EXHIBIT 9.1
AMENDED AND RESTATED
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STOCKHOLDERS AGREEMENT
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THIS AMENDED AND RESTATED STOCKHOLDERS AGREEMENT is made and entered into
as of this 15th day of April, 1998, by and among LMC Leasing, Ltd., a Delaware
corporation (the "Company"), and Peter A. Ferro, Jr., as Voting Trustee of the
Ferro Brothers LMC Leasing, Ltd. Voting Trust; Peter A. Ferro, Jr. and William
J. Sabo, as Co-Trustees of the Melissa Kate Lambrecht Trust u/t/a Dated 5/3/93,
the Paul John Lambrecht Trust u/t/a Dated 5/3/93 and the Matthew Lambrecht Trust
u/t/a Dated 5/3/93; Charles P. Hammersmith, Jr.; Robert W. Kegley, Sr.; Thomas
J. Lambrecht; William J. McEnery, as Trustee fbo William J. McEnery; Edward T.
McGowan, as Trustee fbo Edward T. McGowan; William J. Sabo; and Martin McNally
(collectively, the "Stockholders").
RECITAL
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The Stockholders are parties to a Stockholder Agreement (the "Original
Agreement") dated as of July 8, 1997, as amended, with respect to the
Corporation and desire to amend and restate the Original Agreement, all on the
terms and subject to the conditions contained herein.
IT IS THEREFORE, AGREED:
ARTICLE I
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GENERAL DEFINITIONS
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Section 1.1 BOARD OF DIRECTORS. The term "Board of Directors" shall
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refer to the Board of Directors of the Corporation as now or hereafter
constituted.
Section 1.2 COMPETITOR. The term "Competitor" shall refer to any
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corporation, partnership, limited partnership, sole proprietorship, joint
venture or any other person or entity whatsoever which is in any way engaged in
the business of gaming in the State of Illinois or Indiana.
Section 1.3 CONTRIBUTION SHARE. Intentionally Omitted.
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Section 1.4 DIRECT INDEBTEDNESS FINANCING. Intentionally Omitted.
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Section 1.5 EQUITY CONTRIBUTION. Intentionally Omitted.
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Section 1.6 FINANCIAL STATEMENTS. The term "Financial Statements" shall
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refer to the consolidated balance sheets, consolidated statements of income and
retained earnings and consolidated statements of cash flow of the Corporation
and its Subsidiaries, for and as of each calendar month and each Fiscal Year,
prepared in accordance with generally accepted accounting
principles or, in the case of the calendar month or quarterly Financial
Statements, in accordance with those accounting practices and principles,
consistently applied, utilized by the Corporation's management in the
preparation of unaudited financial statements in the ordinary course of
business.
Section 1.7 FISCAL YEAR. The term "Fiscal Year" shall refer to the
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twelve month period selected by the Corporation for purposes of accounting for
its operations on an annual basis and for the preparation of its annual audited
financial statements.
Section 1.8 OFFER. The term "Offer" shall refer to a written bona fide
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offer from an independent third party to purchase Shares, which states the
number of Shares to be transferred, the name and business address of the
proposed transferees, and the amount of the consideration and the other
essential terms of the sale.
Section 1.9 OWNER'S START-UP AMOUNT. Intentionally Omitted.
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Section 1.10 PERMITTED TRANSFEREE. The term "Permitted Transferee" shall
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refer to:
(a) Any inter vivos trust established by any Stockholder which
is revocable at any time by the Stockholder and of which the Stockholder
(or a person approved by (i) all appropriate regulatory authorities and
(ii) Stockholders holding at least 50% of the Shares outstanding) is the
sole trustee, and which is a Qualified Subchapter S Trust under Section
1361 (d) of the Internal Revenue Code of 1986 as amended from time to time
(the "Code") .
(b) Any transfer which would not cause the Corporation to cease
to be qualified as a Subchapter S corporation under the Code and which is
approved in advance of the transfer by an affirmative vote of those
Stockholders holding more than fifty percent (50%) of the Shares
outstanding, on such terms and conditions as the Stockholders so voting
deem appropriate.
Notwithstanding the preceding provisions of this Section 1.10, a person shall
not be a Permitted Transferee unless the transfer to such person has been
formally approved in writing by all appropriate regulatory authorities (unless
in the opinion of legal counsel to the Corporation such approvals are not
legally required), and is otherwise in compliance with the applicable terms of
all applicable laws and regulations regarding such transfer.
Section 1.11 REPURCHASE EVENTS. The term "Repurchase Events" shall refer
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to any of the following events with respect to a Stockholder:
(a) Death. The death of the Stockholder.
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(b) Bankruptcy. The Stockholder shall (i) admit in writing his or
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her inability to pay debts generally as they become due; (ii) file a
petition in bankruptcy or a petition to take advantage of any insolvency
act; (iii) make an assignment for the benefit of his or her creditors; (iv)
consent to the appointment of a receiver for himself or herself or the
whole or substantially all of his or her property; (v) on a petition in
bankruptcy filed against him or her, be adjudicated a bankrupt; or (vi)
file a petition or answer seeking reorganization or arrangement or other
aid or relief under any bankruptcy or insolvency laws or any other law for
the relief of debtors.
(c) Judicial Transfer of Control. If, under the provisions of any
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law for the relief of debtors, any court of competent jurisdiction shall
assume custody or control of the Stockholder's assets, without the consent
of the Stockholder, and such custody or control shall not be terminated or
stayed within sixty (60) days from the date of assumption of such custody
or control.
(d) Mandatory Transfers. The Shares owned by the Stockholder shall
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be subject to mandatory transfer to a person or entity other than a
Permitted Transferee by operation of law or similar circumstances.
(e) Violation of Laws. The Stockholder shall no longer meet the
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minimum requirements imposed upon Stockholders of the Corporation by the
laws or regulations of any state applicable to the Corporation or any of
its Subsidiaries.
(f) 10% Interest in Competitor. The Stockholder shall have, directly
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or indirectly, acquired a ten percent (10%) or more interest in the
ownership value, voting rights or beneficial interests of any Competitor.
(g) Subchapter S Violations. The Stockholder shall no longer qualify
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as an eligible Stockholder of a Subchapter S corporation under Section
1361(b) of the Code.
