Preferred Stock issued and outstanding. SECTION 3.2(a)(i) of the
Lady Luck Disclosure Schedule sets forth the number of shares of Lady Luck
Common Stock reserved for future issuance upon exercise of Lady Luck Options
granted and outstanding as of the date hereof and under the Lady Luck Stock
Option Plans.
SECTION 3.2(a)(i) of the Lady Luck Disclosure Schedule also sets forth
as of the date hereof, for each Lady Luck Stock Option Plan, the dates on
which Options which are still outstanding under such plan were granted, the
number of outstanding Options granted on each such date and the exercise
price thereof. Except as disclosed in SECTION 3.2(a)(i) of the Lady Luck
Disclosure Schedule, since December 31, 1998 through the date of this
Agreement, Lady Luck has not made any grants under any of the Lady Luck
Stock Option Plans. Except as disclosed in SECTION 3.2(a)(i) of the Lady
Luck Disclosure Schedule, as of the date of this Agreement, Lady Luck has
not granted any contractual rights the value of which is derived from the
financial performance of Lady Luck or from the value of shares of Lady Luck
Common Stock. Except as disclosed in SECTION 3.2(a)(ii) of the Lady Luck
Disclosure Schedule, there are no obligations, contingent or otherwise, of
Lady Luck or any of its Subsidiaries to repurchase, redeem or otherwise
acquire any shares of Lady Luck Common Stock or the capital stock or
ownership interests of any Subsidiary or to provide funds to or make any
investment in an amount greater than $250,000 in the aggregate (in the form
of a loan, capital contribution or otherwise) in any such Subsidiary or any
other entity other than guarantees of bank obligations or indebtedness for
borrowed money of Subsidiaries entered into in the ordinary course of
business. All of the outstanding shares of capital stock (including shares
which may be issued upon exercise of outstanding options) or other ownership
interests of each of Lady Luck's Subsidiaries are duly authorized, validly
issued, fully paid and nonassessable and, except as disclosed in SECTION
3.2(a)(iii) of the Lady Luck Disclosure Schedule and except as required by
gaming industry regulations, all such shares and ownership interests are
owned by Lady Luck or another Subsidiary of Lady Luck, free and clear of all
security interests, liens, claims, pledges, agreements, limitations on Lady
Luck's voting rights, charges or other encumbrances or restrictions on
transfer of any nature. I-6
(b) There are no bonds, debentures, notes or other indebtedness having
voting rights (or convertible into securities having such rights) in
connection with the Merger or the transactions contemplated by this
Agreement ("Voting Debt") of Lady Luck or any of its Subsidiaries issued and
outstanding, other than the debt securities disclosed in SECTION 3.2(b) of
the Lady Luck Disclosure Schedule. Except as set forth in SECTION 3.2(a) or
in this SECTION 3.2(b) or as reserved for future grants of options under the
Lady Luck Stock Option Plans as of the date hereof, (i) there are no shares
of capital stock of any class of Lady Luck, or any security exchangeable
into or exercisable for such equity securities, issued, reserved for
issuance or outstanding; (ii) except as set forth in SECTION 3.2(b) of the
Lady Luck Disclosure Schedule, there are no options, warrants, equity
securities, calls, rights, commitments or agreements of any character to
which Lady Luck or any of its Subsidiaries is a party or by which it is
bound obligating Lady Luck or any of its Subsidiaries to issue, deliver or
sell, or cause to be issued, delivered or sold, additional shares of capital
stock or other ownership interests (including Voting Debt) of Lady Luck or
any of its Subsidiaries or obligating Lady Luck or any of its Subsidiaries
to grant, extend, accelerate the vesting of or enter into any such option,
warrant, equity security, call, right, commitment or agreement; and
(iii) except for the Stockholder Support Agreement being entered into on the
date hereof, there are no voting trusts, proxies or other voting agreements
or understandings with respect to the shares of capital stock of Lady Luck.
All shares of Lady Luck Common Stock subject to issuance as specified in
this SECTION 3.2(b) are duly authorized and, upon issuance on the terms and
conditions specified in the instruments pursuant to which they are issuable,
shall be validly issued, fully paid and nonassessable.
