-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, V4g+la3U5MLoy84IOwzOYE7r0x3Bu6CbLjChbciFmdJVvaGtOz7WUaRRFgZN9SUw GoSr/I9xnFQAnF+QIlsJFw== 0000351903-99-000005.txt : 19990309 0000351903-99-000005.hdr.sgml : 19990309 ACCESSION NUMBER: 0000351903-99-000005 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19990208 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 19990308 FILER: COMPANY DATA: COMPANY CONFORMED NAME: JACKPOT ENTERPRISES INC CENTRAL INDEX KEY: 0000351903 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-MISCELLANEOUS AMUSEMENT & RECREATION [7990] IRS NUMBER: 880169922 STATE OF INCORPORATION: NV FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 001-09728 FILM NUMBER: 99559760 BUSINESS ADDRESS: STREET 1: 1110 PALMS AIRPORT DR CITY: LAS VEGAS STATE: NV ZIP: 89119 BUSINESS PHONE: 7023693424 MAIL ADDRESS: STREET 2: 1110 PALMS AIRPORT DRIVE CITY: LAS VEGAS STATE: NV ZIP: 89119 8-K 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 DATE OF REPORT - February 8, 1999 (Date of Earliest Event Reported) JACKPOT ENTERPRISES, INC. (Exact name of registrant as specified in its charter) Commission File No. 1-9728 Nevada 88-0169922 _______________________ ___________________________________ (State of Incorporation) (I.R.S. Employer Identification No.) 1110 Palms Airport Drive Las Vegas, Nevada 89119 __________________________ __________ (Address of principal (Zip Code) executive offices) Registrant's telephone number, including area code: (702) 263-5555 N/A ____________________________________________________________ (Former name or former address, if changed since last report) Item 5. Other Events ____________ A. Acquisition of Players International, Inc. __________________________________________ On February 8, 1999, the Company and JEI Merger Corp., a wholly-owned subsidiary of the Company, entered into an Agreement and Plan of Merger ("Players Merger Agreement") with Players International, Inc. ("Players") which provides for the acquisition of Players by the Company through the merger of JEI Merger Corp. with and into Players (the "Players Merger"). As a result of the Players Merger, Players will become a wholly-owned subsidiary of the Company. Players is a multi-jurisdictional casino and entertainment gaming company which owns and operates riverboat casino facilities on the Ohio River in Metropolis, Illinois, in Lake Charles, Louisiana and in Maryland Heights, Missouri, a suburb of St. Louis. Reference is made to Players' public filings for its historical, financial and operating results. A copy of the Players Merger Agreement is attached hereto as an exhibit and the content thereof is incorporated herein by reference. In connection with the Players Merger, stockholders of Players will receive, for each share owned by them, the sum of (i) $6.75 in cash and (ii) a fraction of a share of common stock of the Company, to be determined by dividing $1.50 by the average of the daily closing prices of the Company's common stock on the New York Stock Exchange during a period of 30 trading days ending on the third trading day preceding the date of closing of the transaction, except that if this fraction exceeds 3/10 of one share, the Company shall be required to increase the cash portion so that the sum of (i) and (ii) equals $8.25. The Company anticipates that the cash portion of the purchase price, which is expected to be approximately $223 million, will be funded through a combination of the Company's existing cash reserves, bank debt and high yield debt financing. Closing of the Players Merger is subject to a number of conditions, including approval by the stockholders of both companies, receipt of all necessary regulatory approvals, including the approvals of the Illinois, Louisiana, Missouri and Nevada gaming authorities, and the financing of the transaction. The Company has received a "highly confident" letter from Merrill Lynch Pierce Fenner & Smith, Inc. with respect to the raising of the financing needed to satisfy the cash portion of the transaction. B. Acquisition of CRC Holdings, Inc. _________________________________ On February 17, 1999, the Company entered into an Agreement and Plan of Merger ("CRC Merger Agreement") with CRC Holdings, Inc. ("CRC"), a privately owned company operating as Carnival Resorts and Casinos. The CRC Merger Agreement provides for the acquisition of CRC by the Company through a direct merger of CRC into the Company ("CRC Merger"). CRC operates Casino Rama, a casino located on an Indian reservation outside Toronto, Canada, owns and operates (through a majority-owned subsidiary) a riverboat casino in Baton Rouge, Louisiana and has rights with respect to the development and operation of certain other potential casino properties in the States of Washington and Massachusetts. Immediately prior to the CRC Merger, CRC will spin off to its shareholders its non-gaming related assets and certain liabilities, which will not be part of the CRC businesses to be acquired by the Company. Based on unaudited financial information provided to the Company by management of CRC, the revenues of the businesses to be acquired by the Company through the CRC Merger were approximately $85 million and the earnings before interest, income taxes, depreciation, amortization, minority interests and other non-cash items ("EBITDA") for those businesses was approximately $22 million for its fiscal year ended November 30, 1998. EBITDA should not be construed as an alternative to operating income or net income (as determined in accordance with generally accepted accounting principles), as an indicator of CRC's operating performance, as an alternative to cash flows provided by operating activities (as determined in accordance with generally accepted accounting principles), or as a measure of liquidity. EBITDA is presented solely as a supplemental disclosure because management believes that it enhances the understanding of the financial performance of a company with substantial amortization and depreciation expense. A copy of the CRC Merger Agreement is attached hereto as an exhibit and the content thereof is incorporated herein by reference. Each of Players and CRC currently maintain corporate offices separate from their respective operating locations. On an annualized basis, the unaudited consolidated corporate operating expenses, including nonrecurring costs of Players, CRC and Jackpot would aggregate approximately $23 million. After the completion of both the Players Merger and the CRC Merger, the Company intends to restructure and consolidate all such corporate operations in Jackpot's Las Vegas headquarters in order to enhance the effectiveness and minimize the expense of maintaining corporate management. Based upon its preliminary review of the above mentioned corporate operating expenses, management expects that such restructuring and consolidation, and the elimination of certain nonrecurring costs should result in aggregate annualized cost savings ranging from $8 million to $11 million. In connection with the CRC Merger, all outstanding stock and options in CRC will be exchanged for a total of approximately 3,500,000 shares of the Company's common stock and the issuance of senior subordinated notes in the principal amount of approximately $25.8 million, subject to reduction in such consideration under certain conditions. Upon consummation of the CRC Merger, Sherwood M. Weiser and Donald E. Lefton, co-founders of CRC, will become members of the Board of Directors of the Company, and Mr. Weiser will become co-Chairman of the Board of Directors. The shares of Company common stock to be issued in the CRC Merger will be registered under the Securities Act of 1933, as amended, although Messrs Weiser and Lefton, who will receive a majority of the shares, have agreed not to resell their shares publicly for at least one year (subject to certain volume limitations in subsequent periods) and the other CRC stockholders will be restricted from publicly reselling the shares which they receive for a minimum of six months, also with subsequent volume limitations. Closing of the CRC Merger is subject to a number of conditions, including approval by the Company's stockholders and receipt of necessary regulatory approvals, including the approvals of the Louisiana, Nevada, the province of Ontario, Canada and Washington State gaming authorities and the U.S. Indian Gaming Commission. Both the Players Merger and CRC Merger are expected to close in the second half of 1999. Neither of the mergers is conditioned upon consummation of the other. Certain information included in this Form 8-K and other materials filed or to be filed by the Company with the Securities and Exchange Commission contains statements that may be considered forward-looking. In addition, from time to time, the Company may release or publish forward-looking statements relating to such matters as anticipated financial performance, business prospects, technological developments and similar matters. The Private Securities Litigation Reform Act of 1995 provides a safe harbor for forward-looking statements. In order to comply with the terms of the safe harbor, the Company notes that a variety of factors could cause the Company's actual results and experience to differ materially from the anticipated results or other expectations expressed in the Company's forward- looking statements. The risks and uncertainties that may affect the operations, performance, development and results of the Company's business include, but are not limited to, competitive pressures, the loss or nonrenewal of any of Jackpot's significant contracts, conditioning or suspension of any gaming license, unfavorable changes in gaming regulations, adverse results of significant litigation matters, possible future financial difficulties of a significant customer and the continued growth of the gaming industry and population in Nevada. Readers are cautioned not to place undue reliance on any forward-looking statements, which speak only as of the date thereof. The Company assumes no obligation to update or supplement forward-looking statements as a result of new circumstances or subsequent events. Item 7. Financial Statements, Pro Forma Financial Information _____________________________________________________ and Exhibits. _____________ (c) Exhibits. 1. Agreement and Plan of Merger dated as of February 8, 1999 among Jackpot Enterprises, Inc., JEI Merger Corp. and Players International, Inc. 2. Agreement and Plan of Merger dated as of February 17, 1999 between Jackpot Enterprises, Inc. and CRC Holdings, Inc. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. JACKPOT ENTERPRISES, INC. ________________________________________ (Registrant) By: /s/ Bob Torkar ________________________________________ BOB TORKAR Senior Vice President - Finance, Treasurer and Chief Accounting Officer Dated: March 8, 1999 EXHIBIT INDEX Exhibit No. Description ___________ ___________ 1. Agreement and Plan of Merger dated as of February 8, 1999 among Jackpot Enterprises, Inc., JEI Merger Corp. and Players International, Inc. 2. Agreement and Plan of Merger dated as of February 17, 1999 between Jackpot Enterprises, Inc. and CRC Holdings, Inc. EX-1 2 AGREEMENT AND PLAN OF MERGER dated as of February 8, 1999 among Jackpot Enterprises, Inc. JEI Merger Corp. and Players International, Inc. TABLE OF CONTENTS ARTICLE I. THE MERGER Section 1.1. The Merger Section 1.2. Effective Time of the Merger Section 1.3. Closing Section 1.4. Effect of the Merger Section 1.5. Articles of Incorporation and Bylaws of the Surviving Corporation Section 1.6. Directors and Officers of the Surviving Corporation ARTICLE II. EFFECT OF THE MERGER ON SECURITIES OF THE CONSTITUENT CORPORATIONS Section 2.1. Conversion of Securities Section 2.2. Exchange of Certificates Section 2.3. Acceleration and Payment for Players Options ARTICLE III. REPRESENTATIONS AND WARRANTIES OF Players Section 3.1. Organization of Players and its Subsidiaries Section 3.2. Capitalization Section 3.3. Authority; No Conflict; Required Filings and Consents Section 3.4. Public Filings; Financial Statements Section 3.5. No Undisclosed Liabilities Section 3.6. Absence of Certain Changes or Events Section 3.7. Taxes Section 3.8. Real Property, Title and Related Matters Section 3.9. Title to Personal Property; Liens Section 3.10. Intellectual Property Section 3.11. Agreements, Contracts and Commitments Section 3.12. Litigation Section 3.13. Environmental Matters Section 3.14. Employee Benefit Plans Section 3.15. Compliance Section 3.16. Labor Matters Section 3.17. Insurance Section 3.18. Information in Proxy Statement/Prospectus Section 3.19. State Takeover Statute Section 3.20. Voting Requirements Section 3.21. Players Rights Agreement Section 3.22. Year 2000 Section 3.23. Opinion of Financial Advisor Section 3.24. Brokers ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF BUYER AND MERGER SUB Section 4.1. Organization of Buyer and its Subsidiaries Section 4.2. Capitalization Section 4.3. Authority; No Conflict; Required Filings and Consents Section 4.4. Public Filings; Financial Statements Section 4.5. No Undisclosed Liabilities Section 4.6. Absence of Certain Changes or Events Section 4.7. Taxes Section 4.8. Real Property, Title and Related Matters Section 4.9. Title to Personal Property; Liens Section 4.10. Intellectual Property Section 4.11. Agreements, Contracts and Commitments Section 4.12. Litigation Section 4.13. Environmental Matters Section 4.14. Employee Benefit Plans Section 4.15. Compliance Section 4.16. Registration Statement; Joint Proxy Statement/Prospectus Section 4.17. Labor Matters Section 4.18. Insurance Section 4.19. [Intentionally Omitted] Section 4.20. Voting Requirements Section 4.21. Year 2000 Section 4.22. Opinion of Financial Advisor Section 4.23. Brokers Section 4.24. No Operations or Liabilities of Merger Sub Section 4.25. Ownership of Securities ARTICLE V. COVENANTS Section 5.1. Conduct of Business Section 5.2. Cooperation; Notice; Cure Section 5.3. No Solicitation Section 5.4. Joint Proxy Statement/ Prospectus; Registration Statement Section 5.5. Special Meeting Section 5.6. Access to Information Section 5.7. Governmental Approvals Section 5.8. Publicity Section 5.9. Indemnification Section 5.10. Stockholder Litigation Section 5.11. Employee Benefits Section 5.12. Further Assurances and Actions Section 5.13. Rights Plan Section 5.14. Buyer's Board of Directors ARTICLE VI. CONDITIONS TO MERGER Section 6.1. Conditions to Each Party's Obligation to Effect the Merger Section 6.2. Additional Conditions to Obligations of Players Section 6.3. Additional Conditions to Obligations of Buyer ARTICLE VII. TERMINATION AND AMENDMENT Section 7.1. Termination Section 7.2. Effect of Termination Section 7.3. Fees and Expenses Section 7.4. Amendment Section 7.5. Extension; Waiver ARTICLE VIII. MISCELLANEOUS Section 8.1. Nonsurvival of Representations, Warranties and Agreements Section 8.2. Notices Section 8.3. Interpretation Section 8.4. Counterparts Section 8.5. Entire Agreement; No Third Party Beneficiaries Section 8.6. Governing Law Section 8.7. Assignment Section 8.8. Severability; Enforcement Section 8.9. Specific Performance TABLE OF DEFINED TERMS Cross Reference Terms in Agreement Accountant Section 5.11(d) Accountant's Report Section 5.11(d) Acquisition Proposal Section 5.3 Agreement Preamble Articles of Merger Section 1.2 Average Buyer Common Stock Price Section 2.1(a) Buyer Preamble Buyer Balance Sheet Section 4.4(b) Buyer Common Stock Section 2.1(a) Buyer Disclosure Schedule Article IV Buyer Employee Plans Section 4.14(a) Buyer Gaming Laws Section 4.15(b) Buyer Material Adverse Effect Section 4.1 Buyer Material Contracts Section 4.11(a) Buyer Options Section 4.2(a) Buyer Permits Section 4.15(a) Buyer Preferred Stock Section 4.2(a) Buyer Reporting Subsidiaries Section 4.4(a) Buyer SEC Reports Section 4.4(a) Buyer Special Meeting Section 5.5 Buyers Stock Option Plans Section 4.2(a) Buyer Stockholder Approval Section 4.20 Buyer Welfare Plan Section 4.14(g) Cash Consideration Section 2.1(a) Certificate Section 2.1(f) Closing Section 1.3 Closing Date Section 1.3 Code Section 2.2(f) Confidentiality Agreement Section 5.6 CRC Section 5.1(b) CRC Transaction Section 5.1(b) DLJ Section 3.23 Encumbrances Section 3.8(b) Effective Time Section 1.2 Employment Agreements Section 5.11(d) Environmental Law Section 3.13(b) ERISA Section 3.14(a) ERISA Affiliate Section 3.14(a) Exchange Act Section 3.3(c) Exchange Agent Section 2.2(a) Exchange Fund Section 2.2(a) Exchange Ratio Section 2.1(a) Executives Section 5.11(d) GAAP Section 3.4(b) Governmental Approvals Section 5.7(a) Governmental Entity Section 3.3(c) Hazardous Substance Section 3.13(c) HSR Act Section 3.3(c) Indebtedness Section 3.11(a) Indemnified Parties Section 5.9(a) IRS Section 3.7(b) Joint Proxy Statement/Prospectus Section 5.4(a) Leased Real Property Section 3.8(b) Liens Section 3.1 Merger Preamble Merger Consideration Section 2.1(a) Merger Sub Preamble Merger Sub Common Stock Section 4.2(c) Merrill Lynch Section 4.22 Multiemployer Plan Section 3.14(e) Notifying Party Section 5.7(a) NRS Section 1.1 NYSE Section 2.1(a) Offer Documents Section 5.12(c) Offer to Purchase Section 5.12(c) Outside Date Section 7.1(b) Owned Real Property Section 3.8(b) PBGC Section 3.14(f) Permitted Encumbrances Section 3.8(b) Per Share Amount Section 2.1(a) Perskie Option Section 2.3 Players Preamble Players Balance Sheet Section 3.4(b) Players Common Stock Section 2.1(a) Players Disclosure Schedule Article III Players Employee Plans Section 3.14(a) Players Gaming Laws Section 3.15(b) Players, Inc. Section 1.5 Players Material Adverse Effect Section 3.1 Players Material Contracts Section 3.11(a) Players Option Section 2.3 Players Permits Section 3.15(a) Players Preferred Stock Section 3.2(a) Players Rights Plan Section 3.2(b) Players SAR Section 2.3 Players SEC Reports Section 3.4(a) Players Special Meeting Section 5.5 Players Stockholder Approval Section 3.20 Players Stock Option Plans Section 2.3 Players Welfare Plan Section 3.14(g) Reduced Amount Section 5.11(d) Registration Statement Section 5.4(a) Rights Agreement Section 3.21 SEC Section 3.3(c) Securities Act Section 3.4(a) Senior Notes Section 5.12(c) Software Section 3.22 Stock Consideration Section 2.1(a) Stockholder Support Agreements Preamble Stock Option Plan for Non-Employee Directors Section 2.3 Subsidiary Section 3.1 Superior Proposal Section 5.3 Surviving Corporation Section 1.1 Taxes Section 3.7(a) Tender Offer Section 5.12(c) Tender Offer and Consent Solicitation Section 5.12(c) Terminating Buyer Breach Section 7.1(h) Terminating Players Breach Section 7.1(g) Third Party Section 5.3 Voting Debt Section 3.2(b) Warrant Agreement Section 2.3 1985 Plan Section 2.3 1990 Plan Section 2.3 1993 Plan Section 2.3 1994 Plan Section 2.3 AGREEMENT AND PLAN OF MERGER AGREEMENT AND PLAN OF MERGER (the "Agreement"), dated as of February 8, 1999, by and among JACKPOT ENTERPRISES, INC., a Nevada corporation ("Buyer"), JEI MERGER CORP., a Nevada corporation and a wholly-owned subsidiary of Buyer ("Merger Sub"), and PLAYERS INTERNATIONAL, INC., a Nevada corporation ("Players"). WHEREAS, the Board of Directors of Players has determined that the merger of Merger Sub with and into Players, upon the terms and subject to the conditions set forth in this Agreement (the "Merger"), is fair to, and in the best interests of, Players 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 Players 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 Players', Buyer's and Merger Sub's willingness to enter into this Agreement, certain stockholders of Players and of Buyer have entered into Stockholder Support Agreements with Buyer and Players, respectively, dated as of the date of this Agreement in the forms attached hereto as Exhibit A (the "Stockholder Support Agreements"), pursuant to which such stockholders have agreed, among other things, to vote all voting securities of Players or Buyer, as the case may be, beneficially owned by them 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 1. THE MERGER Section 1.1. The Merger. Upon the terms and subject to the provisions of this Agreement and in accordance with Chapter 92A of the Nevada Revised Statutes (the "NRS"), at the Effective Time (as defined in Section 1.2), Merger Sub shall be merged with and into Players. As a result of the Merger, the separate corporate existence of Merger Sub shall cease and Players 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), articles of merger with respect to the Merger in such form as is required by NRS Section 92A.200 (the "Articles of Merger") shall be duly prepared, executed and acknowledged and thereafter delivered to the Secretary of State of the State of Nevada for filing, as provided in the NRS, 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 Articles of Merger or at such time within 90 days of the date of filing as is specified in the Articles 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 Players, 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"), unless another date is agreed to by Buyer and Players. Section 1.4. Effect of the Merger. Upon becoming effective, the Merger shall have the effects set forth in the NRS. 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 Players shall vest in the Surviving Corporation, and all debts, liabilities and duties of Merger Sub and Players shall become the debts, liabilities and duties of the Surviving Corporation. Section 1.5. Articles of Incorporation and Bylaws of the Surviving Corporation. At the Effective Time, the Articles of Incorporation and Bylaws of the Surviving Corporation shall be amended to be identical to the Articles of Incorporation and Bylaws, respectively, of Merger Sub as in effect immediately prior to the Effective Time (except that the name of the Surviving Corporation shall be "Players International, Inc."), in each case until duly amended in accordance with applicable law. 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 Articles of Incorporation and Bylaws of the Surviving Corporation. 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 Articles of Incorporation and Bylaws of the Surviving Corporation. 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) Players Common Stock. Each share of common stock, par value $0.005 per share, of Players ("Players Common Stock") issued and outstanding immediately prior to the Effective Time (other than shares to be canceled in accordance with Section 2.1(b)), together with all rights in respect thereto, shall be converted, subject to Section 2.1(e) and 2.1(f), into the right to receive from the Surviving Corporation (i) a net amount of $6.75 in cash, without interest and subject to adjustment in accordance with the next sentence (the "Cash Consideration") and (ii) a fraction (the "Exchange Ratio") of a share of common stock, par value $.01 per share of Buyer ("Buyer Common Stock") equal to the quotient (calculated to the nearest 0.0001) of $1.50 divided by the Average Buyer Common Stock Price (as defined herein); provided that the Exchange Ratio shall not exceed 0.30 (the "Stock Consideration" and together with the Cash Consideration, the "Merger Consideration"). If but for the proviso in the preceding sentence the Exchange Ratio would have exceeded 0.30, Buyer may increase the Cash Consideration amount specified in clause (i) above by the amount necessary so that at the Effective Time the sum of (a) the Cash Consideration (as so increased) and (b) the Average Buyer Common Stock Price multiplied by the Exchange Ratio is equal to $8.25. If Buyer fails to increase the Merger Consideration to the amount set forth in the preceding sentence, Players may terminate this Agreement. For purposes of this Agreement, "Average Buyer Common Stock Price" shall mean the average regular way closing price per share of Buyer Common Stock on the New York Stock Exchange (the "NYSE") as reported on the NYSE Composite Tape during the thirty (30) consecutive NYSE trading days immediately preceding the second NYSE trading day prior to the Closing Date. All shares of Buyer Common Stock issued as Merger Consideration shall be validly issued, fully-paid and non-assessable. As of the Effective Time, all shares of Players 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 Players Common Stock that are owned by Players as treasury stock and any shares of Players 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) Players Debt Securities. Except as otherwise repaid, redeemed or purchased in connection with the transactions contemplated hereby, all notes and other debt instruments of Players 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. (e) 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 Players Common Stock, as applicable), reorganization, recapitalization or any other like change with respect to Players Common Stock or Buyer Common Stock occurring after the date hereof and prior to the Effective Time. (f) Fractional Shares. No certificates or scrip representing fractional shares of Buyer Common Stock shall be issued in connection with the Merger, and fractional share interests will not entitle the owner thereof to vote or to any other rights as a stockholder of Buyer. In lieu of any such fractional shares, each holder of a certificate evidencing Players Common Stock (a "Certificate") upon surrender of such Certificate for exchange shall be paid an amount in cash (without interest), rounded up to the nearest cent, determined by multiplying (i) the Average Buyer Common Stock Price, by (ii) the fractional interest to which such holder would otherwise be entitled (after taking into account all shares of Players Common Stock then held of record by such holder). 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 (the "Exchange Agent"), for the benefit of the holders of shares of Players Common Stock outstanding immediately prior to the Effective Time, for exchange in accordance with this Section 2.2, through the Exchange Agent, (i) certificates evidencing the shares of Buyer Common Stock sufficient to pay the Stock Consideration and (ii) cash in an aggregate amount sufficient to pay the Cash Consideration and for fractional shares pursuant to Section 2.1(f) (the shares and cash so deposited being hereinafter referred to collectively 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 Players 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 Players Common Stock which is not registered in the transfer records of Players 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 Players 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 Players Common Stock 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 Players shall be closed, and there shall be no further registration of transfers of Players Common Stock thereafter on the records of Players. (d) Termination of Exchange Fund. Any portion of the Exchange Fund which remains undistributed to the former stockholders of Players 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 Players 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, Players or the Exchange Agent shall be liable to any holder of Players 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 Players 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 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 Players 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 Players 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. (h) Distributions with Respect to Unsurrendered Certificates. No dividends or other distributions declared or made after the Effective Time with respect to Buyer Common Stock with a record date after the Effective Time shall be paid to the holder of any unsurrendered Certificate with respect to the shares of Buyer Common Stock the holder thereof is entitled to receive upon surrender thereof, and no cash payment in lieu of any fractional shares shall be paid to any such holder pursuant to Section 2.1(f), until the holder of such Certificate shall surrender such Certificate. Subject to the effect of escheat, tax or other applicable laws, following surrender of any such Certificate, there shall be paid to the holder of Certificates representing whole shares of Buyer Common Stock issued in exchange therefor, without interest, (i) promptly, the amount of any cash payable with respect to a fractional share of Buyer Common Stock to which such holder is entitled pursuant to Section 2.1(f) and the amount of dividends or other distributions with a record date after the Effective Time and theretofore paid with respect to such whole shares of Buyer Common Stock, and (ii) at the appropriate payment date, the amount of dividends or other distributions, with a record date after the Effective Time but prior to surrender and a payment date occurring after surrender, payable with respect to such whole shares of Buyer Common Stock. After the Effective Time, each outstanding Certificate which theretofore represented shares of Players Common Stock shall, until surrendered for exchange in accordance with this Section 2.2, be deemed for all purposes to evidence ownership of the number of shares of Buyer Common Stock and cash into which the shares of Players Common Stock (which, prior to the Effective Time, were represented thereby) shall have been so converted. Section 2.3. Acceleration and Payment for Players Options. Following the execution of this Agreement, the Board of Directors of Players (or, if appropriate, any committee administering the Players Stock Option Plans (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 Players Common Stock (a "Players Option") heretofore granted under any stock option or other stock-based incentive plan, program or arrangement of Players including (i) the 1985 Incentive Stock Option Plan ("1985 Plan"), (ii) the 1990 Incentive Stock Option and Non-Qualified Option Plan ("1990 Plan"), (iii) the Amended and Restated 1993 Stock Incentive Plan ("1993 Plan"), (iv) the 1994 Directors Stock Incentive Plan ("1994 Plan"), (v) the Stock Option Plan for Non-Employee Directors (which consists of individual option grants in 1993 to outside directors) ("Stock Option Plan for Non-Employee Directors"), (vi) the option granted to Steven P. Perskie pursuant to the Retirement Agreement and General Release, dated September 30, 1996 ("Perskie Option") (with the plans referred to in clauses (i)-(vi) above collectively referred to as the "Players Stock Option Plans") and (vii) the Warrant Agreement dated as of June 16, 1994 between Players and Gem Gaming, Inc. (the "Warrant Agreement") 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 Players Common Stock subject to such Stock 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 Stock Option; provided, however, that such excess shall not be less than zero. Notwithstanding anything in this Section 2.3 to the contrary, any Players Option or stock appreciation right ("Players SAR") granted under any stock option or other stock-based incentive plan, program or arrangement of Players, including, without limitation, the Players Stock Option Plans and Warrant Agreement, having a per share exercise price that is greater than the Merger Consideration, whether or not vested and exercisable, 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 Players Option or Players SAR shall have received no payment for the Players Option or Players SAR. ARTICLE III. REPRESENTATIONS AND WARRANTIES OF Players Players 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 Players to Buyer and Merger Sub on or before the date of this Agreement (the "Players Disclosure Schedule"), or as otherwise expressly contemplated by this Agreement. Any reference in the Merger Agreement to Players' "best knowledge," or "the best of Players' knowledge," or words of similar import, shall be deemed a reference to the actual knowledge of any of the corporate officers of Players or any of its Subsidiaries, for all purposes. The Players Disclosure Schedule has been prepared based upon the foregoing definition. Section 3.1. Organization of Players and its Subsidiaries. Each of Players 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 and as proposed to be conducted. Each of Players 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) or results of operations of Players and its Subsidiaries, taken as a whole (a "Players Material Adverse Effect"). Players has delivered to Buyer a true and correct copy of the Articles of Incorporation and Bylaws of Players, in each case as amended to the date of this Agreement. Assuming regulatory compliance by Buyer, the respective organizational documents of Players' 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 Players. Except as set forth on the Players 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 Players, 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). Except as set forth in Exhibit 21(18) to the Players Annual Report on Form 10-K for the year ended March 31, 1998, neither Players nor any of its Subsidiaries directly or indirectly owns (other than ownership interests in Players or in one or more of its Subsidiaries) any equity or similar interest in, or any interest convertible into or exchangeable or exercisable for, any corporation, partnership, joint venture or other business association or entity. 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 a majority 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. The authorized capital stock of Players consists of 90,000,000 shares of Players Common Stock, $0.005 par value per share, and 10,000,000 shares of preferred stock, with no par value per share ("Players Preferred Stock"). As of the date hereof, (i) 32,024,737 shares of Players Common Stock were issued and outstanding, all of which are validly issued, fully paid and nonassessable, (ii) 672,100 shares of Players Common Stock were held in the treasury of Players or by Subsidiaries of Players, and (iii) no shares of Players Preferred Stock are issued and outstanding. Section 3.2(a)(i) of the Players Disclosure Schedule sets forth the number of shares of Players Common Stock reserved for future issuance upon exercise of Players Options granted and outstanding as of the date hereof and under the Players Stock Option Plans. Section 3.2(a)(i) of the Players Disclosure Schedule also sets forth as of the date hereof, for each Players Stock Option Plan, the dates on which Options and Players SARs which are still outstanding under such plan were granted, the number of outstanding Options and Players SARs granted on each such date and the exercise price thereof. Except as disclosed in Section 3.2(a)(i) of the Players Disclosure Schedule, since September 30, 1998 through the date of this Agreement, Players has not made any grants under any of the Players Stock Option Plans. Except as disclosed in Section 3.2(a)(i) of the Players Disclosure Schedule with respect to Players SARs, as of the date of this Agreement, Players has not granted any contractual rights the value of which is derived from the financial performance of Players or from the value of shares of Players Common Stock. Except as disclosed in Section 3.2(a)(ii) of the Players Disclosure Schedule, there are no obligations contingent or otherwise, of Players or any of its Subsidiaries to repurchase, redeem or otherwise acquire any shares of Players Common Stock or the capital stock or ownership interests of any Subsidiary or to provide funds to or make any material investment (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 Players' Subsidiaries are duly authorized, validly issued, fully paid and nonassessable and, except as disclosed in Section 3.2(a)(iii) of the Players Disclosure Schedule and except as required by gaming industry regulation, all such shares and ownership interests are owned by Players or another Subsidiary of Players free and clear of all security interests, liens, claims, pledges, agreements, limitations on Players' voting rights, charges or other encumbrances or restrictions on transfer of any nature. (b) There are no bonds, debentures, notes or other indebtedness having voting rights (or convertible into securities having such rights) ("Voting Debt") of Players or any of its Subsidiaries issued and outstanding. 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 Players Stock Option Plans and except for the common stock purchase rights issued and issuable under the Stockholders' Rights Plan dated as of January 27, 1997 (the "Players Rights Plan"), as of the date hereof, (i) there are no shares of capital stock of any class of Players, 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 Players Disclosure Schedule there are no options, warrants, equity securities, calls, rights, commitments or agreements of any character to which Players or any of its Subsidiaries is a party or by which it is bound obligating Players 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 Players or any of its Subsidiaries or obligating Players 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) there are no voting trusts, proxies or other voting agreements or understandings with respect to the shares of capital stock of Players. All shares of Players 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) Players 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 Players have been duly authorized by all necessary corporate action on the part of Players, subject only to the approval and adoption of this Agreement and the Merger by a majority of Players' stockholders. This Agreement has been duly executed and delivered by Players and constitutes the valid and binding obligation of Players, enforceable against Players in accordance with its terms. (b) Other than as disclosed in Section 3.3(b) of the Players Disclosure Schedule, the execution and delivery of this Agreement by Players 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 Articles of Incorporation or Bylaws of Players 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 Players 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 Players 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 Players 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 Players 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 instrumentality ("Governmental Entity") is required by or with respect to Players 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 Articles of Merger with respect to the Merger with the Secretary of State of the State of Nevada, (iii) the filing of any Joint Proxy Statement/Prospectus (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, (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, and (vii) such other filings, consents, approvals, orders, registrations and declarations as may be required under the laws of any jurisdiction in which Players or any of its Subsidiaries conducts any business or owns any assets the failure of which to obtain would not have a Players Material Adverse Effect. Section 3.4. Public Filings; Financial Statements. (a) None of Players' Subsidiaries is required to file forms, reports and documents with the SEC. Players has filed with the SEC all reports, schedules, forms, statements and other documents required to be filed by the Securities Act and the Exchange Act since March 31, 1998. Except as set forth in Section 3.4(a) of the Players 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 Players with the SEC prior to the date of this Agreement (the "Players 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 of 1933, as amended (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 Players SEC Reports or necessary in order to make the statements in such Players 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 Players contained in the Players SEC Reports complied as to form in all material respects with the applicable published 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 Players and its consolidated 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 Players as of March 31, 1998 is referred to herein as the "Players Balance Sheet." Section 3.5. No Undisclosed Liabilities. Except as disclosed in the Players SEC Reports or in Section 3.5 of the Players Disclosure Schedule, and except for liabilities and obligations incurred since the date of the Players Balance Sheet in the ordinary course of business consistent with past practices, Players 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, which would be reasonably likely to have a Players Material Adverse Effect. Section 3.6. Absence of Certain Changes or Events. Except as disclosed in the Players SEC Reports or in Section 3.6 of the Players Disclosure Schedule since the date of the Players Balance Sheet, Players and its Subsidiaries have conducted their respective businesses only in the ordinary course consistent with past practice, and there has not been (i) any Players Material Adverse Effect, (ii) any declaration, setting aside or payment of any dividend or other distribution (whether in cash, stock or property) with respect to any of Players' capital stock, (iii) 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, (iv) (w) any granting by Players or any of its Subsidiaries to any director or officer of Players 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 Players SEC Reports, (x) any granting by Players or any of its Subsidiaries to any director or officer of any stock options, except as was required under employment agreements in effect as of the date of the most recent financial statements included in the Players SEC Reports, (y) any granting by Players or any of its Subsidiaries to any officer of any increase in severance or termination pay, except as was required under any employment, severance or termination agreements, plans or arrangements in effect as of the date of the most recent financial statements included in the Players SEC Reports or (z) any entry by Players or any of its Subsidiaries into any employment, severance or termination agreement with any officer, (v) any change in accounting methods, principles or practices having a material adverse effect on Players, except insofar as may have been required by a change in GAAP, (vi) any tax election that individually or in the aggregate would have a Players Material Adverse Effect, or (vii) any settlement of pending or threatened litigation involving Players or any of its Subsidiaries (whether brought by a private party or a Governmental Entity) other than any settlement which is not reasonably likely to have a Players Material Adverse Effect. 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. For purposes of this Agreement, "Taxes" also includes any obligations under any agreements or arrangements with any other person with respect to Taxes of such other person (including pursuant to Treas. Reg. 1.1502-6 or comparable provisions of state, local or foreign tax law) and including any liability for Taxes of any predecessor entity. (b) Players 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). Except as set forth in Section 3.7(b) of the Players Disclosure Schedule, neither the Internal Revenue Service (the "IRS") nor any other taxing authority has asserted any claim for Taxes, or to the actual knowledge of the executive officers of Players, is threatening to assert any claims for Taxes. Players 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. Neither Players nor any of its Subsidiaries has made an election under Section 341(f) of the Code. There are no liens for Taxes upon the assets of Players 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). (c) Neither Players 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 Players or any Subsidiary of Players. (d) Neither Players 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. 