Section 1.12 RESTRICTED STOCK TRANSFER CLOSING DATE. The term
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"Restricted Stock Transfer Closing Date" shall refer to the date for the closing
of the purchase and sale of Shares pursuant to Article IV hereof, which date
shall be:
(a) Pre-Solicitation Sales. In the case of Shares sold to the
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Corporation or the remaining Stockholders under Section 4.3(a), no later
than forty-five (45) days from the date on which the parties have agreed
upon the terms of the sale.
(b) First Refusal Sales. In the case of Shares sold pursuant to an
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Offer under Section 4.3(b), the date set forth in the applicable Offer
which date shall be no later than forty-five (45) days from the date on
which the last option to the Corporation and the Stockholders has expired.
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(c) Repurchase Events. In the case of Shares purchased by the
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Corporation or the remaining Stockholders under Section 4.4, the date
agreed upon by the parties to the transaction which date shall be no later
than forty-five (45) days from the date on which the applicable Restricted
Stock Transfer Purchase Price has been determined. However, if in the
opinion of legal counsel to the Corporation any transfer of Shares to which
this Section applies requires the approval of any regulatory authority the
applicable forty-five (45) day period shall be extended by the number of
days required to obtain such approvals. The purchasing party or parties
shall be responsible for setting the Restricted Stock Transfer Closing Date
within the time periods set forth above and shall give at least fifteen
(15) days' prior notice of the Restricted Stock Transfer Closing Date to
the selling party.
Section 1.13 RESTRICTED STOCK TRANSFER PURCHASE PRICE. The term
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"Restricted Stock Transfer Purchase Price" shall refer to the price payable for
Shares to be purchased pursuant to Section 4.4 of this Agreement. The
Restricted Stock Transfer Purchase Price shall be the fair market value of the
subject Shares determined as set forth in Section 4.5.
Section 1.14 STOCKHOLDERS. The term "Stockholders" shall refer to each of
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the Stockholders, any Permitted Transferee of such Stockholders and any other
parties who from time to time acquire Shares and execute an agreement by which
they agree to be bound by the terms of Article IV of this Stockholders
Agreement.
Section 1.15 STOCKHOLDERS AGREEMENT. The term "Stockholders Agreement"
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shall refer to this Stockholders Agreement as it may be amended, modified or
supplemented from time to time.
Section 1.16 SHARES. The term "Shares" shall refer to all voting and non-
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voting shares of the Common Stock of the Corporation presently outstanding or
hereafter issued and outstanding.
Section 1.17 SUBSIDIARY. The term "Subsidiary" shall refer to any
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corporation or other organization, whether incorporated or unincorporated, of
which at least fifty and one tenth percent (50.1%) 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 the Corporation or by any one or more of its Subsidiaries.
Section 1.18 THIRD PARTY GUARANTEE FINANCING. Intentionally Omitted.
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ARTICLE II
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FINANCING OBLIGATIONS OF STOCKHOLDER.
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Section 2.1 UNDERTAKING OF THE STOCKHOLDERS. Intentionally Omitted.
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Section 2.2 ADMISSION OF ADDITIONAL STOCKHOLDERS. The Stockholders may,
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by a vote of over fifty percent (50%) of the Shares outstanding, agree to admit
to the Corporation and make parties to the Stockholders Agreement additional
Stockholders who shall become Stockholders for all purposes of this Agreement.
Any such additional Stockholders shall be admitted as Stockholders on the terms
and conditions set forth by the Board of Directors, which terms and conditions
may vary from those terms and conditions applicable to the Stockholders
originally signing this Agreement. Notwithstanding anything to the contrary
contained in this Section, no person who could otherwise become a Stockholder
hereunder shall become a Stockholder if either (i) the then-existing
Stockholders have not obtained formal written approval of the admission of such
person as a Stockholder from all applicable regulatory authorities, if in the
opinion of legal counsel to the Corporation such approval is legally required,
or (ii) the admission of such person as a Stockholder would result in the loss
of the Corporation's status as a Subchapter S corporation under the Code. Any
issuance of Shares under this Section 2.2 shall be subject to the provisions of
Section 3.5.
Section 2.3 REDETERMINATION OF CONTRIBUTION SHARE. Intentionally
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Omitted.
Section 2.4 INDEMNIFICATION BY CORPORATION. Intentionally Omitted.
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Section 2.5 FAILURE TO MEET UNDERTAKING. Intentionally Omitted.
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ARTICLE III
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SHARES AND RELATED RIGHTS
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Section 3.1 ISSUANCE OF SHARES. Intentionally Omitted.
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Section 3.2 LEGEND ON SHARES CERTIFICATES. Each certificate for the
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Shares issued under this Article III shall bear a legend in substantially the
following form:
"This stock certificate and the shares represented hereby are subject
to the terms and conditions of, and no transfer or other disposition
thereof may, be made except in accordance with, that certain
Stockholders Agreement (the "Agreement") dated [the date of this
Agreement], by and among LMC Leasing, Ltd., a Delaware corporation
(the "Corporation"), and those persons who are shown on the books and
records of the Corporation to be the stockholders of the
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Corporation as of such date, and such other persons who may thereafter
become stockholders of the Corporation. A copy of the Agreement is on
file at the office of the Corporation and will be furnished by the
Corporation to any Stockholder upon request and without charge. Under
certain circumstances, the Agreement provides for certain limitations
on the transfer of the shares represented hereby. In addition, the
shares represented hereby may not be offered for sale, sold,
transferred or otherwise disposed of unless (1) a registration
statement is then effective as to such shares under the Securities Act
of 1933, as amended, and all applicable state securities statutes, or
(2) prior thereto the issuer shall have received an opinion of counsel
satisfactory to it that such offer to sell, sale, transfer or other
disposition can be lawfully effected under such Act and all applicable
state securities statutes, without registration of the shares."
The last sentence of the above legend shall be removed and the Corporation shall
issue a certificate with a legend so amended for the applicable Shares in the
event that such Shares are registered under the Securities Act of 1933, as
amended and all applicable state securities statutes.