Section 3.3. AUTHORITY; NO CONFLICT; REQUIRED FILINGS AND CONSENTS.
(a) Lady Luck has all requisite corporate power and authority to enter
into this Agreement and to consummate the transactions contemplated by this
Agreement. The execution and delivery of this Agreement and the consummation
of the transactions contemplated hereby by Lady Luck have been duly
authorized by all necessary corporate action on the part of Lady Luck,
subject only to the approval and adoption of this Agreement and the Merger
by Lady Luck's common stockholders holding at least 75% of the outstanding
shares of Lady Luck Common Stock. This Agreement has been duly executed and
delivered by Lady Luck and constitutes the valid and binding obligation of
Lady Luck, enforceable against Lady Luck in accordance with its terms.
(b) Other than as disclosed in SECTION 3.3(b) of the Lady Luck
Disclosure Schedule, the execution and delivery of this Agreement by Lady
Luck does not, and the consummation of the transactions contemplated hereby
will not, (i) conflict with, or result in any violation or breach of, any
provision of the Certificate of Incorporation or Bylaws of Lady Luck or the
comparable charter or organizational documents of any of its Subsidiaries,
(ii) result in any violation or breach of, or constitute (with or without
notice or lapse of time, or both) a default (or give rise to a right of
termination, cancellation or acceleration of any obligation or loss of any
material benefit) under, or require a consent or waiver under, any of the
terms, conditions or provisions of any note, bond, mortgage, indenture,
lease, contract or other agreement, instrument or obligation to which Lady
Luck or any of its Subsidiaries is a party or by which any of them or any of
their properties or assets may be bound, or (iii) subject to the
governmental filings and other matters referred to in SECTION 3.3(c),
conflict with or violate any permit, concession, franchise, license,
judgment, order, decree, statute, law, ordinance, rule or regulation
applicable to Lady Luck or any of its Subsidiaries or any of its or their
properties or assets, except in the case of clauses (ii) and (iii) for any
such conflicts, violations, defaults, terminations, cancellations or
accelerations which (x) are not, individually or in the aggregate,
reasonably likely to have a Lady Luck Material Adverse Effect or (y) would
not prevent or materially delay the consummation of the Merger.
(c) Except as disclosed in SECTION 3.3(c) of the Lady Luck Disclosure
Schedule, no consent, approval, order or authorization of, or registration,
declaration or filing with, any court, administrative agency, commission,
gaming authority or other governmental authority or I-7
instrumentality ("Governmental Entity") is required by or with respect to
Lady Luck or any of its Subsidiaries in connection with the execution and
delivery of this Agreement or the consummation of the transactions
contemplated hereby, except for (i) the filing of the pre-merger
notification report under the Hart-Scott-Rodino Antitrust Improvements Act
of 1976, as amended ("HSR Act"), (ii) the filing of the Certificate of
Merger with respect to the Merger with the Secretary of State of the State
of Delaware, (iii) the filing of any Proxy Statement (as such term is
defined in SECTION 5.4(a) below) with the Securities and Exchange Commission
(the "SEC") in accordance with the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), (iv) any approvals and filing of notices
required under any applicable gaming industry regulation, (v) such consents,
approvals, orders, authorizations, permits, filings or registrations related
to, or arising out of, compliance with statutes, rules or regulations
regulating the consumption, sale or serving of alcoholic beverages, and
(vi) such immaterial filings and consents as may be required under any
environmental, health or safety law or regulation pertaining to any
notification, disclosure or required approval triggered by the Merger.
Section 3.4. PUBLIC FILINGS; FINANCIAL STATEMENTS.