1.1502-6 or comparable provisions of state, local or foreign tax law) and including any liability for Taxes of any predecessor entity. Section 3.8. Real Property, Title and Related Matters. (a) Real Property. Section 3.8 (a) of the Players Disclosure Schedule sets forth a true and complete list as of the date of this Agreement of (i) all contracts or agreements relating to the Leased Real Property, and (ii) a brief description of each piece of Owned Real Property. Players or a Subsidiary of Players, as the case may be, has (A) good and marketable title to all Owned Real Property and to all 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 Players Disclosure Schedule, Item (I)(1)(c), 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 Players Disclosure Schedule is a valid contract or agreement enforceable against Players or its Subsidiary, as the case may be, in accordance with its terms and, to the knowledge of Players, against the other parties thereto. To the knowledge of Players, there are no rights or options of any third party to acquire such leased property or any ownership therein. Neither Players 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 Players Disclosure Schedule. To the knowledge of Players, 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 Players or a Subsidiary of Players as tenant and listed on Section 3.8(a) of the Players Disclosure Schedule or by Buyer or a Subsidiary of Buyer as tenant and listed on Section 4.8 of the Buyer Disclosure Schedule, as applicable, together with, to the extent leased by Players or Buyer, as applicable, all buildings and other structures, facilities or improvements currently or hereafter located thereon, all fixtures, systems, equipment and personal property of Players or Buyer 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 Players or any of its Subsidiaries and listed on Section 3.8(a) of the Players Disclosure Schedule or by Buyer or any of Buyer's Subsidiaries and listed on Section 4.8 of the Buyer Disclosure Schedule, as applicable, 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 Players Disclosure Schedule or Section 4.8 of the Buyer Disclosure Schedule, as applicable, except for (A) any Encumbrance which would prevent the use of the subject property for its current use, or (B) any Encumbrance which secures any indebtedness (other than indebtedness that is otherwise permitted by this Agreement, (ii) liens for taxes, assessments, fees, and other governmental charges or levies which are not yet due, payable or delinquent, (iii) such survey exceptions or reciprocal easement agreements that do not prevent Players or its Subsidiaries or Buyer or its Subsidiaries, and would not prevent the Surviving Corporation, from conducting Players' or Buyer's business as applicable as currently conducted and which would not have a Players Material Adverse Effect or a Buyer Material Adverse Effect, (iv) the provisions of any federal, state or local law, ordinance or regulation, provided the same are not violated by the current use of the property, (v) Encumbrances imposed by law, such as materialmen's, mechanics', carriers', workmen's and repairmen's liens and other similar liens arising in the ordinary course of business securing obligations that are not in excess of $250,000.00 in the aggregate at any time, and (vi) pledges or deposits to secure obligations under workers' compensation laws or similar legislation or to secure public or statutory obligations. Section 3.9. Title to Personal Property; Liens. To the best knowledge of Players, Players and each of its Subsidiaries has sufficiently good and valid title to, or an adequate leasehold interest in, its material tangible personal properties and assets (including all riverboats operated by Players and its Subsidiaries) in order to allow it to conduct, and continue to conduct, its business as and where currently conducted, except for such matters which, individually or in the aggregate, would not be reasonably likely to have a Players Material Adverse Effect. Except as disclosed in Section 3.9 of the Players Disclosure Schedule, such material tangible personal assets and properties are sufficiently free of liens to allow each of Players and its Subsidiaries to conduct, and continue to conduct, its business as currently conducted and to the best knowledge of Players, the consummation of the transactions contemplated by this Agreement will not alter or impair such ability in any respect which, individually or in the aggregate, would be reasonably likely to have a Players Material Adverse Effect. Section 3.10. Intellectual Property. Section 3.10 of the Players Disclosure Schedule lists all (i) trademark and service mark registrations and applications owned by Players or any of its Subsidiaries and (ii) trademark, service mark and trade name license agreements to which Players or any of its Subsidiaries is a party. Except as disclosed in Section 3.10 of the Players Disclosure Schedule, all material trademarks, trademark applications, trade names, service marks, trade secrets (including customer lists and customer databases), copyrights, patents, licenses, know-how and other proprietary intellectual property rights used in connection with the businesses of Players and its Subsidiaries as currently conducted are without material restrictions or material conditions on use, and there is no conflict with the intellectual property rights of Players and its Subsidiaries therein or any conflict by them with the intellectual property rights of others therein which, individually or in the aggregate, would be reasonably likely to have a Players Material Adverse Effect. Section 3.11. Agreements, Contracts and Commitments. (a) Except as disclosed in the Players SEC Reports or as disclosed in Section 3.11(a) of the Players Disclosure Schedule, as of the date of this Agreement, neither Players nor any of its Subsidiaries is a party to any oral or written (i) agreement, contract, indenture or other instrument relating to Indebtedness (as defined below) in an amount exceeding $1,000,000, (ii) partnership, joint venture or limited liability or management agreement with any person, (iii) agreement, contract, or other instrument relating to any merger, consolidation, business combination, share exchange, business acquisition, or for the purchase, acquisition, sale or disposition of any material assets of Players or any of its Subsidiaries outside the ordinary course of business, (iv) other contract, agreement or commitment to be performed after the date hereof which would be a material contract (as defined in Item 601(b)(10) of Regulation S-K of the SEC), (v) agreement, contract, or other instrument relating to any "strategic alliances" (i.e., cross-marketing, affinity relationship, etc.), (vi) contract, agreement or commitment which materially restricts (geographically or otherwise) the conduct of any line of business by Players or any of its Subsidiaries, (vii) any contract, agreement or other instrument having as a party a partnership, joint venture or limited liability company in which Players or any of its Subsidiaries is a partner, joint venture party or member which would otherwise satisfy the criteria in clauses (i), (iii), (iv), (v) or (vi) if Players or any of its Subsidiaries were a party to such contract, agreement or other instrument or (viii) any other material contract requiring annual or remaining payments in excess of $250,000 after the date hereof and which is not cancelable on less than 30 days' notice (collectively, the "Players Material Contracts"). "Indebtedness" means any liability in respect of (A) borrowed money, (B) capitalized lease obligations, (C) the deferred purchase price of property or services (other than trade payables in the ordinary course of business) and (D) guarantees of any of the foregoing incurred by any other person other than Players or any of its Subsidiaries. (b) Except as disclosed in the Players SEC Reports filed prior to the date of this Agreement or as disclosed in Section 3.11(b) of the Players Disclosure Schedule, as of the date of this Agreement, (i) each of the Players Material Contracts is valid and binding upon Players or any of its Subsidiaries (and, to Players' best knowledge, on all other parties thereto) in accordance with its terms and is in full force and effect, (ii) there is no material breach or violation of or default by Players or any of its Subsidiaries under any of the Players Material Contracts, whether or not such breach, violation or default has been waived, and (iii) no event has occurred with respect to Players or any of its Subsidiaries which, with the notice or lapse of time or both, would constitute a material breach, violation or default, or give rise to a right of termination, modification, cancellation, foreclosure, imposition of a lien, prepayment or acceleration under any of the Players Material Contracts, which breach, violation or default referred to in clauses (ii) or (iii), alone or in the aggregate with other such breaches, violations or defaults referred to in clauses (ii) or (iii), would be reasonably likely to have a Players Material Adverse Effect. Section 3.12. Litigation. Except as disclosed in the Players SEC Reports or in Section 3.12 of the Players Disclosure Schedule, there is no action, suit or proceeding, claim, arbitration or investigation against or affecting Players or any of its Subsidiaries pending, or as to which Players or any of its Subsidiaries has received any written notice of assertion against or affecting, Players or any of its Subsidiaries or any property or asset of Players or any of its Subsidiaries, before any court, arbitrator, or administrative, governmental or regulatory authority or body, domestic or foreign that individually or in the aggregate could reasonably be expected to (i) have a Players Material Adverse Effect or (ii) prevent or materially delay the consummation of the transactions contemplated by this Agreement. Section 3.13. Environmental Matters. (a) Except as disclosed in Section 3.13 of the Players Disclosure Schedule, the Players SEC Reports and as would not be reasonably likely to have a Players Material Adverse Effect: (i) Players and its Subsidiaries have complied with all applicable Environmental Laws (as defined in Section 3.13(b)); (ii) the properties currently owned or operated by Players and its Subsidiaries (including soils, groundwater, surface water, buildings or other structures) are not contaminated with any Hazardous Substances (as defined in Section 3.13(c)); (iii) neither Players nor its Subsidiaries are subject to liability for any Hazardous Substance disposal or contamination on any third party property; (iv) neither Players nor any of its Subsidiaries has been associated with any release or threat of release of any Hazardous Substance; (v) neither Players nor any of its Subsidiaries has received any notice, demand, letter, claim or request for information alleging that Players or any of its Subsidiaries may be in violation of or liable under any Environmental Law; (vi) neither Players nor any of its Subsidiaries is subject to any orders, decrees, injunctions or other arrangements with any Governmental Entity or is subject to any indemnity or other agreement with any third party relating to liability under any Environmental Law or relating to Hazardous Substances; and (vii) there are no circumstances or conditions involving Players or any of its Subsidiaries that could reasonably be expected to result in any claims, liability, investigations, costs or restrictions on the ownership, use or transfer of any property of Players or any of its Subsidiaries pursuant to any Environmental Law. (b) For purposes of this Agreement, the term "Environmental Law" means any federal, state, local or foreign law, regulation, order, decree, permit, authorization, opinion, common law or agency requirement relating to: (A) the protection, investigation or restoration of the environment, health and safety, or natural resources, (B) the handling, use, presence, disposal, release or threatened release of any Hazardous Substance or (C) noise, odor, wetlands, pollution, contamination or any injury or threat of injury to persons or property. (c) For purposes of this Agreement, the term "Hazardous Substance" means any substance that is: (A) listed, classified or regulated pursuant to any Environmental Law; (B) any petroleum product or by-product, asbestos-containing material, lead-containing paint or plumbing, polychlorinated biphenyls, radioactive materials or radon; or (C) any other substance which is the subject of regulatory action by any Governmental Entity pursuant to any Environmental Law. Section 3.14. Employee Benefit Plans. (a) Section 3.14(a) of the Players Disclosure Schedule contains a true and complete list of all employee benefit plans (as defined in Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended ("ERISA")), all employment, retention, change of control and severance agreements, and all bonus, stock option, stock purchase, incentive, deferred compensation, supplemental retirement, severance and other similar employee benefit plans, programs, policies and agreements, written or otherwise, in each case that is sponsored, maintained, contributed to or required to be contributed to by Players or any of its Subsidiaries or any trade or business (whether or not incorporated) which, together with Players or any of its Subsidiaries, would be deemed a "single employer" under Section 4001 (b) of ERISA (an "ERISA Affiliate"), or to which Players, any of its Subsidiaries or any ERISA Affiliate is a party for the benefit of any current or former employee, consultant, director or independent contractor of Players or any of its Subsidiaries (together, the "Players Employee Plans"). (b) Players has delivered or made available to Buyer all material documents related to the Players Employee Plans, including, without limitation: (i) true and complete copies of all Players Employee Plan documents and any summary plan descriptions, summary annual reports and insurance contracts relating thereto, (ii) detailed summaries of all unwritten Players Employee Plans, (iii) true and complete copies of the most recent financial statements and actuarial reports with respect to all Players Employee Plans for which financial statements or actuarial reports are required or have been prepared; (iv) the most recent determination letter from the IRS (if applicable) for any such Players Employee Plan, and (v) true and complete copies of any filing with or report to any Governmental Entity with respect to any Players Employee Plan made by Players or any of its Subsidiaries during the twenty-four months prior to the date of this Agreement, including, without limitation, annual reports for Players Employee Plans, and a copy of any correspondence to Players or any of its Subsidiaries from any Governmental Entity with respect to any such Players Employee Plan during such period. (c) All Players Employee Plans conform in all material respects to, and are being administered and operated in all material respects in compliance with, the requirements of ERISA, the Code and all other applicable laws, including applicable laws of foreign jurisdictions. Except as set forth in Section 3.14(c) of the Players Disclosure Schedule, there have not been any "prohibited transactions," as such term is defined in Section 4975 of the Code or Section 406 of ERISA, involving any of the Players Employee Plans that could subject Players or any of its Subsidiaries to any penalties or taxes imposed under the Code or ERISA. Section 3.14(c) of the Players Disclosure Schedule sets forth a true and complete list of all outstanding loans from Players or any of its Subsidiaries to any current or former director, officer, employee or consultant. (d) Except as set forth in Section 3.14(d) of the Players Disclosure Schedule, any Players Employee Plan that is intended to be qualified under Section 401 (a) of the Code and exempt from tax under Section 501 (a) of the Code has been determined by the Internal Revenue Service to be so qualified, has received a favorable determination letter from the IRS covering provisions of the Tax Reform Act of 1986, and such determination remains in effect and has not been revoked. Nothing has occurred since the date of any such determination that is reasonably likely to affect adversely such qualification or exemption in any material respect, or result in the imposition of material excise taxes or income taxes on unrelated business income under the Code or ERISA with respect to any Players Employee Plan. All contributions or other amounts payable by Players or any of its Subsidiaries with respect to each Players Employee Plan have been paid or accrued in accordance with GAAP, ERISA, the Code and the terms of each such plan. (e) Except as set forth in Section 3.14(e) of the Players Disclosure Schedule, neither Players, any of its Subsidiaries nor any ERISA Affiliate (i) at any time in the past has had a current or contingent obligation to contribute to any multiemployer plan (as defined in Section 3(37) of ERISA) ("Multiemployer Plan") or (ii) at any time in the past has had any liability, contingent or otherwise, under Title IV of ERISA or Section 412 of the Code. As of the date of this Agreement, no Players Employee Plan is subject to Title IV of ERISA and no Players Employee Plan is a Multiemployer Plan. (f) There are no pending, or to Players' knowledge, any threatened or anticipated claims by or on behalf of any Players Employee Plan, or by or on behalf of any individual participants or beneficiaries of any Players Employee Plan, alleging any breach of fiduciary duty on the part of Players or any of its Subsidiaries or any of the officers, directors or employees of Players or any of its Subsidiaries under ERISA or any other applicable Regulations, or claiming benefit payments other than those made in the ordinary operation of such plans, or alleging any violation of any other applicable Laws. To the knowledge of Players or any of its Subsidiaries, the Players Employee Plans are not the subject of any investigation, audit or action by the Internal Revenue Service, the Department of Labor or the Pension Benefit Guaranty Corporation ("PBGC"). (g) With respect to any Players Employee Plan that is an employee welfare benefit plan (within the meaning of Section 3(l) of ERISA) (a "Players Welfare Plan"), (i) each Players Welfare Plan for which contributions are claimed as deductions under any provision of the Code is in compliance in all material respects with all applicable requirements pertaining to such deduction and (ii) any Players Employee Plan that is a group health plan (within the meaning of Section 4980B(g)(2) of the Code) complies, and in each and every case has complied in all material respects, with all of the requirements of ERISA and Section 4980B of the Code. No welfare benefit fund (within the meaning of Section 419(e)(1) of the Code) or voluntary employees' beneficiary association (within the meaning of 501 (c)(9) of the Code) has been established or maintained in connection with a Players Welfare Plan. Section 3.15. Compliance. (a) Except as disclosed in Section 3.15 of the Players Disclosure Schedule, each of Players and its Subsidiaries, and each of their respective directors (but with respect to non-employee directors, only to Players' best knowledge), officers, persons performing management functions similar to officers and, to Players' best knowledge, partners hold all permits, registrations, findings of suitability, licenses, variances, exemptions, certificates of occupancy, orders and approvals of all Governmental Entities (including all authorizations under Environmental Laws, the Merchant Marine Act of 1920 and the Shipping Act of 1916, Certificates of Inspection issued by the US Coast Guard and permits and approvals issued by the United States Army Corps of Engineers and Players Gaming Laws (as defined below)), necessary to conduct the business and operations of Players and each of its Subsidiaries as currently conducted, each of which is in full force and effect in all material respects and no notice of revocation has been received in respect thereof, except where the failure to hold such permits, registrations, findings of suitability, licenses, variances, exemptions, certificates of occupancy, orders and approvals would not, individually or in the aggregate, be reasonably likely to have a Players Material Adverse Effect (the "Players Permits"). Except as disclosed in the Players SEC Reports, as disclosed in Section 3.15 of the Players Disclosure Schedule, or as would not be reasonably likely to have a Players Material Adverse Effect, the businesses of Players and its Subsidiaries are not being conducted in violation of any law, ordinance or regulation of any Governmental Entity. (b) The term "Players Gaming Laws" means any Federal, state, local or foreign statute, ordinance, rule, regulation, permit, consent, registration, finding of suitability, approval, license, judgment, order, decree, injunction or other authorization, including any condition or limitation placed thereon, governing or relating to the current or contemplated casino and gaming activities and operations of Players or any of its Subsidiaries, including any applicable state gaming law and any federal or state laws relating to currency transactions. (c) Except as disclosed in Section 3.15 of the Players Disclosure Schedule (i) neither Players nor any of its Subsidiaries, nor any director (but with respect to non-employee directors, only to Players' best knowledge), officer, key employee or, to Players' best knowledge, partners of Players or any of its Subsidiaries has received any written claim, demand notice, complaint, court order or administrative order from any Governmental Entity in the past three years under, or relating to any violation or possible violation of any Players Gaming Laws which did or would be reasonably likely to result in fines or penalties of $250,000 or more; (ii) to the best knowledge of Players, there are no facts, which if known to the regulators under the Players Gaming Laws could reasonably be expected to result in the revocation, limitation or suspension of a license, finding of suitability, registration, permit or approval of it or them, or any officer, director, other person performing management functions similar to an officer or partner, under any Players Gaming Laws; and (iii) neither Players nor any of its Subsidiaries has suffered a suspension or revocation of any material license, finding of suitability, registration, permit or approval held under the Players Gaming Laws. Section 3.16. Labor Matters. Except as disclosed in Section 3.16 of the Players Disclosure Schedule, (i) there are no proceedings pending between Players or any of its Subsidiaries and any of their respective employees before the Equal Employment Opportunity Commission, Department of Labor, or any other Governmental Entity; (ii) to the best knowledge of Players, there are no activities or proceedings of any labor union to organize any non-unionized employees; (iii) neither Players nor any of its Subsidiaries has received notice of any alleged unfair labor practice charges and/or complaints pending against Players or any of its Subsidiaries or any of their respective representatives or employees before the National Labor Relations Board or any current union representation questions involving employees of Players or any of its Subsidiaries; and (iv) Players' employment policies and practices comply in all material respects with applicable law; and (v) there is no strike, slowdown, work stoppage, labor dispute or lockout, or, to the best knowledge of Players, threat thereof, by or with respect to any employees of Players or any of its Subsidiaries. Players and its Subsidiaries are not parties to any collective bargaining agreements or other labor union contracts applicable to individuals employed or previously employed by Players or any of its Subsidiaries and, except as disclosed in Players Disclosure Schedule 3.16, no collective bargaining agreement or labor union contract is being negotiated by Players or any such Subsidiary. Section 3.17. Insurance. All material fire and casualty, general liability, business interruption, product liability, and sprinkler and water damage insurance policies maintained by Players or any of its Subsidiaries are listed on Section 3.17 of the Players Disclosure Schedule. At the Effective Time, all such insurance policies, or replacements thereof, will be outstanding and duly in force. To Players' knowledge, no notice of termination or non- renewal of any such insurance policy has been received by Players. Section 3.18. Information in Proxy Statement/Prospectus. The Joint Proxy Statement/Prospectus, as such term is defined in Section 5.4(a) below (or any amendment thereof or supplement thereto), at the date mailed to Players' stockholders and at the time of the Players Special Meeting, will not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they are made, not misleading, provided, however, that no representation is made by Players with respect to statements made therein based on information supplied by Buyer or Merger Sub for inclusion in the Proxy Statement/Prospectus. The Proxy Statement/Prospectus will comply in all material respects with the provisions of the Exchange Act and the rules and regulations thereunder. Section 3.19. State Takeover Statute. The Board of Directors of Players has approved the Merger, this Agreement and the Stockholder Support Agreements and, assuming the accuracy of the representations contained in Section 4.25 hereof (without giving effect to the knowledge qualification therein), such approval is sufficient to render inapplicable to the Merger, this Agreement and the Stockholder Support Agreements and the transactions contemplated hereby and thereby the provisions of Section 78.378 through 78.3793 of the NRS to the extent, if any, such Sections are applicable to the Merger, this Agreement and the Stockholder Support Agreements and the transactions contemplated hereby and thereby. Section 3.20. Voting Requirements. The affirmative vote of the holders of a majority of the outstanding shares of Players Common Stock entitled to vote thereon at the Players Special Meeting with respect to the approval of the Merger (the "Players Stockholder Approval") is the only vote of the holders of any class or series of Players' capital stock necessary to approve and adopt this Agreement and the transactions contemplated by this Agreement. Section 3.21. Players Rights Agreement. The Players Rights Agreement dated as of January 27, 1997 (the "Rights Agreement") has been amended as of February 8, 1999, in the form attached hereto as Exhibit B, so as to provide that (i) no "Distribution Date," "Stock Acquisition Date," or "Trigger Event" thereunder shall be deemed to have occurred, (ii) none of Buyer or any of its Subsidiaries will be an "Acquiring Person" thereunder and (iii) no holder of rights issued thereunder shall be entitled to exercise such rights under, or be entitled to any rights or benefits pursuant to, the Rights Agreement, in each case solely by reason of the approval and execution of this Agreement or the execution of the Stockholder Support Agreements, or the consummation of the transactions contemplated hereby or thereby. Section 3.22. Year 2000. Except as disclosed in Section 3.22 of the Players Disclosure Schedule, as of the date hereof, all computer software necessary for the conduct of its business (the "Software") is (or will be, prior to December 31, 1999, as provided in Section 3.22 of the Players Disclosure Schedule) designed to be used prior to, during, and after December 31, 1999, and the Software will operate during each such time period without error relating to the year 2000, specifically including any error relating to, or the product of, date data which represents or references different centuries or more than one century. Players further represents and warrants that as of the date hereof, the Software either does or will, prior to December 31, 1999 as provided in Section 3.22 of the Players Disclosure Schedule accept, calculate, sort, extract and otherwise process date inputs and date values, and return and display date values, in a consistent manner regardless of the dates used, whether before, on, or after January 1, 2000. Section 3.23. Opinion of Financial Advisor. Players has received the oral opinion of Donaldson, Lufkin & Jenrette Securities Corporation ("DLJ") as of the date of this Agreement, to the effect that the Merger Consideration is fair to the holders of Players Common Stock from a financial point of view. Section 3.24. Brokers. None of Players, any of its Subsidiaries, or any of their respective officers, directors or employees have employed any broker, financial advisor or finder or incurred any liability for any brokerage fees, commissions, finder's or other fees in connection with the transactions contemplated by this Agreement, except that Players has retained DLJ as its financial advisor. ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF BUYER AND MERGER SUB Buyer and Merger Sub represent and warrant to Players that the statements contained in this Article III are true and correct except as set forth herein and in the disclosure schedule delivered by Buyer and Merger Sub to Players on or before the date of this Agreement (the "Buyer Disclosure Schedule"), or as otherwise expressly contemplated by this Agreement. Any reference in the Merger Agreement to Buyer's "best knowledge," or "the best of Buyer's knowledge," or words of similar import, shall be deemed a reference to the actual knowledge of any of the corporate officers of Buyer or any of its Subsidiaries, for all purposes. The Buyer Disclosure Schedule has been prepared based upon the foregoing definition. Section 4.1. Organization of Buyer and its Subsidiaries. Each of Buyer 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 and as proposed to be conducted. Each of Buyer 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) or results of operations of Buyer and its Subsidiaries, taken as a whole (a "Buyer Material Adverse Effect"). Buyer has delivered to Players a true and correct copy of the Certificate of Incorporation and Bylaws of Buyer, in each case as amended to the date of this Agreement. Except as set forth on the Buyer 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 Buyer, free and clear of all 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). Except as set forth in Section 4.1 of the Buyer Disclosure Schedule, neither Buyer nor any of its Subsidiaries directly or indirectly owns (other than ownership interests in Buyer or in one or more of its Subsidiaries) any equity or similar interest in, or any interest convertible into or exchangeable or exercisable for, any corporation, partnership, joint venture or other business association or entity. Section 4.2. Capitalization. (a) The authorized capital stock of Buyer consists of 30,000,000 shares of Buyer Common Stock, $.01 par value per share, and 1,000,000 shares of preferred stock, with $1.00 par value per share ("Buyer Preferred Stock"). As of the date hereof, (i) 8,616,680 shares of Buyer Common Stock were issued and outstanding, all of which are validly issued, fully paid and nonassessable, (ii) 1,243,572 shares of Buyer Common Stock were held in the treasury of Buyer or by Subsidiaries of Buyer, and (iii) no shares of Buyer Preferred Stock are issued and outstanding. Section 4.2(a)(i) of the Buyer Disclosure Schedule sets forth the number of shares of Buyer Common Stock reserved for future issuance upon exercise of options to acquire shares of Buyer Common Stock ("Buyer Options") granted and outstanding as of the date hereof and under Buyer's stock option plans ("Buyer Stock Option Plans"). Section 4.2(a)(i) of the Buyer Disclosure Schedule also sets forth as of the date hereof, for each Buyer Stock Option Plan, the dates on which Options and Buyer SARs which are still outstanding under such plan were granted, the number of outstanding Options and Buyer SARs granted on each such date and the exercise price thereof. Except as disclosed in Section 4.2(a)(i) of the Buyer Disclosure Schedule, since December 31, 1998 through the date of this Agreement, Buyer has not made any grants under any of the Buyer Stock Option Plans. Except as disclosed in Section 4.2(a)(i) of the Buyer Disclosure Schedule, as of the date of this Agreement, Buyer has not granted any contractual rights the value of which is derived from the financial performance of Buyer or from the value of shares of Buyer Common Stock. Except as disclosed in Section 4.2(a)(ii) of the Buyer Disclosure Schedule, there are no obligations contingent or otherwise, of Buyer or any of its Subsidiaries to repurchase, redeem or otherwise acquire any shares of Buyer Common Stock or the capital stock or ownership interests of any Subsidiary or to provide funds to or make any material investment (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 Buyer's Subsidiaries are duly authorized, validly issued, fully paid and nonassessable and, except as disclosed in Section 4.2(a)(iii) of the Buyer Disclosure Schedule and except as required by gaming industry regulation, all such shares and ownership interests are owned by Buyer or another Subsidiary of Buyer free and clear of all security interests, liens, claims, pledges, agreements, limitations on Buyer's voting rights, charges or other encumbrances or restrictions on transfer of any nature. (b) There is no Voting Debt of Buyer or any of its Subsidiaries issued and outstanding. Except as set forth in Section 4.2(a) or in this Section 4.2(b) or as reserved for future grants of options or restricted stock under the Buyer Stock Option Plans as of the date hereof, (i) there are no shares of capital stock of any class of Buyer, or any security exchangeable into or exercisable for such equity securities, issued, reserved for issuance or outstanding; (ii) except as set forth in Section 4.2(b) of the Buyer Disclosure Schedule there are no options, warrants, equity securities, calls, rights, commitments or agreements of any character to which Buyer or any of its Subsidiaries is a party or by which it is bound obligating Buyer 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 Buyer or any of its Subsidiaries or obligating Buyer 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) there are no voting trusts, proxies or other voting agreements or understandings with respect to the shares of capital stock of Buyer. All shares of Buyer Common Stock subject to issuance as specified in this Section 4.2(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. (c) The authorized capital stock of Merger Sub consists of 2,500 shares of common stock, par value $.01 per share ("Merger Sub Common Stock"), of which 1,000 shares are issued and outstanding. Buyer owns directly all the outstanding shares of Merger Sub Common Stock. The outstanding shares of Merger Sub Common Stock are duly authorized, validly issued, fully paid and assessable and free of any preemptive rights. Section 4.3. Authority; No Conflict; Required Filings and Consents. (a) Buyer and Merger Sub have 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 Buyer and Merger Sub have been duly authorized by all necessary corporate action on the part of Buyer and Merger Sub, subject only to the Buyer Stockholder Approval specified in Section 4.20 hereof and the review by Buyer's Compliance Committee, as required by Buyer's internal reporting system, of this Agreement, the transactions identified herein, and the persons designated by Players to serve on Buyer's Board of Directors, such review to be completed no later than 60 days after the date of this Agreement. This Agreement has been duly executed and delivered by Buyer and Merger Sub and constitutes the valid and binding obligation of Buyer and Merger Sub, enforceable against each of them in accordance with its terms. (b) Other than as disclosed in Section 4.3(b) of the Buyer Disclosure Schedule, the execution and delivery of this Agreement by Buyer and Merger Sub 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 Buyer 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 Buyer 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 4.3(c), conflict with or violate any permit, concession, franchise, license, judgment, order, decree, statute, law, ordinance, rule or regulation applicable to Buyer 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 Buyer Material Adverse Effect or (y) would not impair or materially delay the consummation of the Merger. (c) Except as disclosed in Section 4.3(c) of the Buyer Disclosure Schedule, no consent, approval, order or authorization of, or registration, declaration or filing with, any Governmental Entity is required by or with respect to Buyer or any of its Subsidiaries in connection with the execution and delivery of this Agreement or the consummation of the transactions contemplated hereby, other than (i) the filing of the pre-merger notification report under the HSR Act, (ii) the filing of the Articles of Merger with respect to the Merger with the Secretary of State of the State of Nevada, (iii) the filing of any Joint Proxy Statement/Prospectus (as such term is defined in Section 5.4(a) (below) with the SEC in accordance with 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, (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 or the transactions contemplated by this Agreement, and (vii) such other filings, consents, approvals, orders, registrations and declarations as may be required under the laws of any jurisdiction in which Buyer or any of its Subsidiaries conducts any business or owns any assets the failure of which to obtain would not have a Buyer Material Adverse Effect. Section 4.4. Public Filings; Financial Statements. (a) Buyer and its Subsidiaries that are required to file, or that file, forms, reports or other documents with the SEC (the "Buyer Reporting Subsidiaries") have filed and made available to Players all forms, reports and documents required to be filed by Buyer and the Buyer Reporting Subsidiaries with the SEC since January 1, 1995 (the "Buyer SEC Reports"). The Buyer 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 Buyer SEC Reports or necessary in order to make the statements in such Buyer SEC Reports, in the light of the circumstances under which they were made, not misleading. (b) Except as set forth in Section 4.4(a), each of the consolidated financial statements (including, in each case, any related notes) of Buyer contained in the Buyer SEC Reports complied as to form in all material respects with the applicable published rules and regulations of the SEC with respect thereto, was prepared in accordance with 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 Buyer and its consolidated 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 Buyer as of June 30, 1998 is referred to herein as the "Buyer Balance Sheet." Section 4.5. No Undisclosed Liabilities. Except as disclosed in the Buyer SEC Reports or in Section 4.5 of the Buyer Disclosure Schedule, and except for liabilities and obligations incurred since the date of the Buyer Balance Sheet in the ordinary course of business consistent with past practices, Buyer and its consolidated Subsidiaries do not have indebtedness, obligations, or liabilities of any kind, whether 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, which would be reasonably likely to have a Buyer Material Adverse Effect. Section 4.6. Absence of Certain Changes or Events. Except as disclosed in the Buyer SEC Reports or in Section 4.6 of the Buyer Disclosure Schedule, since the date of the Buyer Balance Sheet, Buyer and its Subsidiaries have conducted their respective businesses only in the ordinary course and in a manner consistent with past practice, and there has not been (i) any Buyer Material Adverse Effect, (ii) any declaration, setting aside or payment of any dividend or other distribution (whether in cash, stock or property) with respect to any of Buyer's capital stock, (iii) 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, (iv) (w) any granting by Buyer or any of its Subsidiaries to any director or officer of Buyer 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 Buyer SEC Reports, (x) any granting by Buyer or any of its Subsidiaries to any director or officer of any stock options, except as was required under employment agreements in effect as of the date of the most recent financial statements included in the Buyer SEC Reports, (y) any granting by Buyer or any of its Subsidiaries to any officer of any increase in severance or termination pay, except as was required under any employment, severance or termination agreements, plans or arrangements in effect as of the date of the most recent financial statements included in the Buyer SEC Reports or (z) any entry by Buyer or any of its Subsidiaries into any employment, severance or termination agreement with any officer, (v) any change in accounting methods, principles or practices having a material adverse effect on Buyer, except insofar as may have been required by a change in GAAP, (vi) any tax election that individually or in the aggregate would have a Buyer Material Adverse Effect, or (vii) any settlement of pending or threatened litigation involving Buyer or any of its Subsidiaries (whether brought by a private party or a Governmental Entity) other than any settlement which is not reasonably likely to have a Buyer Material Adverse Effect. Section 4.7. Taxes. (a) Buyer 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). Except as set forth in Section 4.7(a) of the Buyer Disclosure Schedule, neither the IRS nor any other taxing authority has asserted any claim for Taxes, or to the actual knowledge of the executive officers of Buyer, is threatening to assert any claims for Taxes. Buyer 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. Neither Buyer nor any of its Subsidiaries has made an election under Section 341(f) of the Code. There are no liens for Taxes upon the assets of Buyer 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). (b) Neither Buyer 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 Buyer or any Subsidiary of Buyer. (c) Neither Buyer 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. 1.1502-6 or comparable provisions of state, local or foreign tax law) and including any liability for Taxes of any predecessor entity. Section 4.8. Real Property, Title and Related Matters. Section 4.8 of the Buyer Disclosure Schedule sets forth a true and complete list as of the date of this Agreement of (i) all contracts or agreements relating to the Leased Real Property and (ii) a brief description of each piece of Owned Real Property. Buyer or a Subsidiary of Buyer, as the case may be, has, except as set forth in Section 4.8 of the Buyer Disclosure Schedule, (A) the right to quiet enjoyment of the Leased Real Property for the full term of the leases, and (B) good and marketable title to all Owned Real Property and to all fixtures thereon, free and clear of any Encumbrances, except for Permitted Encumbrances. Each lease or other contract referred to in Section 4.8 of the Buyer Disclosure Schedule is a valid contract or agreement enforceable against Buyer or its Subsidiary, as the case may be, in accordance with its terms and, to the knowledge of Buyer, against the other parties thereto. To the knowledge of Buyer, there are no rights or options of any third party to acquire such leased property or any ownership therein. Neither Buyer 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 4.8 of the Buyer Disclosure Schedule. To the knowledge of Buyer, no other party to any such leases, ground leases, licenses, options or other agreements is in default thereunder. Section 4.9. Title to Personal Property; Liens. To the best knowledge of Buyer, Buyer and each of its Subsidiaries has sufficiently good and valid title to, or an adequate leasehold interest in, its material tangible personal properties and assets in order to allow it to conduct, and continue to conduct, its business as and where currently conducted, except for such matters which, individually or in the aggregate, would not be reasonably likely to have a Buyer Material Adverse Effect. Except as disclosed in Section 4.9 of the Buyer Disclosure Schedule, such material tangible personal assets and properties are sufficiently free of liens to allow each of Buyer and its Subsidiaries to conduct, and continue to conduct, its business as currently conducted and to the best knowledge of Buyer, the consummation of the transactions contemplated by this Agreement will not alter or impair such ability in any respect which, individually or in the aggregate, would be reasonably likely to have a Buyer Material Adverse Effect. Section 4.10. Intellectual Property. Section 4.10 of the Buyer Disclosure Schedule lists all (i) trademark and service mark registrations and applications owned by Buyer or any of its Subsidiaries and (ii) trademark, service mark and trade name license agreements to which Buyer or any of its Subsidiaries is a party. Except as disclosed in Section 4.10 of the Buyer Disclosure Schedule, all material trademarks, trademark applications, trade names, service marks, trade secrets (including customer lists and customer databases), copyrights, patents, licenses, know-how and other proprietary intellectual property rights used in connection with the businesses of Buyer and its Subsidiaries as currently conducted are without material restrictions or material conditions on use, and there is no conflict with the intellectual property rights of Buyer and its Subsidiaries therein or any conflict by them with the intellectual property rights of others therein which, individually or in the aggregate, would be reasonably likely to have a Buyer Material Adverse Effect. Section 4.11. Agreements, Contracts and Commitments. (a) Except as disclosed in the Buyer SEC Reports or as disclosed in Section 4.11(a) of the Buyer Disclosure Schedule, as of the date of this Agreement, neither Buyer nor any of its Subsidiaries is a party to any oral or written (i) agreement, contract, indenture or other instrument relating to Indebtedness in an amount exceeding $1,000,000, (ii) partnership, joint venture or limited liability or management agreement with any person, (iii) agreement, contract, or other instrument relating to any merger, consolidation, business combination, share exchange, business acquisition, or for the purchase, acquisition, sale or disposition of any material assets of Buyer or any of its Subsidiaries outside the ordinary course of business, (iv) other contract, agreement or commitment to be performed after the date hereof which would be a material contract (as defined in Item 601(b)(10) of Regulation S-K of the SEC), (v) agreement, contract, or other instrument relating to any "strategic alliances" (i.e., cross-marketing, affinity relationship, etc.), (vi) contract, agreement or commitment which materially restricts (geographically or otherwise) the conduct of any line of business by Buyer or any of its Subsidiaries, (vii) any contract, agreement or other instrument having as a party a partnership, joint venture or limited liability company in which Buyer or any of its Subsidiaries is a partner, joint venture party or member which would otherwise satisfy the criteria in clauses (i), (iii), (iv), (v) or (vi) if Buyer or any of its Subsidiaries were a party to such contract, agreement or other instrument or (viii) any other material contract requiring annual or remaining payments in excess of $250,000 after the date hereof and which is not cancelable on less than 30 days' notice (collectively, the "Buyer Material Contracts"). (b) Except as disclosed in the Buyer SEC Reports filed prior to the date of this Agreement or as disclosed in Section 4.11(b) of the Buyer Disclosure Schedule, as of the date of this Agreement, (i) each of the Buyer Material Contracts is valid and binding upon Buyer or any of its Subsidiaries (and, to Buyer's best knowledge, on all other parties thereto) in accordance with its terms and is in full force and effect, (ii) there is no material breach or violation of or default by Buyer or any of its Subsidiaries under any of the Buyer Material Contracts, whether or not such breach, violation or default has been waived, and (iii) no event has occurred with respect to Buyer or any of its Subsidiaries which, with the notice or lapse of time or both, would constitute a material breach, violation or default, or give rise to a right of termination, modification, cancellation, foreclosure, imposition of a lien, prepayment or acceleration under any of the Buyer Material Contracts, which breach, violation or default referred to in clauses (ii) or (iii), alone or in the aggregate with other such breaches, violations or defaults referred to in clauses (ii) or (iii), would be reasonably likely to have a Buyer Material Adverse Effect. Section 4.12. Litigation. Except as disclosed in the Buyer SEC Reports or in Section 4.12 of the Buyer Disclosure Schedule, there is no action, suit or proceeding, claim, arbitration or investigation against or affecting Buyer or any of its Subsidiaries pending, or as to which Buyer or any of its Subsidiaries has received any written notice of assertion against or affecting, Buyer or any of its Subsidiaries or any property or asset of Buyer or any of its Subsidiaries, before any court, arbitrator, or administrative, governmental or regulatory authority or body, domestic or foreign that individually or in the aggregate could reasonably be expected to (i) have a Buyer Material Adverse Effect or (ii) prevent or materially delay the consummation of the transactions contemplated by this Agreement. Section 4.13. Environmental Matters. Except as disclosed in Section 4.13 of the Buyer Disclosure Schedule, the Buyer SEC Reports and as would not be reasonably likely to have a Buyer Material Adverse Effect: (i) Buyer and its Subsidiaries have complied with all applicable Environmental Laws (as defined in Section 3.13(b)); (ii) the properties currently owned or operated by Buyer and its Subsidiaries (including soils, groundwater, surface water, buildings or other structures) are not contaminated with any Hazardous Substances (as defined in Section 3.13(c)); (iii) neither Buyer nor its Subsidiaries are subject to liability for any Hazardous Substance disposal or contamination on any third party property; (iv) neither Buyer nor any of its Subsidiaries has been associated with any release or threat of release of any Hazardous Substance; (v) neither Buyer nor any of its Subsidiaries has received any notice, demand, letter, claim or request for information alleging that Buyer or any of its Subsidiaries may be in violation of or liable under any Environmental Law; (vi) neither Buyer nor any of its Subsidiaries is subject to any orders, decrees, injunctions or other arrangements with any