Section 3.3 EXEMPT TRANSACTION. Each Stockholder hereby expressly
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acknowledges and agrees that the Corporation's issuance of the Shares hereunder
shall be exempt from the registration requirements of the Securities Act of
1933, as amended, and all regulations promulgated pursuant thereto, as well as
from all applicable state securities laws. Each Stockholder further expressly
represents and warrants to the Corporation that he or she will acquire the
Shares issued hereunder for investment purposes only and not with a view to
distribution or resale.
Section 3.4 SIZE OF BOARD OF DIRECTORS. Each of the Stockholders hereby
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covenants and agrees that he shall vote his Shares for and take all other action
reasonably necessary to establish a Board of Directors composed of the following
seven (7) members: Peter A. Ferro, Jr., Charles P. Hammersmith, Jr., Robert W.
Kegley, Sr., Thomas J. Lambrecht, William J. McEnery, Edward T. McGowan and
William J. Sabo (each, an "Initial Director"). The directors and officers of
the Corporation, acting as a stockholder of each of its Subsidiaries, shall
cause each of the Initial Directors who has a right to be elected to the Board
of Directors of the Corporation to be elected to the Board of Directors of each
of the Subsidiaries. After the date hereof, the size of the Board of Directors
may be increased or decreased as allowed under applicable law, provided,
however, that so long as any Initial Director still holds, either beneficially
or of record, any Shares, each of the Stockholders hereby covenants and agrees
that he shall take all action reasonably necessary to assure the continued
selection of such Initial Directors.
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Section 3.5 PRE-EMPTIVE RIGHTS.
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(a) Rights In General. Upon each issuance or sale by the
Corporationof Shares or securities convertible into or rights to acquire
Shares (for purposes of this Section 3.5, collectively referred to as the
"Shares"), each Stockholder shall have the right to purchase in accordance
with the procedure set forth in Section 3.5(b), such number of Shares as
shall be necessary for each such Stockholder to maintain, after such
issuance, his or her ownership of the total number of issued and
outstanding Shares as such Stockholder owned immediately prior to such
issuance.
(b) Notice. The Corporation shall give each Stockholder prior
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written notice of its intention to issue Shares to any person. The
notice shall set forth the terms of the proposed issuance, including the
number of Shares proposed to be issued, the purchase price per Share, and
the other material terms of the proposed issuance. If any Stockholder
desires to exercise the right of such Stockholder under Section 3.5(a), he
or she shall do so, if at all, by written notice delivered to the
Corporation and all other Stockholders within twenty (20) days of the
Corporation's written notice. The failure of any Stockholder to exercise
its rights under Section 3.5(a) on any occasion when such right is
available shall not affect its future right to receive notice of and to
purchase Shares in accordance with and subject to the terms and conditions
of this Section 3.5.
(c) Notwithstanding anything to the contrary contained in this
Section 3.5, none of the Stockholders shall be entitled to any of the
rights contained in this Section 3.5 upon the issuance of Shares in
connection with the merger of Empress Casino Joliet Corporation ("Empress
Joliet") into a Subsidiary of the Corporation.
Section 3.6 CUMULATIVE VOTING. The Corporation shall have cumulative
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voting rights with respect to the election of its Board of Directors, and the
Stockholders shall take all necessary action to so provide in the Corporation's
bylaws; provided, however, that the exercise of such cumulated voting rights
shall not be inconsistent with Section 3.4 hereof.
Section 3.7 SPECIAL VOTING REQUIREMENTS REGARDING CERTAIN TRANSACTION.
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(a) Actions Requiring 75% Approval. Each of the Stockholders
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expressly covenants and agrees that the following actions may not be
taken without the approval of those Stockholders holding at least seventy-
five percent (75%) of the Shares of the Corporation then outstanding:
(i) Sales of The Business. The sale, lease or disposition of all
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or substantially all of the assets of the Corporation or any
of its Subsidiaries or the merger or consolidation of the
Corporation or any of its Subsidiaries with or into any
other corporation, corporations or other entity, including a
sale of all or substantially all of the assets of the
Corporation or any of its
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Subsidiaries by means of a sale of the outstanding Shares of
the Corporation or any of its Subsidiaries. In the event
that a sale of the outstanding Shares of the Corporation as
described in the preceding sentence is favorably voted upon
in the manner required under this Section 3.7(a), all the
Stockholders, including Stockholders who may have voted
against such sale, shall tender their Shares as required
under the applicable Shares purchase agreement and execute
the purchase agreement and other related instruments
negotiated by the Corporation and approved by the
Stockholders as herein provided, provided that such purchase
agreement extends to all non-approving Stockholders the same
purchase price and terms of purchase accepted by those
Stockholders voting to approve the sale and does not impose
any personal liability on the Stockholder required to so
sign other than the Stockholder's agreement and
representation that he or she owns the Shares being sold
free and clear of all liens or other encumbrances of
whatsoever kind or nature. Each of the Stockholders
expressly covenants and agrees to waive any appraisal and/or
dissenter's rights provided to him or her by Section 262 of
the Delaware General Corporation Law in connection with this
Section 3.7(a).
(ii) Preferred Stock. The issuance or sale by the Corporation of
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any shares of Preferred Stock.
(iii) Stock of Empress Hammond or Empress Joliet. The issuance or
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sale by Empress Joliet, Empress Casino Hammond Corporation
("Empress Hammond") or the Corporation of any shares of
capital stock of Empress Joliet or Empress Hammond or
securities convertible into or other rights to acquire
shares of capital stock of Empress Joliet or Empress
Hammond.
(iv) Amendment of This Agreement. Any amendment of this
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Agreement, other than an amendment to the specific
provisions discussed in Section 3.7(b)(i).
(b) Action Requiring Unanimous Approval. Each of the
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Stockholders expressly covenants and agrees that the following actions
may not be taken without the approval of those Stockholders holding One
Hundred Percent (100%) of the Shares of the Corporation then outstanding:
(i) Amendment of Certain Provisions. Any amendment of Sections
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3.7(a)(i) or (iii) above or 4.3(b)(iii) below.
(ii) Amendment to Sections 2.5(a) and 2.5(b) Provisions.
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Intentionally Omitted.
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(iii) Stockholder Contribution Obligations. Intentionally
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Omitted.
