EXECUTION VERSION
AGREEMENT AND PLAN OF MERGER
Dated as of July 14, 2004,
By and Among
▇▇▇▇▇▇'▇ Entertainment, Inc.,
▇▇▇▇▇▇'▇ Operating Company, Inc.
and
Caesars Entertainment, Inc.
TABLE OF CONTENTS
ARTICLE I. THE MERGER......................................................................................
Section 1.01 The Merger.............................................................
Section 1.02 Closing................................................................
Section 1.03 Effective Time.........................................................
Section 1.04 Effect of the Merger...................................................
Section 1.05 Certificate of Incorporation and By-laws...............................
Section 1.06 Directors..............................................................
Section 1.07 Officers...............................................................
ARTICLE II. EFFECT ON THE CAPITAL STOCK OF THE CONSTITUENT CORPORATIONS; EXCHANGE OF CERTIFICATES..........
Section 2.01 Effect on Capital Stock................................................
Section 2.02 Exchange of Certificates...............................................
Section 2.03 Elections..............................................................
Section 2.04 Company Equity Awards..................................................
ARTICLE III. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.................................................
Section 3.01 Organization, Standing and Power.......................................
Section 3.02 The Company Subsidiaries; Equity Interests.............................
Section 3.03 Capital Structure......................................................
Section 3.04 Authority; Execution and Delivery; Enforceability......................
Section 3.05 No Conflicts; Consents.................................................
Section 3.06 Company SEC Documents; Undisclosed Liabilities.........................
Section 3.07 Information Supplied...................................................
Section 3.08 Absence of Certain Changes or Events...................................
Section 3.09 Taxes..................................................................
Section 3.10 Absence of Changes in Benefit Plans....................................
Section 3.11 ERISA Compliance; Excess Parachute Payments............................
Section 3.12 Litigation.............................................................
Section 3.13 Compliance With Applicable Laws........................................
Section 3.14 Assets Other Than Real Property Interests..............................
Section 3.15 Real Property..........................................................
Section 3.16 Labor Matters..........................................................
Section 3.17 Contracts..............................................................
Section 3.18 Environmental Matters..................................................
Section 3.19 Intellectual Property..................................................
Section 3.20 Brokers; Schedule of Fees and Expenses.................................
Section 3.21 Opinion of Financial Advisor...........................................
ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB........................................
Section 4.01 Organization, Standing and Power.......................................
Section 4.02 Parent Subsidiaries; Equity Interests..................................
Section 4.03 Capital Structure......................................................
Section 4.04 Authority; Execution and Delivery; Enforceability......................
Section 4.05 No Conflicts; Consents.................................................
Section 4.06 Parent SEC Documents; Undisclosed Liabilities..........................
Section 4.07 Information Supplied...................................................
Section 4.08 Absence of Certain Changes or Events...................................
Section 4.09 Taxes..................................................................
Section 4.10 Absence of Changes in Benefit Plans....................................
Section 4.11 ERISA Compliance; Excess Parachute Payments............................
Section 4.12 Litigation.............................................................
Section 4.13 Compliance With Applicable Laws........................................
Section 4.14 Assets Other Than Real Property Interests..............................
Section 4.15 Real Property..........................................................
Section 4.16 Labor Matters..........................................................
Section 4.17 Contracts..............................................................
Section 4.18 Environmental Matters..................................................
Section 4.19 Intellectual Property..................................................
Section 4.20 Brokers; Schedule of Fees and Expenses.................................
Section 4.21 Opinion of Financial Advisor...........................................
Section 4.22 Financing..............................................................
ARTICLE V. COVENANTS RELATING TO CONDUCT OF BUSINESS.......................................................
Section 5.01 Conduct of Business....................................................
Section 5.02 No Solicitation........................................................
ARTICLE VI. ADDITIONAL AGREEMENTS..........................................................................
Section 6.01 Preparation of the Form S-4 and the Joint
Proxy Statement; Stockholders Meetings...............................
Section 6.02 Access to Information; Confidentiality.................................
Section 6.03 Reasonable Efforts; Notification.......................................
Section 6.04 Benefit Plans..........................................................
Section 6.05 Indemnification........................................................
Section 6.06 Fees and Expenses......................................................
Section 6.07 Public Announcements...................................................