Governmental Entity or is subject to any indemnity or other agreement with any third party relating to liability under any Environmental Law or relating to Hazardous Substances; and (vii) there are no circumstances or conditions involving Buyer or any of its Subsidiaries that could reasonably be expected to result in any claims, liability, investigations, costs or restrictions on the ownership, use or transfer of any property of Buyer or any of its Subsidiaries pursuant to any Environmental Law. Section 4.14. Employee Benefit Plans. (a) Section 4.14(a) of the Buyer Disclosure Schedule contains a true and complete list of all employee benefit plans (as defined in Section 3(3) of ERISA), all employment, retention, change of control and severance agreements, and all bonus, stock option, stock purchase, incentive, deferred compensation, supplemental retirement, severance and other similar employee benefit plans, programs, policies and agreements, written or otherwise, in each case that is sponsored, maintained, contributed to or required to be contributed to by Buyer or any of its Subsidiaries or any ERISA Affiliate, or to which Buyer, any of its Subsidiaries or any ERISA Affiliate is a party for the benefit of any current or former employee, consultant, director or independent contractor of Buyer or any of its Subsidiaries (together, the "Buyer Employee Plans"). (b) Buyer has delivered or made available to Players all material documents related to the Buyer Employee Plans, including, without limitation: (i) true and complete copies of all Buyer Employee Plan documents and any summary plan descriptions, summary annual reports and insurance contracts relating thereto, (ii) detailed summaries of all unwritten Buyer Employee Plans, (iii) true and complete copies of the most recent financial statements and actuarial reports with respect to all Buyer Employee Plans for which financial statements or actuarial reports are required or have been prepared; (iv) the most recent determination letter from the IRS (if applicable) for any such Buyer Employee Plan, and (v) true and complete copies of any filing with or report to any Governmental Entity with respect to any Buyer Employee Plan made by Buyer or any of its Subsidiaries during the twenty-four months prior to the date of this Agreement, including, without limitation, annual reports for Buyer Employee Plans, and a copy of any correspondence to Buyer or any of its Subsidiaries from any Governmental Entity with respect to any such Buyer Employee Plan during such period. (c) All Buyer Employee Plans conform in all material respects to, and are being administered and operated in all material respects in compliance with, the requirements of ERISA, the Code and all other applicable laws, including applicable laws of foreign jurisdictions. Except as set forth in Section 4.14(c) of the Buyer Disclosure Schedule, there have not been any "prohibited transactions," as such term is defined in Section 4975 of the Code or Section 406 of ERISA, involving any of the Buyer Employee Plans that could subject Buyer or any of its Subsidiaries to any penalties or taxes imposed under the Code or ERISA. Section 4.14(c) of the Buyer Disclosure Schedule sets forth a true and complete list of all outstanding loans from Buyer or any of its Subsidiaries to any current or former director, officer, employee or consultant. (d) Except as set forth in Section 4.14(d) of the Buyer Disclosure Schedule, any Buyer Employee Plan that is intended to be qualified under Section 401 (a) of the Code and exempt from tax under Section 501 (a) of the Code has been determined by the IRS to be so qualified, has received a favorable determination letter from the IRS covering provisions of the Tax Reform Act of 1986, and such determination remains in effect and has not been revoked. Nothing has occurred since the date of any such determination that is reasonably likely to affect adversely such qualification or exemption in any material respect, or result in the imposition of material excise taxes or income taxes on unrelated business income under the Code or ERISA with respect to any Buyer Employee Plan. All contributions or other amounts payable by Buyer or any of its Subsidiaries with respect to each Buyer Employee Plan have been paid or accrued in accordance with GAAP, ERISA, the Code and the terms of each such plan. (e) Except as set forth in Section 4.14(e) of the Buyer Disclosure Schedule, neither Buyer, any of its Subsidiaries nor any ERISA Affiliate (i) at any time in the past has had a current or contingent obligation to contribute to any Multiemployer Plan or (ii) at any time in the past has had any liability, contingent or otherwise, under Title IV of ERISA or Section 412 of the Code. As of the date of this Agreement, no Buyer Employee Plan is subject to Title IV of ERISA and no Buyer Employee Plan is a Multiemployer Plan. (f) There are no pending, or to Buyer's knowledge, any threatened or anticipated claims by or on behalf of any Buyer Employee Plan, or by or on behalf of any individual participants or beneficiaries of any Buyer Employee Plan, alleging any breach of fiduciary duty on the part of Buyer or any of its Subsidiaries or any of the officers, directors or employees of Buyer or any of its Subsidiaries under ERISA or any other applicable Regulations, or claiming benefit payments other than those made in the ordinary operation of such plans, or alleging any violation of any other applicable Laws. To the knowledge of Buyer or any of its Subsidiaries, the Buyer Employee Plans are not the subject of any investigation, audit or action by the IRS, the Department of Labor or the PBGC. (g) With respect to any Buyer Employee Plan that is an employee welfare benefit plan (within the meaning of Section 3(l) of ERISA) (a "Buyer Welfare Plan"), (i) each Buyer Welfare Plan for which contributions are claimed as deductions under any provision of the Code is in compliance in all material respects with all applicable requirements pertaining to such deduction and (ii) any Buyer Employee Plan that is a group health plan (within the meaning of Section 4980B(g)(2) of the Code) complies, and in each and every case has complied in all material respects, with all of the requirements of ERISA and Section 4980B of the Code. No welfare benefit fund (within the meaning of Section 419(e)(1) of the Code) or voluntary employees' beneficiary association (within the meaning of 501(c)(9) of the Code) has been established or maintained in connection with a Buyer Welfare Plan. Section 4.15. Compliance. (a) Except as disclosed in Section 4.15 of the Buyer Disclosure Schedule, each of Buyer and its Subsidiaries, and each of their respective directors (but with respect to non-employee directors, only to Buyer's best knowledge), officers, persons performing management functions similar to officers and, to Buyer's best knowledge, partners hold all permits, registrations, findings of suitability, licenses, variances, exemptions, certificates of occupancy, orders and approvals of all Governmental Entities (including all authorizations under Environmental Laws, the Merchant Marine Act of 1920 and the Shipping Act of 1916, Certificates of Inspection issued by the US Coast Guard and permits and approvals issued by the United States Army Corps of Engineers and Buyer Gaming Laws (as defined below)), necessary to conduct the business and operations of Buyer and each of its Subsidiaries as currently conducted, each of which is in full force and effect in all material respects and no notice of revocation has been received in respect thereof, except where the failure to hold such permits, registrations, findings of suitability, licenses, variances, exemptions, certificates of occupancy, orders and approvals would not, individually or in the aggregate, be reasonably likely to have a Buyer Material Adverse Effect (the "Buyer Permits"). Except as disclosed in the Buyer SEC Reports, as disclosed in Section 4.15 of the Buyer Disclosure Schedule, or as would not be reasonably likely to have a Buyer Material Adverse Effect, the businesses of Buyer and its Subsidiaries are not being conducted in violation of any law, ordinance or regulation of any Governmental Entity. (b) The term "Buyer Gaming Laws" means any Federal, state, local or foreign statute, ordinance, rule, regulation, permit, consent, registration, finding of suitability, approval, license, judgment, order, decree, injunction or other authorization, including any condition or limitation placed thereon, governing or relating to the current or contemplated casino and gaming activities and operations of Buyer or any of its Subsidiaries, including any applicable state gaming law and any federal or state laws relating to currency transactions. (c) Except as disclosed in Section 4.15 of the Buyer Disclosure Schedule (i) neither Buyer nor any of its Subsidiaries, nor any director (but with respect to non-employee directors, only to Buyer's best knowledge), officer, key employee or, to Buyer's best knowledge, partners of Buyer or any of its Subsidiaries has received any written claim, demand notice, complaint, court order or administrative order from any Governmental Entity in the past three years under, or relating to any violation or possible violation of any Buyer Gaming Laws which did or would be reasonably likely to result in fines or penalties of $250,000 or more; (ii) to the best knowledge of Buyer, there are no facts, which if known to the regulators under the Buyer Gaming Laws could reasonably be expected to result in the revocation, limitation or suspension of a license, finding of suitability, registration, permit or approval of it or them, or any officer, director, other person performing management functions similar to an officer or partner, under any Buyer Gaming Laws; and (iii) neither Buyer nor any of its Subsidiaries has suffered a suspension or revocation of any material license, finding of suitability, registration, permit or approval held under the Buyer Gaming Laws. Section 4.16. Registration Statement; Joint Proxy Statement/Prospectus. The information supplied by Buyer for inclusion or incorporation by reference in the Registration Statement shall not at the time the Registration Statement (as defined in Section 5.4(a) below) is declared effective by the SEC contain any untrue statement of a material fact or omit to state any material fact required to be stated in the Registration Statement or necessary in order to make the statements in the Registration Statement, in light of the circumstances under which they were made, not misleading. The information supplied by Buyer for inclusion or incorporation by reference in the Joint Proxy Statement/Prospectus (as defined in Section 5.4(a) below) shall not, on the date the Joint Proxy Statement/Prospectus is first mailed to stockholders of Players or Buyer, at the time of the Players and the Buyer Special Meeting (as provided for in Section 5.5) and at the Effective Time, contain any statement which, at such time and in light of the circumstances under which it shall be made, is false or misleading with respect to any material fact, omit to state any material fact necessary in order to make the statements made in the Joint Proxy Statement/Prospectus not false or misleading, or omit to state any material fact necessary to correct any statement in any earlier communication with respect to the solicitation of proxies for the Players Special Meeting which has become false or misleading. Section 4.17. Labor Matters. Except as disclosed in Section 4.17 of the Buyer Disclosure Schedule, (i) there are no proceedings pending between Buyer or any of its Subsidiaries and any of their respective employees before the Equal Employment Opportunity Commission, Department of Labor, or any other Governmental Entity; (ii) to the best knowledge of Buyer, there are no activities or proceedings of any labor union to organize any non-unionized employees; (iii) neither Buyer nor any of its Subsidiaries has received notice of any alleged unfair labor practice charges and/or complaints pending against Buyer or any of its Subsidiaries or any of their respective representatives or employees before the National Labor Relations Board or any current union representation questions involving employees of Buyer or any of its Subsidiaries; and (iv) Buyer's employment policies and practices comply in all material respects with applicable law; and (v) there is no strike, slowdown, work stoppage, labor dispute or lockout, or, to the best knowledge of Buyer, threat thereof, by or with respect to any employees of Buyer or any of its Subsidiaries. Buyer and its Subsidiaries are not parties to any collective bargaining agreements or other labor union contracts applicable to individuals employed or previously employed by Buyer or any of its Subsidiaries and, except as disclosed in Buyer Disclosure Schedule 4.17, no collective bargaining agreement or labor union contract is being negotiated by Buyer or any such Subsidiary. Section 4.18. Insurance. All material fire and casualty, general liability, business interruption, product liability, and sprinkler and water damage insurance policies maintained by Buyer or any of its Subsidiaries are listed on Section 4.18 of the Buyer Disclosure Schedule. At the Effective Time, all such insurance policies, or replacements thereof, will be outstanding and duly in force. To Buyer's knowledge, no notice of termination or non- renewal of any such insurance policy has been received by Buyer. Section 4.19. [Intentionally Omitted]. Section 4.20. Voting Requirements. The affirmative vote of the holders of a majority of Buyer Common Stock present at the Buyer Special Meeting (at which a quorum is present, in favor of the issuance of Buyer Common Stock pursuant to this Agreement, consistent with the requirements of the NYSE (the "Buyer Stockholder Approval"), is the only vote of the holders of any class or series of Buyer's capital stock necessary to approve the transactions contemplated by this Agreement. Section 4.21. Year 2000. Except as disclosed in Section 4.21 of the Buyer Disclosure Schedule, as of the date hereof, all computer software necessary for the conduct of its business (the "Software") is (or will be, prior to December 31, 1999, as provided in Section 4.22 of the Buyer Disclosure Schedule) designed to be used prior to, during, and after December 31, 1999, and the Software will operate during each such time period without error relating to the year 2000, specifically including any error relating to, or the product of, date data which represents or references different centuries or more than one century. Buyer further represents and warrants that as of the date hereof, the Software either does or will, prior to December 31, 1999 as provided in Section 4.21 of the Buyer Disclosure Schedule accept, calculate, sort, extract and otherwise process date inputs and date values, and return and display date values, in a consistent manner regardless of the dates used, whether before, on, or after January 1, 2000. Section 4.22. Opinion of Financial Advisor. Buyer has received the opinion of Merrill, Lynch, Pierce, Fenner and Smith Incorporated ("Merrill Lynch") dated the date of this Agreement, to the effect that the Merger Consideration is fair to the holders of Buyer Common Stock from a financial point of view. Section 4.23. Brokers. None of Buyer, any of its Subsidiaries, or any of their respective officers, directors or employees have employed any broker, financial advisor or finder or incurred any liability for any brokerage fees, commissions, finder's or other fees in connection with the transactions contemplated by this Agreement, except that Buyer has retained Merrill Lynch as its financial advisor. Section 4.24. No Operations or Liabilities of Merger Sub. Other than in connection with the transactions contemplated by this Agreement, since its date of incorporation, Merger Sub has not conducted any business, has not owned, leased or operated any real property and has not incurred, and is not subject to, any liabilities or obligations of any nature, whether or not accrued, contingent or otherwise. Section 4.25. Ownership of Securities. As of the date hereof, neither Buyer nor, to Buyer's knowledge, any of its affiliates or associates (as such terms are defined under the Exchange Act), (i) beneficially owns, directly or indirectly, or (ii) is party to an agreement, arrangement or understanding (other than this Agreement) for the purpose of acquiring, holding or disposing of, in each case, shares of Players Common Stock representing at least 20% of the total number of outstanding shares of Players Common Stock. ARTICLE V. COVENANTS Section 5.1. Conduct of Business. (a) By Buyer. Except as disclosed in Section 5.1 of the Buyer Disclosure Schedule or in the Buyer SEC Reports, during the period from the date of this Agreement and continuing until the earlier of the termination of this Agreement or the Effective Time, Buyer agrees as to itself and its Subsidiaries (except to the extent that Players shall otherwise consent in writing) to carry on its business in the usual, regular and ordinary course in substantially the same manner as previously conducted, to pay its debts and taxes when due subject to good faith disputes over such debts or taxes, to pay or perform its other obligations when due, and, to the extent consistent with such business, use all commercially reasonable efforts consistent with past practices and policies to preserve intact its present business organization, keep available the services of its present officers and key employees and preserve its relationships with customers, suppliers, distributors, and others having business dealings with it. Without limiting the generality of the foregoing, during the period from the date of this Agreement until the Effective Time, Buyer agrees (except as otherwise contemplated by this Agreement, or to the extent that Players shall otherwise consent in writing) as follows: (i) Governing Documents. Buyer shall not amend its Certificate of Incorporation, By-laws or other charter or organizational documents. (ii) No Acquisitions. Buyer shall not and shall cause its Subsidiaries not to acquire or agree to acquire (including, without limitation, by merger, consolidation or acquisition of stock or assets) any material business, including through the acquisition of any interest in any corporation, partnership, joint venture, association or other business organization or division thereof nor, in the case of the pending acquisition (the "CRC Transaction") of CRC Holdings, Inc. ("CRC"), shall it complete such acquisition on terms and conditions materially less advantageous to Buyer or Buyer's stockholders than those previously disclosed to Players; provided, however, that Buyer will be permitted to acquire for fair value Nevada based route businesses for consideration not exceeding $20,000,000 in the aggregate. (iii) No Dispositions. Buyer shall not and shall cause its Subsidiaries not to sell, lease, license, mortgage or otherwise encumber or otherwise dispose of any of its material properties or assets, other than in the ordinary course of business consistent with past practice. (iv) Accounting Matters. Buyer shall not make any material change in accounting methods, principles or practices except as required by GAAP, or the applicable regulations under the Securities Act and the Exchange Act. (v) Issuance of Securities. Buyer shall not and shall cause its Subsidiaries not to issue, deliver, sell, pledge or otherwise encumber any shares of its capital stock, any other voting securities or any securities convertible into, or any rights, warrants or options to acquire, any such shares, voting securities or convertible securities (other than the issuance of shares of Buyer Common Stock upon the exercise of Buyer Options outstanding on the date of this Agreement and in accordance with their present terms, pursuant to this Agreement or the transactions contemplated herein or in connection with the CRC Transaction; provided, however, that Buyer will be permitted to issue Buyer Common Stock (or securities convertible into or exercisable for Buyer Common Stock), at a per share price not less than the then current market price; not exceeding $15,000,000 in the aggregate in order to consummate Nevada based route business acquisitions permitted by clause (ii) above. (vi) Indebtedness. Buyer shall not and shall cause its Subsidiaries not to (y) incur any indebtedness for borrowed money or guarantee any such indebtedness of another person, issue or sell any debt securities or warrants or other rights to acquire any debt securities of Buyer or any of its Subsidiaries, or guarantee any debt securities of another person, other than short-term bank financing in the ordinary course of business consistent with past practice or (z) make any loans, advances or capital contributions to, or investments in, any other person, other than in the ordinary course of business consistent with past practice, except as required under this Agreement and the transactions contemplated herein or in connection with the CRC Transaction; provided, however, that Buyer will be permitted to incur indebtedness in an aggregate principal amount not exceeding $15,000,000 in order to consummate Nevada based route business acquisitions permitted by clause (ii) above. (vii) Settlement. Buyer shall not and shall cause its Subsidiaries not to settle any pending or threatened litigation involving Buyer or any of its Subsidiaries (whether brought by a private party or a Government Entity), except for settlements that, in the aggregate, involve payments, not covered by insurance, by Buyer or any Subsidiaries of less than $250,000 and which settle entire claims or causes of action arising out of the same or similar facts and circumstances or do not impose any material restrictions on the business or operations of Buyer or any of its Subsidiaries. (viii) General. Buyer shall not and shall cause its Subsidiaries not to authorize any of, or commit or agree to take any of, the foregoing actions. (b) By Players. Except as disclosed in Section 5.1 of the Players Disclosure Schedule during the period from the date of this Agreement and continuing until the earlier of the termination of this Agreement or the Effective Time, Players agrees as to itself and its respective Subsidiaries (except to the extent that Buyer shall otherwise consent in writing) to carry on its business in the usual, regular and ordinary course in substantially the same manner as previously conducted, to pay its debts and taxes when due subject to good faith disputes over such debts or taxes, to pay or perform its other obligations when due, and, to the extent consistent with such business, use all commercially reasonable efforts consistent with past practices and policies to preserve intact its present business organization, keep available the services of its present officers and key employees and preserve its relationships with customers, suppliers, distributors, and others having business dealings with it. Without limiting the generality of the foregoing, during the period from the date of this Agreement until the Effective Time, Players agrees (except as otherwise contemplated by this Agreement, or to the extent that Buyer shall otherwise consent in writing) as follows: (i) Dividends; Changes in Stock. Players shall not and shall cause its Subsidiaries not to, other than dividends and distributions by a direct or indirect wholly owned Subsidiary of Players to its parent (x) declare, set aside or pay any dividends on, or make any other distributions (whether in cash, stock or property), in respect of , any of its capital stock, (y) split, combine or reclassify any of its capital stock or issue or authorize the issuance of any other securities in respect of, in lieu of or in substitution for shares of its capital stock (other than the issuance of shares of Players Common Stock upon the exercise of Players Options outstanding on the date of this Agreement and in accordance with their present terms) or (z) purchase, redeem or otherwise acquire any shares of capital stock of Players or any of its Subsidiaries or any other securities thereof or any rights, warrants or options to acquire any such shares or other securities. (ii) Issuance of Securities. Players shall not and shall cause its Subsidiaries not to issue, deliver, sell, pledge or otherwise encumber any shares of its capital stock, any other voting securities or any securities convertible into, or any rights, warrants or options to acquire, any such shares, voting securities or convertible securities (other than the issuance of shares of Players Common Stock upon the exercise of Players Options outstanding on the date of this Agreement and in accordance with their present terms). (iii) Governing Documents. Players shall not and shall cause its Subsidiaries not to amend its Certificate of Incorporation, By-Laws or other comparable charter or organizational documents. (iv) No Acquisitions. Players shall not and shall cause its Subsidiaries not to acquire or agree to acquire (including, without limitation, by merger, consolidation or acquisition of stock or assets) any business, including through the acquisition of any interest in any corporation, partnership, joint venture, association or other business organization or division thereof. (v) No Dispositions. Players shall not and shall cause its Subsidiaries not to sell, lease, license, mortgage or otherwise encumber or otherwise dispose of any of its material properties or assets, other than in the ordinary course of business consistent with past practice. (vi) Indebtedness. Players shall not and shall cause its Subsidiaries not to (y) incur any indebtedness for borrowed money or guarantee any such indebtedness of another person, issue or sell any debt securities or warrants or other rights to acquire any debt securities of Players or any of its Subsidiaries, or guarantee any debt securities of another person, other than short-term bank financing in the ordinary course of business consistent with past practice or (z) make any loans, advances or capital contributions to, or investments in, any other person, other than in the ordinary course of business consistent with past practice. (vii) Employee Benefits. Players shall not and shall cause its Subsidiaries not to, except as required by applicable law or, with respect to the limitations contained in subclauses (C) and (G) of this Section 5.1(b)(vii), agreements, plans or arrangements existing on the date hereof, (A) adopt, enter into, terminate or amend any employment, severance, retention or similar agreement or contract; (B) negotiate or enter into any collective bargaining agreement or labor union contract; (C) increase, in any manner, the compensation or fringe benefits of, or pay any bonus to, any director, officer or employee (except for normal increases of cash compensation or cash bonuses in the ordinary course of business consistent with past practice); (D) adopt or establish any new benefit plan; or amend any existing benefit plan, including, without limitation, the Players Employee Plans and the Players Welfare Plan, except as required by law; or pay any benefit not provided for under any Players Employee Plan or Players Welfare Plan; (E) adopt, establish or amend any severance pay plan; or increase in any manner the severance or termination pay of any officer or employee; (F) modify the provisions of any Players Stock Option Plan; or adjust or modify the terms of any outstanding Players Options; or take any action to accelerate the vesting of, or cash out rights associated with, any Players Option or Players SAR, except as contemplated by the Employment Agreements; or remove existing restrictions in any Players Stock Option Plan or other plan or arrangement; (G) grant any new awards under any Players Stock Option Plan or other bonus, incentive, performance or compensation plan or arrangement, including the grant of Players Options, Players SARs, stock-based or stock-related awards, performance units or restricted stock; (H) take any action to fund or, in any other way secure, the payment of compensation or benefits under any Players Employee Plan, Players Welfare Plan or other employee plan, agreement, contract or arrangement; or (I) hire any individual as an employee, independent contractor or consultant who will be paid an annual base salary that equals or exceeds $100,000, without the prior written consent of the Buyer. (viii) Material Contracts. Players shall not and shall cause its Subsidiaries not to enter into any agreement of a nature that would be required to be filed as an exhibit to Form 10-K under the Exchange Act. (ix) Accounting Matters. Players shall not and shall cause its Subsidiaries not to make any material change in accounting methods, principles or practices except as required by GAAP, or the applicable regulations under the Securities Act and the Exchange Act. (x) ax Matters. Players shall not and shall cause its Subsidiaries not to make any material tax election or enter into any settlement or compromise with respect to any material income tax liability. (xi) Settlement. Players shall not and shall cause its Subsidiaries not to settle any pending or threatened litigation involving Players or any of its Subsidiaries (whether brought by a private party or a Government Entity), except for settlements that, in the aggregate, involve payments, not covered by insurance, by Players or any Subsidiaries of less than $250,000 and which settle entire claims or causes of action arising out of the same or similar facts and circumstances or do not impose any material restrictions on the business or operations of Players or any of its Subsidiaries. (xii) Capital Expenditures. Players together with its Subsidiaries shall not make capital expenditures in excess of $1,500,000 individually or $10,000,000 in the aggregate. (xiii) General. Players shall not and shall cause its Subsidiaries not to authorize any of, or commit or agree to take any of, the foregoing actions. Section 5.2. Cooperation; Notice; Cure. Subject to compliance with applicable law, from the date hereof until the Effective Time, each of Buyer and Players shall confer on a regular and frequent basis with one or more representatives of the other party to report on the general status of ongoing operations. Each of Players and Buyer shall promptly notify the other in writing of, and will use all commercially reasonable efforts to cure before the Closing Date, any event, transaction or circumstance, as soon as practical after it becomes known to such party, that causes or will cause any covenant or agreement of Players or Buyer under this Agreement to be breached in any material respect or that renders or will render untrue in any material respect any representation or warranty of Players or Buyer contained in this Agreement. Section 5.3. No Solicitation. From and after the date hereof, Players shall not, directly or indirectly, through any officer, director, employee, financial advisor, representative or agent of such party (i) solicit, initiate, or encourage (including by way of furnishing information) or take any other action to facilitate knowingly any inquiries or proposals that constitute, or could reasonably be expected to lead to, a proposal or offer for a merger, consolidation, business combination, sale of substantial assets, sale of shares of capital stock (including without limitation by way of a tender or exchange offer) or similar transaction involving Players or any of its Subsidiaries, other than the transactions contemplated by this Agreement (any of the foregoing inquiries or proposals being referred to in this Agreement as an "Acquisition Proposal"), (ii) engage in negotiations or discussions with any person (or group of persons) other than Buyer or its respective affiliates (a "Third Party") concerning, or provide any non-public information to any person or entity relating to, any Acquisition Proposal, or (iii) agree to or recommend any Acquisition Proposal; provided, however, that until approval of the Merger at the Players Special Meeting (as defined below), nothing contained in this Agreement shall prevent Players or its Board of Directors, from furnishing non- public information to, or entering into discussions or negotiations with, any person or entity in connection with an unsolicited bona fide written Acquisition Proposal by such person or entity or modifying or withdrawing its recommendation with respect to the transactions contemplated hereby or recommending an unsolicited bona fide written Acquisition Proposal to the stockholders of Players, if the Board of Directors of Players reasonably believes in good faith that (i) such Acquisition Proposal after consultation with, and receipt of advice from, DLJ is reasonably capable of being completed on substantially the terms proposed and to be superior from a financial point of view to the holders of Players Common Stock and (ii) after receipt of advice to such effect from outside legal counsel (who may be Players' regularly engaged outside legal counsel), determines in good faith that such action is required for the Board of Directors of Players to comply with its duties to holders of Players Common Stock imposed by applicable law (a "Superior Proposal"). Section 5.4. Joint Proxy Statement/ Prospectus; Registration Statement. (a) As promptly as practicable after the execution of this Agreement, Players and Buyer shall prepare and file with the SEC, in preliminary form, a joint proxy statement/prospectus to be sent to the respective stockholders of each of Players and Buyer in connection with, and to consider this Agreement and the Merger (the "Joint Proxy Statement/Prospectus") and the related registration statement in which the Joint Proxy Statement/Prospectus will be included as a prospectus (the "Registration Statement"), provided that Players and Buyer may delay the filing of the Registration Statement until approval of the Joint Proxy Statement/Prospectus by the SEC. Players and Buyer shall use all reasonable efforts to cause the Registration Statement to become effective as soon after such filing as practicable. (b) Players and Buyer shall make all necessary filings with respect to the Merger under the Securities Act, the Exchange Act, applicable state blue sky laws and the rules and regulations thereunder. (c) Buyer agrees that the Registration Statement shall enable resales of Buyer Common Stock by former "affiliates" (as defined in Rule 405 under the Securities Act) of Players so that such former Players affiliates are not subject to any volume limitation on resale pursuant to Rule 145(d) under the Securities Act. Section 5.5. Special Meeting. Players shall duly call, give notice of, convene and hold a special meeting of its stockholders for the purpose of voting upon this Agreement and the Merger (the "Players Special Meeting") and Buyer shall duly call, give notice of, convene and hold a special meeting of its stockholders for the purpose of voting upon and approving the transactions contemplated by this Agreement (the "Buyer Special Meeting"), in each case as promptly as reasonably practicable after the date hereof. Except as expressly otherwise provided in Section 5.3 hereof, Players shall, through its Board of Directors, recommend to its stockholders adoption and approval of this Agreement and the Merger. Buyer shall through its Board of Directors, recommend to its stockholders approval of the transactions contemplated by this Agreement, and each party shall use all reasonable efforts to solicit from its stockholders proxies in favor of such matters. Section 5.6. Access to Information. Upon reasonable notice, each of Buyer and Players (and each of their respective Subsidiaries) shall afford to the other party and its officers, employees, accountants, counsel and other representatives, reasonable access, during normal business hours during the period prior to the Effective Time, to all its personnel, properties, books, contracts, commitments and records and, during such period, each of Buyer and Players shall, and shall cause each of its respective Subsidiaries to, furnish promptly to the other (a) copies of monthly financial reports and development reports, (b) a copy of each report, schedule, registration statement and other documents filed or received by it during such period pursuant to the requirements of federal or state securities laws and (c) all other information concerning its business, properties and personnel as the other party may reasonably request. Each party making such requests will hold any such information furnished to it by the other party in confidence in accordance with the confidentiality agreement between the parties (the "Confidentiality Agreement"). No information or knowledge obtained in any investigation pursuant to this Section 5.6 shall affect or be deemed to modify any representation or warranty contained in this Agreement or the conditions to the obligations of the parties to consummate the Merger. Section 5.7. Governmental Approvals. (a) The parties hereto shall cooperate with each other and use all commercially reasonable efforts to promptly prepare and file all necessary documentation, to effect all applications, notices, petitions and filings, to obtain as promptly as practicable without conditions, restrictions or limitations that are more restrictive than those conditions, restrictions and limitations applicable to Players on the date hereof, all permits, registrations, licenses, findings of suitability, consents, variances, exemptions, orders, approvals and authorizations of all third parties and Governmental Entities which are necessary or advisable to consummate the transactions contemplated by this Agreement ("Governmental Approvals"). Each of the parties hereto and their respective officers, directors and affiliates shall file within 60 days after the date hereof, all required initial applications and documents in connection with obtaining the Governmental Approvals and shall act reasonably and promptly thereafter in responding to additional requests in connection therewith. Players and Buyer shall have the right to review in advance, and to the extent practicable each will consult the other on, in each case subject to applicable laws relating to the exchange of information, all the information relating to Players or to Buyer, as the case may be, and any of their respective Subsidiaries, directors, officers and stockholders which appear in any filing made with, or written materials submitted to, any third party or any Governmental Entity in connection with the transactions contemplated by this Agreement. Without limiting the foregoing, each of Players and Buyer (the "Notifying Party") will notify the other reasonably promptly of the receipt of material comments or requests from Governmental Entities relating to Governmental Approvals, and will supply the other party with copies of all material correspondence between the Notifying Party or any of its representatives and Governmental Entities with respect to Governmental Approvals; provided, however, that it shall not be required to supply the other party with copies of correspondence relating to the personal applications of individual applicants except for evidence of filing. (b) Players and Buyer shall promptly advise each other upon receiving any communication from any Governmental Entity whose consent or approval is required for consummation of the transactions contemplated by this Agreement which causes such party to believe that there is a reasonable likelihood that any approval needed from a Governmental Entity will not be obtained or that the receipt of any such approval will be materially delayed. Players and Buyer shall take any and all actions reasonably necessary to vigorously defend, lift, mitigate and rescind the effect of any litigation or administrative proceeding adversely affecting this Agreement or the transactions contemplated hereby or thereby, including, limitation, promptly appealing any adverse court or administrative order or injunction to the extent reasonably necessary for the foregoing purposes. Section 5.8. Publicity. Players and Buyer shall agree on the form and content of the initial press release regarding the transactions contemplated hereby and thereafter shall consult with each other before issuing, and use all reasonable efforts to agree upon, any press release or other public statement with respect to any of the transactions contemplated hereby and shall not issue any such press release or make any such public statement prior to such consultation, except as may be required by law. Section 5.9. Indemnification. (a) From and after the Effective Time, Buyer agrees that it will, and will cause the Surviving Corporation to, indemnify and hold harmless each present and former director and officer of Players (the "Indemnified Parties"), against any costs or expenses (including attorneys' fees), judgments, fines, losses, claims, damages, liabilities or amounts paid in settlement incurred in connection with any claim, action, suit, proceeding or investigation, whether civil, criminal, administrative or investigative, arising out of or pertaining to matters existing or occurring at or prior to the Effective Time, whether asserted or claimed prior to, at or after the Effective Time, to the fullest extent that Players would have been permitted under Nevada law and its Articles of Incorporation or Bylaws in effect on the date hereof to indemnify such Indemnified Party. (b) For a period of three years after the Effective Time, Buyer shall maintain or shall cause the Surviving Corporation to maintain in effect a directors' and officers' liability insurance policy covering those persons who are currently covered by Players' directors' and officers' liability insurance policy (copies of which have been heretofore delivered by Players to Buyer) with coverage in amount and scope at least as favorable as Players' existing coverage; provided that in no event shall Buyer or the Surviving Corporation be required to expend in the aggregate in excess of 200% of the annual premium currently paid by Players for such coverage; and if such premium would at any time exceed 200% of the such amount, then Buyer or the Surviving Corporation shall maintain insurance policies which provide the maximum and best coverage available at an annual premium equal to 200% of such amount. (c) The provisions of this Section 5.9 are intended to be an addition to the rights otherwise available to the current officers and directors of Players by law, charter, statute, bylaw or agreement, and shall operate for the benefit of, and shall be enforceable by, each of the Indemnified Parties, their heirs and their representatives. Section 5.10. Stockholder Litigation. Players shall give Buyer the reasonable opportunity to participate in the defense or settlement of any stockholder litigation against Players and its directors relating to the transactions contemplated hereby, provided, however, that no such settlement shall be agreed to without Buyer's consent. Section 5.11. Employee Benefits. (a) Buyer shall cause the Surviving Corporation to honor all written employment, severance and termination agreements (including change in control provisions) of the employees of Players and its Subsidiaries provided to Buyer on or prior to the date of this Agreement and which are identified on Players Disclosure Schedule 3.14(a). (b) For purposes of determining eligibility for participation and vesting under any employee benefit plan or arrangement of Buyer or the Surviving Corporation, employees of Players and its Subsidiaries as of the Effective Time shall receive service credit for service with Players and any of its Subsidiaries to the same extent such service was granted under the Employee Plans but not for purposes of determining benefit accruals. This Section 5.11 shall not obligate the Buyer or Surviving Corporation to provide duplicate benefits to employees of Players and its Subsidiaries. (c) Nothing in this Agreement is intended to create any right of employment for any person or to create any obligation for Buyer or the Surviving Corporation to continue any Plan of Players following the Effective Time. (d) Players shall obtain and deliver to Buyer prior to the Closing Date a written resignation letter from each of Howard A. Goldberg, Peter J. Aranow, John Groom and Patrick Madamba, Jr. (the "Executives") which shall be effective as of the Effective Time, and Buyer agrees that it will, and will cause the Surviving Corporation to, (i) treat each such resignation as a "Termination Upon a Change of Control" for purposes of the respective Employment Agreement or Agreement with Players governing the terms of each Executive's employment and severance from employment with Players, and for purposes of all related option and other agreements affecting the terms and conditions of such Executive's employment (collectively, the "Employment Agreements"), and (ii) pay at Closing the amounts, and provide the benefits, required to be paid or provided to each such Executive upon a Termination Upon a Change of Control under the applicable Employment Agreement, in each case, without the need for any further action by any Executive. To the extent permitted by and in accordance with the Employment Agreements, the Buyer shall reduce the amounts required to be paid to each Executive due to a Termination Upon Change of Control or otherwise (the "Reduced Amount") to the extent necessary to avoid any limitation of the Buyer's federal income tax deduction under Section 280G of the Code and the rulings and regulations thereunder. The Reduced Amount shall represent the maximum severance payment that an Executive may receive without causing such payment to be subject to an excise tax and the limitations on deductions under Section 280G of the Code. To the extent necessary to avoid any limitation on the Buyer's deductions under Section 280G of the Code, after determination of the Reduced Amount, the Buyer may also cause an Executive's "parachute payments" (within the meaning of Code Section 280G) to be reduced to the Reduced Amount, after consulting with each affected Executive to determine which payments shall be reduced. At least ninety days before the Closing Date, a report (the "Accountant's Report"), setting for the Reduced Amount, as described in Section 5.11(d) hereof, for each Executive, prepared by Ernst & Young (the "Accountant") shall be delivered to Buyer for its review. Section 5.12. Further Assurances and Actions. (a) Subject to the terms and conditions herein, each of the parties hereto agrees to use its reasonable best efforts to take, or cause to be taken, all appropriate action, and to do, or cause to be done, all things necessary, proper or advisable under applicable laws and regulations to consummate and make effective the transactions contemplated by this Agreement, including, without limitation, (i) using their respective reasonable best efforts to obtain all licenses, permits, consents, approvals, authorizations, qualifications and orders of Governmental Entities and parties to contracts with each party hereto as are necessary for consummation of the transactions contemplated by this Agreement, and (ii) to fulfill all