ARTICLE IV
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SALE OR DISPOSITION OF SHARES
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Section 4.1 GENERAL RESTRICTION ON SALE OR DISPOSITION. Each
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Stockholder hereby covenants and agrees that, commencing on the date hereof, he
or she shall not, directly or indirectly, including, without limitation, by
means of a transfer of control of a Permitted Transferee, voluntarily or
involuntarily, sell, pledge, hypothecate, encumber or otherwise dispose of any
of his or her Shares or any interest therein, except as expressly permitted by
this Article IV. A Stockholder selling or otherwise transferring or desiring to
sell or transfer his or her Shares in accordance with this Article IV is
sometimes referred to herein as the "Selling Stockholder."
Section 4.2 PERMITTED TRANSFERS. Subject to the provisions of Article V
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(regarding the maintenance of Subchapter S status), a Stockholder may sell,
assign or otherwise transfer all or any portion of his or her Shares to a
Permitted Transferee, provided that prior to such transfer the Permitted
Transferee executes an appropriate supplement to this Agreement agreeing to be
bound by the terms and provisions thereof as if such Permitted Transferee were
an original party hereto.
Section 4.3 RIGHT OF FIRST REFUSAL. Except for sales or other transfers
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permitted pursuant to Section 4.2, a Selling Stockholder shall comply with the
following procedures:
(a) Actions Prior to Solicitation of Offers. Prior to soliciting
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offers for purchase of all or any portion of his or her Shares, the
Selling Stockholder shall first give written notice to the Corporation
and the remaining Stockholders of the intention to solicit such offers,
specifying the number of Shares proposed to be offered for sale (the
"Offered Shares").
(i) Within ten (10) days of receipt of such notice, the
Corporation and the Selling Stockholder shall commence to
negotiate in good faith to determine the fair market value of
the Offered Shares and other terms and conditions for the sale
of all, but not less than all, of the Offered Shares to the
Corporation. If within twenty (20) days of the commencement of
such negotiations, the Corporation and the Selling Stockholder
are unable to agree on the terms of purchase of all of the
Offered Shares, then the Selling Stockholder shall repeat the
same procedure with the remaining Stockholders who desire to
acquire the Offered Shares.
(ii) If within twenty (20) days of the commencement of the second
level of negotiations, the parties to such negotiations are
unable to agree on the
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terms of purchase of all of the Offered Shares, then, subject to
the remaining provisions of this Article IV, the Selling
Stockholder may proceed to solicit offers from third parties for
the Offered Shares. Any purchase of the Offered Shares by the
Stockholders as provided in this Section shall be in the
proportion of the respective ownership of Shares among those
Stockholders purchasing the Offered Shares unless otherwise
agreed by such purchasing Stockholders.
(b) Treatment of Offer. Within five (5) days after receipt of an
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Offer which the Selling Stockholder intends to accept, the Selling
Stockholder shall provide the Corporation and the remaining Stockholders
with a copy of the Offer. The following procedure shall then apply:
(i) Within thirty (30) days of the Corporation's receipt of the
copy of the Offer, the Corporation shall have the option (without
obligation) to purchase, if at all, all, but not less than all, of
Shares subject to the Offer (the "Third Party Offer Shares") at the
price and other terms disclosed in the Offer.
(ii) If the Corporation fails to purchase the Third Party Offer
Shares within the thirty (30)-day period, then the remaining
Stockholders shall have the option for a period of ten (10) days from
the end of the thirty (30)-day period to purchase the Third Party
Offer Shares at the price and other terms disclosed in the Offer. No
purchase under this Section 4.3(b)(ii) shall be final and effective
unless all the Shares purchasable pursuant to the Offer are purchased
pursuant to these provisions. Any purchase of Shares by any
Stockholders pursuant to these provisions shall be in the proportion
of the respective ownership of Shares among those Stockholders
purchasing such Shares unless otherwise agreed by such purchasing
Stockholders.
(iii) In lieu of exercising any option under the provisions of
Section 4.3(b)(ii), each remaining Stockholder shall have the option
exercisable within ten (10) days after the ten (10) day period
referred to in Section 4.3(b)(ii), to tender for sale to the offeror
of the Offer (each such tendering Stockholder hereafter a "Tendering
Stockholder"), on the same terms disclosed in the Offer, such number
of the Tendering Stockholder's Shares (including a fraction of a
single Share of the Tendering Stockholder's Shares if the Offer is for
a single Share) representing, as a percentage of the Third Party Offer
Shares, the same percentage of the Tendering Stockholder's ownership
interest in the Corporation as of the date of the Offer, thereby
reducing by the same number (or fraction thereof) the number of Third
Party Offer Shares which may be sold by the Selling Stockholder to the
offeror under the Offer. The Selling Stockholder agrees to take any
action necessary to accomplish the application of the provisions of
the preceding sentence, and any Offer which fails to allow Tendering
Stockholders to
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so apply the said provisions shall be ineffective and
may not be consummated as herein otherwise permitted.
(iv) If the Corporation and the remaining Stockholders fail to
exercise the options set forth in Sections 4.3(b)(i) and (ii) (and
after the expiration of the 10 day period granted to Tendering
Stockholders under Section 4.3(b)(iii)) the Selling Stockholder, and
to the extent options under Section 4.3(b)(iii) have been exercised,
the Tendering Stockholders, may proceed to consummate the sale of the
Third Party Offer Shares to the offeror under the Offer strictly in
accordance with the terms and conditions disclosed in the Offer,
provided that (A) the Selling and Tendering Stockholders have complied
with the provisions of Section 4.3(c), (B) such sale is consummated
within eighty five (85) days from the date on which the Corporation
received a copy of the Offer as herein provided; provided, however,
that if in the opinion of legal counsel to the Corporation any
transfer of Shares to which this Section applies requires the approval
of any regulatory authority, the aforesaid eighty five (85)-day period
shall be extended by the number of days required to obtain such
approval, and (C) the offeror, prior to the consummation of a sale,
has executed a supplement to this Stockholders Agreement in which it
agrees to be bound by the terms and conditions of this Stockholders
Agreement as if it were an original party thereto. If, however,
either the purchase price or other material terms disclosed in the
Offer are decreased or adjusted in a manner which is materially
favorable to the person proposing to purchase Shares under the Offer,
such change shall be deemed to be a new Offer, which shall again be
subject to compliance by the Selling Stockholder with all the
provisions of Section 4.3(b).