Section 6.08 Transfer Taxes.........................................................
Section 6.09 Affiliates.............................................................
Section 6.10 Section 16 Matters.....................................................
Section 6.11 Stock Exchange Listing.................................................
Section 6.12 Tax Matters............................................................
Section 6.13 Litigation.............................................................
Section 6.14 Parent Board...........................................................
Section 6.15 Company Rights Agreement...............................................
Section 6.16 Title Insurance and Surveys............................................
ARTICLE VII. CONDITIONS PRECEDENT..........................................................................
Section 7.01 Conditions to Each Party's Obligation to Effect the Merger.............
Section 7.02 Conditions to Obligations of Parent and Merger Sub.....................
Section 7.03 Conditions to Obligation of the Company................................
Section 7.04 Frustration of Closing Conditions......................................
ARTICLE VIII. TERMINATION, AMENDMENT AND WAIVER............................................................
Section 8.01 Termination............................................................
Section 8.02 Effect of Termination..................................................
Section 8.03 Amendment..............................................................
Section 8.04 Extension; Waiver......................................................
Section 8.05 Procedure for Termination, Amendment, Extension or Waiver..............
ARTICLE IX. GENERAL PROVISIONS.............................................................................
Section 9.01 Nonsurvival of Representations and Warranties..........................
Section 9.02 Notices................................................................
Section 9.03 Definitions............................................................
Section 9.04 Interpretation; Disclosure Letters.....................................
Section 9.05 Severability...........................................................
Section 9.06 Counterparts; Facsimile................................................
Section 9.07 Entire Agreement; No Third-Party Beneficiaries.........................
Section 9.08 Governing Law..........................................................
Section 9.09 Assignment.............................................................
Section 9.10 Enforcement; Waiver of Jury Trial......................................
Section 9.11 Mutual Drafting........................................................
Exhibit A Form of Affiliate Letter
Exhibit B Form of Parent Tax Matters Certificate
Exhibit C Form of Company Tax Matters Certificate
AGREEMENT AND PLAN OF MERGER (the "Agreement") dated as of
July 14, 2004, by and among ▇▇▇▇▇▇'▇ Entertainment, Inc., a Delaware
corporation ("Parent"), ▇▇▇▇▇▇'▇ Operating Company, Inc., a Delaware
corporation and a wholly owned subsidiary of Parent ("Merger Sub"), and
Caesars Entertainment, Inc., a Delaware corporation (the "Company").
WHEREAS, the respective Boards of Directors of Parent,
Merger Sub and the Company have approved the merger (the "Merger") of the
Company into Merger Sub on the terms and subject to the conditions set forth
in this Agreement, whereby each issued share of common stock, par value $0.01
per share, of the Company (the "Company Common Stock") not owned by Parent,
Merger Sub or the Company shall be converted into the right to receive the
Merger Consideration; and
WHEREAS, Parent, as the sole stockholder of Merger Sub, will
immediately following the execution of this Agreement approve this Agreement;
WHEREAS, subject to Section 6.12 hereof, for Federal income
tax purposes it is intended that the Merger qualify as a "reorganization"
within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as
amended (the "Code"); and
WHEREAS, Parent, Merger Sub and the Company desire to make
certain representations, warranties, covenants and agreements in connection
with the Merger and also to prescribe various conditions to the Merger.
NOW, THEREFORE, in consideration of the foregoing and the
respective representations, warranties, covenants and agreements hereinafter
set forth, the parties hereto agree as follows:
ARTICLE I.
THE MERGER
Section 1.01 The Merger. Subject to Sections 6.12(c) and
6.12(d) hereof, on the terms and subject to the conditions set forth in this
Agreement, and in accordance with the General Corporation Law of the State of
Delaware (the "DGCL"), the Company shall be merged with and into Merger Sub at
the Effective Time. At the Effective Time and as a result of the Merger, the
separate corporate existence of the Company shall cease and Merger Sub shall
continue as the surviving entity (the "Surviving Entity"). The Merger, the
payment of cash in connection with the Merger, the issuance by Parent of
shares of common stock, par value $0.10 per share, of Parent ("Parent Common
Stock") in connection with the Merger (the "Share Issuance") and the other
transactions contemplated by this Agreement are referred to in this Agreement
as the "Transactions."