conditions precedent applicable to such party pursuant to this Agreement. (b) In case at any time after the Effective Date any further action is necessary or desirable to carry out the purposes of this Agreement or to vest the Surviving Corporation with full title to all properties, assets, rights, approvals, immunities, franchises of any of the parties to the Merger, the proper officers and/or directors of Buyer, Players and the Surviving Corporation shall take all such necessary action. (c) Notwithstanding the foregoing, if Buyer reasonably determines that it is necessary or desirable to consummate the Merger or any of the other transactions contemplated by this Agreement, Buyer (or any Subsidiary of Buyer) or, at Buyer's request, Players shall commence an offer (the "Tender Offer") to purchase all of the outstanding 10 % Senior Notes due 2005 (the "Senior Notes") and a solicitation of consents to eliminate substantially all of the restrictive covenants contained in the indenture governing the Senior Notes (collectively, the "Tender Offer and Consent Solicitation"), which Tender Offer and Consent Solicitation shall be commenced in sufficient time in advance of the Closing Date so that the Tender Offer can be consummated on the Closing Date and shall be on such terms as are reasonably designed to result in the acceptance of such offer and consent by the holder of the Senior Notes representing at least 662/3% of the aggregate principal amount of Senior Notes outstanding at the time the Tender Offer and Consent Solicitation is consummated. If Players commences the Tender Offer and Consent Solicitation, Players shall prepare, subject to advice and comments of Buyer, an offer to purchase and consent solicitation for the Senior Notes and forms of related letters of transmittal (collectively, the "Offer to Purchase") and summary advertisement, as well as all other information and exhibits (collectively, the "Offer Documents"). All mailings to the holder of the Senior Notes in connection with the Tender Offer and Consent Solicitation shall be subject to prior review, comment and approval of Buyer. Players will use commercially reasonable efforts to cause the Offer Documents to be mailed to the holders of the Senior Notes as promptly as practicable following receipt of the request from Buyer to do so. Players agrees to promptly correct any information in the Offer Documents that shall or have become false or misleading in any material respect. Players shall waive any of the conditions to the Tender Offer and Consent Solicitation and make any other changes in the terms and conditions of the Tender Offer and Consent Solicitation as may be reasonably requested by Buyer; provided that the Tender Offer and Consent Solicitation are not required to be consummated unless the Merger is consummated. If Players commences the Tender Offer and Consent Solicitation at Buyer's request pursuant to this Section 5.12(c) and this Agreement is subsequently terminated under circumstances in which Buyer is entitled to neither the Termination Fee pursuant to Section 7.3(b) nor reimbursement of expenses pursuant to Section 7.3(c), then Buyer shall reimburse Players for all its expenses related thereto. Section 5.13. Rights Plan. Prior to the Effective Date and at Buyer's request, Players shall take all necessary action (i) to redeem, for .005 per Right (as defined in the Rights Agreement), all of the outstanding Rights under the Rights Agreement, effective immediately prior to the Effective Time, and to ensure that after such redemption (A) neither Buyer nor Merger Sub shall have any obligations under the Rights or Rights Agreement and (B) none of the holders of the Rights shall have any rights under the Rights or Rights Agreement or (ii) to amend the Rights Agreement to provide that the Rights expire without any payment in respect thereof immediately prior to the Effective Time. Section 5.14. Buyer's Board of Directors. Buyer and Players shall use their reasonable efforts to agree on two individuals to be appointed as additional directors to serve on Buyer's Board of Directors commencing the Effective Time. If, prior to the Effective Time, the CRC Transaction has not closed, Players and Buyer shall agree on a third additional director to serve on the Buyer's Board of Directors in the event the CRC Transaction ultimately fails to close. ARTICLE VI. CONDITIONS TO MERGER Section 6.1. Conditions to Each Party's Obligation to Effect the Merger. The respective obligations of each party to this Agreement to effect the Merger shall be subject to the satisfaction or waiver by each party prior to the Effective Time of the following conditions: (a) Stockholder Approval. This Agreement and the Merger shall have been approved by the stockholders of Players in the manner required under the NRS and the Articles of Incorporation of Players. The Buyer Stockholder Approval shall have been received in accordance with the requirements of the NYSE. (b) No Injunctions. No Governmental Entity shall have enacted, issued, promulgated, enforced or entered any order, executive order, stay, decree, judgment or injunction or statute, rule, regulation which is in effect and which has the effect of making the Merger illegal or otherwise prohibiting consummation of the Merger. (c) Governmental Approvals. All Governmental Approvals required to consummate the transactions contemplated by this Agreement shall have been obtained, all such approvals shall remain in full force and effect, all statutory waiting periods in respect thereof (including, without limitation, under the HSR Act) shall have expired and no such approval shall contain any conditions, limitations or restrictions which either party reasonably determines in good faith will have or would reasonably be expected to have a Players Material Adverse Effect or a Buyer Material Adverse Effect. (d) Registration Statement. The Registration Statement shall have been declared effective, and no stop order suspending the effectiveness of the Registration Statement shall be in effect and no proceedings for such purpose shall be pending before or threatened by the SEC. (e) NYSE. The shares of Buyer Common Stock to be issued in the Merger shall have been authorized for listing on the NYSE, subject to official notice of issuance. Section 6.2. Additional Conditions to Obligations of Players. The obligation of Players to effect the Merger is subject to the satisfaction of each of the following conditions prior to the Effective Time, any of which may be waived in writing exclusively by Players: (a) Representations and Warranties. The representations and warranties of Buyer and Merger Sub set forth in this Agreement shall be true and correct in all material respects (except for those qualified as to materiality or a Buyer Material Adverse Effect, which shall be true and correct) as of the date of this Agreement and, except to the extent such representations speak as of an earlier date, as of the Closing Date as though made on and as of the Closing Date, except for changes contemplated by this Agreement; provided, that notwithstanding anything contained herein, no condition involving the accuracy of representations and warranties made by Buyer shall be deemed not fulfilled if the respects in which the representations and warranties are inaccurate, in the aggregate, are not materially adverse to the business, financial condition or results of operations of Buyer and its Subsidiaries, taken as a whole. Players shall have received a certificate signed on behalf of Buyer by the Chief Executive Officer and the Chief Financial Officer of Buyer to such effect. (b) Performance of Obligations of Buyer. Buyer shall have performed in all material respects all material obligations required to be performed by it under this Agreement at or prior to the Closing Date, and Players shall have received a certificate signed on behalf of Buyer by the Chief Executive Officer and the Chief Financial Officer of Buyer to such effect. (c) Buyer Acquisition. Buyer shall not have completed the CRC Transaction on terms which are materially less advantageous to Buyer or Buyer's stockholders than those contained in the form of agreement (including the forms of agreements referenced therein) previously supplied to Players. Section 6.3. Additional Conditions to Obligations of Buyer. The obligations of Buyer and Merger Sub to effect the Merger are subject to the satisfaction of each of the following conditions prior to the Effective Time, any of which may be waived in writing exclusively by Buyer: (a) Representations and Warranties. The representations and warranties of Players set forth in this Agreement shall be true and correct in all material respects (except for those qualified as to materiality or a Players Material Adverse Effect, which shall be true and correct) as of the date of this Agreement and, except to the extent such representations and warranties speak as of an earlier date, as of the Closing Date as though made on and as of the Closing Date, except for changes contemplated by this Agreement; provided that, notwithstanding anything contained herein, no condition involving the accuracy of representations and warranties made by Players shall be deemed not fulfilled if the respects in which the representations and warranties are inaccurate, in the aggregate, are not materially adverse to the business, financial condition or results of operations of Players and its Subsidiaries, taken as a whole. Buyer shall have received a certificate signed on behalf of Players by the Chief Executive Officer and the Chief Financial Officer of Players to such effect. (b) Performance of Obligations of Players. Players shall have performed in all material respects all material obligations required to be performed by it under this Agreement at or prior to the Closing Date. Buyer shall have received a certificate signed on behalf of Players by the Chief Executive Officer and the Chief Financial Officer of Players to each such effect. (c) Financing. Buyer shall have obtained financing sufficient to allow Buyer to complete the transactions contemplated in this Agreement. ARTICLE VII. TERMINATION AND AMENDMENT Section 7.1. Termination. This Agreement may be terminated at any time prior to the Effective Time (with respect to Sections 7.1(b) through 7.1(k), by written notice by the terminating party to the other party), whether before or after approval of the matters presented in connection with the Merger by the stockholders of the parties: (a) by mutual written consent of Players and Buyer; or (b) by either Buyer or Players if the Merger shall not have been consummated by September 30, 1999 (the "Outside Date"); provided that either Buyer or Players may extend the Outside Date to December 31, 1999 by providing written notice thereof to the other party within five (5) business days prior to and including September 30, 1999 if (i) the Merger shall not have been consummated by such date because the requisite Governmental Approvals required under Section 6.1(c) have not been obtained and are still being pursued, (ii) the party requesting such extension has not violated any of its obligations under this Agreement in a manner that was the cause of or resulted in the failure of the Merger to occur on or before September 30, 1999, (iii) it is reasonably probable, based on, among other things, the status of completed regulatory filings, scheduled regulatory meetings and the advice of regulatory counsel to such party, that the requisite Governmental Approvals will be obtained within such extension period; and (iv) in the event such extension is requested by Buyer, Buyer either (A) has furnished to Players a letter, dated as of the date Buyer requests such extension, from Merrill Lynch to the effect that Merrill Lynch is, as of the date of such letter, highly confident that Merrill Lynch (or another nationally recognized investment banking firm of comparable stature) will be able to raise funds sufficient for Buyer to meet all of its financial obligations under this Agreement, or (B) has permanently waived the condition to closing set forth in Section 6.3(c); provided further that the right to terminate this Agreement under this Section 7.1(b) shall not be available to any party whose failure to fulfill any obligation under this Agreement has been the cause or resulted in the failure of the Merger to occur on or before such date; or (c) by either Buyer or Players if a court of competent jurisdiction or other Governmental Entity shall have issued an order, decree or ruling or taken any other final action not subject to appeal, in each case having the effect of permanently restraining, enjoining or otherwise prohibiting the Merger; or (d) by either Buyer or Players, if, at the Players Special Meeting (including any adjournment or postponement), the requisite vote of the stockholders of Players in favor of the approval and adoption of this Agreement and the Merger shall not have been obtained; or (e) by Buyer, if the Board of Directors of Players shall have (i) withdrawn or modified its recommendation of this Agreement or the Merger, (ii) recommended an Acquisition Proposal to the stockholders of Players, or (iii) failed to reaffirm its recommendation of this Agreement and the Merger upon the request of Buyer at any time, in the case of (i), (ii) and (iii) in accordance with the proviso in Section 5.3; or (f) by Players, in accordance with Section 5.3; provided that no termination under this Section 7.1(f) shall be effective until (i) the termination fee required by Section 7.3(b) shall be paid and (ii) at least three Business Days shall have elapsed after delivery to Buyer of a written notice from Players providing a complete and accurate description of material terms of the Superior Proposal, including the identity of all parties thereto. (g) by Buyer, upon breach of any material representation, warranty, covenant or agreement on the part of Players set forth in this Agreement, or if any representation or warranty of Players shall have become untrue, in either case such that the conditions set forth in Section 6.3 would not be satisfied ("Terminating Players Breach"); provided, however, that, if such Terminating Players Breach is curable by Players through best efforts within 30 days and for so long as Players continues to exercise such best efforts during such 30 day period, Buyer may not terminate this Agreement under this Section 7.1(g); or (h) by Players, upon breach of any material representation, warranty, covenant or agreement on the part of Buyer set forth in this Agreement, or if any representation or warranty of Buyer shall have become untrue, in either case such that the conditions set forth in Section 6.2 would not be satisfied ("Terminating Buyer Breach"); provided, however, that, if such Terminating Buyer Breach is curable by Buyer through best efforts within 30 days and for so long as Buyer continues to exercise such best efforts during such 30 day period, Players may not terminate this Agreement under this Section 7.1(h); or (i) by Players, if Buyer has not filed all required initial applications and documents in connection with obtaining the Governmental Approvals within 60 days after the date of this Agreement, as further set forth in Section 5.7 hereof; provided, however, that Players shall not be permitted to terminate this Agreement pursuant to this Section 7.1(i) if Buyer has filed all such required initial applications and documents; (j) by either Buyer or Players if, at the Buyer Special Meeting (including any adjournment or postponement), the requisite vote of the stockholders of Buyer in favor of the transactions contemplated by this Agreement shall not have been obtained; or (k) by Players pursuant to Section 2.1(a). Neither Players nor Buyer shall have the right to terminate this Agreement based on any findings of Buyer's Compliance Committee referenced in Section 4.3(a). Section 7.2. Effect of Termination. In the event of termination of this Agreement as provided in Section 7.1, this Agreement shall immediately become void and there shall be no liability or obligation on the part of Buyer, Merger Sub or Players, or their respective officers, directors, stockholders or Affiliates, except as set forth in Section 7.3 and except that such termination shall not limit liability for (i) a willful breach of this Agreement or (ii) a breach by Buyer or Merger Sub of its obligations pursuant to the second sentence of Section 5.7(a); provided that the provisions of this Section 7.2 and Section 7.3 of this Agreement and the Confidentiality Agreement shall remain in full force and effect and survive any termination of this Agreement. Section 7.3. Fees and Expenses. (a) Except as set forth in this Section 7.3 and the last sentence of Section 5.12(c), all fees and expenses incurred in connection with this Agreement and the transactions contemplated hereby shall be paid by the party incurring such expenses, whether or not the Merger is consummated. Fees and expenses payable under this Section 7.3 to any party hereunder shall include all costs of collection and interest from the date such payment is due at a rate per annum of London Interbank Offered Rate plus 2%. (b) Players shall pay Buyer a termination fee of $13,500,000 via wire transfer of same-day funds on the date of the earliest to occur of the following events: (i) the termination of this Agreement by Buyer or Players pursuant to Section 7.1(d), if an Acquisition Proposal involving Players shall have been publicly announced and be pending at the time of the Special Meeting; (ii) the termination of this Agreement by Buyer pursuant to Section 7.1(e); or (iii) the termination of this Agreement by Players pursuant to Section 7.1(f). Players' payment of a termination fee pursuant to this subsection shall be the sole and exclusive remedy of Buyer against Players and any of its Subsidiaries and their respective directors, officers, employees, agents, advisors or other representatives with respect to the occurrences giving rise to such payment; provided that this limitation shall not apply in the event of a willful breach of this Agreement by Players. (c) In addition to the provisions of Section 7.3(b), if (i) Buyer or Players terminates the Agreement pursuant to Section 7.1(d), (ii) Buyer terminates this Agreement pursuant to Section 7.1(g) or (iii) Players or Buyer terminates this Agreement pursuant to Section 7.1(b) and the condition specified in Section 6.1(c) shall not have been satisfied because of facts or circumstances relating to Players, its employees or operations not previously disclosed to Buyer by Players, Players shall immediately thereafter reimburse Buyer and Merger Sub all fees and expenses incurred in connection with this Agreement and the transactions contemplated hereby up to an amount equal to $1,000,000 plus, in the case of (i) above, a termination fee of $3,000,000; provided, further, that Players shall reimburse Buyer and Merger Sub one-half of all fees (i) incurred by Buyer in respect of Buyer's financing under this Agreement and (ii) approved in writing by Players prior to the time incurred. (d) If (i) Players terminates this Agreement pursuant to Section 7.1(i), (ii) Buyer or Players terminates this Agreement pursuant to Section 7.1(j), (iii) Players terminates this Agreement pursuant to Section 7.1(h) or (iv) Players or Buyer terminates this Agreement pursuant to Section 7.1(b) and the condition specified in Section 6.1(c) shall not have been satisfied because of facts or circumstances relating to Buyer, its employees or operations, Buyer shall immediately thereafter reimburse Players all fees and expenses incurred in connection with this Agreement and the transactions contemplated hereby up to an amount equal to $1,000,000 plus, in the case of (ii) above, a termination fee of $3,000,000. (e) If this Agreement is terminated by either Buyer or Players pursuant to Section 7.1(b), and all conditions to closing other than that contained in Section 6.3(c) are or would have been satisfied (or, with respect to the conditions under Section 6.2, are capable of being waived by Players) at a closing held on the date of termination, Buyer shall pay Players a termination fee of $3,000,000 and shall reimburse Players all fees and expenses incurred in connection with this Agreement and the transactions contemplated hereby up to an amount equal to $1,000,000. Section 7.4. Amendment. This Agreement may be amended by the parties hereto, by action taken or authorized by their respective Boards of Directors, at any time before or after approval of the matters presented in connection with the Merger by the stockholders of Players, but, after any such approval, no amendment shall be made which by law requires further approval by such stockholders without such further approval. This Agreement may not be amended except by an instrument in writing signed on behalf of each of the parties hereto. Section 7.5. Extension; Waiver. At any time prior to the Effective Time, the parties hereto, by action taken or authorized by their respective Boards of Directors, may, to the extent legally allowed (i) extend the time for the performance of any of the obligations or other acts of the other parties hereto, (ii) waive any inaccuracies in the representations and warranties contained herein or in any document delivered pursuant hereto and (iii) waive compliance with any of the agreements or conditions contained here. Any agreement on the part of a party hereto to any such extension or waiver shall be valid only if set forth in a written instrument signed on behalf of such party. ARTICLE VIII. MISCELLANEOUS Section 8.1. Nonsurvival of Representations, Warranties and Agreements. None of the representations, warranties, covenants and agreements in this Agreement or in any instrument delivered pursuant to this Agreement shall survive the Effective Time, except for the agreements contained in Sections 1.4, 1.5, 1.6, 2.1, 2.2, 2.3, 5.9, and 5.11 and Article VIII. The Confidentiality Agreement shall survive the execution and delivery of this Agreement. Section 8.2. Notices. Any and all notices, demands or other communications required or desired to be given hereunder by any party shall be in writing and shall be validly given or made to another party if served personally, or by facsimile or air courier, or deposited in the United States mail, certified or registered, postage prepaid, return receipt requested. If such notice, demand or other communications be served personally, or by facsimile or air courier, service shall be conclusively deemed made at the time of such service. If such notice, demand or other communications be given by mail, it shall be conclusively deemed given three (3) days after the deposit thereof in the United States mail, addressed to the party to whom such notice, demand or other communication is to be given as hereinafter set forth: if to Players, to Players International, Inc. Attention: Chief Executive Officer 1300 Atlantic Avenue, Suite 800 Atlantic City, NJ 08401 with a copy to Morgan, Lewis & Bockius LLP Attention: Peter P. Wallace, Esq. 300 South Grand Avenue, 22nd Floor Los Angeles, CA 90071 if to Buyer or Merger Sub, to Jackpot Enterprises, Inc. Attention: Don R. Kornstein 1110 Palms Airport Drive Las Vegas, NV 89119 with a copy to: Camhy Karlinsky & Stein LLP Attention: Alan I. Annex, Esq. 1740 Broadway, 16th Floor New York, NY 10019 Shearman & Sterling Attention: John A. Marzulli, Jr., Esq. 599 Lexington Avenue New York, NY 10022 Section 8.3. Interpretation. When a reference is made in this Agreement to Sections, such reference shall be to a Section of this Agreement unless otherwise indicated. The table of contents and headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. Whenever the words "include," "includes" or "including" are used in this Agreement they shall be deemed to be followed by the words "without limitation." The phrase "made available" in this Agreement shall mean that the information referred to has been made available if requested by the party to whom such information is to be made available. The phrases "the date of this Agreement," "the date hereof," and terms of similar import, unless the context otherwise requires, shall be deemed to refer to February 8, 1999. Section 8.4. Counterparts. This Agreement may be executed in two or more counterparts, all of which shall be considered one and the same agreement and shall become effective when two or more counterparts have been signed by each of the parties and delivered to the other parties, it being understood that all parties need not sign the same counterpart. Section 8.5. Entire Agreement; No Third Party Beneficiaries. This Agreement and all documents and instruments referred to herein (a) constitute the entire agreement and supersedes all prior agreements and understandings, both written and oral, among the parties with respect to the subject matter hereof, and (b) except as provided in Section 5.9, are not intended to confer upon any person other than the parties hereto any rights or remedies hereunder; provided that the Confidentiality Agreements shall survive the execution and delivery of this Agreement. Each party hereto agrees that, except for the representations and warranties contained in this Agreement, none of Buyer, Merger Sub or Players makes any other representations or warranties, and each hereby disclaims any other representations and warranties made by itself or any of its officers, directors, employees, agents, financial and legal advisors or other representatives, with respect to the execution and delivery of this Agreement or the transactions contemplated hereby, notwithstanding the delivery or disclosure to any of them or their respective representatives of any documentation or other information with respect to any one or more of the foregoing. Section 8.6. Governing Law. Except to the extent that Nevada law applies to the Merger as a matter of law, this Agreement shall be governed and construed, and the obligations, rights and remedies of the parties hereunder shall be determined, in accordance with the laws of the State of New York without reference to the conflicts of law or choice of law doctrine of such state. Section 8.7. Assignment. Neither this Agreement nor any of the rights, interests or obligations hereunder shall be assigned by any of the parties hereto (whether by operation of law or otherwise) without the prior written consent of the other party, except that Merger Sub may assign its rights and obligations hereunder to any direct or indirect wholly-owned subsidiary of Buyer; provided that no such assignment shall relieve Buyer of its obligations hereunder. Subject to the preceding sentence, this Agreement will be binding upon, inure to the benefit of and be enforceable by the parties and their respective successors and assigns. Section 8.8. Severability; Enforcement. Except to the extent that the application of this Section 8.8 would have a Buyer Material Adverse Effect with respect to Buyer or a Players Material Adverse Effect with respect to Players, the invalidity of any portion hereof shall not affect the validity, force or effect of the remaining portions hereof. If it is ever held that any covenant hereunder is too broad to permit enforcement of such covenant to its fullest extent, each party agrees that a court of competent jurisdiction may enforce such covenant to the maximum extent permitted by law, and each party hereby consents and agrees that such scope may be judicially modified accordingly in any proceeding brought to enforce such covenant. Section 8.9. Specific Performance. Except as provided in Sections 7.3(b), the parties hereto agree that the remedy at law for any breach of this Agreement will be inadequate and that any party by whom this Agreement is enforceable shall be entitled to specific performance in addition to any other appropriate relief or remedy. Such party may, in its sole discretion, apply to a court of competent jurisdiction for specific performance or injunctive or such other relief as such court may deem just and proper in order to enforce this Agreement or prevent any violation hereof and, to the extent permitted by applicable laws, each party hereto waives any objection to the imposition of such relief. Signatures Begin Next Page IN WITNESS WHEREOF, Buyer, Inc., Buyer Sub Corp. and Players International, Inc. have caused this Agreement to be signed by their respective duly authorized officers as of the date first written above. JACKPOT ENTERPRISES, INC. /s/ Don R. Kornstein ___________________________________ By: Don R. Kornstein Its: Chief Executive Officer JEI MERGER CORP. /s/ Don R. Kornstein ___________________________________ By: Don R. Kornstein Its: Chief Executive Officer PLAYERS INTERNATIONAL, INC. /s/ Howard A. Goldberg __________________________________ By: Howard A. Goldberg Its: Chief Executive Officer EX-2 3 EXECUTION COPY AGREEMENT AND PLAN OF MERGER BETWEEN JACKPOT ENTERPRISES, INC. AND CRC HOLDINGS, INC. AGREEMENT AND PLAN OF MERGER (this "Agreement"), dated as of February 17, 1999, between Jackpot Enterprises Inc., a Nevada corporation whose address is 1110 Palms Airport Drive, Las Vegas, Nevada 89119-3730 ("JEI"), and CRC Holdings, Inc., a Florida corporation whose address is 3250 Mary Street, Miami, Florida 33133 ("CRC"). JEI in its capacity as the surviving corporation is herein sometimes called the "Surviving Corporation," and JEI and CRC are herein sometimes called the "Constituent Corporations." W I T N E S S E T H : WHEREAS, the Boards of Directors of JEI and CRC have each determined that it is advisable and in the best interests of their respective stockholders for JEI, following the consummation of the Spinoff (as defined below) and subject to certain consents and approvals, including but not limited to approvals by certain appropriate governmental gaming regulatory authorities, to acquire the businesses of CRC which CRC shall continue to own immediately following the Spinoff (the "Acquired Businesses") and to effect such acquisition through a merger of CRC with and into JEI (the "Merger") following the Spinoff; WHEREAS, prior to Closing (as such term is defined in Section 1.04 below) CRC intends to (i) contribute the Spinco Businesses (as defined in the Reorganization Agreement referred to below) to a Florida limited liability company to be formed prior to the Closing ("Spinco"), and (ii) to distribute all of the ownership interests in Spinco pro rata to the stockholders of CRC (the "Spinoff"), all in accordance with that certain Reorganization Agreement between CRC and Spinco substantially in the form attached hereto as Exhibit A (the "Reorganization Agreement"); WHEREAS, concurrently with the execution of this Agreement and as a condition and inducement to JEI's willingness to enter into this Agreement, the three largest stockholders of CRC have entered into an agreement with JEI of even date herewith (the "CRC Stockholders Agreement") pursuant to which such stockholders have agreed to vote their shares of CRC Common Stock (as defined in Section 2.01) in favor of the CRC Merger Proposal (as defined in Section 3.04), and any other matter which may require approval by the stockholders of CRC in order to consummate the transactions contemplated hereby. WHEREAS, concurrently with the execution of this Agreement and as a condition and inducement of CRC's willingness to enter into this Agreement, certain stockholders of JEI have entered into an agreement with CRC of even date herewith (the "JEI Stockholders Agreement") pursuant to which such stockholders have agreed to vote their shares of JEI Common Stock (as defined in Section 2.01) in favor of the JEI Merger Proposal (as defined in Section 3.04), and any other matter which may require approval by the stockholders of JEI in order to consummate the transactions contemplated hereby. WHEREAS, for United States Federal income tax purposes, it is intended that the Merger qualify as a reorganization under the provisions of Section 368(a) of the Internal Revenue Code of 1986, as amended (together with the rules and regulations promulgated thereunder, the "Code"), unless the parties agree to modify the structure of the transaction in accordance with Section 1.08 of this Agreement, in which case the parties intend that Section 351 of the Code apply to the transaction; and WHEREAS, JEI and CRC desire to make certain representations, warranties and agreements in connection with the Merger and also to prescribe various conditions to the Merger. NOW, THEREFORE, in consideration of the mutual covenants and agreements set forth in this Agreement, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows: I. THE MERGER. 1.01 The Merger. At the Effective Time (as defined in Section 1.03), upon the terms and subject to the conditions of this Agreement, CRC shall be merged with and into JEI in accordance with the Nevada Revised Statutes ("NRS") and the Florida Business Corporation Act (the "FBCA"). JEI shall be the surviving corporation in the Merger. As a result of the Merger, the outstanding shares of capital stock of CRC shall be converted or canceled, as the case may be, in the manner provided in Article II. 1.02 Spinoff. Immediately prior to the consummation of the Merger, CRC shall contribute to Spinco the Spinco Businesses (the "Contribution"), in exchange for all of the ownership interests in Spinco (the "Spinco Interests"). Immediately following the Contribution, CRC shall distribute pro rata to its stockholders and holders of CRC Options (as defined in Section 2.03(a)) all of the issued and outstanding Spinco Interests. The businesses of CRC which CRC will continue to own following the Spinoff (constituting the Acquired Businesses), including the assets and liabilities in respect thereof, are listed on Schedule 1.02 1.03 Effective Time. Subject to the terms and conditions hereof, on the Closing Date, CRC and JEI shall file (a) Articles of Merger (the "Florida Articles") in the form attached hereto as Exhibit 1.03(a) with the Secretary of State of the State of Florida in accordance with the relevant provisions of the FBCA and (b) Articles of Merger (the "Nevada Articles") in the form attached hereto as Exhibit 1.03(b) with the Secretary of State of the State of Nevada in accordance with the relevant provisions of the NRS. A form of the Nevada Articles, to the extent practicable, shall be precleared with the Secretary of State of the State of Nevada prior to the Closing Date and a form of the Florida Articles, to the extent practicable, shall be precleared with the Secretary of State of the State of Florida prior to the Closing Date. The Merger shall be effective at such time as provided in the Nevada Articles (the "Effective Time") but in no event later than the Release Time (as hereinafter defined). 1.04 Closing. The closing of the Merger (the "Closing") will take place at the offices of Camhy Karlinsky & Stein LLP, 1740 Broadway, New York, New York 10019- 4315, or at such other place as the parties hereto mutually agree, on a date and at a time to be specified by the parties, which shall in no event be later than 10:00 a.m., local time, on the next business day following satisfaction of the condition set forth in Section 5.01(a), provided that the other closing conditions set forth in Article V have been satisfied or, if permissible, waived in accordance with this Agreement, or on such other date as the parties hereto mutually agree (the "Closing Date"). At the Closing there shall be delivered to JEI and CRC the certificates and other documents and instruments required to be delivered under Article V. 1.05 Directors of the Surviving Corporation. At the Effective Time, each person who is a director of JEI immediately prior to the Effective Time and each person who is listed on Schedule 1.05 hereto shall be a director of the Surviving Corporation. 1.06 Certificate of Incorporation and Bylaws. The articles of incorporation and Bylaws of JEI as in effect immediately prior to the Effective Time shall be the articles of incorporation and Bylaws of the Surviving Corporation until thereafter amended in accordance with applicable law. 1.07 Effects of the Merger. The separate corporate existence of JEI, as the Surviving Corporation, shall continue unimpaired by the Merger. From and after the Effective Time, the Surviving Corporation shall possess all the rights, privileges, powers, immunities and franchises and be subject to all of the restrictions, disabilities and duties of the Constituent Corporations, all as provided under the NRS. The Surviving Corporation shall, except as otherwise specifically provided herein, succeed to all the properties and assets of the Constituent Corporations and to all debts, choses in action and other interests of, due to or belonging to the Constituent Corporations with the effect and as more fully set forth in Section 92A.250 of the NRS. 1.08 Modification of Structure. Following execution of this Agreement and at any time prior to the mailing of the Joint Proxy Statement (as defined in Section 4.01(i)), if mutually agreed to by JEI and CRC, the parties may change the form of transaction pursuant to which JEI will acquire the Acquired Businesses to a transaction to which Section 351 of the Code will apply, and the parties agree, in such circumstances, to use their best efforts to enter into an amendment to this Agreement consistent with such change. II. STATUS AND CONVERSION OF SECURITIES. 2.01 Conversion of CRC Common Stock and CRC Options. (a) Share Merger Consideration. Except for Dissenting Shares (as defined in Section 2.05 below) and except as provided in paragraph (c) of this Section 2.01, each holder of shares of common stock, par value $0.005 per share, of CRC ("CRC Common Stock") and each holder of CRC Options issued and outstanding at the Effective Time shall, by virtue of the Merger and without any action on the part of any such holder, be entitled to receive a portion of the Share Merger Consideration as set forth in the last sentence of this paragraph, except that shares of CRC Common Stock held in CRC's treasury or owned by JEI at the Effective Time shall be canceled without payment of any consideration thereof. The "Share Merger Consideration" means an aggregate of 3,516,530 shares of common stock, par value $.01 per share, of JEI ("JEI Common Stock"), together with any and all rights attached thereto or associated therewith, including but not limited to the rights to purchase Series A Junior Preferred Stock of JEI as set forth in that certain Rights Agreement dated as of July 11, 1994, subject to (i) adjustment by reason of any stock dividend, subdivision, reclassification, recapitalization, split, combination, exchange or similar stock event, (ii) reduction for any adjustment effected pursuant to Section 2.02 and (iii) a holdback of such number of shares of JEI Common Stock that would be issuable in respect of all Dissenting Shares if such Dissenting Shares were ultimately deemed to be converted into the right to receive the portion of the Share Merger Consideration attributable to such Dissenting Shares (the "Withheld Shares"). The Share Merger Consideration shall be distributed in accordance with instructions delivered by CRC to JEI not less than three (3) business days prior to the Closing Date. The Withheld Shares shall be distributed or canceled as provided in paragraph (d) of this Section 2.01. (b) Exchange of CRC Common Stock Pledged to Carnival for JEI Assignable Notes. All shares of CRC Common Stock currently pledged by the record holders of such shares to Carnival Corporation ("Carnival") to secure notes payable by such holders to Carnival (collectively, the "CCL Notes") will, by virtue of the Merger and without any action on the part of such record holders, be exchanged for promissory notes of JEI (the "JEI Assignable Notes") in the aggregate principal amount of $13,208,441 and having the terms set forth on Exhibit 2.01(b). Such JEI Assignable Notes have been assigned by the holders who will receive them, effective immediately following the Effective Time, to Carnival in partial satisfaction of the CCL Notes. The aggregate principal amount of the JEI Assignable Notes shall be subject to reduction in the aggregate principal amount thereof for any adjustment effected pursuant to Section 2.02. Upon the issuance by JEI (or any affiliate) for cash, pursuant to Rule 144A of not less than $175,000,000 of indebtedness ("144A Notes") to finance the Players Merger (as defined in Section 3.02(a)) as contemplated by the merger agreement related thereto, JEI shall, at its option, either (i) exchange the JEI Assignable Notes and the JEI Note (as defined in Section 2.01(c)) for an equal principal amount of 144A Notes (to be supplemented, if the issue price of such 144A Notes is at a discount to the face amount thereof (without regard to any applicable underwriting discount), by additional 144A Notes having an aggregate face amount equal to the discount in respect of 144A Notes having a face amount equal to the principal amount of the JEI Assignable Notes) and concurrent therewith pay to Carnival all accrued and unpaid interest under the JEI Assignable Notes and the JEI Note; or (ii) pay in cash to Carnival all principal and accrued and unpaid interest on the JEI Assignable Notes and the JEI Note. (c) Exchange of CRC Common Stock held by Carnival for the JEI Note. All shares of CRC Common Stock registered in the name of Carnival at the Effective Time shall, by virtue of the Merger and without any action on the part of Carnival, be exchanged for a promissory note of JEI in the principal amount of $12,601,156 and having the same terms and conditions as the JEI Assignable Notes (the "JEI Note", and, together with the Share Merger Consideration and the JEI Assignable Notes, the "Merger Consideration"), subject to reduction in the aggregate principal amount thereof for any adjustment effected pursuant to Section 2.02. (i) Distribution or Cancellation of Withheld Shares. To the extent any holder (a "Dissenting Holder") of Dissenting Shares, following the Effective Time, withdraws a demand for payment, fails to comply fully with the requirements of Florida law, or otherwise fails to establish the right of such Dissenting Holder to be paid the value of such Dissenting Holder's Dissenting Shares under Florida law, that portion of the Withheld Shares relating to such Dissenting Shares shall thereupon be delivered to such Dissenting Holder. In the event a Dissenting Holder is paid the value of the Dissenting Shares, the portion of the Withheld Shares attributable to such Dissenting Shares shall thereupon be canceled. 