(c) Detrimental Sales. In the event that the Corporation concludes,
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for good and valid business reasons, that any proposed sale of Shares
pursuant to an Offer or otherwise to a specific purchaser would be
detrimental to the business of the Corporation, the Corporation shall
notify the Selling Stockholder of such fact in a written notice delivered
to the Selling Stockholder within thirty (30) days from being notified in
writing of the identity of the proposed purchaser, specifying with
particularity the specific reasons for its conclusion. Such notice may
also identify any other potential purchasers which the Corporation
concludes would be objectionable for similar reasons, it being understood
that any such identification is not inclusive. The Selling Stockholder
shall, in good faith, give due consideration to such concerns of the
Corporation but shall not, except as provided in the next sentence, be
prohibited from consummating such sale so long as the Selling Stockholder,
in good faith, does not believe that the proposed sale would be detrimental
to the business of the Corporation. Without limiting the generality of the
foregoing, each of the Stockholders hereby expressly acknowledges and
agrees that any of the following transfers, whether direct or indirect,
shall be conclusively presumed detrimental to the Corporation and shall be
prohibited: (i) any transfer to any person having any beneficial or legal
ownership interest in any Competitor of the Corporation,
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(ii) any transfer to a person which would cause the Corporation to lose its
status as a Subchapter S corporation under the Code or (iii) any transfer
to a person who, in the opinion of legal counsel to the Corporation, could
jeopardize any of the Corporation's gaming licenses.
(d) Notices. The exercise of any option granted under this Section
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4.3 shall be by delivery of written notice of the exercise within the time
period specified in the provisions to which the option relates.
Section 4.4 REPURCHASE EVENTS. Upon the occurrence of any Repurchase
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Event with respect to a Stockholder:
(a) Non-Death Events. In all Repurchase Events other than the death
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of a Stockholder, the Corporation and the other Stockholders shall have the
right, without obligation, to purchase all the Shares of the Stockholder
which rights may be exercised in accordance with the procedures set forth
in Section 4.3(b) as if the Repurchase Event was an Offer to purchase all
the Shares of the Stockholder at the Restricted Stock Transfer Purchase
Price (determined in accordance with Section 4.5 below), except that all
time periods shall commence from the date on which the occurrence of the
applicable Repurchase Event has been communicated in writing to the
Corporation.
(b) Death Event. In the case of the death of a Stockholder, the
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Corporation shall have the right, but not the obligation, to purchase the
Shares held by such Stockholder, his estate, legal representative and any
Permitted Transferee of such Stockholder (the "Corporation Call Option")
and, in the event of the exercise of the Corporation Call Option, each such
person shall sell such Shares to the Corporation at the Restricted Stock
Transfer Purchase Price determined in accordance with Section 4.5 below and
payable as set forth in Section 4.6(a)(i) below. In order to exercise the
Corporation Call Option, the Corporation must provide written notice of
such exercise to the deceased Stockholder's estate, legal representative
and/or any applicable Permitted Transferee within six (6) months after the
deceased Stockholder's death. Notwithstanding the provisions of the two
immediately preceding sentences, with respect to those Shares of the
deceased Stockholder which would, by reason of such Stockholder's death,
be, directly or indirectly transferred to or held for the benefit of such
Stockholder's spouse and/or children, the provisions of the two immediately
preceding sentences shall not apply and instead each of such spouse and/or
children (or the estate or other legal representative of the deceased
Stockholder acting on their behalf or other person holding such Shares for
their benefit) shall have the right to continue to own such Shares.
Section 4.5 DETERMINATION OF RESTRICTED STOCK TRANSFER PURCHASE PRICE.
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The Restrictive Stock Transfer Purchase Price shall be the fair market value of
the Shares being
12
purchased by reason of a Repurchase Event, determined under the provisions of
this Section 4.5 without regard to any minority discount and taking into account
all income tax effects.
(a) Agreement by Corporation and Selling Stockholder. The Restricted
------------------------------------------------
Stock Transfer Purchase Price shall be as agreed to by the Corporation
and the Selling Stockholder within thirty (30) days from the date of the
Repurchase Event.
(b) First Fair Market Value Appraisal. If Section 4.5(a) is
---------------------------------
inapplicable, the Corporation and the Selling Stockholder shall each
appoint a qualified independent appraiser of their respective choice within
five (5) days after the end of the 30-day period referred to in Section
4.5(a), and both appraisers shall have thirty (30) days from the date of
their appointment to agree upon the fair market value of the Shares. For
all purposes of this Section 4.5, any two appraisers shall be deemed to
"agree" or to have "agreed" if their individual determinations do not vary
from each other by more than five percent (5%). However, the fair market
value shall then be the average of the two determinations.
(c) Subsequent Fair Market Value Appraisals. If the two appraisers
---------------------------------------
cannot agree upon the fair market value within thirty (30) days after
their appointment, they shall, within eight (8) days after the end of this
30-day period, appoint a third qualified independent appraiser of their
collective choice. The three appraisers shall then determine the fair
market value of the Shares within twenty (20) days of the appointment of
the third appraiser. The fair market value agreed to by two of the three
appraisers (as the term "agree" and "agreed" is defined in Section 4.5(b))
shall be the purchase price for purposes of Section 4.5. However, the fair
market value shall then be the average of the two determinations. If two
of the three appraisers cannot agree on the fair market value, then the
procedures set forth in Section 4.5(b) and (c) shall be repeated until the
fair market value has been determined as herein provided.
(d) General Valuation Requirements. Any party appointing an
------------------------------
appraiser pursuant to this Section 4.5 shall direct the appraiser to
strictly comply with (i) the time periods set forth in this Section 4.5,
(ii) the requirement for appointment of a third appraiser, and (iii) the
valuation standards herein prescribed, and to immediately notify the
selling and purchasing parties in writing of any determination made
hereunder. The fees of the first two appraisers appointed hereunder shall
be payable by the appointing party and the fees of the third appraiser
shall be divided equally between the selling and purchasing parties.
Section 4.6 CLOSING AND PAYMENT OF PURCHASE PRICE.