Section 1.02 Closing. The closing (the "Closing") of the
Merger shall take place at the offices of ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP, ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ at 10:00 a.m., Pacific
Time, on the second Business Day following the satisfaction (or, to the extent
permitted by Law, waiver by the party or parties entitled to the benefits
thereof) of the conditions set forth in Article VII (other than those
conditions that by their nature are to be satisfied at the Closing, but
subject to the fulfillment or waiver of those conditions), or at such other
place, time and date as shall be agreed in writing by Parent and the Company.
The date on which the Closing occurs is referred to in this Agreement as the
"Closing Date."
Section 1.03 Effective Time. Prior to the Closing, Parent
shall prepare, and on the Closing Date, the Surviving Entity shall file with
the Secretary of State of the State of Delaware, a certificate of merger or
other appropriate documents (in any such case, the "Certificate of Merger")
executed in accordance with the relevant provisions of the DGCL and shall make
all other filings or recordings required under the DGCL. The Merger shall
become effective at such time as the Certificate of Merger is duly filed with
such Secretary of State on the Closing Date, or at such later time as Parent
and the Company shall agree and specify in the Certificate of Merger (the time
the Merger becomes effective being the "Effective Time").
Section 1.04 Effect of the Merger. At the Effective Time,
the effect of the Merger shall be as provided herein and in the applicable
provisions of the DGCL.
Section 1.05 Certificate of Incorporation and By-laws.
(a) The certificate of incorporation of Merger Sub,
as in effect immediately prior to the Effective Time, shall be the certificate
of incorporation of the Surviving Entity until thereafter changed or amended
as provided therein or by the DGCL or applicable Law.
(b) The by-laws of Merger Sub, as in effect
immediately prior to the Effective Time, shall be the by-laws of the Surviving
Entity until thereafter changed or amended as provided therein or by
applicable Law.
Section 1.06 Directors. The directors of Merger Sub
immediately prior to the Effective Time shall be the directors of the
Surviving Entity, until the earlier of their resignation or removal or until
their respective successors are duly elected and qualified, as the case may
be.
Section 1.07 Officers. The officers of the Merger Sub
immediately prior to the Effective Time shall be the officers of the Surviving
Entity, until the earlier of their resignation or removal or until their
respective successors are duly elected or appointed and qualified, as the case
may be.
ARTICLE II.
EFFECT ON THE CAPITAL STOCK OF THE CONSTITUENT CORPORATIONS;
EXCHANGE OF CERTIFICATES
Section 2.01 Effect on Capital Stock. At the Effective Time,
by virtue of the Merger and without any action on the part of the holder of
any shares of Company Common Stock or any shares of capital stock of Merger
Sub:
(a) Capital Stock of Merger Sub. Each issued and
outstanding share of capital stock of Merger Sub shall continue to be issued
and outstanding and shall constitute the only issued and outstanding shares of
the Surviving Entity.
(b) Cancellation of Treasury Stock and Parent-Owned
Stock. Each share of Company Common Stock that is owned by the Company, Parent
or Merger Sub (or any direct or indirect wholly-owned subsidiary of Parent or
Merger Sub) shall no longer be outstanding and shall automatically be canceled
and retired and shall cease to exist, and no cash, Parent Common Stock or
other consideration shall be delivered or deliverable in exchange therefor.
(c) Conversion of Company Common Stock.
(1) Subject to Sections 2.01(b), 2.01(d) and
2.02(e), each issued and outstanding share of Company Common Stock outstanding
prior to the Effective Time shall be converted into the right to receive, at
the election of the holder thereof, one of the following:
(i) for each such share of Company Common
Stock with respect to which an election to receive stock
consideration (a "Stock Election") has been effectively made, and not
revoked or lost, pursuant to Section 2.03 (each, an "Electing
Share"), the right to receive (subject to adjustment as provided in
Section 2.01(e)) 0.3247 (the "Exchange Ratio") shares of Parent
Common Stock (the "Stock Consideration"), including the associated
special stock purchase rights issued ("Parent Rights") pursuant to
the Rights Agreement dated as of October 6, 1996 between Parent and
the Bank of New York, as Rights Agent (the "Parent Rights
Agreement"); and
(ii) for each such share of Company Common
Stock other than Electing Shares (each, a "Non-Electing Share") the
right to receive (subject to adjustment as provided in Section
2.01(e)) $17.75 in cash, without interest (the "Cash Consideration"),
and each stockholder of the Company that holds Non-Electing Shares
shall be deemed to have made a cash election (a "Cash Election") with
respect to such Non-Electing Shares.