2.02 Adjustments to the Merger Consideration. (a) Adjustment Based on Assumed Assets and Liabilities. (i) CRC has delivered to JEI an unaudited balance sheet of the Acquired Businesses as of November 30, 1998 (the "Initial November 30 Balance Sheet"), a copy of which is included as part of the CRC Financial Statements attached as Schedule 4.01(e). The Initial November 30 Balance Sheet has been prepared in accordance with generally accepted accounting principles ("GAAP"), provided that the selection of certain categories of assets and liabilities to be included and/or omitted from the Initial November 30 Balance Sheet may not be in accordance with GAAP. Pursuant to Section 3.01(f)(i), CRC will deliver an updated balance sheet of the Acquired Businesses as of November 30, 1998 (the "Updated November 30 Balance Sheet") which shall have been prepared based on the audited financial statements of the Acquired Businesses to be delivered pursuant to Section 3.01(f), as adjusted on a basis consistent with the Initial November 30 Balance Sheet. The parties acknowledge and agree that, for purposes of preparing the Initial November 30 Balance Sheet and Updated November 30 Balance Sheet, (A) the amount accrued for redemption of warrants to purchase Common Stock of Louisiana Casino Cruises, Inc., a Louisiana corporation ("LCC"), will be fixed at $4,376,000, notwithstanding any determination after the date hereof that the actual amount to be accrued or expended is more or less than that amount and (B) the maximum amount which CRC may pay or accrue for bonuses for the fiscal year ended November 30, 1998 shall not exceed $700,000. Subject to the procedures set forth in Section 2.02(a)(ii) below in the event of any dispute with respect to any item on the Updated November 30 Balance Sheet, if the net worth of the Acquired Businesses as reflected in the Updated November 30 Balance Sheet is less than $74,000 (i.e., the net worth of the Acquired Businesses as reflected on the Initial November 30 Balance Sheet), then the Merger Consideration shall be reduced as follows: (A) the Share Merger Consideration shall be reduced to the number of shares of JEI Common Stock equal to the product of 55.758% and the quotient of (x) the amount by which the net worth of the Acquired Businesses at November 30, 1998 is less than $74,000 (the "Net Worth Deficit") and (y) $9.25. (B) The aggregate principal amount of the JEI Assignable Notes shall be reduced by an amount equal to 22.641% of the Net Worth Deficit. (C) The aggregate principal amount of the JEI Note shall be reduced by an amount equal to 21.601% of the Net Worth Deficit. (ii) Within 30 days following receipt of the Updated November 30 Balance Sheet from CRC, JEI shall notify CRC in writing whether it accepts or disputes the amounts set forth on said balance sheet. If the Updated November 30 Balance Sheet is acceptable to JEI, it shall be utilized to determine whether an adjustment to the Merger Consideration pursuant to this Section 2.02(a) is necessary and, if so, the amount of such adjustment. If JEI disputes any amounts set forth on said balance sheet, it shall state its specific objections in its notice, which objections must be made in good faith. If the parties and their advisors cannot resolve the objections of JEI within 30 days following delivery by JEI of its objections to CRC, then the Updated November 30 Balance Sheet must be submitted to a nationally recognized accounting firm acceptable to both CRC and JEI, which shall conduct a review of the items in said balance sheet which are in dispute and determine whether, in each instance, the amount of any item as proposed by CRC or JEI is more appropriate. Such determination shall be final and binding on the parties hereto. (iii) Notwithstanding (i) and (ii) above, the parties acknowledge that any reduction in the line items entitled "Deferred Income Taxes" on the Initial November 30 Balance Sheet which is reflected in the Updated November 30 Balance Sheet shall, in lieu of a reduction in the Merger Consideration, be offset, on a dollar-for-dollar basis, by a reduction in the line items entitled "Due to CRC" on the Updated November 30 Balance Sheet (referred to hereinafter as the "Due to CRC Line Items"). (iv) The parties further agree and acknowledge that any tax savings realized by the Acquired Businesses from and after December 1, 1998 through the Closing Date which are attributable to expenses of the Spinco Businesses (which expenses shall, for this purpose, be deemed allocated between the Acquired Businesses and the Spinco Businesses in accordance with Schedule 3.01(f) attached hereto) shall be paid by JEI to Spinco within 10 business days following the date on which the tax return for the period during which such tax savings have been realized is filed by JEI; provided, however, if the Acquired Businesses would not have generated taxable income during the period between December 1, 1998 and the Closing Date without giving effect to the deductions attributable to the expenses of the Spinco Businesses during that period, JEI will have no obligation to pay Spinco pursuant to this clause (iv). (b) Adjustments Based on Pre-November 30, 1998 Liabilities Not Reflected on Updated November 30 Balance Sheet. (i) In the event that, subsequent to delivery of the Updated November 30 Balance Sheet for the Acquired Businesses and prior to the Closing, CRC notifies JEI as set forth in clause (ii) below of the existence of liabilities (whether absolute, accrued, contingent, estimated, deferred, fixed or otherwise) of the Acquired Businesses, or an impairment of the carrying value of any asset of the Acquired Businesses, relating to or arising out of events or circumstances occurring on or before November 30, 1998 and which, had such events and circumstances been known at the time of preparation of the Updated November 30 Balance Sheet, would have been required, in accordance with GAAP as modified to the extent provided in Section 2.02(a)(i) above, to have been reflected or reserved against on the Updated November 30 Balance Sheet, there shall be a reduction in the Merger Consideration at the Closing for the amount of any Net Worth Deficit, if any, caused by such liability or impairment of value or, if the Updated November 30 Balance Sheet prior to this adjustment already reflected a Net Worth Deficit, by the amount of such liability or impairment of value. Any such adjustment shall be determined in accordance with the formulas set forth in Section 2.02(a) above for determining a reduction in the Merger Consideration. (ii) CRC shall notify JEI in writing if CRC becomes aware of any liability or impairment of value that could result in an adjustment under Section 2.02(b)(i). Such notice shall specify in reasonable detail the nature and amount of such liability or impairment of value and the amount of the proposed adjustments to the Share Merger Consideration, the aggregate principal amount of the JEI Assignable Notes and the aggregate principal amount of the JEI Note as a result thereof. Within 15 days following receipt of such notification, JEI shall notify CRC in writing whether it accepts or disputes the proposed adjustment. If JEI disputes the amount of the proposed adjustment, it shall state its specific objection in its notice, which objection must be made in good faith. If the parties cannot resolve such objection, the parties shall submit their dispute to a nationally recognized accounting firm acceptable to JEI and CRC (which shall be the same firm, if any, selected pursuant to Section 2.01(a)(ii)), which shall determine whether the adjustments are appropriate or not. Such determination shall be binding on the parties hereto. (c) Adjustments Based on Payments Made in Respect of Liabilities of the Spinco Businesses Prior to Closing and Transaction Expenses. (i) In the event that liabilities of the Spinco Businesses are paid, discharged or otherwise satisfied by CRC or any of the CRC Acquired Subsidiaries using assets of the Acquired Businesses from and after December 1, 1998, including cash from the operations of the Acquired Businesses from and after December 1, 1998, there shall be a reduction in the Merger Consideration as follows: (A) The number of shares of JEI Common Stock constituting the Share Merger Consideration shall be reduced by 55.758% of the quotient of (x) the amount of all assets of the Acquired Businesses used to pay, discharge or otherwise satisfy liabilities of the Spinco Businesses (the "Diverted Asset Amount") and (y) $9.25. (B) The aggregate principal amount of the JEI Assignable Notes shall be reduced by an amount equal to 22.641% of the Diverted Asset Amount. (C) The aggregate principal amount of the JEI Note shall be reduced by an amount equal to 21.601% of the Diverted Asset Amount. The Diverted Asset Amount shall be determined as follows. Within five business days prior to the Closing Date, the chief financial officer of CRC shall deliver to JEI an income statement for the Acquired Businesses for the period from December 1, 1998 through the last day of the most recent month preceding the Closing Date for which such statements are available (the "Pre-Closing Income Statement"), and a balance sheet for the Acquired Businesses as of the end of such month (the "Pre-Closing Balance Sheet"), along with a certification that (x) such Pre-Closing Income Statement and Pre-Closing Balance Sheet were prepared in accordance with the books and records of CRC and the CRC Acquired Subsidiaries and on a basis consistent with the Initial November 30 Balance Sheet (without regard to any changes in accounting principles) and (y) accurately reflect the items shown thereon. In addition, on the Closing Date, CRC and JEI shall estimate the amount, if any, of assets of the Acquired Businesses which have been used to satisfy any liabilities of the Spinco Businesses since the date of the Pre-Closing Balance Sheet (the "Stub Period Diverted Asset Amount"). The Diverted Asset Amount shall be equal to the sum of (i) the amount, if any, by which net income for the period from December 1, 1998 to the date of the Pre-Closing Balance Sheet exceeds the increase in "Stockholders' Equity" on the Pre-Closing Balance Sheet compared to "Stockholders' Equity" on the Updated November 30 Balance Sheet (or, if there is a net loss for the period from December 1, 1998 to the date of the Pre-Closing Balance Sheet, the amount, if any, by which the net loss for such period is less than the decrease in "Stockholders' Equity" on the Pre-Closing Balance Sheet compared to "Stockholders' Equity" on the Updated November 30 Balance Sheet) plus (ii) the Stub Period Diverted Asset Amount. Notwithstanding the foregoing, the parties acknowledge and agree that (I) the calculation of Diverted Asset Amount shall be made without regard to severance benefits paid to certain CRC personnel on or prior to the Closing Date up to the amounts set forth in Schedule 2.02(c) hereto, which payments (from whatever source) will in no event result in a reduction to the Merger Consideration and (II) with respect to any Diverted Asset Amount in excess of $800,000, in lieu of the reduction of the Merger Consideration that would be effected pursuant to this subparagraph (c)(i), CRC shall have the option (which option shall be exercised by written notice delivered to JEI not less than three (3) business days prior to the Closing Date) to have the Due to CRC Line Items reduced by the amount of such excess; provided that the amount of such reduction, plus the amount of all other reductions in the Due to CRC Line Items which CRC elects to make as permitted hereunder, shall not cause the Due to CRC Line Items to be reduced below zero; provided, further, that if any amount of such excess remains after the Due to CRC Line Items have been reduced to zero, CRC shall have the further option to satisfy such excess with cash. (ii) In the event the aggregate expenses of the Merger and the other transactions contemplated by this Agreement incurred by CRC and the CRC Acquired Subsidiaries (inclusive of the amount reserved on the Updated November 30 Balance Sheet in respect thereof) exceed $800,000, there shall be a reduction at Closing in the Merger Consideration as follows: (A) The number of shares of JEI Common Stock constituting the Share Merger Consideration shall be reduced by 55.758% of the quotient of (y) the amount of expenses in excess of $800,000 (the "Excess Expenses") and (z) $9.25. (B) The aggregate principal amount of the JEI Assignable Notes shall be reduced by an amount equal to 22.641% of the Excess Expenses. (C) The aggregate principal amount of the JEI Note shall be reduced by an amount equal to 21.601% of the Excess Expenses. For purposes of this Section 2.02(c)(ii), CRC agrees that all expenses incurred by CRC and the CRC Acquired Subsidiaries related to matters arising from the merger of CHC International, Inc. with and into Patriot American Hospitality Operating Company and the transactions consummated in connection therewith, or in connection with the formation of Spinco and development of the Spinco Businesses prior to the Effective Time, shall not be considered expenses of the Merger. In lieu of the reduction of the Merger Consideration that would be effected pursuant to this subparagraph (c)(ii), CRC shall have the option (which option shall be exercised by written notice delivered to JEI not less than three (3) business days prior to the Closing Date) to have the Due to CRC Line Items reduced by the amount of such Excess Expenses; provided that the amount of such reduction, plus the amount of all other reductions in the Due to CRC Line Items which CRC elects to make as permitted hereunder, shall not cause the Due to CRC Line Items to be reduced below zero; provided, further, that if any amount of such Excess Expenses remains after the Due to CRC Line Items have been reduced to zero, CRC shall have the further option to satisfy such Excess Expenses with cash. (d) Adjustment Based on Tax Liabilities Attributable to Spinoff. (i) In the event there shall be a tax liability to CRC as a result of the Contribution and Spinoff (the "Spinoff Tax Liability") as calculated below, there shall be an adjustment at the Closing in the Merger Consideration as follows: (A) The number of shares of JEI Common Stock constituting the Share Merger Consideration shall be reduced by 55.758% of the quotient of (x) the Spinoff Tax Liability and (y) $9.25. (B) The aggregate principal amount of the JEI Assignable Notes shall be reduced by an amount equal to 22.641% of the Spinoff Tax Liability. (C) The aggregate principal amount of the JEI Note shall be reduced by an amount equal to 21.601% of the Spinoff Tax Liability. (ii) The Spinoff Tax Liability shall be calculated in accordance with the following procedures: (A) No later than 45 days prior to the expected Closing Date, PricewaterhouseCoopers LLP ("PWC") shall make an estimate of the fair market value of the Spinco Businesses as of the date of the Spinoff, taking into account in the valuation the best estimate of the Spinco Businesses' share of the expenses attributable to the transactions contemplated by this Agreement. (B) PWC shall estimate the tax items of CRC which are available to reduce such liability (including operating losses, net operating and capital loss carryovers) (collectively, the "Tax Attributes"). The Tax Attributes shall be calculated without taking into account the operations of the Acquired Businesses for periods after November 30, 1998. (C) PWC shall then calculate the difference between (i) the estimated value of the Spinco Businesses and (ii) CRC's adjusted tax basis in the stock of Spinco (assuming that the Contribution is a tax free transaction) at such time and then subtract from that difference the Tax Attributes. It shall then multiply such remainder, if any, by the applicable Federal, state, foreign and local tax rates applicable to income of CRC, and the product shall be the tentative Spinoff Tax Liability. (D) The foregoing calculation shall be submitted in writing by PWC (the "PWC Report") to JEI. JEI shall then have the opportunity to review the determination of the tentative Spinoff Tax Liability. (E) Within 15 business days of the receipt of the PWC Report, JEI shall notify CRC as to whether it accepts or disputes the tentative Spinoff Tax Liability reflected in the PWC Report. JEI must make such determination in good faith. (F) If the tentative Spinoff Tax Liability is acceptable to JEI, it shall be deemed to be the Spinoff Tax Liability. (G) If JEI disputes the tentative Spinoff Tax Liability, it shall state its specific objections in its notice, which objections must be made in good faith. If the parties and their respective advisors cannot resolve the objections of JEI, then the PW Report must be submitted to a nationally recognized accounting firm acceptable to both JEI and CRC (which shall be the same firm, if any, selected pursuant to Section 2.02(a)(ii)). Such firm shall then submit its determination of the Spinoff Tax Liability, which determination will be binding on both parties. In lieu of the reduction of the Merger Consideration that would be effected pursuant to this paragraph (d), CRC shall have the option (which shall be exercised by written notice delivered to JEI not less than three (3) business days prior to the Closing Date) to have the Due to CRC Line Items reduced by the amount of such Spinoff Tax Liability; provided that the amount of such reduction, along with the amount of all other reductions to the Due to CRC Line Items as permitted hereunder, shall not cause the Due to CRC Line Items to be reduced below zero; provided, further, if any amount of such Spinoff Tax Liability remains after the Due to CRC Line Items have been reduced to zero, CRC shall have the further option to satisfy such excess with cash. (e) No Reduction in Merger Consideration. Notwithstanding anything in this Section 2.02 to the contrary, there shall not be an adjustment in any of the Share Merger Consideration, the aggregate principal amount of the JEI Assignable Notes or the aggregate amount of the JEI Note if and to the extent the liability causing such adjustment is paid, discharged or assumed on or prior to the Closing by Spinco or any stockholder of CRC (without liability to JEI or any of the Acquired Businesses following the Effective Time and subject, in the case of an assumption only, to Spinco or such assuming stockholder, as the case may be, agreeing in writing to indemnify JEI with respect thereto) or is otherwise paid or discharged from funds which are not assets of the Acquired Businesses or funds other than revenues generated by operations of the Acquired Businesses, in either case from and after December 1, 1998. 2.03 Stock Options. (a) Schedule 2.03 sets forth a list of each outstanding subscription, option, warrant, right (including "phantom" stock rights), preemptive right or other contract, commitment, understanding or arrangement, including any right of conversion or exchange under any outstanding security, instrument or agreement (collectively, "Options"), obligating CRC to issue or sell any shares of capital stock of CRC or to grant, extend or enter into any Option with respect thereto to which CRC is a party ("CRC Options"), whether granted under the CSMC Management Services Inc. Stock Option Plan (the "Stock Plan") or otherwise, which has not been exercised by the date of this Agreement, and for each CRC Option sets forth (i) the name of the holder of such CRC Option, (ii) the maximum number of shares of CRC Common Stock for which such CRC Option is exercisable, (iii) the exercise price per share of CRC Common Stock of such CRC Option and (iv) the vesting schedule of such CRC Option. (b) Prior to the Effective Time, CRC shall take all actions (including, without limitation, amending the provisions of the Stock Plan or option agreements issued thereunder to the extent permitted thereunder) necessary to provide that: (i) each CRC Option which has not previously been exercised, canceled or otherwise satisfied shall, immediately prior to the Effective Time, be canceled and each holder of such CRC Option shall be entitled to receive an amount of consideration at the Closing as set forth in a schedule to be delivered to JEI with the instructions referred to in the last sentence of Section 2.01(a); and (ii) as of the Effective Time, the Stock Plan shall be terminated. 2.04 Affiliates of CRC. CRC and JEI agree that each will use its best efforts so that the Merger and other transactions contemplated hereby shall be consummated without violating the securities laws of the United States or of any state or other jurisdiction. Not later than twenty (20) days after the date of this Agreement, CRC shall deliver to JEI a letter (the "Affiliates Letter") identifying all persons who are "affiliates" of CRC for purposes of Rule 145 under the Securities Act of 1933, as amended (the "Securities Act"), and the rules and regulations promulgated thereunder ("Affiliates"). CRC agrees that it will use its best efforts to cause all persons identified in the Affiliates Letter to enter into an agreement with JEI (and JEI hereby agrees to enter into such an agreement with such persons) in the form attached hereto as Exhibit 2.04 (the "Affiliates Agreement"). 2.05 Dissenting Shares. Any shares of CRC Common Stock held by a Dissenting Holder who demands payment for his or her shares pursuant to and in accordance with the applicable provisions of Florida law shall be herein called "Dissenting Shares." Any Dissenting Shares shall not, after the Effective Time, be entitled to vote for any purpose or receive any dividends or other distributions and shall not be converted into the right to receive any portion of the Share Merger Consideration; provided, however, that Dissenting Shares held by a Dissenting Holder who subsequently withdraws a demand for payment, fails to comply fully with the requirements of Florida law, or otherwise fails to establish the right of such Dissenting Holder to be paid the value of such Dissenting Shares under Florida law shall be deemed to be converted into the right to receive a portion of the Share Merger Consideration pursuant to the terms and conditions referred to above. 2.06 Section 16 Matters. CRC and JEI shall take all such steps as may be required to provide that, with respect to each Section 16 Affiliate (as defined below), (i) the transactions contemplated by this Article II and (ii) any other dispositions of CRC equity securities (including derivative securities) or other acquisitions of JEI equity securities (including derivative securities) in connection with this Agreement, shall be exempt under Rule 16b-3 promulgated under the Securities Exchange Act of 1934, as amended, in accordance with the terms and conditions set forth in that certain No-Action Letter, dated January 12, 1999, issued by the SEC to Skadden, Arps, Slate, Meagher & Flom LLP. For purposes of this Agreement, "Section 16 Affiliate" shall mean each individual who (x) immediately prior to the Effective Time is a director or officer of CRC or (y) at the Effective Time will become a director or officer of JEI. II. COVENANTS. 3.01 Covenants of CRC. From and after the date hereof until the earlier of the Effective Time and the termination of this Agreement pursuant to Article VI (the "Release Time"), unless JEI otherwise agrees in writing, CRC agrees, and agrees to cause the CRC Acquired Subsidiaries, to comply with the following covenants and agreements (it being understood that (i) such covenants and agreements apply solely with respect to the Acquired Businesses, (ii) such covenants and agreements are subject to applicable gaming laws and (iii) with respect to LCC, CRC shall only be required to use reasonable best efforts to cause LCC to comply with the following covenants and agreements (and shall be subject to fiduciary duties and contractual restrictions, in each case as they relate to the minority shareholders of LCC)): (a) Articles of Incorporation and By-laws. No amendment will be made to the articles of incorporation or by-laws of CRC or of any CRC Acquired Subsidiary. (b) Shares and Options. No share of capital stock of any CRC Acquired Subsidiary, or any option, warrant for, right to subscribe to or other right to purchase any such share or security convertible into or exchangeable for any such share (collectively, "CRC Subsidiary Options") shall be issued or sold by CRC or any CRC Acquired Subsidiary, nor shall CRC or any CRC Acquired Subsidiary enter into any agreement or commitment to effect any such issuance or sale, except as set forth in Schedule 3.01(b) hereto. (c) Dividends and Purchases of Stock. Except for the Spinoff and except for any dividend or distribution consisting solely of funds generated by the Spinco Businesses, no cash or non-cash dividend or liquidating or other distribution shall be authorized, declared, paid, or effected by CRC in respect of the outstanding shares of CRC Common Stock or any other shares of capital stock of CRC. Except as set forth in Schedule 3.01(c) or as required by law or the charter documents of CRC or any CRC Acquired Subsidiary as in effect on the date hereof, no direct or indirect redemption, purchase, or other acquisition shall be made by CRC or any CRC Acquired Subsidiary of shares of CRC Common Stock, any capital stock of any CRC Acquired Subsidiary, any CRC Option or any CRC Subsidiary Option. (d) Access. Subject to the confidentiality letter agreement, dated August 25, 1998, from CRC to JEI (the "CRC Confidentiality Agreement") and reasonable notice to CRC, CRC will afford the officers, directors, employees, counsel, agents, investment bankers, accountants, and other representatives of JEI or any JEI Subsidiary (as defined in Section 3.02) and JEI's lenders and prospective lenders (if any) reasonable access during normal business hours to the plants, properties, books, and records of CRC and the CRC Acquired Subsidiaries, will permit them to make extracts from and copies of such books and records, and will from time to time furnish JEI with such additional financial and operating data and other information as to the financial condition, results of operations, businesses, properties, assets, liabilities, or future prospects of CRC and the CRC Acquired Subsidiaries as are prepared by CRC in the ordinary course consistent with past practice on a calendar month basis, as well as the income statements and balance sheets of the Acquired Businesses set forth in Section 3.01(f)(ii). CRC will use its reasonable best efforts to cause the independent certified public accountants of CRC and the CRC Acquired Subsidiaries to make available to JEI and its independent certified public accountants the work papers relating to the financial statements of the Acquired Businesses referred to in Sections 3.01(f) and 4.01(e); provided, however, that the use of reasonable best efforts shall not require the payment of a material amount of money not ordinarily incidental to such process. All information furnished by or on behalf of CRC pursuant to this Section 3.01(d) or otherwise obtained from CRC as contemplated by this Section 3.01(d) shall be subject to the CRC Confidentiality Agreement. (e) Conduct of Business. Except as specifically required or contemplated by this Agreement, CRC shall and shall cause the CRC Acquired Subsidiaries to carry on their respective businesses in the ordinary course of business and use all reasonable efforts to preserve intact their current business organizations, keep available the services of their current officers and employees and preserve their relationships consistent with past practice with desirable customers, suppliers, licensors, licensees, distributors and others having business dealings with them to the end that their goodwill and ongoing businesses shall be unimpaired in all material respects at the Effective Time; provided, however, that the use of reasonable efforts shall not require the payment of a material amount of money not ordinarily incidental to such process. Except as expressly permitted or contemplated by the terms of this Agreement, without limiting the generality of the foregoing, CRC shall not, and shall not permit any of the CRC Acquired Subsidiaries to (without JEI's prior written consent, which consent may not be unreasonably withheld): (i) (A) reclassify any of its capital stock or issue or authorize the issuance of any capital stock, other than (x) additional shares of CRC Common Stock or (y) shares of LCC Common Stock issued upon the exercise of warrants to purchase LCC Common Stock outstanding on the date hereof or (B) amend any shares of capital stock of CRC or any of the CRC Acquired Subsidiaries or any other securities thereof, or any CRC Options or CRC Subsidiary Options to acquire any such shares or other securities; (ii) issue, deliver or sell, or pledge or otherwise encumber (unless such pledge or other encumbrance is released or eliminated at or prior to Closing), any shares of capital stock or any other voting securities of CRC or any CRC Acquired Subsidiary, or any CRC Options or CRC Subsidiary Options to acquire any such shares, voting securities or convertible or exchangeable securities (other than the issuance of (A) additional shares of CRC Common Stock and (B) additional CRC Options); (iii) develop, acquire or agree to develop or acquire any projects, assets or lines of business which would be part of the Acquired Businesses, including without limitation, by merging or consolidating with, or by purchasing all or a substantial portion of the assets of, any corporation, partnership, joint venture, association or other business organization or division thereof, or make any capital expenditures relating to the Acquired Businesses, except (u) purchases of inventory, furnishings and equipment in the ordinary course of business and consistent with past practice, (v) expenditures consistent with CRC's fiscal 1999 capital budget (the "Budget") unless expressly otherwise limited hereby, (w) expenditures in excess of $200,000 in the aggregate for the Kalispel project, $100,000 in the aggregate for the Wampanoag project and $100,000 in the aggregate for the Lake Las Vegas project (provided that JEI's consent to expenditures in excess of the respective maximum amounts listed for each project will not be unreasonably withheld), (x) expenditures for expansion projects involving either Casino Rama or LCC (provided that (1) JEI's consent to such expenditures for such expansion projects will not be unreasonably withheld and (2) the parties understand and agree that this clause (x) as it relates to Casino Rama is intended only to limit expenditures by CRC or any CRC Acquired Subsidiary and shall not in any manner whatsoever affect existing contractual arrangements or the operation of the casino generally), (y) any capital expenditures with respect to CRC's Miami office, other than those expenditures which CRC is legally obligated to make as of the date hereof, or (z) except as set forth on Schedule 3.01(e)(iii); (iv) sell, lease, license, swap, barter, mortgage or otherwise encumber or subject to any liens, claims, mortgages, encumbrances, pledges, security interests, equities and charges of any kind (each a "Lien"), or otherwise dispose of any of its properties or assets which are part of the Acquired Businesses, except Liens for taxes not currently due or those currently being contested in good faith or for transactions in the ordinary course of business and consistent with past practice; (v) (A) other than indebtedness available under any line of credit or other lending arrangement existing on the date hereof which will be for the benefit of the Acquired Businesses following the Closing Date, incur any indebtedness (including any capital or operating lease which would be classified as indebtedness on the financial statements of the Acquired Businesses), forgive any debt obligations of any person to CRC or the CRC Acquired Subsidiaries, issue or sell any debt securities or warrants or other rights to acquire any debt securities of CRC or any of the CRC Acquired Subsidiaries, guarantee any indebtedness of another person, enter into any "keep well" or other agreement to maintain any financial statement condition of another person or enter into any arrangement having the economic effect of any of the foregoing or (B) other than (1) advances to employees, suppliers or customers in the ordinary course of business and consistent with past practice, and (2) expenditures consistent with the Budget, make any loans, advances or capital contributions to, or investments in, any other person, other than loans or advances to directors, officers, employees, consultants, Affiliates or agents in accordance with clause (viii) below. (vi) (A) settle any claim, action, or lawsuit relating to material Taxes (as hereinafter defined) pending as of the date hereof or arising on or after the date hereof, (B) make any material Tax (as hereinafter defined) election, or (C) amend any material Tax return in any respect (except, in each case, to the extent relating solely to Spinco); (vii) (A) pay, discharge, settle or satisfy any material claims, liabilities or obligations (absolute, accrued, asserted or unasserted, contingent or otherwise) (other than those relating to Taxes, which are covered by clause (vi) above), other than the payment, discharge, settlement or satisfaction of liabilities reflected or reserved against in the Updated November 30 Balance Sheet (for an amount not in excess of the amount reflected or reserved) or incurred by the Acquired Businesses in the ordinary course of business and consistent with past practice after November 30, 1998, or (B) waive the benefits of, or agree to modify in any manner, any confidentiality, standstill or similar agreement to which CRC or any of the CRC Acquired Subsidiaries is a party; (viii) make any change in the compensation payable or to become payable to any of its officers, directors, employees, agents or consultants or other persons providing any services to the Acquired Businesses, or enter into or amend any employment, severance, consulting, termination or similar agreement or employee benefit plan or make any loans or advances to any of its officers, directors, employees, Affiliates, agents or consultants that are not repaid on or prior to Closing, or make any change in its existing borrowing or lending arrangements for or on behalf of any of such persons pursuant to an employee benefit plan or otherwise (other than (A) increases or other changes in wages to employees who are not officers, directors or Affiliates in the ordinary course of business and consistent with past practice, (B) payment of annual bonuses in the ordinary course of business and consistent with past practice (provided, however, that bonuses paid in respect of the fiscal year ended November 30, 1998 shall not exceed $700,000) and (C) increases or other modifications to salary for officers pursuant to regular annual reviews in the ordinary course of business and consistent with past practice and approved pursuant to Board authority; provided, however, that no compensation described in this clause (C) shall be in the form of capital stock of any CRC Acquired Subsidiary or any CRC Subsidiary Options; (ix) pay or make any accrual or arrangement for payment of any pension, retirement allowance or other employee benefit pursuant to any existing plan, agreement or arrangement to any officer, director, employee or Affiliate or pay or agree to pay or make any accrual or arrangement for payment to any officer, director, employee or Affiliate of any amount relating to unused vacation days, except payments and accruals made in the ordinary course of business and consistent with past practice; adopt or pay, grant, issue, accelerate or accrue salary or other payments or benefits pursuant to any pension, profit-sharing, bonus, extra compensation, incentive, deferred compensation, stock purchase, stock option, stock appreciation right, group insurance, severance pay, retirement or other employee benefit plan, agreement or arrangement, or any employment or consulting agreement with or for the benefit of any director, officer, employee, agent or consultant, whether past or present, other than as required under applicable law or the current terms of any plan or agreement identified in Schedule 4.01(n) or as permitted pursuant to clause (viii) above, provided that CRC may establish and pay or accrue benefits pursuant to bonus plan targets and incentive amounts consistent with past practice (provided, however, that bonuses paid in respect of the fiscal year ended November 30, 1998 shall not be considered in determining what is consistent with past practice for this purpose) and, provided further, CRC shall be entitled to pay severance or other separation payments up to the maximum amounts provided for in the Reorganization Agreement; or amend in any material respect any such existing plan, agreement or arrangement in a manner inconsistent with the foregoing; (x) enter into any collective bargaining agreement; (xi) enter into any transaction, agreement or arrangement with, any Affiliates, officers, directors, stockholders or their Affiliates, associates or family members or do or enter into any of the foregoing with respect to employees, agents or consultants except as permitted by clauses (viii) and (ix) above; (xii) modify or amend any CRC Material Contract (including any CRC Material Contract relating to indebtedness), as such term is defined in Section 4.01(x), if such modification or amendment is reasonably likely to have a Material Adverse Effect, as such term is defined in Section 4.01(a), on the Acquired Businesses taken as a whole; (xiii) make any cash disbursement or series of related cash disbursements, in excess of $100,000 in the aggregate, other than disbursements (a) made in the ordinary course of business consistent with past practice, (b) reflected in the Budget, unless expressly otherwise limited hereunder, (c) otherwise permitted hereunder and (d) as may be required by any agreement outstanding on the date hereof; (xiv) make any change in accounting principles (except as may be required by GAAP, in which event CRC shall fully disclose any such change to JEI and the reasons therefor); (xv) authorize any of, or commit or agree to take any of, the foregoing actions, except as otherwise permitted or contemplated by this Agreement. (f) Financial Statements. (i) CRC shall furnish to JEI, within 45 days following the date of this Agreement, the following financial statements: (i) audited financial statements, including balance sheets, statements of income and shareholders' equity and statements of cash flows, of CRC for the fiscal year ended November 30, 1998, (ii) audited financial statements of the Acquired Businesses for the three fiscal years ended November 30, 1998, which shall include balance sheets as of November 30, 1998 and 1997 and statements of income, shareholders' equity and cash flows for each of the three years ended November 30, 1998, and (iii) the Updated November 30 Balance Sheet. (ii) CRC shall prepare a monthly balance sheet and income statement for the Acquired Businesses, beginning with the month ended December 31, 1998, and a report detailing the allocation of overhead expenses between the Acquired Businesses and the Spinco Businesses, with such allocations being made in the manner set forth in Schedule 3.01(f) attached hereto. Each monthly balance sheet, income statement and allocation report shall be certified by CRC's chief financial officer as being true and correct and shall be delivered to JEI within 30 days following each month, except that the monthly balance sheet and income statement for the month ended December 31, 1998 shall be delivered by no later than the fifteenth day following the date of this Agreement. (g) Advice of Changes. CRC will, as promptly as practicable, advise JEI in a reasonably detailed written notice of any fact or occurrence or any pending or threatened occurrence of which it obtains knowledge and which either: (i) would reasonably be expected to have a Material Adverse Effect on the Acquired Businesses, taken as a whole or (ii) if existing and known at the Effective Time, would cause a condition to any party's obligations under this Agreement not to be fully satisfied. (h) Public Statements. Before CRC releases any information concerning this Agreement, the Merger, or any of the other transactions contemplated by this Agreement which is intended for or is reasonably expected to result in public dissemination thereof, CRC shall cooperate with JEI, shall furnish drafts of all documents or proposed oral statements to JEI for comments, and shall not release any such information without the prior consent of JEI; provided, however, that the foregoing shall not be deemed to prevent CRC from (i) releasing any information or making any disclosure to the extent that CRC reasonably determines that it is required to do so by law or (ii) complying with its periodic reporting obligations under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), with respect to LCC. (i) Consents. CRC will use its reasonable best efforts to obtain or cause to be obtained prior to the Closing Date all necessary consents and approvals to the performance of the obligations of CRC under this Agreement, including, without limitation, the consents and approvals described in Schedule 4.01(d); provided, however, that the use of reasonable best efforts shall not require the payment of a material amount of money not otherwise or ordinarily incidental to such process. CRC will cooperate in all reasonable respects with JEI with a view toward obtaining timely satisfaction of the conditions to the Closing set forth herein. CRC shall use its reasonable best effort to make all filings, document submissions, applications, statements and reports to all Federal, state or local government agencies or entities which are required to be made by it prior to the Closing Date pursuant to any applicable statute, rule or regulation in connection with the Agreement and the transactions contemplated hereby, including any filings with any Governmental or Regulatory Authority (as defined in Section 4.01(d)); provided, however, that the use of reasonable best efforts shall not require the payment of a material amount of money not ordinarily incidental to such process. CRC shall (i) furnish to JEI copies of all filings and such necessary information and assistance as may be requested by JEI in connection with its preparation of required filings or submissions to any Governmental or Regulatory Authority and (ii) as promptly as practicable upon CRC becoming aware of any inquiries made of it or any CRC Acquired Subsidiary by any Federal, state or local agency or authority with respect to this Agreement or the transactions contemplated hereby, shall give detailed written notice thereof to JEI and shall use its reasonable best efforts to update JEI of the status of such inquiries. CRC shall not make any agreement or reach any understanding, not approved in writing by JEI, as a condition for obtaining any consent, authorization, approval, order, license, certificate, or permit required for the consummation of the transactions contemplated by this Agreement, unless such agreement or understanding shall not require the payment of a material amount of money and could not otherwise reasonably be expected to have a Material Adverse Effect on the Acquired Businesses taken as a whole. (j) Lake Las Vegas. CRC shall use commercially reasonable efforts to obtain an extension with respect to the contracts listed on Schedule 3.01(j) related to Lake Las Vegas until the later of July 1, 1999 and sixty (60) days after the Closing. (k) Budget. JEI hereby acknowledges that CRC has previously delivered to JEI the Budget for fiscal 1999 for CRC and each of the CRC Acquired Subsidiaries, which includes all capital expenditures with appropriate details and back-up schedules and assumptions for CRC and each CRC Acquired Subsidiary. 3.02 Covenants of JEI. From and after the date hereof until the earlier of the Effective Time and the Release Time, unless CRC otherwise agrees in writing, JEI agrees, and agrees to cause each direct and indirect subsidiary of JEI (collectively, the "JEI Subsidiaries"), to comply with the following covenants and agreements (subject to applicable gaming laws): (a) Certificate of Incorporation and By-laws; Ratification of Prior Acts. No amendment will be made to the certificate of incorporation of JEI, other than to change the corporate name of JEI and other than as may be required to consummate the merger (the "Players Merger") contemplated by that certain Agreement and Plan of Merger dated as of February 8, 1999 among JEI, JEI Merger Corp. and Players International, Inc. (the "Players Merger Agreement"); provided that any amendment to the certificate of incorporation which is proposed in connection with the Players Merger, other than amendments to change the capitalization of JEI to accommodate such transaction, shall require the prior consent of CRC (which consent shall not be unreasonably withheld) and no amendment will be made to the by-laws of JEI unless CRC has been afforded the opportunity to review such proposed amendment and such amendment is consented to by CRC (which consent shall not be unreasonably withheld). The by-laws of all applicable JEI Subsidiaries will be amended to delete the requirement therein that contracts for goods or services involving payments in excess of a fixed amount be authorized and approved by the board of directors of such JEI Subsidiary, and the board of directors of each such JEI Subsidiary will take all necessary action to confirm and ratify any contract heretofore entered into by such JEI Subsidiary in violation of said requirement. (b) Dividends. No cash or non-cash dividend or liquidating or other distribution shall be authorized, declared, paid, or effected by JEI in respect of the outstanding shares of JEI Common Stock or any other capital stock of JEI or any JEI Subsidiary. (c) Access. Subject to the confidentiality letter agreement, dated November 3, 1998, from JEI to CRC (the "JEI Confidentiality Agreement") and reasonable notice to JEI, JEI will afford the officers, directors, employees, counsel, agents, investment bankers, accountants, and other representatives of CRC or any CRC Acquired Subsidiary reasonable access, during normal business hours, to the plants, properties, books, and records of JEI and the JEI Subsidiaries, will permit them to make extracts from and copies of such books and records (except for the agreements listed on Schedule 3.02(c), as to which agreements CRC will not be entitled to make extracts or copies thereof), and will from time to time furnish CRC with such additional financial and operating reports as are prepared by JEI in the ordinary course of business on a calendar month basis. JEI will use its reasonable best efforts to cause the independent certified public accountants of JEI Subsidiaries to make available to CRC and its independent certified public accountants the work papers relating to the financial statements of JEI and the JEI Subsidiaries; provided, however, that the use of reasonable best efforts shall not require the payment of a material amount of money not ordinarily incidental to such process. All information furnished by or on behalf of JEI pursuant to this Section 3.02(c) or otherwise obtained from JEI as contemplated by this Section 3.02(c) shall be subject to the JEI Confidentiality Agreement. (d) Conduct of Business. JEI shall, and shall cause the JEI Subsidiaries to, carry on their respective businesses in the ordinary course (except as otherwise contemplated by the Players Merger Agreement) and will use all reasonable efforts to preserve intact their current business organizations, keep available the services of their current officers and employees, and preserve their relationships consistent with past practice with desirable customers, suppliers, licensors, licensees, distributors and others having business relations with any of them to the end that their goodwill and ongoing businesses shall be unimpaired in all material respects at the Effective Time. Without limiting the generality of the foregoing, JEI will not (without the consent of CRC, which consent may not be unreasonably withheld) (i) issue any JEI Option (as defined in Section 4.02(b)(i)) at an exercise price which is less than 100% of the closing sale price of the JEI Common Stock as reported on the New York Stock Exchange on the date of grant and which is not otherwise granted in the ordinary course of business consistent with past practice or as may be granted to employees of Players International, Inc. and its subsidiaries (collectively referred to herein as "Players") following consummation of the Players Merger or (ii) modify or amend any JEI Material Contract (as defined in Section 4.02(v)), unless such modification or amendment is reasonably likely to have no material adverse effect on the rights and benefits of JEI under such JEI Material Contract. (e) Advice of Changes. JEI will, as promptly as practicable, advise CRC in a reasonably detailed written notice of any fact or occurrence or any pending or threatened occurrence of which it obtains knowledge and which either (i) would reasonably be expected to have a Material Adverse Effect on JEI and the JEI Subsidiaries, taken as a whole, or (ii) if existing and known at the time of the Effective Time, would cause a condition to any party's obligations under this Agreement not to be fully satisfied. (f) Public Statements. Before JEI releases any information concerning this Agreement, the Merger, or any of the other transactions contemplated by this Agreement which is intended for or is reasonably expected to result in public dissemination thereof, JEI shall cooperate with CRC, shall furnish drafts of all documents or proposed oral statements to CRC for comments, and shall not release any such information without the prior consent of CRC; provided, however, that the foregoing shall not be deemed to prevent JEI from (i) releasing any information or making any disclosure to the extent that JEI reasonably determines that it is required to do so by law or (ii) complying with its periodic reporting obligations under the Exchange Act. (g) Consents. JEI will use its reasonable best efforts to obtain or cause to be obtained prior to the Closing Date all necessary consents and approvals to the performance of the obligations of JEI under this Agreement, including, without limitation, the consents and approvals required under Section 4.02(d); provided, however, that the use of reasonable best efforts shall not require the payment of a material amount of money not otherwise or ordinarily incidental to such process. JEI will cooperate in all reasonable respects with CRC and the CRC Acquired Subsidiaries with a view toward obtaining timely satisfaction of the conditions to the Closing set forth herein. JEI shall use its reasonable best efforts to make all filings, document submissions, applications, statements and reports to all Federal, state or local government agencies or entities which are required to be made by it prior to the Closing Date pursuant to any applicable statute, rule or regulation in connection with this Agreement and the transactions contemplated hereby, including any filings with any Governmental or Regulatory Authority; provided, however, that the use of reasonable best efforts shall not require the payment of a material amount of money not otherwise or ordinarily incidental to such process. JEI shall (i) furnish to CRC copies of all filings and such necessary information and assistance as may be requested by CRC in connection with its preparation of required filings or submissions to any Governmental or Regulatory Authority and (ii) as promptly as practicable upon JEI becoming aware of any inquiries made of it by any Federal, state or local agency or authority with respect to this Agreement or the transactions contemplated hereby, shall give detailed written notice thereof to CRC and shall use its reasonable best efforts to update CRC of the status of such inquiries. (h) JEI will not consummate the Players Merger on terms which are materially less favorable to JEI than those which are set forth in the Players Merger Agreement as in effect on the date hereof. 