-------------------------------------
(a) Closing Date and Payment Terms. The purchase of Shares
------------------------------
pursuant to this Article IV shall be consummated on the applicable
Restricted Stock Transfer Closing Date at the office of the Corporation and
shall be paid as follows:
13
(i) The Restricted Stock Transfer Purchase Price for Shares
purchased by reason of an event described in Section 4.4 shall be paid
as follows:
(A) If such purchase price for the applicable Selling
Stockholder is less than One Million Dollars ($1,000,000)
then twenty-five percent (25%) of the Restricted Stock
Transfer Purchase Price shall be paid within 60 days after
its determination and the balance shall be paid in equal
semi-annual installments over three years commencing on the
first anniversary of the applicable Repurchase Event and
continuing on each anniversary thereafter until payment in
full.
(B) If such purchase price for any Selling Stockholder equals
or exceeds One Million Dollars ($1,000,000), then twenty
five percent (25%) of the Restricted Stock Transfer
Purchase Price shall be paid within 60 days after its
determination and the balance shall be paid in equal annual
installments over five years commencing on the first
anniversary of the applicable Repurchase Event and
continuing on each anniversary thereafter until payment in
full.
(C) The amount of such purchase price outstanding during the
aforesaid three year or five year periods shall bear simple
interest at the rate of ten percent (10%) per annum which
interest shall be paid annually on the date of the
applicable principal payments. The Corporation shall pledge
the Shares being sold by the applicable Selling
Stockholders as collateral to secure the prompt payment of
all amounts due to such Selling Stockholder.
(D) Notwithstanding the preceding provisions, if at the time
any payment under this Section 4.6 is due, the Corporation
is prohibited under the laws of the State of Delaware or
any other competent jurisdiction from making the payment,
the Corporation shall have a grace period for making the
payment for the length of the prohibition period, provided
that, in addition to accrual of interest on the principal
portion of such payment as herein provided, interest shall
accrue on the interest portion of each payment so deferred
at the rate specified in Section 4.6(a)(i)(C) from the due
date thereof without regard to the grace period through the
payment thereof.
(iii) The purchase price for Shares purchased pursuant to Section
4.3(a) shall be paid in accordance with the terms and conditions
agreed upon by the Selling Stockholders and the Corporation or
remaining Stockholders (as applicable) on the applicable Restricted
Stock Transfer Closing Date.
14
(iv) The purchase price for Shares purchased pursuant to Section
4.3(b) shall be paid in accordance with the payment terms stated in
the applicable Offer on the applicable Restricted Stock Transfer
Closing Date.
(vi) Notwithstanding anything to the contrary contained herein,
in the event that any person contests the ownership of any
Stockholder's Shares (by any applicable proceeding) the Corporation
may, at its option, deposit payments due to the Selling Stockholder
under this Section 4.6 into an escrow account or take such other
actions as it deems necessary or reasonable pending the resolution of
the applicable dispute.
(b) Delivery of Stock Certificate On the Restricted Stock Transfer
-----------------------------
Closing Date for a purchase of Shares pursuant to this Article IV, the
Selling Stockholder shall deliver to the purchasing party or parties a
certificate or certificates representing the purchased Shares, duly
endorsed in blank or accompanied by a duly executed assignment separate
from certificate. Any sale of Shares pursuant to this Article IV shall be
made free and clear of all liens, encumbrances and restrictions (except
those created by this Stockholders Agreement), and the Selling Stockholder
shall furnish to the purchasing party or parties such additional evidence
and executed documents as may be reasonably necessary to establish the
validity of and accomplish the transfer.
Section 4.7 TERM AND TERMINATION. The provisions of Article IV of the
--------------------
Stockholders Agreement shall cease to apply to any events which occur after the
occurrence of any of the following events:
(a) Bankruptcy and Dissolution. The bankruptcy or dissolution of the
--------------------------
Corporation;
(b) Single Remaining Stockholder. A single Stockholder becoming the
----------------------------
owner of all of the Shares of the Corporation which are then subject to
this Agreement; or
(c) Mutual Agreement. The execution of a written instrument
----------------
terminating the provisions of Article IV by the Corporation and those
Stockholders who approve such instrument by a vote of seventy-five percent
(75%) of the outstanding Shares.
The termination of the rights and obligations of the parties under this Section
4.7 for any reason shall not affect any right or remedy existing hereunder prior
to the effective date of termination.
Section 4.8 RELEASE FROM OBLIGATIONS. If a Stockholder disposes of his
------------------------
or her Shares in accordance with this Article IV, such Stockholder shall be
relieved of all obligations under this Article IV (except for any obligations
under this Article IV arising prior to or as a consequence of such disposition)
and the provisions of this Article IV shall have no further force and effect as
to that Stockholder. In addition, if any Stockholder disposes of his or her
Shares in accordance with
15
this Article IV, the Corporation and the remaining Stockholders shall use their
good faith efforts to obtain the release of such selling Stockholder from such
Stockholder's liability under any guaranty or other obligation incurred by such
selling Stockholder as a result of his or her ownership of Shares; provided,
however, that such releases shall only be obtained if they result in no economic
cost to the Corporation or remaining Stockholders.
Section 4.9 CORPORATION RECORDS.
-------------------
(a) Effectiveness of Transfers. No Shares of any Stockholder shall
--------------------------
be transferred upon the books of the Corporation, nor shall any sale or
transfer or any other disposition thereof be effective, unless and until
all the terms and conditions of this Article IV shall first have been
complied with.
(b) Lending of Shares. Each Stockholder shall surrender the
-----------------
certificate of stock evidencing his or her Shares to the Secretary of the
Corporation, for the purpose of inscribing thereon the same legend as set
forth in Section 3.2, if such legend does not already appear thereon.
Section 4.10 SPECIAL PROVISION FOR PROPOSED SALE TO CERTAIN COMPETITORS.