(2) The cash payable, and the shares of Parent
Common Stock to be issued, upon the conversion of shares of Company Common
Stock pursuant to this Section 2.01(c), and any cash payable in lieu of
fractional shares of Parent Common Stock as contemplated by Section 2.02(e),
are referred to collectively as "Merger Consideration." As of the Effective
Time, all such shares of Company Common Stock 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 of Company Common
Stock shall cease to have any rights with respect thereto, except the right to
receive Merger Consideration upon surrender of such certificate in accordance
with Section 2.02, without interest.
(3) Notwithstanding anything in this Agreement to
the contrary, if, between the date of this Agreement and the Effective Time,
the outstanding shares of Parent Common Stock or Company Common Stock shall
have been changed into a different number of shares or a different class by
reason of any reclassification, recapitalization, split-up, combination,
exchange of shares or readjustment, or a stock dividend thereon shall be
declared with a record date within said period, the Exchange Ratio shall be
correspondingly adjusted.
(d) Dissenter Rights. Notwithstanding anything in
this Agreement to the contrary, shares ("Dissenter Shares") of Company Common
Stock that are outstanding immediately prior to the Effective Time and that
are held by any person who is entitled to demand and properly demands payment
for such Dissenter Shares pursuant to, and who complies in all respects with,
Sections 262 of the DGCL (the "Dissenter Rights") shall not be converted into
Merger Consideration as provided in Section 2.01(c)(1), but rather the holders
of Dissenter Shares shall be entitled to payment for such Dissenter Shares in
accordance with the Dissenter Rights; provided, however, that if any such
holder shall fail to perfect or otherwise shall waive, withdraw or lose the
right to receive payment under the Dissenter Rights, then the right of such
holder to be paid in accordance with the Dissenter Rights shall cease and such
Dissenter Shares shall be deemed to have been converted as of the Effective
Time into, and to have become exchangeable solely for the right to receive,
Merger Consideration as provided in Section 2.01(c)(1). The Company shall
serve prompt notice to Parent of any written notice of intent to demand
payment, or any written demand for payment, received by the Company in respect
of any shares of Company Common Stock, and Parent shall have the right to
participate in and direct all negotiations and proceedings with respect to
such demands. Prior to the Effective Time, the Company shall not, without the
prior written consent of Parent, make any payment with respect to, or settle
or offer to settle, any such demands, or agree to do any of the foregoing.
(e) Proration. Notwithstanding anything in this
Agreement to the contrary:
(1) the total number of shares of Company Common
Stock to be converted into the Stock Consideration pursuant to Section
2.01(c)(1) shall be equal to the product obtained by multiplying (x) the
number of shares of Company Common Stock outstanding immediately prior to the
Effective Time by (y) 0.6642 (the "Stock Cap"), and all other shares of
Company Common Stock shall be converted into the Cash Consideration.
(2) if the aggregate number of Electing Shares
exceeds the Stock Cap, then (x) all Non-Electing Shares of each holder thereof
shall be converted into the right to receive the Cash Consideration and (y)
the Electing Shares of each holder thereof will be converted into the right to
receive the Stock Consideration in respect of that number of Electing Shares
equal to the product obtained by multiplying (A) the number of Electing Shares
held by such holder by (B) a fraction, the numerator of which is the Stock Cap
and the denominator of which is the aggregate number of Electing Shares, with
the remaining number of such holder's Electing Shares being converted into the
right to receive the Cash Consideration; and
(3) if the aggregate number of Electing Shares is
less than the Stock Cap (the amount by which the aggregate number of Electing
Shares is less than the Stock Cap being referred to herein as the "Shortfall
Number"), then (x) all Electing Shares shall be converted into the right to
receive the Stock Consideration and (y) the Non-Electing Shares of each holder
thereof will be converted into the right to receive the Stock Consideration in
respect of that number of Non-Electing Shares equal to the product obtained by
multiplying (A) the number of Non-Electing Shares held by such holder by (B) a
fraction, the numerator of which is the Shortfall Number and the denominator
of which is the aggregate number of Non-Electing Shares, with the remaining
number of such holder's Non-Electing Shares being converted into the right to
receive the Cash Consideration.