3.03 Preparation of Registration Statement and Joint Proxy Statement. (a) CRC and JEI shall prepare and file with the Securities and Exchange Commission (the "SEC"), as soon as reasonably practicable after the date hereof, the Joint Proxy Statement (as defined in Section 4.01(i)) and JEI shall prepare and file with the SEC, as soon as practicable after the date hereof, a Registration Statement on Form S-4 in connection with the issuance of the JEI Common Stock in the Merger, as amended and supplemented from time to time (as so amended and supplemented, the "Registration Statement"), in which the Joint Proxy Statement will be included as part of the Registration Statement. JEI will use its best efforts (and CRC will use its best efforts to cooperate, to the extent necessary), to have the Registration Statement declared effective by the SEC as promptly as practicable after such filing. JEI also shall take any action (other than qualifying as a foreign corporation or taking any action that would subject it to service of process in any jurisdiction where JEI is not now so qualified or subject) required to be taken under applicable state blue sky or securities laws in connection with the issuance of JEI Common Stock in connection with the Merger. JEI and CRC shall cooperate with each other in the preparation of the Registration Statement and the Joint Proxy Statement and any amendment or supplement thereto, and each shall notify the other of the receipt of any comments of the SEC with respect to the Registration Statement or the Joint Proxy Statement and of any requests by the SEC for any amendment or supplement thereto or for additional information, and shall promptly provide to the other copies of all correspondence between JEI or CRC, as the case may be, or any of its representatives with respect to the Registration Statement or the Joint Proxy Statement. Each of CRC and JEI agrees to use its best efforts, after consultation with the other party hereto, to respond promptly to all such comments of and requests by the SEC and to cause the Registration Statement to be declared effective by the SEC and the Joint Proxy Statement to be mailed to the holders of JEI Common Stock and, to the extent a separate information statement is not prepared by CRC for use in soliciting CRC Stockholders' Approval (as defined below), holders of CRC Common Stock entitled to vote at the meetings of the stockholders of JEI and CRC, respectively, at the earliest practicable time. (b) CRC and JEI shall each use its best efforts to cause to be delivered to the other a letter of their respective independent auditors, dated a date within two business days before the date on which the Registration Statement shall become effective and addressed to the other, customary in form, scope and substance for letters delivered by independent public accountants in connection with registration statements similar to the Registration Statement, and JEI shall use its best efforts to cause any similar letter of the independent auditors of Players International Inc. which is delivered in connection with the Players Merger to also be addressed and delivered to CRC or, if required by internal procedures of such auditors, a substantially identical letter prepared under the "agreed upon procedures" guidelines. 3.04 Approval of Stockholders. (a) JEI shall, through its Board of Directors, duly call, give notice of, convene and hold a meeting of its stockholders (the "JEI Stockholders' Meeting") for the purpose of voting on the ratification and approval of this Merger Agreement and the issuance of the shares of JEI Common Stock pursuant to the Merger (the "JEI Merger Proposal"), as soon as reasonably practicable following the date hereof. Subject to the exercise of fiduciary obligations under applicable law as advised by independent legal counsel, JEI shall, through its Board of Directors, include in the Joint Proxy Statement the recommendation of the Board of Directors of JEI that the stockholders of JEI vote in favor of the JEI Merger Proposal (the "JEI Stockholders' Approval") and shall use its best efforts to obtain such approval. (b) (i) CRC shall, through its Board of Directors, duly call, give notice of, convene and hold a meeting of its stockholders (the "CRC Stockholders' Meeting" and, together with the JEI Stockholders' Meeting, the "Stockholders' Meetings") for the purpose of approving this Agreement and the approval of the Merger (the "CRC Merger Proposal") as soon as reasonably practicable after the date hereof; and (ii) subject to the exercise of fiduciary obligations under applicable law as advised by independent counsel, CRC shall, through its Board of Directors, include in the Joint Proxy Statement (or, if applicable, a separate information statement prepared by CRC for use in soliciting the CRC Stockholders' Approval) the recommendation of the Board of Directors of CRC that the stockholders of CRC vote in favor of the CRC Merger Proposal (the "CRC Stockholders' Approval"), and shall use its best efforts to obtain such approval. (c) JEI and CRC shall coordinate and cooperate with respect to the timing of the Stockholders' Meetings and shall use their reasonable best efforts to cause the Stockholders' Meetings to be held by no later than July 15, 1999. 3.05 Certain Filings. CRC and JEI shall (a) cooperate with one another as soon as practicable in determining whether any action by or in respect of, or filing with, any Governmental or Regulatory Authority (including, without limitation, any filing requirements under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended ("HSR Act")), or any actions, consents, approvals or waivers are required to be obtained from parties to any CRC Material Contracts or JEI Material Contracts, as the case may be, in connection with the consummation of the transactions contemplated by this Agreement and (b) promptly take all actions necessary or make filings with any Governmental or Regulatory Authority and third parties. JEI will endeavor in good faith and use all reasonable best efforts to cause any Governmental or Regulatory Authority in the State of Louisiana which is to review the transactions with CRC contemplated hereby to review such transactions separately from the Players Merger. 3.06 Directors' and Officers' Indemnification. (a) From and after the Effective Time, JEI shall indemnify, defend and hold harmless each person who is now, or has been at any time prior to the date hereof or who becomes prior to the Effective Time, a director or officer of CRC or any of the CRC Acquired Subsidiaries (the "Indemnified Parties") against (i) all losses, claims, damages, costs, and expenses (including reasonable attorneys' fees), liabilities, judgments, and settlement amounts that are paid or incurred in connection with any claim, action, suit, proceeding, or investigation (whether civil, criminal, administrative or investigative and whether asserted or claimed prior to, at, or after the Effective Time) that is (x) based in whole or in part on, or arises in whole or in part out of, the fact that such Indemnified Party is or was a director or officer of CRC or any of the CRC Acquired Subsidiaries, (y) relates to or arises out of an action or omission occurring at or prior to the Effective Time relating to the Acquired Businesses ("Indemnified Liabilities"), and (z) is asserted on or before the third anniversary of the Effective Time and (ii) all Indemnified Liabilities which are asserted on or before the third anniversary of the Effective Time based in whole or in part on, or arising in whole or in part out of or pertaining to, this Agreement or the transactions contemplated hereby, including, without limitation, any statement or omission in the Registration Statement or the Joint Proxy Statement, in each case to the fullest extent a corporation is permitted to indemnify its own directors, officers, employees or agents, as the case may be, under Nevada law; provided, however, that JEI shall not be liable for any settlement of any claim effected without its written consent, which consent shall not be unreasonably withheld. Without limiting the foregoing, in the event that any such claim, action, suit, proceeding, or investigation is brought against any Indemnified Party (whether arising prior to or after the Effective Time), (w) JEI will pay expenses in advance of the final disposition of any such claim, action, suit, proceeding, or investigation to each Indemnified Party to the full extent permitted by applicable law, provided that the person to whom expenses are advanced provides an undertaking to repay such advance if it is ultimately determined that such person is not entitled to indemnification; (x) the Indemnified Parties shall retain counsel reasonably satisfactory to JEI; (y) JEI shall pay all reasonable fees and expenses of such counsel for the Indemnified Parties (subject to the final sentence of this paragraph) promptly as statements therefor are received; and (z) JEI shall use all commercially reasonable efforts to assist in the vigorous defense of any such matter. Any Indemnified Party wishing to claim indemnification under this Section 3.06, upon learning of any such claim, action, suit, proceeding, or investigation, shall notify JEI, but the failure to so notify JEI shall not relieve it from any liability which it may have under this paragraph except to the extent such failure irreparably prejudices such party. The Indemnified Parties as a group may retain only one law firm to represent them with respect to each such matter unless there is a conflict of defenses or positions among the Indemnified Parties (including any impleaded parties), in which case the Indemnified Parties who have a conflict shall each have the right to retain one separate counsel, reasonably satisfactory to JEI, and JEI shall be responsible for the reasonable fees and expenses of each such counsel. (b) The provisions of this Section 3.06 (i) are intended to be for the benefit of, and shall be enforceable by, each Indemnified Party and his or her heirs and legal representatives, (ii) and shall be in addition to any other rights an Indemnified Party may have under the Articles of Incorporation or Bylaws of JEI, CRC or any of the CRC Acquired Subsidiaries, under the NRS, FBCA or otherwise and (iii) shall survive the Closing. (c) In the event JEI (i) consolidates with or merges into any other person and shall not be the continuing or surviving corporation or entity of such consolidation or merger or (ii) transfers all or substantially all of its properties and assets to any person, then, and in each such case, proper provision shall be made so that the successors and assigns of JEI shall assume the obligations set forth in this Section 3.06. 3.07 Election of Directors. (a) Effective as of the Closing Date, JEI will take all necessary and appropriate actions to cause (i) the number of directors comprising the Board of Directors of JEI to be increased by two (2) members, (ii) two (2) persons selected by CRC (who are identified on Schedule 1.05) to be elected or appointed as directors of JEI to fill the positions resulting from such increase, and (iii) Sherwood M. Weiser to be elected as Co-chairman of the Board of Directors. At JEI's next regular meeting of stockholders after the Closing Date at which directors are elected, JEI shall use its best efforts to ensure that the slate of persons nominated by the Board of Directors for election as directors of JEI at that meeting includes any such persons whose term on the Board of Directors has or would expire at that meeting. The Board of Directors will solicit proxies from the stockholders of JEI for such persons and will vote all such proxies in favor of such nominees, except for such proxies that specifically indicate to the contrary. (b) In the event the Players Merger is not consummated and the Players Merger Agreement is terminated, the Board of Directors of JEI shall be increased following the Closing Date by an additional one (1) member, who shall be designated by the persons identified in Schedule 1.05 after consultation with the existing JEI Board of Directors. (c) In the event any of the persons elected or appointed as a director of JEI pursuant to Section 3.07 is unable to continue to serve as a director during the remainder of that person's term, there will be no right to designate any successor for such director. 3.08 Employee Matters. (a) Any severance or other separation payments in respect of terminated employees of CRC or any CRC Acquired Subsidiaries to be paid by CRC (or JEI following the Effective Time) will not exceed the amount set forth in Schedule 2.02(c). (b) On the Closing Date, JEI shall enter into three year consulting agreements with each of Sherwood Weiser and Donald Lefton having the terms set forth on Exhibit 3.08. 3.09 Further Action. CRC and JEI each shall, and each shall cause the their respective subsidiaries to, subject to the fulfillment at or before the Effective Time of each of the conditions of performance set forth herein or the waiver thereof, perform such further acts and execute such documents as may reasonably be required to effect the Merger and the transactions contemplated by this Agreement; provided, however, that the performance of such further acts and the execution of such further documents shall not require the payment of a material amount of money not otherwise or ordinarily incidental to such process. IV. REPRESENTATIONS AND WARRANTIES. 4.01 Certain Representations and Warranties of CRC. Except as disclosed in the LCC SEC Reports (as defined below), CRC represents and warrants, solely with respect to the Acquired Businesses, to JEI as follows: (a) Organization and Qualification. Each of CRC and each direct or indirect subsidiary of CRC which is to become a direct or indirect subsidiary of JEI as a result of the Merger (the "CRC Acquired Subsidiaries"), as listed on Schedule 4.01 (a), is a corporation duly organized, validly existing, and in good standing under the laws of its jurisdiction of incorporation and has full corporate power and authority to conduct its business as and to the extent now conducted and to own, use, and lease its assets and properties. Each of CRC and the CRC Acquired Subsidiaries is duly qualified, licensed, or admitted to do business and is in good standing in each jurisdiction listed on Schedule 4.01(a), which is each jurisdiction in which the ownership, use, or leasing of its assets and properties, or the conduct or nature of its businesses, makes such qualification, licensing, or admission necessary, except for such failures to be so qualified, licensed, or admitted and in good standing which, individually or in the aggregate, are not having and could not be reasonably expected to have a Material Adverse Effect on CRC and the CRC Acquired Subsidiaries taken as a whole. As used in this Agreement, a "Material Adverse Effect" shall mean a material adverse effect on the businesses, properties, assets, liabilities, condition (financial or otherwise) or results of operations of an entity (or group of entities taken as a whole). Except as disclosed in Schedule 4.01(a) hereto, CRC does not directly or indirectly own any equity or similar interest in, or any interest convertible into or exchangeable or exercisable for, any equity or similar interest in, any corporation, partnership, joint venture or other business association or entity. (b) Capital Stock. (i) The authorized capital stock of CRC consists solely of 20,000,000 shares of CRC Common Stock and 1,000,000 shares of preferred stock, par value $.01 per share, of CRC ("CRC Preferred Stock"). As of December 31, 1998, 10,741,802 shares of CRC Common Stock were issued and outstanding, no shares were held in the treasury of CRC and 1,700,000 shares were reserved for issuance pursuant to the Stock Plan. No CRC Options have been issued other than pursuant to the Stock Plan. As of the date hereof, there has been no change in the number of issued and outstanding shares of CRC Common Stock or shares of CRC Common Stock held in treasury or reserved for issuance since such date, other than changes arising from the exercise of CRC Options. As of the date hereof, no shares of CRC Preferred Stock are issued and outstanding. All of the issued and outstanding shares of CRC Common Stock are, and all shares reserved for issuance will be, upon issuance in accordance with the terms specified in the instruments or agreements pursuant to which they are issuable, duly authorized, validly issued, fully paid, and nonassessable. As of the date hereof, except as set forth in Schedule 2.03, there are no outstanding CRC Options. (ii) Except as disclosed in Schedule 4.01(b) hereto, there are no outstanding contractual obligations of CRC or any CRC Acquired Subsidiary to repurchase, redeem, or otherwise acquire any shares of CRC Common Stock or any capital stock of any CRC Acquired Subsidiary, or any CRC Options or CRC Subsidiary Options, or to provide funds to, or make any investment (in the form of a loan, capital contribution or otherwise) in, any CRC Acquired Subsidiary or any other person in which CRC or any CRC Acquired Subsidiary owns an interest. (c) Authority Relative to this Agreement. CRC has full corporate power and authority to enter into this Agreement and, subject to obtaining the CRC Stockholders' Approval and the approvals of any Governmental or Regulatory Authority as identified on Schedule 4.01(c) hereto, to perform its obligations hereunder and to consummate the transactions contemplated hereby. The execution, delivery, and performance of this Agreement by CRC and the consummation by CRC of the transactions contemplated hereby have been duly and validly authorized by the Board of Directors of CRC, the Board of Directors of CRC has adopted a resolution recommending approval of this Agreement and the Merger by the stockholders of CRC and directing that this Agreement be submitted to the stockholders of CRC for their consideration, and no other corporate proceedings on the part of CRC or its stockholders are necessary to authorize the execution, delivery and performance of this Agreement by CRC and the consummation by CRC of the transactions contemplated hereby, except for the CRC Stockholders' Approval. This Agreement has been duly and validly executed and delivered by CRC and, subject to obtaining the CRC Stockholders' Approval and any required approvals of any Governmental or Regulatory Authority, constitutes a legal, valid, and binding obligation of CRC enforceable against CRC in accordance with its terms, except as enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium, or other similar laws affecting the enforcement of creditors' rights generally and by general equitable principles (regardless of whether such enforceability is considered in a proceeding in equity or at law), and except to the extent that indemnification provisions may be unenforceable due to public policy. Stockholders of CRC who are parties to the CRC Stockholders Agreement own not less than a majority of the outstanding shares of CRC Common Stock. (d) Non-Contravention; Approvals and Consents. (i) Subject to obtaining the CRC Stockholders' Approval and the taking of the actions described in paragraph (ii) of this Section 4.01(d), the execution and delivery of this Agreement by CRC do not, and the performance by CRC of its obligations hereunder and the consummation of the transactions contemplated hereby will not, conflict with, result in a violation or breach of, constitute (with or without notice or lapse of time or both) a default under, result in or give to any person any right of payment or reimbursement, termination, cancellation, modification or acceleration of, or result in the creation or imposition of any Lien upon any of the assets or properties of CRC or any of the CRC Acquired Subsidiaries under, any of the terms, conditions or provisions of (x) the certificates or articles of incorporation or by-laws (or other comparable charter documents) of CRC or any of the CRC Acquired Subsidiaries, (y) any statute, law, rule, regulation, or ordinance (collectively, "Laws"), or any judgment, decree, order, writ, permit, or license (collectively, "Orders"), of any court, tribunal, arbitrator, authority, agency, commission, official, or other instrumentality of the United States, any foreign country, or any domestic or foreign state, county, city, or other political subdivision (a "Governmental or Regulatory Authority"), applicable to CRC or any of the CRC Acquired Subsidiaries or any of their respective assets or properties which are part of the Acquired Businesses or (z) any note, bond, mortgage, security agreement, indenture, license (except for the license agreement with Carnival, which shall terminate at Closing), franchise, permit, concession, contract, lease (capital or operating) or other instrument, obligation or agreement of any kind (collectively, "Contracts") to which CRC or any of the CRC Acquired Subsidiaries is a party or by which CRC or any of the CRC Acquired Subsidiaries or any of their respective assets or properties which are part of the Acquired Businesses is bound, except for any of the foregoing matters which, individually or in the aggregate, would not reasonably be expected to have Material Adverse Effect on the Acquired Business, taken as a whole, or on the ability of CRC to consummate the transactions contemplated by this Agreement. (ii) Except for (v) the filing of a premerger notification and report form by CRC under the HSR Act, (w) the filing of the Joint Proxy Statement with the SEC pursuant to the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder (the "Exchange Act"), and filings with various state securities authorities that may be required in connection with the transactions contemplated by this Agreement, (x) the filing of the Nevada Articles and Florida Articles and other appropriate merger documents pursuant to and in accordance with the laws of the States of Nevada and Florida, and appropriate documents with the relevant authorities of other states in which CRC is qualified to do business, (y) the licensing, permitting, registration or other approval of, or written consent or no action letter from, each Governmental or Regulatory Authority with regulatory control or jurisdiction over the conduct of lawful gaming or gambling by CRC and the CRC Acquired Subsidiaries, including, without limitation the Louisiana State Police, the Louisiana Gaming Control Board, the Ontario Casino Corporation, the Alcohol and Gaming Commission of Ontario, the State of Washington Gambling Commission and the U.S. National Indian Gaming Commission (a "CRC Gaming Authority"), within each municipality, state or commonwealth, or subdivision thereof, wherein CRC or any of the CRC Acquired Subsidiaries conducts business on the date hereof and (z) obtaining the consents and approvals described in Schedule 4.01(d) hereto (which shall include, but not be limited to, consents to the assignment of Contracts with the Wampanoag and Kalispel Tribes), no consent, approval, or action of, filing with, or notice to any Governmental or Regulatory Authority or other public or private third party is necessary or required under any of the terms, conditions or provisions of any Law or Order of any Governmental or Regulatory Authority or any Contract to which CRC or any of the CRC Acquired Subsidiaries is a party or by which CRC or any of the CRC Acquired Subsidiaries or any of their respective assets or properties which are part of the Acquired Businesses is bound for the execution and delivery of this Agreement by CRC, the performance by CRC of its obligations hereunder or the consummation of the transactions contemplated hereby, except for such consents, approvals, or actions of, filings with or notices to any Governmental or Regulatory Authority or other public or private third party the failure of which to make or obtain could not be reasonably expected to have a Material Adverse Effect on the Acquired Businesses taken as a whole or on the ability of CRC to consummate the transactions contemplated by this Agreement. (e) Financial Statements; SEC Reports. (i) Attached hereto as Schedule 4.01(e) are (A) the audited financial statements of CHC International, Inc. for the three fiscal years ended November 30, 1997, (B) the unaudited consolidated balance sheet and statements of income (excluding footnotes) of CRC as, of and for the fiscal year ended November 30, 1998 and (C) the Initial November 30 Balance Sheet for the Acquired Businesses (collectively, the "CRC Financial Statements"). The CRC Financial Statements (including the notes thereto, to the extent not excluded therefrom) have been prepared in accordance with GAAP applied on a consistent basis during the periods involved (except as may be indicated therein or in the notes thereto), and except that the selection of categories of assets and liabilities included in the Initial November 30 Balance Sheet may not be made in accordance with GAAP and fairly present (subject to normal, recurring year-end audit adjustments which are not expected to be, individually or in the aggregate, materially adverse to the entities and businesses to which they relate) the consolidated financial position of the entities and businesses, as the case may be, as of the respective dates thereof and the results of their operations and cash flows for the respective periods then ended. Each CRC Acquired Subsidiary is treated as a consolidated subsidiary of CRC in the CRC Financial Statements. (ii) Other than LCC, none of CRC or the CRC Acquired Subsidiaries files or is required to file any reports, or registration statements with the SEC. CRC delivered to JEI prior to the execution of this Agreement a true, correct, and complete copy (exclusive of schedules or exhibits) of each form, report, schedule, registration statement, definitive proxy statement and other document (together with all amendments thereof and supplements thereto) filed by LCC with the SEC since January 1, 1996 (as such documents have since the time of their filing been amended or supplemented, the "LCC SEC Reports"), which are all the documents (other than preliminary material) that LCC was required to file with the SEC since such date. As of their respective dates, to CRC's knowledge the LCC SEC Reports (consisting of periodic reports on Forms 10-K, 10-Q and 8-K filed under the Exchange Act and registration statements filed under the Securities Act and/or the Exchange Act) (i) complied as to form in all material respects with the requirements of the Securities Act or the Exchange Act, as the case may be, and (ii) did not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. The audited financial statements and unaudited interim financial statements (including, in each case, the notes, if any, thereto) included in the LCC SEC Reports complied as to form in all material respects with the published rules and regulations of the SEC with respect thereto, were prepared in accordance with GAAP applied on a consistent basis during the periods involved (except as may be indicated therein or in the notes thereto and except with respect to unaudited statements as permitted by Form 10-Q) and fairly present in all material respects (subject, in the case of the unaudited interim financial statements, to normal, recurring year-end audit adjustments which are not expected to be, individually or in the aggregate, materially adverse to LCC) the financial position of LCC as at the respective dates thereof and the results of its operations and cash flows for the respective periods then ended. (f) Events Subsequent to November 30, 1998. Since November 30, 1998, except as disclosed in the LCC SEC Reports or as described in Schedule 4.01(f), there has not been any adverse change in the business, financial condition, operations, results of operations, or future prospects of any of the Acquired Businesses (other than any change as a consequence of the economy generally or in the industries in which CRC and the CRC Acquired Subsidiaries operate not specific to the Acquired Businesses) which could, individually or the aggregate, reasonably be expected to have a Material Adverse Effect on the Acquired Businesses taken as a whole (a "Material Adverse Change in the Acquired Businesses"). Without limiting the generality of the foregoing, except as set forth on Schedule 4.01(f), or as otherwise permitted elsewhere in this agreement, since that date through the date hereof (it being understood that any exceptions to (i) through (xii) below which are required to be set forth on Schedule 4.01(f) shall only relate to activities, assets and liabilities of the Acquired Businesses): (i) none of CRC or any of the CRC Acquired Subsidiaries has sold, leased, transferred, or assigned any of its assets, tangible or intangible, other than in the ordinary course of business consistent with past practice; (ii) none of CRC or any of the CRC Acquired Subsidiaries has entered into any agreement, contract, lease, or license involving the payment or receipt of more than $50,000 (or series of related agreements, contracts, leases and licenses) other than in the ordinary course of business consistent with past practice; (iii) none of CRC or any of the CRC Acquired Subsidiaries has permitted any security interest to be imposed upon any of its assets, tangible or intangible; (iv) none of CRC or any of the CRC Acquired Subsidiaries has made any capital expenditure (or series of related capital expenditures); (v) none of CRC or any of the CRC Acquired Subsidiaries has made any capital investment in, any loan to, or any acquisition of the securities or assets of, any other person (or series of related capital investments, loans, and acquisitions) except in the ordinary course consistent with past practice; (vi) none of CRC or any of the CRC Acquired Subsidiaries has declared, set aside, or paid any dividend or made any distribution with respect to its capital stock (whether in cash or in kind) or redeemed, purchased, or otherwise acquired any of its capital stock; (vii) none of CRC or any of the CRC Acquired Subsidiaries has entered into any employment contract or collective bargaining agreement, written or oral, or modified the terms of any existing such contract or agreement; (viii) none of CRC or any of the CRC Acquired Subsidiaries has made any loan to, or entered into any other transaction with any of its directors, officers and employees; (ix) none of CRC or any of the CRC Acquired Subsidiaries has granted any increase in the base compensation of any of its directors, officers, and employees, except in the ordinary course of business consistent with past practice; (x) none of CRC or any of the CRC Acquired Subsidiaries has adopted, amended, modified, or terminated any bonus, profit-sharing, incentive, severance, or other plan, contract, or commitment for the benefit of any of its directors, officers, and employees (or taken any such action with respect to any other Employee Benefit Plan, as defined in Section 4.01(n) below); (xi) none of CRC or any of the CRC Acquired Subsidiaries has made any other change in employment terms for any of its directors, officers, and employees outside the ordinary course of business; and (xii) none of CRC or any of the CRC Acquired Subsidiaries has committed to any of the foregoing. (g) Absence of Undisclosed Liabilities. Except for liabilities which will not be liabilities of the Acquired Businesses after the Merger, neither CRC nor any of the CRC Acquired Subsidiaries has any liabilities or obligations (whether absolute, accrued, contingent or otherwise, or whether due or to become due) of any nature that would be required by GAAP to be reflected or reserved against on a consolidated balance sheet of the Acquired Businesses, other than liabilities or obligations reflected or reserved against on the Initial November 30 Balance Sheet and liabilities incurred since November 30, 1998 in the ordinary course of business consistent with past practice on behalf of the Acquired Businesses. (h) Legal Proceedings. Except as disclosed in Schedule 4.01(h), (i) there are no actions, suits, arbitrations or proceedings involving a claim in excess of $10,000 pending or, to the knowledge of CRC, threatened against nor, to the knowledge of CRC, are there any Governmental or Regulatory Authority investigations or audits pending or threatened against, any of CRC or any of the CRC Acquired Subsidiaries or any of their respective assets and properties which are part of the Acquired Businesses, including, without limitation, any affecting their licenses, permits, registrations or other gaming approvals under any CRC Gaming Laws (as defined in Section 4.01(j)), (ii) neither CRC nor any of the CRC Acquired Subsidiaries is subject to any Order of any Governmental or Regulatory Authority and (iii) neither CRC, any of the CRC Acquired Subsidiaries nor, to the knowledge of CRC (without specific inquiry), any director, officer, gaming manager or key employee of CRC or any CRC Acquired Subsidiary has received any written claim, demand, notice, complaint, or Order from any Governmental or Regulatory Authority in the past three years asserting that a license of it or them as applicable under CRC Gaming Laws should be revoked or suspended. None of any of the actions, suits, arbitrations or proceedings, investigations, audits, claims, demands, notices, complaints or Orders disclosed on Schedule 4.01(h) could reasonably be expected to have a Material Adverse Effect on the Acquired Businesses taken as a whole or on the ability of CRC to consummate the transactions contemplated by this Agreement. (i) Information Supplied. The information furnished by CRC for use in connection with joint proxy statement/prospectus relating to the Stockholders' Meetings, as amended or supplemented from time to time (as so amended and supplemented, the "Joint Proxy Statement"), and the Registration Statement will comply as to form in all material respects with the requirements of the Exchange Act and the Securities Act and will not, on the date of filing of the Registration Statement or, in the case of the Joint Proxy Statement, at the date it is mailed to stockholders of JEI, at the time of the JEI Stockholders Meetings and at the Effective Time, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they are made, not misleading. (j) Compliance with Laws, Orders, etc. CRC, the CRC Acquired Subsidiaries and, to the knowledge of CRC (without specific inquiry), each of their respective directors, officers and gaming managers hold all permits, licenses, variances, exemptions, orders and approvals of all Governmental and Regulatory Authorities necessary for the lawful conduct of the Acquired Businesses, including all authorizations under applicable CRC Gaming Laws (the "CRC Permits"), except where the failure to obtain such CRC Permits would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on the Acquired Businesses taken as a whole, and no event has occurred which permits, or upon the giving of notice or passage of time or both would permit, revocation, non-renewal, modification, suspension or termination (other than expiration of any CRC Permit in the ordinary course) of any CRC Permit that currently is in effect with respect to any of the Acquired Businesses. CRC and the CRC Acquired Subsidiaries and, to the knowledge of CRC (without specific inquiry), each of their respective directors, officers and gaming managers, are in compliance in all material respects with the material terms of the CRC Permits relating to the Acquired Businesses. Except as disclosed in Schedule 4.01(j), CRC and the CRC Acquired Subsidiaries are not in violation of or default under any Law or Order of any Governmental or Regulatory Authority applicable to the Acquired Businesses, including all applicable CRC Gaming Laws, except for violations or defaults which, individually or in the aggregate, are not having and could not reasonably be expected to have a Material Adverse Effect on the Acquired Businesses taken as a whole. The term "CRC Gaming Laws" means any Federal, state, local or foreign statute, ordinance, rule, regulation, permit, consent, registration, finding of suitability, approval, license, judgment, order, decree, injunction or other authorization, including any condition or limitation placed thereon, governing or relating to the current or contemplated casino activities and operations of CRC and the CRC Acquired Subsidiaries, including without limitation the rules and regulations of all applicable state or local casino commissions. (k) Compliance with Charter Documents and Certain Agreements. Except as disclosed in Schedule 4.01(k), neither CRC nor any of the CRC Acquired Subsidiaries nor, to the knowledge of CRC (without specific inquiry), any other party thereto is in breach or violation of, or in default in the performance or observance of any term or provision of, and no event has occurred which, with notice or lapse of time or both, could be reasonably expected to result in a default under (x) the certificate or articles of incorporation or by-laws (or other comparable charter documents) of CRC or any of the CRC Acquired Subsidiaries or (y) any CRC Material Contract to which CRC or any of the CRC Acquired Subsidiaries is a party or by which CRC or any of the CRC Acquired Subsidiaries or any of their respective assets or properties is bound, which breach, violation or default could reasonably be expected to have a Material Adverse Effect on the Acquired Businesses taken as a whole. (l) Tax Matters. For the purposes of this Agreement: "Audit" means any audit, assessment, or other examination relating to Taxes by any Tax Authority or any judicial or administrative proceedings relating to Taxes; "Tax" or "Taxes" means all Federal, state, local, and foreign taxes, and other assessments of a similar nature (whether imposed directly or through withholding), including any interest, additions to tax, or penalties applicable thereto, imposed by any Tax Authority including, without limitation, liability imposed pursuant to Treasury Regulation Section 1.1502-6 (or any similar provision of state, local or foreign law) which may be imposed upon an entity as a transferee or successor; "Tax Authority" means the Internal Revenue Service and any other domestic or foreign governmental authority responsible for the administration of any Taxes; and "Tax Returns" mean all Federal, state, local and foreign tax returns, declarations, statements, reports, schedules, forms, and information returns and any amendments thereto. Except as set forth in Schedule 4.01(l) hereto: (i) CRC and each of the CRC Acquired Subsidiaries and any combined, consolidated, unitary or affiliated group of which CRC and each of the CRC Acquired Subsidiaries have been a member prior to the Closing Date have timely filed, or have had timely filed on their behalf, or will timely file or cause to be timely filed, all Tax Returns required by applicable law to be filed by any of them prior to or as of the Closing Date. All such Tax Returns and amendments thereto are or will be true, complete and correct in all material respects. CRC and each of the CRC Acquired Subsidiaries have established (and until the Closing Date will maintain) on their books and records reserves adequate to pay all Taxes not yet due and payable. (ii) CRC and each of the CRC Acquired Subsidiaries have paid, or have had paid on their behalf, or where payment is not yet due, have established, or have had established on their behalf and for their sole benefit and recourse, or will establish or cause to be established on or before the Closing Date, an adequate accrual for the payment of all Taxes due with respect to any period ending prior to or as of the Closing Date. (iii) No Audit is pending with respect to any Tax Returns filed by, or Taxes due from, CRC or any of the CRC Acquired Subsidiaries. No deficiency or adjustment for any Taxes has been proposed, asserted, or assessed against CRC or any of the CRC Acquired Subsidiaries. There are no material liens for Taxes upon the assets of CRC or any of the CRC Acquired Subsidiaries, except for statutory liens for current Taxes not yet due and those being contested in good faith. (iv) Neither CRC nor any of the CRC Acquired Subsidiaries has given or been requested to give any waiver of statutes of limitations relating to the payment of Taxes or have executed powers of attorney with respect to Tax matters, which will be outstanding as of the Closing Date. (v) Neither CRC nor any of the CRC Acquired Subsidiaries is a party to, is bound by, or has any obligation to any other member of an affiliated or combined group of which CRC or any of the CRC Acquired Subsidiaries is or has been a member, for Taxes under any tax sharing, cost sharing, or similar agreement or policy. (vi) CRC and each of the CRC Acquired Subsidiaries have delivered to JEI correct and complete copies of all Tax Returns, examination reports, and statements of deficiencies assessed against or agreed to by CRC and each of the CRC Acquired Subsidiaries that were requested by JEI. (vii) To the knowledge of CRC, no claim has been made by an authority in a jurisdiction where CRC or any of the CRC Acquired Subsidiaries does not file a Tax Return that it is or may be subject to taxation in that jurisdiction. (viii) Neither CRC nor any of the CRC Acquired Subsidiaries has made any payments, is obligated to make any payments, or is party to anyagreement that under certain circumstances could obligate it to make any payments that will not be deductible under Section 280G of the Code. (ix) There has been no written assertion of a Tax due from CRC or any of the CRC Acquired Subsidiaries for the Taxes of any person under Treasury Regulation Section 1.1502-6 (or any similar provision of state, local or foreign law) as a transferee or successor. (x) The federal Tax Return of CHC International, Inc. and subsidiaries for the period from December 1, 1997 through June 30, 1998 to be filed by CRC with the IRS will not be materially different from the draft form of such Tax Return previously furnished to JEI. (m) Environmental Matters. (i) As of the date hereof, to the knowledge of CRC, no underground storage tanks are present under any property that CRC or any CRC Acquired Subsidiaries has at any time owned, operated, occupied or leased and which is part of the Acquired Businesses. To the knowledge of CRC, as of the date hereof no material amount of any substance that has been designated by any Governmental or Regulatory Authority or by applicable Federal, state or local law to be radioactive, toxic, hazardous or otherwise a danger to health or other environment, including, without limitation, PCBs, asbestos, petroleum, urea-formaldehyde, and all substances listed as hazardous substances pursuant to the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended, or defined as a hazardous waste pursuant to the United States Resource Conservation and Recovery Act of 1976, as amended, and the regulations promulgated pursuant to said laws, a ("Hazardous Material"), but excluding office and janitorial supplies, are present, as a result of the actions of CRC or any of the CRC Acquired Subsidiaries in, on or under any property, including the land and the improvements, ground water and surface water, that CRC or any of the CRC Acquired Subsidiaries has at any time owned, operated, occupied or leased and which is part of the Acquired Businesses. (ii) At no time has CRC or any of the CRC Acquired Subsidiaries transported, stored, used, manufactured, disposed of, released or exposed its employees or others to Hazardous Materials in violation of any Law in effect on or before the Effective Time, which has had or is reasonably likely to have a Material Adverse Effect on the CRC Acquired Businesses taken as a whole, nor has CRC or any of the CRC Acquired Subsidiaries disposed of, transported, sold, or manufactured any product containing a Hazardous Material (collectively, "Hazardous Materials Activities") in violation of any Law or Order promulgated by any Governmental or Regulatory Authority to prohibit, regulate or control Hazardous Materials or any Hazardous Materials Activity, which has or is reasonably likely to have a Material Adverse Effect on the CRC Acquired Businesses taken as a whole. (iii) CRC and any of the CRC Acquired Subsidiaries currently hold all environmental approvals, permits, licenses, clearances and consents (the "Environmental Permits") necessary for the conduct of its Hazardous Materials Activities and other businesses of CRC or any of the CRC Acquired Subsidiaries which are part of the Acquired Businesses as such activities and businesses are currently being conducted, the absence of which would be reasonable likely to have a Material Adverse Effect on the Acquired Businesses taken as a whole. (iv) No action, proceeding, revocation proceeding, amendment procedure, writ, injunction or claim is pending or, to the knowledge of CRC as of the date hereof, threatened concerning any Environmental Permit or any Hazardous Materials Activity of CRC or any of the CRC Acquired Subsidiaries which would be reasonably likely to have a Material Adverse Effect on the Acquired Businesses taken as a whole. Except as set forth on Schedule 4.01(m) or as otherwise would not be reasonably likely to have a Material Adverse Effect on the Acquired Businesses as a whole, CRC is not aware of any fact or circumstance which would involve CRC or any of the CRC Acquired Subsidiaries in any environmental litigation or impose upon CRC or any of the CRC Acquired Subsidiaries any environmental liability. None of the items disclosed on Schedule 4.01(m) would be reasonably likely to have a Material Adverse Effect on the Acquired Businesses taken as a whole. (n) Employee Benefit Plans. (i) Neither CRC nor any CRC Acquired Subsidiaries (A) sponsors, maintains or contributes to any pension, retirement, profit-sharing, deferred compensation, stock option, other incentive plan, or any other type of employee benefit plan (as defined in Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended ("ERISA")) ("Employee Benefit Plan"), or (B) has any obligation to or customary arrangement with employees for bonuses, incentive compensation, vacations, severance pay, sick pay, sick leave, insurance, service award, relocation, disability, tuition refund, or other benefits, whether oral or written ("Benefit Obligation"), except, in each case (a "CRC Employee Benefit Plan" or "CRC Benefit Obligation," as the case may be), as set forth in Schedule 4.01(n) or except as shall be transferred in its entirety to Spinco (which Employee Benefit Plan or Benefit Obligation being transferred to Spinco shall be separately identified on Schedule 4.01(n)). CRC has furnished to JEI: (A) true, correct, and complete copies of all documents evidencing plans, obligations, or arrangements referred to in Schedule 4.01(n) (or true, correct, and complete written summaries of such