----------------------------------------------------------
In addition to all other limitations imposed by this Article IV, in the event
that any Stockholder obtains any right to acquire or acquires, either directly
or indirectly, any interest in the ownership value, voting rights or beneficial
interests of any Competitor doing business in Will, Cook, DuPage, Grundy,
Kankakee or Lake Counties in Illinois (a "Competition Equity Right"), then such
Stockholder (the "Competitor Stockholder") shall, within ten (10) days after
receipt of such Competition Equity Right provide the other Stockholders with a
written copy of the terms of acquisition of such Competition Equity Right. Each
other Stockholder shall have the right, exercisable within fifteen (15) days
after their receipt of a copy of the Competition Equity Right, to participate
with the Competitor Stockholder in the Competition Equity Right by acquiring
that percentage of the aggregate capital stock or other beneficial or equitable
interests represented by the Competition Equity Right which is equal to their
percentage ownership interest of the Corporation on the date of the issuance of
the Competition Equity Right, thereby reducing by the same amount the percentage
of the aggregate capital stock or other beneficial or equitable interests of the
Competition Equity Right available to the Competitor Stockholder. The
Competitor Stockholder agrees to take any actions necessary to accomplish the
application of this Section 4.10 and no Stockholder shall exercise any rights
granted to him or her under a Competition Equity Right if such Stockholder fails
to provide for the application of this Section 4.10.
Section 4.11 REMEDIES. The parties hereto recognize and agree that the
--------
breach of any term, provision, or condition of this Stockholders Agreement may
cause irreparable damage which is difficult to ascertain and that the award of
damages may not be adequate relief to the party aggrieved. The parties
therefore agree that, in addition to all other remedies available in the
16
event of a breach of this Stockholders Agreement, the party aggrieved shall have
the right to injunctive or other equitable relief.
Section 4.12 SPECIAL PROVISIONS APPLICABLE TO HANNIFIN, SHUBIC AND
-----------------------------------------------------
WIRSHING. Intentionally Omitted.
- --------
ARTICLE V
---------
SUBCHAPTER S PROVISIONS
-----------------------
Section 5.1 MAKING OF ELECTION. The Corporation and each of the
------------------
Stockholders have elected to be taxed as a small business corporation under
Subchapter S of the Code, and further agree that such election may be revoked
only upon the vote of more than fifty percent (50%) of the outstanding Shares.
Each Stockholder shall (i) execute all forms, consents and other documents
necessary in order to keep such election effective under the applicable
provisions of the Code and (ii) thereafter take such actions (or refrain from
taking such actions) as are necessary to preserve the Corporation's status as a
Subchapter S corporation under the Code.
Section 5.2 DISTRIBUTIONS FOR TAX PAYMENTS. So long as the S corporation
------------------------------
election is in effect, the Corporation shall make pro rata distributions to the
Stockholders at least equal to the estimated federal and state income taxes
payable by the Stockholders with respect to any tax items of the Corporation
which are reportable on the Stockholders' individual federal and state income
tax returns. This estimated tax liability, which shall be computed by the
accountant who regularly prepares the Corporation's tax returns, shall be
computed on the basis of the highest marginal rate applicable to individual
Stockholders on such tax items for the tax year in question, plus the marginal
Illinois state personal income tax rate (regardless of the rate of state income
tax, if any, applicable to individual Stockholders in the states in which they
reside). Unless prevented from making any distributions under applicable state
law, or the Stockholders unanimously otherwise agree, the total amount of the
minimum mandatory dividend required by this Section shall be declared and paid
no later than March 15 of the calendar year following the close of the
Corporation's taxable year, provided further that payments on account of such
distributions shall be made during the taxable year to the extent that said
accountant determines that such distributions are reasonably necessary in order
for Stockholders to comply with any estimated tax payments requirements
applicable to them.
Section 5.3 POST TERMINATION DISTRIBUTIONS. If the Subchapter S election
------------------------------
is revoked or terminated, the Corporation shall, except to the extent the
Stockholders unanimously agree to the election authorized by Section 1371(e)(2)
of the Code, or unless prevented from doing so by applicable state law, declare
and pay pro rata cash distributions during the post-termination transition
period equal to the Corporation's accumulated adjustment account; provided
however, that at the election of the Corporation any amount so distributable
shall contemporaneously with such distribution be re-loaned by each distributee
Stockholder to the Corporation. Such loan
17
shall bear interest at the Prime Rate as publicly announced by the First
National Bank of Chicago from time to time, and shall be repaid in sixty (60)
equal monthly installments of principal, plus accrued interest, with each
installment being due and payable on the first day of each month following the
month during which such loan was made.
ARTICLE VI
----------
MISCELLANEOUS PROVISIONS
------------------------
Section 6.1 Financial Information. The Corporation shall furnish, in
---------------------
addition to any other information which the Stockholder may be entitled to
receive under applicable law, the following financial information to each of the
Stockholders:
(a) Annual Statements. Within ninety (90) days after the close of
-----------------
each Fiscal Year, the Corporation shall supply each of the Stockholders
with the Financial Statements of the Corporation and its Subsidiaries for
and as of the end of such Fiscal year.
(b) Quarterly Statements. Within thirty (30) days after the close
--------------------
of each fiscal quarter, the Corporation shall supply each of the
Stockholders with the Financial Statements of the Corporation and its
Subsidiaries for and as of the end of such fiscal quarter.
Section 6.2 AMENDMENT, MODIFICATION AND WAIVER. Any amendment or other
----------------------------------
change in the Agreement adopted as provided in Sections 3.7(a)(iv) and 3.7(b)(i)
hereto shall be binding upon all Stockholders, including Stockholders voting
against the amendment or other change. Any failure on the other hand, to comply
with any obligation, covenant, agreement, or condition herein contained may be
expressly waived, in writing only, by the party (or parties) to be benefitted by
such obligation, consent, agreement or condition, and shall be effective only in
the specific instance and for the specific purpose for which made or given.
Section 6.3 NOTICES. All notices provided for by this Agreement shall
-------
be made in writing either by (i) actual delivery of the notice into the hands of
the parties thereunto entitled, or (ii) by telecopy or by the mailing of the
notice in the U.S. Mails, registered or certified mail, return receipt
requested, as follows, or at such other address as a party may from time to time
designate in writing:
To the Corporation: P. 0. Box 2789
Joliet, Illinois 60434-2789
Attention: Chief Executive Officer
With a Copy to: P. 0. Box 2789
Joliet, Illinois 60434-2789
Attention: General Counsel
18
To each Stockholder: At the most recent address for such
Stockholder shown in the
Corporation's books and records
Section 6.4 GOVERNING LAW AND SEVERABILITY. This Agreement and the rights
------------------------------
of the parties hereunder shall be governed by and interpreted in accordance with
the substantive laws (and not the conflict of laws rules) of the State of
Delaware. In the event any provision of this Agreement shall be determined to be
invalid, such provision shall be construed in a fashion which most closely
approximates the intention of the parties and the remainder of this Stockholders
Agreement shall continue in full force and effect in accordance with its terms.