(a) None of Lady Luck's Subsidiaries is required to file forms, reports
and documents with the SEC. Lady Luck has filed with the SEC all reports,
schedules, forms, statements and other documents required to be filed by the
Securities Act of 1933, as amended (the "Securities Act") and the Exchange
Act since December 31, 1998. Except as set forth in SECTION 3.4(a) of the
Lady Luck Disclosure Schedule and except for matters otherwise corrected by
the subsequent filing with the SEC of an appropriate amendment prior to the
date of this Agreement, the reports, forms, documents filed by Lady Luck
with the SEC prior to the date of this Agreement (the "Lady Luck SEC
Reports") (including any financial statements filed as a part thereof or
incorporated by reference therein) (i) at the time filed, complied in all
material respects with the applicable requirements of the Securities Act and
the Exchange Act, as the case may be, and (ii) did not, at the time they
were filed (or if amended or superseded by a filing prior to the date of
this Agreement, then on the date of such filing), contain any untrue
statement of a material fact or omit to state a material fact required to be
stated in such Lady Luck SEC Reports or necessary in order to make the
statements in such Lady Luck SEC Reports, in the light of the circumstances
under which they were made, not misleading.
(b) Except as set forth in SECTION 3.4(a), each of the consolidated
financial statements (including, in each case, any related notes) of Lady
Luck contained in the Lady Luck SEC Reports complied as to form in all
material respects with the applicable rules and regulations of the SEC with
respect thereto; was prepared in accordance with generally accepted
accounting principles ("GAAP") applied on a consistent basis throughout the
periods involved (except as may be indicated in the notes to such financial
statements or, in the case of unaudited statements, as permitted by Form
10-Q under the Exchange Act), and fairly presented the consolidated
financial position of Lady Luck and its Subsidiaries as of the dates, and
the consolidated results of its operations and cash flows for the periods,
indicated, except that the unaudited interim financial statements were or
are subject to normal and recurring year-end adjustments which, with respect
to interim periods since December 31, 1998, were not or are not expected to
be material in amount. The audited balance sheet of Lady Luck as of
December 31, 1998 is referred to herein as the "Lady Luck Balance Sheet."
The unaudited consolidated balance sheet and consolidated income statement
of Lady Luck as of and for the period ended June 30, 1999 are referred to
herein as the "Lady Luck Interim Financial Statements." I-8
Section 3.5. NO UNDISCLOSED LIABILITIES. Except as disclosed in the Lady
Luck SEC Reports or in SECTION 3.5 of the Lady Luck Disclosure Schedule, and
except for liabilities and obligations incurred since the date of the Lady Luck
Balance Sheet in the ordinary course of business consistent with past practices,
Lady Luck and its consolidated Subsidiaries do not have any liabilities accrued,
contingent or otherwise, of the type required to be reflected in financial
statements, including the notes thereto, in accordance with GAAP, and whether
due or to become due.
Section 3.6. ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as disclosed in
the Lady Luck SEC Reports or in SECTION 3.6 of the Lady Luck Disclosure
Schedule, since the date of the Lady Luck Balance Sheet, Lady Luck and its
Subsidiaries have conducted their respective businesses only in the ordinary
course consistent with past practice, and there has not been (a) any event,
series of events, condition or series of conditions that has had a Lady Luck
Material Adverse Effect; (b) any declaration, setting aside or payment of any
dividend or other distribution (whether in cash, stock or property) with respect
to any of Lady Luck's capital stock; (c) any split, combination or
reclassification of any of its capital stock or any issuance or the
authorization of any issuance of any other securities in respect of, in lieu of
or in substitution for shares of its capital stock; (d) (i) any granting by Lady
Luck or any of its Subsidiaries to any director or officer of Lady Luck or its
Subsidiaries of any increase in compensation, except in the ordinary course of
business consistent with prior practice, or as was required under employment
agreements in effect as of the date of the most recent financial statements
included in the Lady Luck SEC Reports, (ii) any granting by Lady Luck or any of
its Subsidiaries to any director or officer of any stock options, (iii) any
granting by Lady Luck or any of its Subsidiaries to any officer of any increase
in severance or termination pay, or (iv) any entry by Lady Luck or any of its
Subsidiaries into any employment, severance or termination agreement with any
director, officer or other employee, consultant or independent contractor; (e)
any material change in accounting methods, principles or practices of Lady Luck,
except insofar as may have been required by a change in GAAP; (f) any tax
election that individually or in the aggregate would be reasonably likely to
have a Lady Luck Material Adverse Effect; or (g) any settlement of pending or
threatened litigation involving Lady Luck or any of its Subsidiaries (whether
brought by a private party or a Governmental Entity) in amounts of $10,000 ormore.