plans, obligations, or arrangements to the extent not evidenced by documents) and true, correct, and complete copies of all documents evidencing trusts related to such plans or arrangements, and all summary plan descriptions of such plans or arrangements; (B) the two most recent annual reports (Form 5500's), if any, including all schedules thereto and the most recent annual and periodic accounting of related plan assets, if any, with respect to each CRC Employee Benefit Plan; (C) the two most recent actuarial valuations with respect to each pension plan (as defined in Section 3(2) of ERISA) (a "Pension Plan") sponsored or contributed to by CRC or any CRC Acquired Subsidiary (a "CRC Pension Plan") subject to Title IV of ERISA; and (D) the most recent determination letter issued by the Internal Revenue Service (the "IRS") with respect to each CRC Pension Plan. (ii) All material liabilities for contributions of CRC or any CRC Acquired Subsidiary to each CRC Employee Benefit Plan (including any CRC Pension Plan) and with respect to each CRC Benefit Obligation that in each case are due on or prior to November 30, 1998, have been paid or accrued in the financial records of CRC or such CRC Acquired Subsidiary. (iii) Except as has not had and could not be reasonably expected to have a Material Adverse Effect on the Acquired Businesses taken as a whole, (A) there has been no violation of the reporting and disclosure requirements imposed under either ERISA or the Code for which a penalty has been or may be imposed with respect to any CRC Employee Benefit Plan; (B) there has been no breach of fiduciary duty or responsibility with respect to any CRC Employee Benefit Plan; (C) no CRC Employee Benefit Plan or related trust has any material liability of any nature, accrued or contingent, including without limitation liabilities for Taxes, other than for routine payments to be made in due course to participants and beneficiaries, except as set forth in Schedule 4.01(n); (D) neither CRC nor any CRC Acquired Subsidiary has any formal plan or commitment to create any additional, or modify in any material respect any existing, CRC Employee Benefit Plan or Benefit Obligation described in Section 4.01(n)(i); (E) each CRC Employee Benefit Plan which is a group health plan within the meaning of Section 5000(b)(1) of the Code is and has been maintained in full compliance in all material respects with the applicable requirements of Section 4980B of the Code; (F) other than the health care continuation requirements of Section 4980B of the Code, neither CRC nor any CRC Acquired Subsidiary has any obligation to provide post-retirement medical benefits or life insurance coverage or any deferred compensation benefits to any present or former employees; (G) there is no litigation, arbitration, claim (other than routine claims for benefits), governmental or other proceeding (formal or informal), or investigation pending or, to the knowledge of CRC, threatened with respect to any CRC Employee Benefit Plan or related trust or with respect to any fiduciary, administrator, or sponsor (in its capacity as such) of any CRC Employee Benefit Plan; (H) no CRC Employee Benefit Plan or related trust and no Benefit Obligation is in material violation of, or in default in any material respect with respect to, any Law or Order, nor is CRC, any CRC Acquired Subsidiary, any CRC Employee Benefit Plan or any related trust required to take any action in order to avoid such a violation or default; and (I) no event has occurred or, to the knowledge of CRC, is threatened or about to occur which would constitute a prohibited transaction under Section 406 of ERISA. (iv) Except as set forth on Schedule 4.01(n), a determination letter of the IRS has been issued with respect to each CRC Pension Plan to the effect that such CRC Pension Plan is qualified under Section 401(a) of the Code, and to the knowledge of CRC, no event has occurred that would materially adversely affect such determination. Each CRC Pension Plan has been operated in accordance with its terms in all material respects. No CRC Pension Plan which is subject to Title IV of ERISA has a material accumulated or waived funding deficiency within the meaning of Section 412 of the Code. No investigation or review by the Internal Revenue Service is currently pending or, to the knowledge of CRC, is threatened in which the IRS has asserted or may reasonably be expected to assert that any CRC Pension Plan is not qualified under Section 401(a) of the Code or that any related trust is not exempt under Section 501 of the Code. Neither CRC nor any CRC Acquired Subsidiary, nor any organization to which CRC or any CRC Acquired Subsidiary is a successor or parent corporation, within the meaning of Section 4069(b) of ERISA, has, at any time within the immediately preceding three years, divested itself of any entity maintaining or with an obligation to contribute to any CRC Pension Plan which had an "amount of unfunded benefit liabilities," as defined in Section 4001(a)(18) of ERISA, at the time of such divestiture. No material assessment of any Federal Taxes with respect to any Employee Benefit Plan has been made and remains unpaid or, to the knowledge of CRC, is threatened against CRC, any CRC Acquired Subsidiary, or any related trust of any CRC Employee Benefit Plan and nothing has occurred which could reasonably be expected to result in a material assessment of unrelated business taxable income under the Code with respect to any Employee Benefit Plan. Form 5500's for the immediately preceding three years have been timely filed with respect to all CRC Pension Plans. No event has occurred or (to the knowledge of CRC) is threatened or about to occur which would constitute a reportable event within the meaning of Section 4043(b) of ERISA with respect to any CRC Pension Plan. No notice of termination has been filed by the plan administrator pursuant to Section 4041 of ERISA or issued by the Pension Benefit Guaranty Corporation pursuant to Section 4042 of ERISA with respect to any CRC Pension Plan. (v) Neither CRC nor any CRC Acquired Subsidiary has at any time within the immediately preceding five years contributed to or effectuated either a complete or partial withdrawal from any multiemployer pension plan within the meaning of Section 3(37) of ERISA. (o) Patents, Trademarks, Etc. Schedule 4.01(o) sets forth all patents, patent applications, trademarks, trademark applications, trade names, service marks, copyrights, copyright applications, franchises, trade secrets, computer programs (in object or source code form), or other intangible property or asset (collectively, "Intangibles") which are individually or in the aggregate material to the conduct of the business of the Acquired Businesses taken as a whole. Except as set forth on Schedule 4.01(o), CRC and the CRC Acquired Subsidiaries have all right, title and interest in, or a valid and binding license to use all such Intangibles. Neither CRC nor any CRC Acquired Subsidiary is in default (or with the giving of notice or lapse of time or both, would be in default) in any material respect under any license to use such Intangible, such Intangible is not, to the knowledge of CRC, being infringed by any third party, and neither CRC nor any CRC Acquired Subsidiary is infringing any Intangible of any third party, except for such defaults and infringements which, individually or in the aggregate, are not having and could not reasonably be expected to have a Material Adverse Effect on the Acquired Businesses taken as a whole. (p) Insurance. Schedule 4.01(p) is a true and complete list of all liability, property, workers' compensation, directors' and officers' liability and other insurance policies currently in effect on the date hereof that insure the business, operations, properties, assets, or employees of CRC or any of the CRC Acquired Subsidiaries that relates to any of the Acquired Businesses, as well as any self-insurance arrangements affecting any of CRC or any of the CRC Acquired Subsidiaries. Such insurance policies are placed with financially sound and reputable insurers and, in light of the respective business, operations, assets, and properties of CRC and the CRC Acquired Subsidiaries, are in amounts and have coverages that are reasonable and customary for persons engaged in such businesses and operations and having such assets and properties. (q) Labor Matters. Except as disclosed in Schedule 4.01(q) hereto, there are no material controversies pending or, to the knowledge of CRC, threatened between CRC or any of the CRC Acquired Subsidiaries and any representatives of its employees, and, to the knowledge of CRC, there are no material organizational efforts presently being made involving any of the now unorganized employees of CRC or any of the CRC Acquired Subsidiaries. There is no work stoppage, strike or similar concerted action by employees of CRC or any of the CRC Acquired Subsidiaries currently pending or, to the knowledge of CRC, threatened. (r) Property and Assets. Except as disclosed in Schedule 4.01(r), CRC and the CRC Acquired Subsidiaries have good and marketable title to, or have valid leasehold interests in or valid rights under contract to use, all property and assets used in the conduct of the CRC Acquired Businesses, free and clear of all Liens other than (i) any statutory Lien arising in the ordinary course of business by operation of Law with respect to a liability that is not yet due or delinquent, (ii) Liens for Taxes not delinquent or being contested in good faith, (iii) deposits or pledges for goods or services made in the ordinary course of business, (iv) customary Liens in favor of mechanics, materialmen and landlords which arise by operation of Law and which are incurred in the ordinary course of business and (v) any minor imperfection of title or similar Lien which individually or in the aggregate with other such Liens does not materially impair the value of the property or asset subject to such Lien or the use of such property or asset in the conduct of the business of CRC or any such CRC Acquired Subsidiary, as the case may be (collectively, "Permitted Liens"). To the best knowledge of CRC, the facilities, structures, and equipment of CRC and the CRC Acquired Subsidiaries which are part of the Acquired Businesses are structurally sound with no known defects and are in good operating condition and repair and are adequate for the uses to which they are being put; and none of such facilities, structures, or equipment is in need of maintenance or repairs except for ordinary, routine maintenance and repairs. Except as set forth on Schedule 4.01(r), neither CRC nor any of the CRC Acquired Subsidiaries has received notification that it is in violation of any applicable building, zoning, anti-pollution, health, or other Laws in respect of its facilities or structures or their operations and no such violation exists. (s) Vote Required. The affirmative vote of the holders of record of a majority of the outstanding shares of CRC Common Stock entitled to vote on the CRC Merger Proposal is the only vote of the holders of any class or series of the capital stock of CRC required to approve the Merger and the other transactions contemplated hereby, including but not limited to the Spinoff. (t) Subsidiaries. Schedule 4.01(t) sets forth for each CRC Acquired Subsidiary (i) its name and jurisdiction of incorporation, (ii) the number of shares of authorized capital stock of each class of its capital stock, (iii) the number of issued and outstanding shares of each class of its capital stock, the names of the holders thereof, and the number of shares held by each such holder, (iv) the number of shares of its capital stock held in treasury, and (v) its directors and officers. CRC has delivered to JEI correct and complete copies of the charter and by-laws of each CRC Acquired Subsidiary (as amended to date). All of the issued and outstanding shares of capital stock of each CRC Acquired Subsidiary have been duly authorized and are validly issued, fully paid, and nonassessable. Except as set forth on Schedule 4.01(t), CRC or one of the CRC Acquired Subsidiaries holds of record and owns beneficially all of the outstanding shares of each such CRC Acquired Subsidiary, free and clear of any Liens (other than Permitted Liens) or any restrictions on transfer (other than restrictions under the Securities Act and state securities laws), security interests, options, warrants, purchase rights, contracts, commitments, equities, claims, and demands. There are no outstanding or authorized CRC Subsidiary Options that could require any of CRC or the CRC Acquired Subsidiaries to sell, transfer, or otherwise dispose of any capital stock of any of the CRC Acquired Subsidiaries or that could require any such subsidiary to issue, sell, or otherwise cause to become outstanding any of its own capital stock. There are no outstanding stock appreciation, phantom stock, profit participation, or similar rights with respect to any capital stock of any CRC Acquired Subsidiary. Except as disclosed in Schedule 4.01(t), there are no voting trusts, proxies, or other commitments, undertakings, restrictions or arrangements in favor of any person other than CRC or a CRC Acquired Subsidiary with respect to the voting of, or the right to participate in, dividends or other earnings on any capital stock of any CRC Acquired Subsidiary. The minute books (containing the records of meetings of the stockholders, the board of directors and any committees of the board of directors), the stock certificate books, and the stock record books of each CRC Acquired Subsidiary are correct and complete in all material respects. None of the CRC Acquired Subsidiaries is in default under or in violation of any provision of its charter or bylaws. Schedule 4.01(t) also sets forth any direct or indirect control or equity participation in any corporation, partnership, trust, or other business association of CRC and each CRC Acquired Subsidiary which is not one of the CRC Acquired Subsidiaries. CRC is the owner, free and clear of any Liens (other than Permitted Liens), of approximately fifty-nine (59%) of the outstanding capital stock of LCC on a fully diluted basis. (u) Brokers. All negotiations relative to this Agreement and the transactions contemplated hereby have been carried out by CRC directly with JEI without the intervention of any person on behalf of CRC in such manner as to give rise to any valid claim by any person against CRC, any CRC Acquired Subsidiaries or JEI for a finder's fee, brokerage commission or similar payment. (v) Agreements Not to Compete. CRC has delivered to JEI true, complete and accurate copies of all Contracts in full force and effect as of the date hereof between CRC or any CRC Acquired Subsidiary and its respective directors, officers, employees, agents (including sales agents), dealers or distributors which prevent or restrict any such person from competing with CRC or any CRC Acquired Subsidiary in any manner. (w) Notes and Accounts Receivable. All notes and accounts receivable of CRC and the CRC Acquired Subsidiaries shown on the Initial November 30 Balance Sheet included with the CRC Financial Statements are reflected properly on their books and records, are valid receivables subject to no setoff or counterclaims, and are current and collectible, subject only to the reserve for bad debts set forth on the face of such balance sheet (rather than in any notes thereto). (x) Contracts. Schedule 4.01(x)(i) lists the following contracts and other agreements to which any of CRC and the CRC Acquired Subsidiaries is a party which relate in any way to any of the Acquired Businesses (each a "CRC Material Contract"): (i) any agreement (or group of related agreements) for the lease of personal property to or from any person providing for lease payments in excess of $50,000 per annum; (ii) any agreement (or group of related agreements) for the purchase or sale of raw materials, commodities, supplies, products, or other personal property, or for the furnishing or receipt of services, the performance of which will extend over a period of more than one year, result in a loss to any of CRC and the CRC Acquired Subsidiaries, or involve consideration in excess of $50,000; (iii) any agreement concerning a partnership or joint venture; (iv) any agreement (or group of related agreements) under which it has created, incurred, assumed, or guaranteed any indebtedness for borrowed money, or any capitalized lease obligation, in excess of $50,000 or under which it has granted a Lien on any of its assets, tangible or intangible; (v) any agreement concerning confidentiality or noncompetition; (vi) any collective bargaining agreement; (vii) any agreement for the employment of any individual on a full-time, part-time, consulting or other basis providing annual compensation in excess of $50,000 or providing severance benefits; (viii) any agreement under which it has advanced or loaned in excess of $10,000 to any of its directors, officers or employees; (ix) any agreement with, or plan covering, any officer or employee of CRC or any CRC Acquired Subsidiary the benefits of which are contingent or vest, or the terms of which are materially altered, upon the occurrence of a transaction involving CRC or any of the CRC Acquired Subsidiaries of the nature contemplated by this Agreement; (x) any agreement under which the consequences of a default or termination could have a Material Adverse Effect on the Acquired Businesses; (xi) any other agreement (or group of related agreements) the performance of which involves consideration in excess of $50,000 during any consecutive 12 month period. CRC has delivered to JEI (i) a correct and complete copy of each CRC Material Contract (as amended to date) and (ii) a written summary setting forth the terms and conditions of each oral agreement referred to in Schedule 4.01(x)(i). With respect to each such agreement: (A) the agreement is legal, valid, binding, enforceable and in full force and effect, except as enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium, or other similar laws affecting the enforcement of creditors' rights generally, by general equitable principals (regardless of whether such enforceability is considered in a proceeding in equity or as law), and except to the extent that indemnification provisions may be unenforceable due to public policy; (B) subject to the receipt of any necessary approvals and consents for the transfer of the rights thereunder to JEI (which approvals and consents are listed on Schedule 4.01(d)), the agreement will continue to be legal, valid, binding, enforceable, and in full force and effect on identical terms following the consummation of the transactions contemplated hereby; (C) except as otherwise set forth on Schedule 4.01(x)(ii)(C) and except for the license agreement with Carnival, which will be terminated at the Closing, no party is in breach or default, and no event has occurred which with notice or lapse of time would constitute a breach or default, or permit termination, modification, or acceleration, under the agreement, except for any of the foregoing matters which, individually or in the aggregate, would not reasonably be expected to have a Material Adverse Effect on the Acquired Businesses taken as a whole; and (D) to the best of CRC's knowledge, no party has repudiated any provision of the agreement. (y) Inventory. The inventory of CRC and the CRC Acquired Subsidiaries which is part of the Acquired Businesses is merchantable and fit for the purpose for which it was procured or manufactured, and none of such inventory is slow-moving, obsolete, damaged, or defective. (z) Product Liability. None of CRC and the CRC Acquired Subsidiaries has any liability (and there is no basis for any present or future action, suit, proceeding, hearing, investigation, charge, complaint, claim, or demand against any of them giving rise to any liability) arising out of any injury to individuals or property as a result of the ownership, possession or use of any product manufactured, sold, leased, or delivered by CRC or any of the CRC Acquired Subsidiaries. 4.02 Certain Representations and Warranties of JEI. JEI represents and warrants to CRC as follows (it being understood that any representation or warranty which relates to a JEI Subsidiary shall not be deemed to apply to Players or any of its subsidiaries): (a) Organization and Qualification. Each of JEI and the JEI Subsidiaries, as listed on Schedule 4.02(a), is a corporation duly organized, validly existing, and in good standing under the laws of its jurisdiction of incorporation and has full corporate power and authority to conduct its business as and to the extent now conducted and to own, use, and lease its assets and properties. Each of JEI and the JEI Subsidiaries is duly qualified, licensed, or admitted to do business and is in good standing in each jurisdiction listed on Schedule 4.02 (a), which is each jurisdiction in which the ownership, use, or leasing of its assets and properties, or the conduct or nature of its businesses, makes such qualification, licensing or admission necessary, except for such failures to be so qualified, licensed, or admitted and in good standing which, individually or in the aggregate, are not having and could not be reasonably expected to have a Material Adverse Effect on JEI and the JEI Subsidiaries taken as a whole. Except as disclosed in Schedule 4.02(a) hereto, JEI does not directly or indirectly own any equity or similar interest in, or any interest convertible into or exchangeable or exercisable for, any equity or similar interest in, any corporation, partnership, joint venture or other business association or entity. (b) Capital Stock. (i) The authorized capital stock of JEI consists solely of 30,000,000 shares of JEI Common Stock and 1,000,000 shares of preferred stock, par value $1.00 per share, of JEI ("JEI Preferred Stock"). As of December 31, 1998, 8,616,680 shares of JEI Common Stock were issued and outstanding, 1,243,572 shares of JEI Common Stock were held in the treasury of JEI and 1,753,972 shares of JEI Common Stock were reserved for issuance pursuant to Options to acquire JEI Common Stock (the "JEI Options"). All JEI Options currently issued and outstanding are described in Schedule 4.02(b)(i). As of the date hereof, there has been no change in the number of issued and outstanding shares of JEI Common Stock or shares of JEI Common Stock held in treasury or reserved for issuance since such date, other than changes arising from the conversion or exercise of the JEI Options described in Schedule 4.02(b)(i) hereto and other than as contemplated to be issued pursuant to the Players Merger Agreement. As of the date hereof, no shares of JEI Preferred Stock are issued and outstanding. All of the issued and outstanding shares of JEI Common Stock are, and all shares reserved for issuance will be, upon issuance in accordance with the terms specified in the instruments or agreements pursuant to which they are issuable, duly authorized, validly issued, fully paid and nonassessable. Except pursuant to this Agreement and except as set forth in Schedule 4.02(b)(i) hereto, there are no outstanding JEI Options. The shares of JEI Common Stock issuable to the holders of CRC Common Stock pursuant to Article II hereof will be, when issued in accordance with this Agreement, duly authorized, validly issued, fully paid and nonassessable. JEI has reserved for issuance the number of shares of JEI Common Stock required to be issued at the Closing to the holders of the CRC Common Stock and CRC Options. (ii) Except as disclosed in Schedule 4.02(b)(ii) and except for cancellation of shares of JEI Merger Corp. as contemplated by the Players Merger Agreement, there are no outstanding contractual obligations of JEI or any JEI Subsidiary to repurchase, redeem, or otherwise acquire any shares of JEI Common Stock or any capital stock of any JEI Subsidiary or any JEI Options or any Options to purchase any capital stock of any JEI Subsidiary or to provide funds to, or make any investment (in the form of a loan, capital contribution or otherwise) in, any JEI Subsidiary or any other person. (c) Authority Relative to this Agreement. JEI has full corporate power and authority to enter into this Agreement and, subject to obtaining the JEI Stockholders' Approval and the approvals of any Governmental or Regulatory Authority identified in Schedule 4.02(c), to perform its obligations hereunder and to consummate the transactions contemplated hereby. The execution, delivery and performance of this Agreement by JEI and the consummation by JEI of the transactions contemplated hereby have been duly and validly authorized by its Board of Directors. The Board of Directors of JEI has adopted a resolution recommending approval of the JEI Merger Proposal by the stockholders of JEI, declaring the advisability of the issuance of JEI Common Stock in connection with the Merger and directing that the JEI Merger Proposal be submitted for consideration by the stockholders of JEI. Except for the review by JEI's Compliance Committee (the "Compliance Committee") of this Agreement, the transactions identified herein, and the principals of CRC and the CRC Acquired Subsidiaries as required by JEI's internal reporting system and no exception taken to any of the foregoing by said Compliance Committee, and except for the JEI Stockholders Approval, no other corporate proceedings on the part of JEI or its stockholders are necessary to authorize the execution, delivery and performance of this Agreement by JEI and the consummation by JEI of the transactions contemplated hereby. This Agreement has been duly and validly executed and delivered by JEI and, subject to obtaining the JEI Stockholders' Approval and any required approvals of any Governmental or Regulatory Authority, constitutes a legal, valid, and binding obligation of JEI enforceable against JEI in accordance with its terms, except as enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting the enforcement of creditors' rights generally and by general equitable principles (regardless of whether such enforceability is considered in a proceeding in equity or at law) and except to the extent that indemnification provisions may be unenforceable due to public policy. (d) Non-Contravention; Approvals and Consents. (i) Subject to obtaining the JEI Stockholders' Approval and the taking of the actions described in paragraph (ii) of this Section 4.02(d), the execution and delivery of this Agreement by JEI do not, and the performance by JEI of its obligations hereunder and the consummation of the transactions contemplated hereby will not, conflict with, result in a violation or breach of, constitute (with or without notice or lapse of time or both) a default under, result in or give to any person any right of payment or reimbursement, termination, cancellation, modification or acceleration of, or result in the creation or imposition of any Lien upon any of the assets or properties of JEI or any of the JEI Subsidiaries under, any of the terms, conditions or provisions of (x) the certificates or articles of incorporation or Bylaws (or other comparable charter documents) of JEI or any of the JEI Subsidiaries, or (y) any Law or Order of any Governmental or Regulatory Authority applicable to JEI or any of the JEI Subsidiaries or any of their respective assets or properties, or (z) any Contracts to which JEI or any of the JEI Subsidiaries is a party or by which JEI or any of the JEI Subsidiaries or any of their respective assets or properties is bound, except for any of the foregoing matters which, individually or in the aggregate, could not be reasonably expected to have a Material Adverse Effect on JEI and the JEI Subsidiaries taken as a whole or on the ability of JEI to consummate the transactions contemplated by this Agreement. (ii) Except for (v) the filing of a premerger notification and report form by JEI under the HSR Act, (w) the filing of the Registration Statement and Joint Proxy Statement with the SEC pursuant to the Securities Act and the Exchange Act, respectively, and filings with various state securities authorities that may be required in connection with the transactions contemplated by this Agreement, (x) the filing of the Nevada Articles and Florida Articles and other appropriate merger documents pursuant to and in accordance with the laws of the States of Nevada and Florida and appropriate documents with the relevant authorities of other states in which CRC is qualified to do business, (y) the licensing, permitting, registration or other approval of, or written consent or no action letter from, each Governmental or Regulatory Authority with regulatory control or jurisdiction over the conduct of lawful gaming or gambling by JEI and the JEI Subsidiaries, including, without limitation the Nevada Gaming Commission (a "JEI Gaming Authority"), within each municipality, state or commonwealth, or subdivision thereof, wherein JEI or any of the JEI Subsidiaries conducts business on the date hereof and (z) obtaining the consents and approvals described in Schedule 4.02(d) hereto, no consent, approval, or action of, filing with, or notice to any Governmental or Regulatory Authority or other public or private third party is necessary or required under any of the terms, conditions or provisions of any Law or Order of any Governmental or Regulatory Authority or any Contract to which JEI or any of the JEI Subsidiaries is a party or by which JEI or any of the JEI Subsidiaries or any of their respective assets or properties is bound for the execution and delivery of this Agreement by JEI, the performance by JEI of its obligations hereunder or the consummation of the transactions contemplated hereby, except for such consents, approvals, or actions of, filings with or notices to any Governmental or Regulatory Authority or other public or private third party the failure of which to make or obtain could not be reasonably expected to have a Material Adverse Effect on the JEI and the JEI Subsidiaries taken as a whole or on the ability of JEI to consummate the transactions contemplated by this Agreement. (e) SEC Reports and Financial Statements. JEI delivered to CRC prior to the execution of this Agreement a true, correct, and complete copy of each form, report, schedule, registration statement, definitive proxy statement and other document (together with all amendments thereof and supplements thereto) filed by JEI or any of the JEI Subsidiaries with the SEC since January 1, 1996 (as such documents have since the time of their filing been amended or supplemented, the "JEI SEC Reports"), which are all the documents (other than preliminary material) that JEI and the JEI Subsidiaries were required to file with the SEC since such date. As of their respective dates, the JEI SEC Reports (i) complied as to form in all material respects with the requirements of the Securities Act or the Exchange Act, as the case may be, and the rules and regulations promulgated thereunder and (ii) did not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. The audited consolidated financial statements and unaudited interim consolidated financial statements (including, in each case, the notes, if any, thereto) included in the JEI SEC Reports (the "JEI Financial Statements") complied as to form in all material respects with the published rules and regulations of the SEC with respect thereto, were prepared in accordance with GAAP applied on a consistent basis during the periods involved (except as may be indicated therein or in the notes thereto and except with respect to unaudited statements as permitted by Form 10-Q) and fairly present (subject, in the case of the unaudited interim financial statements, to normal, recurring year-end audit adjustments which are not expected to be, individually or in the aggregate, materially adverse to JEI and the JEI Subsidiaries taken as a whole) the consolidated financial position of JEI and its consolidated subsidiaries as at the respective dates thereof and the consolidated results of their operations and cash flows for the respective periods then ended. Each JEI Subsidiary is treated as a consolidated subsidiary of JEI in the JEI Financial Statements for all periods covered thereby. (f) Absence of Certain Changes or Events. Except as disclosed in the JEI SEC Reports filed prior to the date of this Agreement, since September 30, 1998 there has not been any adverse change in the business, financial condition, operations or results of operations of JEI or the JEI Subsidiaries (other than any change as a consequence of the economy generally or in the industries in which JEI and the JEI Subsidiaries operate not specific to JEI and the JEI Subsidiaries) which could, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on JEI and the JEI Subsidiaries taken as a whole (a "Material Adverse Change in JEI"). (g) Absence of Undisclosed Liabilities. Except for matters reflected or reserved against in the balance sheet for the period ended September 30, 1998 included in the JEI Financial Statements or as filed pursuant to a more recently filed JEI SEC Report which includes a consolidated balance sheet of JEI and the JEI Subsidiaries, neither JEI nor any of the JEI Subsidiaries had at such date, or has incurred since that date, any liabilities or obligations (whether absolute, accrued, contingent or otherwise, asserted or unasserted, or whether due or to become due) of any nature that would be required by GAAP to be reflected or reserved against on a consolidated balance sheet of JEI and the JEI Subsidiaries, except liabilities or obligations which were incurred in the ordinary course of business consistent with past practice since such date. (h) Legal Proceedings. Except as disclosed in the JEI SEC Reports filed prior to the date of this Agreement or pursuant to Schedule 4.02(h), (i) there are no actions, suits, arbitrations or proceedings pending or, to the knowledge of JEI, threatened against, nor to the knowledge of JEI are there any Governmental or Regulatory Authority investigations or audits pending or threatened against JEI or any of the JEI Subsidiaries or any of their respective assets and properties, including any affecting its licenses, permits, registrations or other gaming approvals under JEI Gaming Laws (as defined in Section 4.01(l)), (ii) neither JEI nor any of the JEI Subsidiaries is subject to any Order of any Governmental or Regulatory Authority and (iii) neither JEI nor any JEI Subsidiary nor, to the knowledge of JEI (without specific inquiry), any director, officer, gaming manager or key employee of JEI or any JEI Subsidiary has received any written claim, demand, notice, complaint, or Order from any Governmental or Regulatory Authority in the past three years asserting that a license of it or them under JEI Gaming Laws should be revoked or suspended. None of any of the actions, suits, arbitrations or proceedings, investigations, audits, claims, demands, notices, complaints or Orders disclosed on Schedule 4.02(h) could reasonably be expected to have a Material Adverse Effect on JEI and the JEI Subsidiaries taken as a whole or on the ability of CRC to consummate the transactions contemplated by this Agreement. (i) Vote Required. The affirmative vote of the holders of record of at least a majority of the outstanding shares of JEI Common Stock with respect to the JEI Merger Proposal and the approval of the issuance of JEI Common Stock in connection with the Merger is the only vote of the holders of any class or series of the capital stock of JEI required to approve the Merger and the other transactions contemplated hereby. (j) State Securities Laws. No state securities or "Blue Sky" permits or other authorizations are necessary to issue the Share Merger Consideration pursuant to the Merger. (k) Joint Proxy Statement and Registration Statement. The Joint Proxy Statement and the Registration Statement and any other document to be filed by JEI with the SEC under the Exchange Act or the Securities Act will comply as to form in all material respects with the requirements of the Exchange Act and the Securities Act, as the case may be, and will not, on the date of its filing or, in the case of the Joint Proxy Statement, at the date it is mailed to stockholders of JEI, at the time of the JEI Stockholders Meetings and at the Effective Time, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they are made, not misleading, except that no representation is made by JEI with respect to information supplied by or on behalf of CRC expressly for inclusion therein and information incorporated by reference therein from documents filed by CRC or any of the CRC Acquired Subsidiaries with the SEC. (l) Compliance with Laws, Orders, etc. JEI, the JEI Subsidiaries and, to the knowledge of JEI (without specific inquiry), each of their respective directors, officers and gaming managers hold all permits, licenses, variances, exemptions, orders and approvals of all Governmental and Regulatory Authorities necessary for the lawful conduct of their businesses, including all authorizations under applicable JEI Gaming Laws (the "JEI Permits"), except where the failure to obtain such JEI Permits would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on JEI and the JEI Subsidiaries taken as a whole, and no event has occurred which permits, or upon the giving of notice or passage of time or both would permit, revocation, non-renewal, modification, suspension or termination (other than expiration of any JEI Permit in the ordinary course) of any JEI Permit that currently is in effect with respect to any of the businesses of JEI or any of the JEI Subsidiaries. JEI and the JEI Subsidiaries and, to the knowledge of JEI (without specific inquiry), each of their respective directors, officers and gaming managers, are in compliance in all material respects with the material terms of the JEI Permits relating to their businesses. Except as disclosed in Schedule 4.02(l), JEI and the JEI Subsidiaries are not in violation of or default under any Law or Order of any Governmental or Regulatory Authority applicable to JEI or any of the JEI Subsidiaries, including all applicable JEI Gaming Laws, except for violations or defaults which, individually or in the aggregate, are not having and could not reasonably be expected to have a Material Adverse Effect on JEI and the JEI Subsidiaries taken as a whole. The term "JEI Gaming Laws" means any Federal, state, local or foreign statute, ordinance, rule, regulation, permit, consent, registration, finding of suitability, approval, license, judgment, order, decree, injunction or other authorization, including any condition or limitation placed thereon, governing or relating to the current or contemplated casino activities and operations of JEI and the JEI Subsidiaries, including without limitation the rules and regulations of all applicable state or local casino commissions. (m) Tax Matters. Except as set forth in Schedule 4.02(m) hereto: (i) JEI and each of the JEI Subsidiaries and any combined, consolidated, unitary or affiliated group of which JEI and the JEI Subsidiaries have been a member prior to the Closing Date have timely filed, or have had timely filed on their behalf, or will timely file or cause to be timely filed, all Tax Returns required by applicable law to be filed by any of them prior to or as of the Closing Date. All such Tax Returns and amendments thereto are or will be true, complete and correct, in all material respects. JEI and each of the JEI Subsidiaries have established (and until the Closing Date will maintain) on their books and records reserves adequate to pay all Taxes not yet due and payable. (ii) JEI and each of the JEI Subsidiaries have paid, or have hadpaid on their behalf, or where payment is not yet due, have established, or have had established on their behalf and for their sole benefit and recourse, or will establish or cause to be established on or before the Closing Date, an adequate accrual for the payment of all Taxes due with respect to any period ending prior to or as of the Closing Date. (iii) No Audit is pending with respect to any Tax Returns filed by, or Taxes due from JEI or any JEI Subsidiary. No deficiency or adjustment for any Taxes has been proposed, asserted, or assessed against JEI or any of the JEI Subsidiaries. There are no material liens for Taxes upon the assets of JEI or any of the JEI Subsidiaries, except for statutory liens for current Taxes not yet due and those being contested in good faith. (iv) Neither JEI nor any of the JEI Subsidiaries has given or been requested to give any waiver of statutes of limitations relating to the payment of Taxes or have executed powers of attorney with respect to Tax matters, which will be outstanding as of the Closing Date. (v) Neither JEI nor any of the JEI Subsidiaries is a party to, is bound by, or has any obligation to any other member of an affiliated or combined group of which JEI or any of the JEI Subsidiaries is or has been a member, for Taxes under any tax sharing, cost sharing, or similar agreement or policy. (vi) JEI and each of the JEI Subsidiaries have delivered to CRC correct and complete copies of all Tax Returns, examination reports, and statements of deficiencies assessed against or agreed to by JEI and each of the JEI Subsidiaries that were requested by CRC. (vii) To the knowledge of JEI, no claim has been made by an authority in a jurisdiction where JEI or any of the JEI Subsidiaries does not file a Tax Return that it is or may be subject to taxation in that jurisdiction. (viii) Neither JEI nor any of the JEI Subsidiaries has made any payments, is obligated to make any payments, or is party to any agreement that under certain circumstances could obligate it to make any payments that will not be deductible under Section 280G of the Code. (ix) There has been no written assertion of a Tax due from JEI nor any of the JEI Subsidiaries for the Taxes of any person under Treasury Regulation Section 1.1502-6 (or any similar provision of state, local or foreign law) as a transferee or successor. (n) Environmental Matters. (i) As of the date hereof, to the knowledge of JEI, no underground storage tanks are present under any property that JEI or any JEI Subsidiary has at any time owned, operated, occupied or leased. To the knowledge of JEI, as of the date hereof no material amount of any substance that has been designated by any Governmental or Regulatory Authority or by applicable Federal, state or local law to be radioactive, toxic, hazardous or otherwise a danger to health or other environment, including, without limitation, PCBs, asbestos, petroleum, urea-formaldehyde, and all Hazardous Material, but excluding office and janitorial supplies, are present, as a result of the actions of JEI or any of the JEI Subsidiaries in, on or under any property, including the land and the improvements, ground water and surface water, that JEI or any of the JEI Subsidiaries has at any time owned, operated, occupied or leased. (ii) At no time has JEI or any of the JEI Subsidiaries transported, stored, used, manufactured, disposed of, released or exposed its employees or others to Hazardous Materials in violation of any Law in effect on or before the Effective Time, which has had or is reasonably likely to have a Material Adverse Effect on JEI and the JEI Subsidiaries taken as a whole, nor has JEI or any of the JEI Subsidiaries engaged in Hazardous Materials Activities in violation of any Law or Order promulgated by any Governmental or Regulatory Authority to prohibit, regulate or control Hazardous Materials or any Hazardous Materials Activity, which has or is reasonably likely to have a Material Adverse Effect on JEI and the JEI Subsidiaries taken as a whole. (iii) JEI and any of the JEI Subsidiaries currently hold all Environmental Permits necessary for the conduct of its Hazardous Materials Activities and other businesses of JEI or any of the JEI Subsidiaries as such activities and businesses are currently being conducted, the absence of which would be reasonably likely to have a Material Adverse ffect on JEI and the JEI Subsidiaries taken as a whole. (iv) No action, proceeding, revocation proceeding, amendment procedure, writ, injunction or claim is pending or, to the knowledge of JEI as of the date hereof, threatened concerning any Environmental Permit or any Hazardous Materials Activity of JEI or any of the JEI Subsidiaries which would be reasonably likely to have a Material Adverse Effect on JEI or the JEI Subsidiaries taken as a whole. JEI is not aware of any fact or circumstance which would involve JEI or any of the JEI Subsidiaries in any environmental litigation or impose upon JEI or any of the JEI Subsidiaries any environmental liability which in either case would be reasonably likely to have a Material Adverse Effect on JEI and the JEI Subsidiaries taken as a whole. (o) Patents, Trademarks, Etc. JEI and the JEI Subsidiaries have all right, title and interest in, or a valid and binding license to use all Intangibles which are individually or in the aggregate material to the conduct of the business of JEI and the JEI Subsidiaries taken as a whole. Neither JEI nor any JEI Subsidiary is in default (or with the giving of notice or lapse of time or both, would be in default) in any material respect under any license to use such Intangible, such Intangible is not, to the knowledge of JEI, being infringed by any third party, and neither JEI nor any JEI Subsidiary is infringing any Intangible of any third party, except for such defaults and infringements which, individually or in the aggregate, are not having and could not reasonably be expected to have a Material Adverse Effect on JEI and the JEI Subsidiaries taken as a whole. (p) Insurance. The insurance maintained by JEI and the JEI Subsidiaries on its business, operations, properties, assets and employees is placed with financially sound and reputable insurers and, in light of the respective business, operations, assets, and properties of JEI and the JEI Subsidiaries, are in amounts and have coverages that are reasonable and customary for persons engaged in such businesses and operations and having such assets and properties. (q) Property and Assets. JEI and the JEI Subsidiaries have good and marketable title to, or have valid leasehold interests in or valid rights under contract to use, all property and assets used in the conduct of the businesses of JEI and the JEI Subsidiaries, free and clear of all Liens other than (i) any statutory Lien arising in the ordinary course of business by operation of Law with respect to a liability that is not yet due or delinquent, (ii) Liens for Taxes not delinquent or being contested in good faith, (iii) deposits or pledges for goods or services made in the ordinary course of business, (iv) customary Liens in favor of mechanics, materialmen and landlords which arise by operation of Law and which are incurred in the ordinary course of business and (v) any minor imperfection of title or similar Lien which individually or in the aggregate with other such Liens does not materially impair the value of the property or asset subject to such Lien or the use of such property or asset in the conduct of the business of JEI or any such JEI Subsidiary. To the best knowledge of JEI, the facilities, structures