Section 6.5 ASSIGNABILITY AND BINDING EFFECT. No party hereto shall assign
--------------------------------
any of his or her rights under this Stockholders Agreement without the prior
written consent of each of the other parties hereto. Subject to the provisions
of the preceding sentence, all the terms and conditions of this Stockholders
Agreement shall be binding upon the parties hereto and their heirs, legatees,
legal representatives, successor and assigns, and shall inure to the benefit of
all the foregoing.
Section 6.6 WILLS AND TRUSTS. Each Stockholder agrees to include in his
----------------
or her will or other instrument providing for the disposition of his or her
estate upon his or her death (or in all applicable trust documents in the case
of the transfer of Shares to a trust which trust qualifies as a Permitted
Transferee), direction and authorization to his or her legal representative to
comply with the provisions of this Stockholders Agreement and to transfer his or
her Shares in accordance with the terms of this Stockholders Agreement,
provided, however, that the failure of any Stockholder to do so shall not effect
the validity or enforceability of this Agreement.
Section 6.7 CAPTIONS. The captions of the Sections and Articles of this
--------
Agreement are inserted for convenience only and in no way define, limit or
extend the scope or intent of any provision of this Stockholders Agreement.
Section 6.8 GENDER. Whenever any words are used in this Stockholders
------
Agreement in the masculine gender, they shall be construed as though they were
also used in the feminine or neuter gender, and whenever any words are used in
this Stockholders Agreement in the singular, they shall be construed as though
they were also used in the plural, and vice versa, all as the context shall
require.
Section 6.9 COUNTERPARTS. This Stockholders Agreement and any amendments
------------
thereto may be executed in one or more counterparts, each of which shall for all
purposes be deemed to be an original, and all such counterparts shall constitute
one and the same instrument. In addition, this Stockholders Agreement and any
amendments thereto may contain more than one counterpart of the signature page,
and all such counterpart signature pages shall have the same force and effect as
though all parties had signed a single signature page.
19
Section 6.10 ENTIRE AGREEMENT. This Stockholders Agreement contains the
----------------
entire understanding of the parties hereto in respect of the subject matter
contained herein, and supersedes all prior agreements, contracts or
understandings between the parties with respect to the subject matter hereof,
including, without limitation, the terms of the Original Agreement.
Section 6.11 NO THIRD PARTY BENEFICIARY RIGHTS. This Stockholders
---------------------------------
Agreement is not intended to and shall not be construed to give any person or
entity other than the parties signatory hereto any interest or rights
(including, without limitation, any third party beneficiary rights) with respect
to or in connection with any agreement or provision contained herein or
contemplated hereby.
Section 6.12 BOARD OF DIRECTOR APPROVAL. Any provision of this Agreement
--------------------------
requiring the approval of the Board of Directors shall be deemed to require the
approval of the majority of the duly elected members of the Board of Directors
as of the date of such approval.
Section 6.13 EFFECTIVENESS OF THIS STOCKHOLDERS AGREEMENT AND TERMINATION
------------------------------------------------------------
OF JOLIET AGREEMENT. This Stockholders Agreement shall become effective upon the
- -------------------
effective date of the merger of Empress Joliet into a Subsidiary of the
Corporation (the "Effective Date"). On the Effective Date, the signatories
hereto covenant and agree that the Shareholders Agreement dated September 30,
1991, as amended, of Empress Joliet shall terminate and be of no further force
or effect.
20
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
LMC LEASING, INC.
By:_______________________________________
Title:______________________________________
/s/ Peter A. Ferro, Jr.
-------------------------------------------
Peter A. Ferro, Jr., as Voting Trustee of the Ferro Brothers
Lake Michigan Charters, Ltd. Voting Trust
MELISSA KATE LAMBRECHT TRUST U/T/A DATED 5/3/93
By: /s/ Peter A. Ferro, Jr.
------------------------------------------
Peter A. Ferro, Jr., as Trustee
By: /s/ William J. Sabo
------------------------------------------
William J. Sabo, as Trustee
PAUL JOHN LAMBRECHT TRUST U/T/A DATED 5/3/93
By: /s/ Peter A. Ferro, Jr.
-------------------------------------------
Peter A. Ferro, Jr., as Trustee
By: /s/ William J. Sabo
--------------------------------------------
William J. Sabo, as Trustee
MATTHEW LAMBRECHT TRUST U/T/A DATED 5/3/93
By: /s/ Peter A. Ferro, Jr.
----------------------------------------
Peter A. Ferro, Jr., as Trustee
By: /s/ William J. Sabo
---------------------------------------
William J. Sabo, as Trustee
/s/ Charles P. Hammersmith, Jr.
------------------------------------------
Charles P. Hammersmith, Jr.
__________________________________________
Robert W. Kegley, Sr.
/s/ Thomas J. Lambrecht
------------------------------------------
Thomas J. Lambrecht
__________________________________________
William J. McEnery, as Trustee fbo William J. McEnery
__________________________________________
Edward T. McGowan, as Trustee fbo Edward T. McGowan
/s/ William J. Sabo
-------------------------------------------
William J. Sabo
__________________________________________
Martin McNally
21
MATTHEW LAMBRECHT TRUST U/T/A DATED 5/3/93
By:_____________________________________________
Peter A. Ferro, Jr., as Trustee
By: ______________________________________
William J. Sabo, as Trustee
__________________________________________
Charles P. Hammersmith, Jr.
/s/ Robert W. Kegley, Sr.
------------------------------------------
Robert W. Kegley, Sr.
__________________________________________
Thomas J. Lambrecht
/s/ William J. McEnery
------------------------------------------
William J. McEnery, as Trustee fbo William J. McEnery
__________________________________________
Edward T. McGowan, as Trustee fbo Edward T. McGowan
------------------------------------------
William J. Sabo
__________________________________________
Martin McNally
22