Section 3.7. TAXES.
(a) For the purposes of this Agreement, a "Tax" or, collectively,
"Taxes," means any and all federal, state, local and foreign taxes,
assessments and other governmental charges, duties, impositions and
liabilities, including taxes based upon or measured by gross receipts,
income, profits, sales, use and occupation, and value added, ad valorem,
transfer, gains, franchise, withholding, payroll, recapture, employment,
excise, unemployment insurance, social security, business license,
occupation, business organization, stamp, environmental and property taxes,
together with all interest, penalties and additions imposed with respect to
such amounts.
(b) Lady Luck and each of its Subsidiaries have: (i) filed all federal,
state, local and foreign Tax returns and reports required to be filed by
them prior to the date of this Agreement (taking into account all applicable
extensions), and such Tax returns and reports (taking into account all
amendments thereto) are true, correct and complete in all material respects;
(ii) paid or accrued all Taxes due and payable; and (iii) paid or accrued
all Taxes for which a notice of assessment or collection has been received
(other than amounts being contested in good faith by appropriate proceedings
with the relevant taxing authority and for which adequate reserves in
accordance with GAAP are being maintained).
(c) Except as set forth in SECTION 3.7(c) of the Lady Luck Disclosure
Schedule, no Tax return of Lady Luck or any of its Subsidiaries is under
examination by the Internal Revenue Service (the "IRS") nor any other taxing
authority and neither the IRS nor any other taxing authority has asserted
any claim for Taxes, or to the actual knowledge of the executive officers of
Lady Luck, is threatening to assert any claims for Taxes. No material issues
relating to Taxes were raised by the I-9
relevant taxing authority in any completed audit or examination that can
reasonably be expected to recur in a later taxable period.
(d) Lady Luck and its Subsidiaries have withheld or collected and paid
over to the appropriate governmental authorities (or are properly holding
for such payment) all Taxes required by law to be withheld or collected.
There are no liens for Taxes upon the assets of Lady Luck or any of its
Subsidiaries (other than liens for Taxes that are not yet due or delinquent
or that are being contested in good faith by appropriate proceedings, with
the relevant taxing authority and for which adequate reserves in accordance
with GAAP are being maintained).
(e) Except as disclosed in SECTION 3.7(c) of the Lady Luck Disclosure
Schedule and Gamblers Supply Management Company ("GSMC"), which currently is
a subsidiary of Sodak Gaming, Inc. ("Sodak"), and which is expected to be
acquired by Lady Luck after the date hereof but prior to Closing pursuant to
the Miss Marquette Agreement (as herein defined), neither Lady Luck nor any
of its Subsidiaries is or has been a member of an affiliated group of
corporations filing a consolidated federal income tax return (or a group of
corporations filing a consolidated, combined or unitary income tax return
under comparable provisions of state, local or foreign tax law) other than a
group the common parent of which is or was Lady Luck or any Subsidiary of
Lady Luck.
(f) Neither Lady Luck nor any of its Subsidiaries has any obligation
under any agreement or arrangement with any other person with respect to
Taxes of such other person (including pursuant to Treas. Reg. Section
1.1502-6 or comparable provisions of state, local or foreign tax law) and
including any liability for Taxes of any predecessor entity.
(g) Except as disclosed in SECTION 3.7(g) of the Lady Luck Disclosure
Schedule, neither Lady Luck nor any of its Subsidiaries shall be required to
include in a taxable period ending after the Effective Time taxable income
attributable to income that accrued in a Tax period prior to the Effective
Time but that was not recognized in any such prior Tax period as a result of
the installment method of accounting, the completed contract or percentage
contract methods of accounting (including the look-back method under Section
460(b)(2) of the Code), the cash method of accounting or Section 481 of the
Code or any comparable provision of state, local, or foreign Tax law, or for
any other reason. Neither Lady Luck nor any of its Subsidiaries has made an
election under Section 341(f) of the Code.