and equipment of JEI and the JEI Subsidiaries are structurally sound with no known defects and are in good operating condition and repair and are adequate for the uses to which they are being put; and none of such facilities, structures or equipment is in need of maintenance or repairs except for ordinary, routine maintenance and repairs. Except as set forth on Schedule 4.02(r), neither JEI nor any of the JEI Subsidiaries has received notification that it is in violation of any applicable building, zoning, anti-pollution, health, or other Laws in respect of its facilities or structures or their operations and no such violation exists. (r) Brokers. All negotiations relative to this Agreement and the transactions contemplated hereby have been carried out by JEI directly with CRC without the intervention of any person on behalf of JEI in such manner as to give rise to any valid claim by any person against JEI, any JEI Subsidiaries or CRC for a finder's fee, brokerage commission or similar payment. (s) Labor Matters. Except as disclosed in Schedule 4.02(s) hereto, there are no material controversies pending or, to the knowledge of JEI, threatened between JEI or any of the JEI Subsidiaries and any representatives of its employees, and, to the knowledge of JEI, there are no material organizational efforts presently being made involving any of the now unorganized employees of JEI or any of the JEI Subsidiaries. There is no work stoppage, strike or similar concerted action by employees of JEI or any of the JEI Subsidiaries currently pending or, to the knowledge of JEI, threatened. (t) Compliance with Charter Documents and Certain Agreements. Except as disclosed in Schedule 4.02(t), neither JEI nor any of the JEI Subsidiaries nor, to the knowledge of JEI (without specific inquiry), any other party thereto is in breach or violation of, or in default in the performance or observance of any term or provision of, and no event has occurred which, with notice or lapse of time or both, could be reasonably expected to result in a default under, (x) the certificate or articles of incorporation or by-laws (or other comparable charter documents) of JEI or any of the JEI Subsidiaries or (y) any JEI Material Contract to which JEI or any of the JEI Subsidiaries is a party or by which JEI or any of the JEI Subsidiaries or any of their respective assets or properties is bound which breach, violation or default could reasonably be expected to have a Material Adverse Effect on JEI and the JEI Subsidiaries taken as a whole. (u) Employee Benefit Plans. (i) Neither JEI nor any JEI Subsidiaries (A) sponsors, maintains or contributes to any Employee Benefit Plan or has any Benefit Obligation except, in each case (a "JEI Employee Benefit Plan" or "JEI Benefit Obligation," as the case may be) as set forth in Schedule 4.02(u). JEI has furnished to CRC: (A) true, correct, and complete copies of all documents evidencing plans, obligations, or arrangements referred to in Schedule 4.02(u) (or true, correct, and complete written summaries of such plans, obligations, or arrangements to the extent not evidenced by documents) and true, correct, and complete copies of all documents evidencing trusts related to such plans or arrangements, and all summary plan descriptions of such plans or arrangements; (B) the two most recent annual reports (Form 5500's), if any, including all schedules thereto and the most recent annual and periodic accounting of related plan assets, if any, with respect to each JEI Employee Benefit Plan; (C) the two most recent actuarial valuations with respect to each Pension Plan sponsored or contributed to by JEI subject to Title IV of ERISA (a "JEI Pension Plan"); and (D) the most recent determination letter issued by the IRS with respect to each JEI Pension Plan. (ii) All material liabilities for contributions of JEI or any JEI Subsidiary to each JEI Employee Benefit Plan (including any JEI Pension Plan) and with respect to each Benefit Obligation that in each case are due on or prior to September 30, 1998, have been paid or accrued in the financial records of JEI or such JEI Subsidiary. (iii) Except as has not had and could not be reasonably expected to have a Material Adverse Effect on JEI and the JEI Subsidiaries taken as a whole, (A) there has been no violation of the reporting and disclosure requirements imposed under either ERISA or the Code for which a penalty has been or may be imposed with respect to any JEI Employee Benefit Plan; (B) there has been no breach of fiduciary duty or responsibility with respect to any JEI Employee Benefit Plan; (C) no JEI Employee Benefit Plan or related trust has any material liability of any nature, accrued or contingent, including without limitation liabilities for Taxes, other than for routine payments to be made in due course to participants and beneficiaries, except as set forth in Schedule 4.02(u); (D) neither JEI nor any JEI Subsidiary has any formal plan or commitment to create any additional, or modify in any material respect any existing, JEI Employee Benefit Plan or JEI Benefit Obligation described in Section 4.02(u); (E) each JEI Employee Benefit Plan which is a group health plan within the meaning of Section 5000(b)(1) of the Code is and has been maintained in full compliance in all material respects with the applicable requirements of Section 4980B of the Code; (F) other than the health care continuation requirements of Section 4980B of the Code, neither JEI nor any JEI Subsidiary has any obligation to provide post-retirement medical benefits or life insurance coverage or any deferred compensation benefits to any present or former employees; (G) there is no litigation, arbitration, claim (other than routine claims for benefits), governmental or other proceeding (formal or informal), or investigation pending or, to the knowledge of JEI, threatened with respect to any JEI Employee Benefit Plan or related trust or with respect to any fiduciary, administrator, or sponsor (in its capacity as such) of any JEI Employee Benefit Plan; (H) no JEI Employee Benefit Plan or related trust and no Benefit Obligation is in material violation of, or in default in any material respect with respect to, any Law or Order, nor is JEI, any JEI Subsidiary, any JEI Employee Benefit Plan or any related trust required to take any action in order to avoid such a violation or default; and (I) no event has occurred or, to the knowledge of JEI, is threatened or about to occur which would constitute a prohibited transaction under Section 406 of ERISA. (iv) Except as set forth on Schedule 4.02(u), a determination letter of the IRS has been issued with respect to each JEI Pension Plan to the effect that such JEI Pension Plan is qualified under Section 401(a) of the Code, and to the knowledge of JEI, no event has occurred that would materially adversely affect such determination. Each JEI Pension Plan has been operated in accordance with its terms in all material respects. No JEI Pension Plan which is subject to Title IV of ERISA has a material accumulated or waived funding deficiency within the meaning of Section 412 of the Code. No investigation or review by the Internal Revenue Service is currently pending or, to the knowledge of JEI, is threatened in which the IRS has asserted or may reasonably be expected to assert that any JEI Pension Plan is not qualified under Section 401(a) of the Code or that any related trust is not exempt under Section 501 of the Code. Neither JEI nor any JEI Subsidiary, nor any organization to which JEI or any JEI Subsidiary is a successor or parent corporation, within the meaning of Section 4069(b) of ERISA, has, at any time within the immediately preceding three years, divested itself of any entity maintaining or with an obligation to contribute to any JEI Pension Plan which had an "amount of unfunded benefit liabilities," as defined in Section 4001(a)(18) of ERISA, at the time of such divestiture. No material assessment of any Federal Taxes with respect to any JEI Employee Benefit Plan has been made or remains unpaid, or, to the knowledge of JEI, is threatened against JEI, any JEI Subsidiary, or any related trust of any JEI Employee Benefit Plan and nothing has occurred which could reasonably be expected to result in a material assessment of unrelated business taxable income under the Code with respect to any JEI Employee Benefit Plan. Form 5500's for the immediately preceding three years have been timely filed with respect to all JEI Pension Plans. No event has occurred or (to the knowledge of JEI) is threatened or about to occur which would constitute a reportable event within the meaning of Section 4043(b) of ERISA with respect to any JEI Pension Plan. No notice of termination has been filed by the plan administrator pursuant to Section 4041 of ERISA or issued by the Pension Benefit Guaranty Corporation pursuant to Section 4042 of ERISA with respect to any JEI Pension Plan. (v) Neither JEI nor any JEI Subsidiary has at any time within the immediately preceding five years contributed to or effectuated either a complete or partial withdrawal from any multiemployer JEI Pension Plan within the meaning of Section 3(37) of ERISA. (v) Contracts. Schedule 4.02(v) lists the following contracts and other agreements to which any of JEI and the JEI Subsidiaries is a party (each a "JEI Material Contract"): (i) any agreement (or group of related agreements) for the lease of personal property to or from any person providing for lease payments in excess of $50,000 per annum; (ii) any agreement (or group of related agreements) for the purchase or sale of raw materials, commodities, supplies, products, or other personal property, or for the furnishing or receipt of services, the performance of which will extend over a period of more than one year, result in a loss to any of JEI and the JEI Subsidiaries, or involve consideration in excess of $50,000; (iii) any agreement concerning a partnership or joint venture; (iv) any agreement (or group of related agreements) under which it has created, incurred, assumed, or guaranteed any indebtedness for borrowed money, or any capitalized lease obligation, in excess of $50,000 or under which it has granted a Lien on any of its assets, tangible or intangible; (v) any agreement concerning confidentiality or noncompetition; (vi) any collective bargaining agreement; (vii) any agreement for the employment of any individual on a full-time, part-time, consulting or other basis providing annual compensation in excess of $50,000 or providing severance benefits; (viii) any agreement under which it has advanced or loaned in excess of $10,000 to any of its directors, officers or employees; (ix) any agreement with, or plan covering, any officer or employee of JEI or any JEI Subsidiary, the benefits of which are contingent or vest, or the terms of which are materially altered upon the occurrence of a transaction involving JEI or any of the JEI Subsidiaries of the nature contemplated by this Agreement. (x) any agreement under which the consequences of a default or termination could have a Material Adverse Effect on JEI; (xi) any other agreement (or group of related agreements) the performance of which involves consideration in excess of $50,000 during any consecutive 12 month period. JEI has delivered to CRC (i) a correct and complete copy of each JEI Material Contract (as amended to date), other than those for which a written summary has been prepared, (ii) a written summary setting forth the terms and conditions of each oral agreement referred to in Schedule 4.02(v) and (iii) in the case of JEI Material Contracts summarized under clause (i) above, a written confirmation of the accuracy of the summary of such JEI Material Contract. With respect to each such agreement: (A) the agreement is legal, valid, binding, enforceable and in full force and effect, except as enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium, or other similar laws affecting the enforcement of creditors' rights generally, by general equitable principals (regardless of whether such enforceability is considered in a proceeding in equity or at law), and except to the extent that indemnification provisions may be unenforceable due to public policy; (B) the agreement will continue to be legal, valid, binding, enforceable, and in full force and effect on identical terms following the consummation of the transactions contemplated hereby; (C) no party is in breach or default, and no event has occurred which with notice or lapse of time would constitute a breach or default, or permit termination, modification, or acceleration (unless such right of termination, modification or acceleration has been waived in connection with the transactions contemplated hereby) under the agreement, except for any of the foregoing matters which, individually or in the aggregate, would not reasonably be expected to have a Material Adverse Effect on JEI and the JEI Subsidiaries taken as a whole; and (D) to the best of JEI's knowledge, no party has repudiated any provision of the agreement. V. CONDITIONS. 5.01 Conditions to Each Party's Obligation to Effect the Merger. The respective obligation of each party to effect the Merger is subject to the fulfillment, at or prior to the Closing, of each of the following conditions: (a) Stockholder Approval. The CRC Merger Proposal shall have been duly approved by the requisite vote of the stockholders of CRC and the JEI Merger Proposal shall have been duly approved by the requisite vote of the stockholders of JEI. (b) HSR Act. Any waiting period (and any extension thereof) under the HSR Act applicable to the transactions contemplated by this Agreement shall have expired or been terminated. (c) NYSE Listing Application. JEI shall have received approval of an amendment to the New York Stock Exchange listing application filed by JEI with respect to the JEI Common Stock. (d) No Injunctions or Restraints. No court of competent jurisdiction or other competent Governmental or Regulatory Authority shall have enacted, issued, promulgated, enforced or entered any Law or Order (whether temporary, preliminary or permanent) which is then in effect and has the effect of making illegal or otherwise restricting, preventing or prohibiting consummation of the Merger or the other transactions contemplated by this Agreement; provided, in the case of any such Order, each of the parties shall have used its best efforts to prevent the entry of any such Order and to appeal as promptly as possible any Order that may be entered. (e) Consents and Approvals. Other than the filing provided for by Section 1.03, all consents, approvals and actions of, filings with and notices to any Governmental or Regulatory Authority (other than any CRC Gaming Authority or JEI Gaming Authority, which is covered by paragraph (f) below) or any other person required of JEI, CRC or any of their respective subsidiaries to consummate the Merger and the other matters contemplated hereby (including, without limitation, those listed on Schedules 4.01(d) and 4.02(d)), the failure of which to be obtained or taken could be reasonably expected to have a Material Adverse Effect either on JEI and the JEI Subsidiaries taken as a whole or the Acquired Businesses taken as a whole, or on the ability of JEI and CRC to consummate the transactions contemplated hereby shall have been obtained, all in form and substance reasonably satisfactory to JEI and CRC, and no such consent, approval or action shall contain any term or condition which could be reasonably expected to result in a material diminution of the benefits of the Merger to the stockholders of JEI and CRC. (f) Gaming Authority Approval. All licenses, permits, registrations, authorizations, consents, waivers, orders, finding of suitability or other approvals required to be made with or given by any CRC Gaming Authority or JEI Gaming Authority to permit the Merger to be consummated and to permit the Surviving Corporation and each of its subsidiaries to conduct their businesses in the jurisdictions regulated by such Gaming Authorities after the Effective Time in the same manner as conducted by JEI and the JEI Subsidiaries, on the one hand, and the Acquired Businesses, on the other hand, prior to the Effective Time shall have been obtained or made, as applicable. (g) Registration Statement. The Registration Statement shall have been declared effective by the SEC under the Securities Act and no stop order suspending the effectiveness of the Registration Statement shall have been issued by the SEC and no proceeding for that purpose shall have been initiated by the SEC and not concluded or withdrawn. (h) Spinoff. The Spinoff shall have been consummated in accordance with the Reorganization Agreement. 5.02 Conditions to Obligation of JEI to Effect the Merger. The obligation of JEI to effect the Merger is further subject to the fulfillment, at or prior to the Closing, of each of the following additional conditions (all or any of which may be waived in whole or in part by JEI in its sole discretion): (a) Representations and Warranties. The representations and warranties made by CRC in this Agreement that are qualified as to materiality shall be true and correct and such representations and warranties that are not so qualified shall be true and correct in all material respects as of the Closing Date, in each case as though made on and as of the Closing Date or, in the case of representations and warranties made as of a specified date earlier than the Closing Date, on and as of such earlier date, and CRC shall have delivered to JEI a certificate, dated the Closing Date and executed on behalf of CRC by its Chairman of the Board or Chief Financial Officer, to such effect. Notwithstanding the foregoing, a representation and warranty shall not be required to be true and correct on the Closing Date or such specified date earlier than the Closing Date if and to the extent failure of such representation and warranty to be true and correct shall have resulted in an adjustment to the Merger Consolidation under Section 2.02 hereof. (b) Performance of Obligations. CRC shall have performed and complied with, in all material respects, each agreement, covenant, and obligation required by this Agreement to be so performed or complied with by CRC at or prior to the Closing, and CRC shall have delivered to JEI a certificate dated the Closing Date and executed on behalf of the Company by its Chairman of the Board or Chief Financial Officer, to such effect. (c) Other Closing Documents. CRC shall have delivered to JEI at or prior to the Effective Time such other documents as JEI may reasonably request in order to enable JEI to determine whether the conditions to their obligations under this Agreement have been met and otherwise to carry out the provisions of this Agreement. (d) No Governmental Action. There shall not have been any action taken, or any Law or Order proposed, promulgated, enacted, entered, enforced or deemed applicable to the transactions contemplated by this Agreement by any Governmental or Regulatory Authority (excluding any CRC Gaming Authority or JEI Gaming Authority), including the entry of a preliminary or permanent injunction, which, in the reasonable judgment of JEI, either (i) requires the divestiture by JEI of a material portion of the business of either JEI and the JEI Subsidiaries taken as a whole, or of the Acquired Businesses taken as a whole, or (ii) otherwise materially impairs the contemplated benefits to JEI of this Agreement, the Merger, or any of the other transactions contemplated by this Agreement. (e) Affiliates of CRC. JEI shall have received the Affiliates Agreement from each Affiliate. (f) Cancellation of CRC Options. Prior to the Effective Time, JEI shall have received evidence of the cancellation of all of CRC Options, as detailed in Section 2.03 above. (g) Material Adverse Change. There shall not have been a Material Adverse Change in the Acquired Businesses since November 30, 1998. (h) Relicensing of Louisiana Facility. JEI shall have received evidence reasonably satisfactory to it that the license held by LCC with respect to the Louisiana facility has been renewed on terms no less favorable to LCC than the terms contained in the license in effect on the date hereof, except that such renewal shall be for a term specified under applicable Louisiana law as in effect on the date of such renewal (it being understood and agreed that such license renewal may be subject to certain conditions as provided by Law, including without limitation, suitability investigations of one or more directors, officers and key employees of the Surviving Corporations and/or LCC). (i) Business Plan. CRC shall have delivered to JEI a business plan, acceptable to JEI, related to the Acquired Businesses, which, upon implementation, would result in a permanent reduction of cash expenses of the Acquired Businesses of at least $2 million per annum without a Material Adverse Effect on the Acquired Businesses taken as a whole. (j) Indemnification Agreement. Except for Dissenting Holders, each of the stockholders of CRC set forth on Schedule 5.02(j) shall enter into an indemnification agreement with JEI in the form attached hereto as Exhibit 5.02(j) ("Indemnification Agreement"). (k) Lockup Agreements. The recipients of the Share Merger Consideration shall enter into the Registration Rights and Lockup Agreement with JEI in the form attached hereto to as Exhibit 5.02(k). (l) Opinion of CRC's Counsel. On the Closing Date, JEI shall have received an opinion of special Florida counsel for CRC (who shall be reasonably acceptable to JEI and shall not be an employee of CRC), dated as of such date, addressed to JEI in form and substance reasonably satisfactory to JEI regarding various customary corporate matters and JEI shall have received an opinion of Arvin Peltz, Esq., CRC's General Counsel (or such other counsel to CRC, who may be an employee of CRC), regarding information furnished by CRC to JEI for use in the Joint Proxy Statement and Registration Statement. (m) Tax Sharing Agreement. CRC and Spinco shall have entered into the Tax Sharing Agreement in the form attached hereto as Exhibit 5.02(m) ("Tax Sharing Agreement"). 5.03 Conditions to Obligation of CRC to Effect the Merger. The obligation of CRC to effect the Merger is further subject to the fulfillment, at or prior to the Closing, of each of the following additional conditions (all or any of which may be waived in whole or in part by CRC in its sole discretion): (a) Representations and Warranties. The representations and warranties made by JEI in this Agreement that are qualified as to materiality shall be true and correct and such representations and warranties that are not so qualified shall be true and correct in all material respects as of the Closing Date as though made on and as of the Closing Date or, in the case of representations and warranties made as of a specified date earlier than the Closing Date, on and as of such earlier date, and JEI shall have delivered to CRC a certificate, dated the Closing Date and executed on behalf of JEI by its Chairman of the Board or President to such effect. (b) Performance of Obligations. JEI shall have performed and complied with, in all material respects, each agreement, covenant and obligation required by this Agreement to be so performed or complied with by JEI at or prior to the Closing, and JEI shall have delivered to CRC a certificate, dated the Closing Date and executed on behalf of JEI by its Chairman of the Board or President to such effect. (c) Other Closing Documents. JEI shall have delivered to CRC at or prior to the Effective Time such other documents as CRC may reasonably request in order to enable CRC to determine whether the conditions to its obligations under this Agreement have been met and otherwise to carry out the provisions of this Agreement. (d) No Governmental Action. There shall not have been any action taken, or any Law or Order proposed, promulgated, enacted, entered, enforced, or deemed applicable to the transactions contemplated by this Agreement by any Governmental or Regulatory Authority (excluding any CRC Gaming Authority or JEI Gaming Authority), including the entry of a preliminary or permanent injunction. which, in the reasonable judgment of CRC, materially impairs the contemplated benefits to CRC and the stockholders of CRC of this Agreement, the Merger, or any of the other transactions contemplated by this Agreement. (e) Registration Rights Agreement. At the Effective Time, JEI shall have entered into the Registration Rights and Lockup Agreement with the recipients of the Share Merger Consideration in the form attached hereto as Exhibit 5.02(k). (f) Material Adverse Change. There shall not have been a Material Adverse Change in JEI since September 30, 1998. (g) Tax Opinion. CRC shall have received at the Effective Time an opinion of Skadden, Arps, Slate, Meagher & Flom LLP, special counsel to CRC, to the effect that the Merger will constitute a reorganization within the meaning of Section 368(a) of the Code (or, if the parties elect to restructure the transaction as contemplated by Section 1.08 of this Agreement, to the effect that the Merger constitutes a transaction to which Section 351 of the Code applies). (h) Opinion of JEI's Counsel. CRC and Carnival shall each have received on the Closing Date an opinion of Camhy Karlinsky & Stein LLP, counsel for JEI, dated as of such date, addressed to CRC and Carnival (except with respect to the information in the Joint Proxy Statement and Registration Statement) in form and substance reasonably satisfactory to CRC regarding customary corporate matters, enforceability of the JEI Assignable Notes and the JEI Note and certain information set forth in the Joint Proxy Statement and Registration Statement. VI. TERMINATION. 6.01 Termination. This Agreement may be terminated, and the transactions contemplated hereby may be abandoned, at any time prior to the Effective Time, whether prior to or after the CRC Stockholders' Approval or the JEI Stockholders' Approval: (a) by mutual written agreement of the parties hereto duly authorized by action taken by or on behalf of their respective Boards of Directors; or (b) by either CRC or JEI upon written notification to the non-terminating party by the terminating party: (i) at any time after December 31, 1999 if the Merger shall not have been consummated on or prior to such date and such failure to consummate the Merger is not caused by a breach of this Agreement by the terminating party; (ii) if the JEI Stockholders' Approval shall not be obtained on or before December 31, 1999 by reason of the failure to obtain the requisite vote upon a vote held at a meeting of such stockholders, or any adjournment thereof, called therefor; or (iii) if facts exist which render impossible the satisfaction of one or more of the conditions set forth in Section 5.01 and such are not waived by CRC and JEI; provided that Section 5.01(f) is not subject to waiver by either CRC or JEI. (c) by CRC upon written notification to JEI, if: (i) there has been a material breach of any representation, warranty, covenant or agreement on the part of JEI set forth in this Agreement which breach has not been cured within ten (10) business days following receipt by JEI of notice of such breach from CRC or assurance of such cure reasonably satisfactory to CRC shall not have been given by or on behalf of JEI within such ten (10) business day period; or (ii) facts exist which render impossible the satisfaction of one or more of the conditions set forth in Section 5.03 and such are not waived by CRC. (d) by JEI, upon written notification to CRC, if: (i) there has been a material breach of any representation, warranty, covenant or agreement on the part of CRC set forth in this Agreement which breach has not been cured within ten (10) business days following receipt by CRC of notice of such breach from JEI or assurance of such cure reasonably satisfactory to JEI shall not have been given by or on behalf of CRC within such ten (10) business day period; or (ii) stockholders of CRC who own more than 10% of the issued and outstanding CRC Common Stock in the aggregate have dissented from the Merger pursuant to Florida law; or (iii) facts exists which render impossible the satisfaction of one or more of the conditions set forth in Section 5.02 and such are not waived by JEI. 6.02 Effect of Termination. If this Agreement is validly terminated by either CRC or JEI pursuant to Section 6.01; (a) This Agreement shall forthwith become null and void and there shall be no liability or obligation on the part of either CRC or JEI (or any of their respective officers, directors, representatives or affiliates), except that (i) the provisions of this Section 6.02, and the CRC Confidentiality Agreement and the JEI Confidentiality Agreement (collectively, the "Confidentiality Agreements"), will continue to apply following any such termination, and (ii) nothing contained herein shall relieve CRC or JEI from liability to the extent that such termination results from the wilful or grossly negligent and material breach by a party of any of its representations, warranties, covenants or agreements set forth in this Agreement or in the Confidentiality Agreement, in which case the other party shall be entitled to recover all damages allowable at law and all relief available in equity. (b) Subject to paragraph (a) of this Section 6.02 above and Section 2.02(c)(ii), and except as provided in paragraph (c) of this Section 6.02 below, each of JEI and CRC shall pay and bear its own fees and expenses incident to the negotiation, preparation, and execution of this Agreement, its meeting of stockholders and the transactions contemplated by this Agreement, including fees and expenses of its counsel, accountants, investment banking firms, and other experts; provided, however, that JEI and CRC shall each pay and bear 50% of all printing costs, including the cost of printing this Agreement, the Proxy Statement, the Registration Statement, and any amendment or supplement thereto. (c) In the event CRC or JEI terminates this Agreement pursuant to Section 6.01(b)(ii), JEI shall pay to CRC all of CRC's actual out-of-pocket, reasonably documented expenses, plus $1,000,000. VII. MISCELLANEOUS. 7.01 Further Actions. Each party hereto will execute such further documents and instruments and take such further actions as may reasonably be requested by the other party to consummate the Merger, to vest the Surviving Corporation with full title to all assets, properties, rights, approvals, immunities, and franchises of either of the Constituent Corporations or to effect the other purposes of this Agreement. 7.02 Availability of Equitable Remedies. Since a breach of the provisions of this Agreement could not adequately be compensated by money damages, any party shall be entitled, either before or after the Effective Time, in addition to any other right or remedy available to it, to an injunction restraining such breach or threatened breach and to specific performance of any such provision of this Agreement, and, in either case, no bond or other security shall be required in connection therewith, and the parties hereby consent to the issuance of such an injunction and to the ordering of specific performance. 7.03 Survival of Representations, Warranties, Etc. All representations and warranties in this Agreement shall terminate as of the Effective Time. This Section 7.03 shall not limit any covenant or agreement set forth herein which by its terms contemplates performance after the Effective Time. 7.04 Modification. This Agreement may be amended, supplemented or modified by action taken by or on behalf of the respective Board of Directors of each of the parties hereto at any time prior to the Effective Time, whether prior to or after adoption of this Agreement at the CRC Stockholders' Meeting or at the JEI Stockholders' Meeting, but after such adoption and approval only to the extent permitted by applicable law. No such amendment, supplement or modification shall be effective unless set forth in a written instrument duly executed by or on behalf of each party hereto. Notwithstanding the foregoing, no amendment, supplement or modification to this Agreement which would have an adverse effect on Carnival shall be made without the written consent of Carnival. 7.05 Notices. Any notice or other communication required or permitted to be given hereunder shall be in writing and shall be mailed by certified mail, return receipt requested or by Federal Express, express mail, or similar overnight delivery or courier service or delivered (in person or by telecopy, telex, or similar telecommunications equipment) against receipt to the party to which it is to be given at the address of such party set forth in the preamble to this Agreement (or to such other address as the party shall have furnished in writing in accordance with the provisions of this Section 7.05), provided that, from and after the Closing Date, notices to CRC shall be given to Spinco at the address given in the preamble for CRC, with copies as follows: If to JEI: Camhy Karlinsky & Stein LLP 1740 Broadway, 16th Floor New York, New York 10019-4315 Attention: Alan I. Annex, Esq. Fax No.: (212) 977-8389 If to CRC: Skadden, Arps, Slate, Meagher & Flom LLP 300 South Grand Avenue, 34th Floor Los Angeles, California 90071 Attention: Jonathan H. Grunzweig, Esq. Fax No.: (213) 687-5600 Any notice shall be addressed to the attention of the Chairman. Any notice or other communication given by certified mail shall be deemed given at the time of certification thereof, except for a notice changing a party's address which will be deemed given at the time of receipt thereof. Any notice given by other means permitted by this Section 7.05 shall be deemed given at the time of receipt thereof. 7.06 Waiver. Any waiver by any party of a breach of any term of this Agreement shall not operate as or be construed to be a waiver of any other breach of that term or of any breach of any other term of this Agreement. The failure of a party to insist upon strict adherence to any term of this Agreement on one or more occasions will not be considered a waiver or deprive that party of the right thereafter to insist upon strict adherence to that term or any other term of this Agreement. Any waiver must be in writing and be authorized by a resolution of the Board of Directors or by an officer of the waiving party. 7.07 Binding Effect. The provisions of this Agreement shall be binding upon and inure to the benefit of JEI and CRC and their respective successors and assigns. 7.08 No Third-Party Beneficiaries. This Agreement does not create, and shall not be construed as creating, any rights enforceable by any person not a party to this Agreement, except for the CRC stockholders and the holders of CRC Options with respect to Section 2.01, the Indemnified Parties with respect to Section 3.06 and Carnival with respect to the last sentence of Section 7.04. 7.09 Severability. If any provision of this Agreement is hereafter held to be invalid, illegal, or unenforceable for any reason, such provision shall be reformed to the maximum extent permitted so as to preserve the parties' original intent, failing which, it shall be severed from this Agreement, with the balance of this Agreement continuing in full force and effect. If any provision of this Agreement is so broad as to be unenforceable, the provision shall be interpreted to be only so broad as is enforceable. If any provision is inapplicable to any person or circumstance, it shall nevertheless remain applicable to all other persons and circumstances. 7.10 Headings. The headings in this Agreement are solely for convenience of reference and shall be given no effect in the construction or interpretation of this Agreement. 7.11 Counterparts; Governing Law. This Agreement may be executed in any number of counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. It shall be governed by, and construed in accordance with, the laws of the State of Nevada, without giving effect to the rules governing conflict of laws. Any action, suit, or proceeding arising out of, based on, or in connection with this Agreement, any document relating hereto or delivered in connection with the transactions contemplated hereby, any statement, certificate, or other instrument delivered by or on behalf of, or delivered to, any party hereto or thereto in connection with the transactions contemplated hereby or thereby, any breach of this Agreement or such other document, the Merger, or the other transactions contemplated hereby or thereby may be brought only in the United States District Court for the District of Nevada and each party covenants and agrees not to assert, by way of motion, as a defense, or otherwise, in any such action, suit, or proceeding, any claim that it is not subject personally to the jurisdiction of such court if it has been duly served with process, that its property is exempt or immune from attachment or execution, that the action, suit, or proceeding is brought in an inconvenient forum, that the venue of the action, suit, or proceeding is improper, or that this Agreement or the subject matter hereof may not be enforced in or by such court. VIII. CROSS REFERENCES 8.01 Cross References for Defined Terms.. Definitions for the following defined terms can be found as follows: "Acquired Businesses" shall have the meaning set forth in the first "Whereas" clause; "Affiliates" shall have the meaning set forth in Section 2.04; "Affiliates Agreement" shall have the meaning set forth in Section 2.04; "Affiliates Letter" shall have the meaning set forth in Section 2.04; "Agreement" shall have the meaning set forth in the Preamble; "Audit" shall have the meaning set forth in Section 4.01(l); "Benefit Obligation" shall have the meaning set forth in Section 4.01(n)(i); "Budget" shall have the meaning set forth in Section 3.01(e)(iii); "Carnival" shall have the meaning set forth in Section 2.01(b); "CCL Notes" shall have the meaning set forth in Section 2.01(b); "Closing" shall have the meaning set forth in Section 1.04; "Closing Date" shall have the meaning set forth in Section 1.04; "Code" shall have the meaning set forth in the fifth "Whereas" clause; "Compliance Committee" shall have the meaning set forth in Section 4.02(c); "Confidentiality Agreements" shall have the meaning set forth in Section 6.02(a); "Constituent Corporations" shall have the meaning set forth in the Preamble; "Contracts" shall have the meaning set forth in Section 4.01(d)(i); "Contribution" shall have the meaning set forth in Section 1.02; "CRC" shall have the meaning set forth in the Preamble; "CRC Acquired Subsidiaries" shall have the meaning set forth in Section 4.01(a); "CRC Benefit Obligations" shall have the meaning set forth in Section 4.01(n)(i); "CRC Common Stock" shall have the meaning set forth in Section 2.01(a); "CRC Confidentiality Agreement" shall have the meaning set forth in Section 3.01(d); "CRC Employee Benefit Plans" shall have the meaning set forth in Section 4.01(n)(i); "CRC Financial Statements" shall have the meaning set forth in Section 4.01(e)(i); "CRC Gaming Authority" shall have the meaning set forth in Section 4.01(d)(ii); "CRC Gaming Laws" shall have the meaning set forth in Section 4.01(j); "CRC Material Contracts" shall have the meaning set forth in Section 4.01(x); "CRC Merger Proposal" shall have the meaning set forth in Section 3.04(b); "CRC Options" shall have the meaning set forth in Section 2.03(a); "CRC Pension Plans" shall have the meaning set forth in Section 4.01(n)(i); "CRC Permits" shall have the meaning set forth in Section 4.01(j); "CRC Preferred Stock" shall have the meaning set forth in Section 4.01(b); "CRC Stockholders Agreement" shall have the meaning set forth in the third "Whereas" clause; "CRC Stockholders' Approval" shall have the meaning set forth in Section 3.04(b); "CRC Stockholders' Meeting" shall have the meaning set forth in Section 3.04(b); "Dissenting Holder" shall have the meaning set forth in Section 2.01(c); "Dissenting Shares" shall have the meaning set forth in Section 2.05; "Diverted Asset Amount" shall have the meaning set forth in Section 2.02(c)(i)(A); 'Due to CRC Line Items" shall have the meaning set forth in Section 2.02(a)(iii); "Effective Time" shall have the meaning set forth in Section 1.03; "Employee Benefit Plan" shall have the meaning set forth in Section 4.01(n)(i); "Environmental Permits" shall have the meaning set forth in Section 4.01(m)(iii); "ERISA" shall have the meaning set forth in Section 4.01(n)(i); "Excess Expenses" shall have the meaning set forth in Section 2.02(c)(ii)(A); "Exchange Act" shall have the meaning set forth in Section 3.01(h); "FBCA" shall have the meaning set forth in Section 1.01; "Florida Articles" shall have the meaning set forth in Section 1.03; "GAAP" shall have the meaning set forth in Section 2.02(a)(i); "Governmental or Regulatory Authority" shall have the meaning set forth in Section 4.01(d)(i); "Hazardous Material" shall have the meaning set forth in Section 4.01(m)(i); "Hazardous Materials Activities" shall have the meaning set forth in Section 4.01(m)(ii); "HSR Act" shall have the meaning set forth in Section 3.05; "Indemnified Liabilities" shall have the meaning set forth in Section 3.06(a); "Indemnified Parties" shall have the meaning set forth in Section 3.06(a); "Initial November 30 Balance Sheet" shall have the meaning set forth in Section 2.02(a)(i); "Intangibles" shall have the meaning set forth in Section 4.01(o); "IRS" shall have the meaning set forth in Section 4.01(n)(i); "JEI" shall have the meaning set forth in the Preamble; "JEI Assignable Notes" shall have the meaning set forth in Section 2.01(b); "JEI Benefit Obligations" shall have the meaning set forth in Section 4.01(n)(i); "JEI Common Stock" shall have the meaning set forth in Section 2.01(a); "JEI Confidentiality Agreement" shall have the meaning set forth in Section 3.02(c); "JEI Employee Benefit Plans" shall have the meaning set forth in Section 4.01(n)(i); "JEI Financial Statements" shall have the meaning set forth in Section 4.02(e); "JEI Gaming Authority" shall have the meaning set forth in Section 4.02(d)(ii); "JEI Gaming Laws" shall have the meaning set forth in Section 4.02(l); "JEI Material Contracts" shall have the meaning set forth in Section 4.02(v); "JEI Merger Proposal" shall have the meaning set forth in Section 3.04(a); "JEI Note" shall have the meaning set forth in Section 2.01(c)(i); "JEI Options" shall have the meaning set forth in Section 4.02(b)(i); "JEI Pension Plans" shall have the meaning set forth in Section 4.01(n)(i); "JEI Permits" shall have the meaning set forth in Section 4.02(l); "JEI Preferred Stock" shall have the meaning set forth in Section 4.02(b)(i); "JEI SEC Reports" shall have the meaning set forth in Section 4.02(e); "JEI Stockholders Agreement" shall have the meaning set forth in the fourth "Whereas" clause; "JEI Stockholders' Approval" shall have the meaning set forth in Section 3.04(a); "JEI Stockholders' Meeting" shall have the meaning set forth in Section 3.04(a); "JEI Subsidiaries" shall have the meaning set forth in Section 3.02; "Joint Proxy Statement" shall have the meaning set forth in Section 4.01(i); "Laws" shall have the meaning set forth in Section 4.01(d)(i); "LCC" shall have the meaning set forth in Section 2.02(a)(i); "LCC Notes" shall have the meaning set forth in Section 5.02(k); "LCC SEC Reports" shall have the meaning set forth in Section 4.01(e)(ii); "Lien" shall have the meaning set forth in Section 3.01(e)(iv); "Material Adverse Effect" shall have the meaning set forth in Section 4.01(a); "Material Adverse Change in JEI" shall have the meaning set forth in Section 4.02(f); "Material Adverse Change in the Acquired Businesses" shall have the meaning set forth in Section 4.01(f); "Merger" shall have the meaning set forth in the first "Whereas" clause; "Merger Consideration" shall have the meaning set forth in Section 2.01(c)(i); "Net Worth Deficit" shall have the meaning set forth in Section 2.02(a)(i)(A); "Nevada Articles" shall have the meaning set forth in Section 1.03; "NRS" shall have the meaning set forth in Section 1.01; "144A Notes" shall have the meaning set forth in Section 2.01(b); "Options" shall have the meaning set forth in Section 2.03(a); "Option Transaction Value" shall have the meaning set forth in Section 2.03(b)(i); "Orders" shall have the meaning set forth in Section 4.01(d)(i); "Pension Plan" shall have the meaning set forth in Section 4.01(n)(i); "Permitted Liens" shall have the meaning set forth in Section 4.01(f); "Players" shall have the meaning set forth in Section 3.02(d); "Players Merger" shall have the meaning set forth in Section 3.02(a); "Players Merger Agreement" shall have the meaning set forth in Section 3.02(a); "Pre-Closing Balance Sheet" shall have the meaning set forth in Section 2.02(c)(i); "Pre-Closing Income Statement" shall have the meaning set forth in Section 2.02(c)(i); "PWC" shall have the meaning set forth in Section 2.02(d)(i)(A); "PWC Report" shall have the meaning set forth in Section 2.02(d)(i)(D); "Registration Statement" shall have the meaning set forth in Section 3.03(a); "Release Time" shall have the meaning set forth in Section 3.01; "Reorganization Agreement" shall have the meaning set forth in the second "Whereas" clause. "SEC" shall have the meaning set forth in Section 3.03(a); "Section 16 Affiliate" shall have the meaning set forth in Section 2.06; "Securities Act" shall have the meaning set forth in Section 2.04; "Share Merger Consideration" shall have the meaning set forth in Section 2.01(a); "Spinco" shall have the meaning set forth in the second "Whereas" clause; "Spinco Businesses" shall have the meaning set forth in the second "Whereas" clause; "Spinco Interests" shall have the meaning set forth in Section 1.02; "Spinoff" shall have the meaning set forth in the second "Whereas" clause; "Spinoff Tax Liability" shall have the meaning set forth in Section 2.02(d)(i); "Stockholders' Meetings" shall have the meaning set forth in Section 3.04(b); "Stock Plan" shall have the meaning set forth in Section 2.03(a); "Stub Period Diverted Asset Amount" shall have the meaning set forth in Section 2.02(c)(i)(A); "Surviving Corporation" shall have the meaning set forth in the Preamble; "Tax" or "Taxes" shall have the meaning set forth in Section 4.01(l); "Tax Attributes" shall have the meaning set forth in Section 2.02(d)(ii)(B); "Tax Authority" shall have the meaning set forth in Section 4.01(l); "Tax Returns" shall have the meaning set forth in Section 4.01(l); "Tax Sharing Agreement" shall have the meaning set forth in Section 5.02(m); "Updated November 30 Balance Sheet" shall have the meaning set forth in Section 2.02(a)(i); "Withheld Shares" shall have the meaning set forth in Section 2.01(a). IN WITNESS WHEREOF, this Agreement has been executed by duly authorized officers of each of the parties hereto as of the date first above written. JACKPOT ENTERPRISES INC. By /s/ Don R. Kornstein ___________________________________________ Name: Don R. Kornstein Title: President and Chief Executive Officer Attest: CRC HOLDINGS, INC. By /s/ Sherwood M. Weiser ___________________________________________ Name: Sherwood M. Weiser Title: Chariman and CEO Attest: -----END PRIVACY-ENHANCED MESSAGE-----