(h) Except as disclosed in SECTION 3.7(h) of the Lady Luck Disclosure
Schedule, (i) there are no outstanding agreements or waivers extending, or
having the effect of extending, the statutory period of limitation
applicable to any Tax returns required to be filed with respect to Lady Luck
or any of its Subsidiaries, (ii) neither Lady Luck nor any of its
Subsidiaries, nor any affiliated group, within the meaning of Section 1504
of the Code, of which Lady Luck or any of its Subsidiaries is or has ever
been a member, has requested any extension of time within which to file any
Tax return, which return has not yet been filed, and (iii) no power of
attorney with respect to any Taxes has been executed or filed with any
taxing authority by or on behalf of Lady Luck or any of its Subsidiaries
which is still in effect.
(i) Except as set forth in SECTION 3.7(i) of the Lady Luck Disclosure
Schedule, no person who holds five percent or more of the stock of Lady Luck
is a "foreign person" as defined in Section 1445 of the Code.
Section 3.8. REAL PROPERTY, TITLE AND RELATED MATTERS.
(a) REAL PROPERTY. SECTION 3.8(a) of the Lady Luck Disclosure Schedule
sets forth a true and complete list as of the date of this Agreement of
(i) all contracts or agreements (including leases, ground leases, licenses,
options and other agreements) relating to Leased Real Property, and (ii) a
brief description of each piece of Owned Real Property. Lady Luck or a
Subsidiary of Lady Luck, as the case may be, has (A) good and marketable
title to all Owned Real Property and to all I-10
fixtures thereon, free and clear of any Encumbrances, except for Permitted
Encumbrances, and (B) except as set forth in SECTION 3.8(a) of the Lady Luck
Disclosure Schedule, the right to quiet enjoyment of the Leased Real
Property for the full term of the leases. Each lease or other contract
referred to in SECTION 3.8(a) of the Lady Luck Disclosure Schedule relating
to Leased Real Property is a valid contract or agreement enforceable against
Lady Luck or its Subsidiary, as the case may be, in accordance with its
terms and, to the knowledge of Lady Luck, against the other parties thereto.
To the knowledge of Lady Luck, there are no rights or options of any third
party to acquire such Leased Real Property or any ownership therein. Neither
Lady Luck nor any of its Subsidiaries are in default, nor have received any
written notice alleging that it or they are in default, under the leases,
ground leases, subleases, licenses, options or other agreements set forth in
SECTION 3.8(a) of the Lady Luck Disclosure Schedule relating to Leased Real
Property. To the knowledge of Lady Luck, no other party to any such leases,
ground leases, licenses, options or other agreements is in default thereunder.
(b) DEFINITIONS. As used in this SECTION 3.8, the following terms shall
have the following meanings:
"Encumbrances" means all leases, mortgages, liens, pledges, charges,
options, encumbrances or defects of any kind or character.
"Leased Real Property" means all of the real property leased or subleased by
Lady Luck or a Subsidiary of Lady Luck as tenant, together with, to the extent
leased by Lady Luck, all buildings and other structures, facilities or
improvements currently or hereafter located thereon, all fixtures, systems,
equipment and personal property of Lady Luck attached or appurtenant thereto,
and all easements, licenses, rights and appurtenances related to the foregoing.
"Owned Real Property" means all of the real property owned by Lady Luck or
any of its Subsidiaries, together with all buildings and other structures,
facilities or improvements currently or hereafter located thereon, all fixtures,
systems, equipment and personal property attached or appurtenant thereto, and
all easements, licenses, rights and appurtenances relating to the foregoing.
"Permitted Encumbrances" means such of the following as to which no
enforcement, collection, execution, levy or foreclosure proceeding shall have
been commenced: (i) Encumbrances that are disclosed in SECTION 3.8(a) of the
Lady Luck Disclosure Schedule, except for