Section 2.02 Exchange of Certificates.
(a) Exchange Agent. As soon as practicable following
the date of this Agreement and in any event not less than three days prior to
dissemination of the Joint Proxy Statement to the stockholders of the Company
and the stockholders of Parent, Parent shall select a bank or trust company
reasonably satisfactory to the Company to act as exchange agent (the "Exchange
Agent") for payment of Merger Consideration upon surrender of certificates
representing Company Common Stock. The Exchange Agent shall also act as the
agent for the Company's stockholders for the purpose of receiving and holding
their Forms of Election and Certificates and shall obtain no rights or
interests in such shares. Promptly following the Effective Time, Parent shall
deposit with the Exchange Agent, for the benefit of the holders of shares of
Company Common Stock, for exchange in accordance with this Article II, through
the Exchange Agent (i) certificates representing the number of shares of
Parent Common Stock issuable and (ii) the amount of cash consideration
payable, in each case, pursuant to Section 2.01(c) in exchange for outstanding
shares of Company Common Stock (such shares of Parent Common Stock and cash,
together with any dividends or distributions with respect thereto, being
hereinafter referred to as the "Exchange Fund"). For the purposes of such
deposit, Parent shall assume that there will not be any fractional shares of
Parent Common Stock. Parent shall make available to the Exchange Agent, from
time to time as needed, cash sufficient to pay cash in lieu of fractional
shares in accordance with Section 2.02(e). The Exchange Agent shall, pursuant
to irrevocable instructions, deliver Parent Common Stock contemplated to be
issued pursuant to Section 2.01 out of the Exchange Fund. The Exchange Fund
may not be used for any other purpose.
(b) Exchange Procedures. As soon as reasonably
practicable after the Effective Time, the Exchange Agent shall mail to each
holder of record of a certificate or certificates (the "Certificates") that
immediately prior to the Effective Time represented outstanding shares of
Company Common Stock whose shares were converted into the right to receive
Merger Consideration pursuant to Section 2.01(c) who did not complete an Form
of Election pursuant to Section 2.03, (i) a letter of transmittal (which shall
specify that delivery shall be effected, and risk of loss and title to the
Certificates shall pass, only upon delivery of the Certificates to the
Exchange Agent and shall be in such form and have such other provisions as
Parent may reasonably specify) and (ii) instructions for use in effecting the
surrender of the Certificates in exchange for Merger Consideration. Upon
surrender of a Certificate for cancellation to the Exchange Agent or to such
other agent or agents as may be appointed by Parent, together with such letter
of transmittal, duly executed, and such other documents as may reasonably be
required by the Exchange Agent, the holder of such Certificate shall be
entitled to receive in exchange therefor the amount of cash, if any, and the
number of whole shares of Parent Common Stock, if any, into which the
aggregate number of shares of Company Common Stock previously represented by
such Certificate shall have been converted pursuant to Section 2.01(c), and
the Certificate so surrendered shall forthwith be canceled. Thereafter, such
holder shall be treated as a holder of Parent Common Stock for purposes of
voting or quorum for any meeting of the stockholders of Parent. In the event
of a transfer of ownership of Company Common Stock that is not registered in
the transfer records of the Company, payment may be made to a person other
than the person in whose name the Certificate so surrendered is registered, if
such Certificate shall be properly endorsed or otherwise be in proper form for
transfer and the person requesting such payment shall pay any transfer or
other taxes required by reason of the payment to a person other than the
registered holder of such Certificate or establish to the satisfaction of
Parent that such tax has been paid or is not applicable. Until surrendered as
contemplated by this Section 2.02, each Certificate shall be deemed at any
time after the Effective Time to represent only the right to receive upon such
surrender the Merger Consideration into which the shares of Company Common
Stock theretofore represented by such Certificate have been converted pursuant
to Section 2.01(c). No interest shall be paid or accrue on any cash payable
upon surrender of any Certificate.
(c) Distributions With Respect to Unexchanged
Shares. No dividends or other distributions with respect to Parent Common
Stock with a record date on or after the Effective Time shall be paid to the
holder of any Certificate formerly representing Company Common Stock with
respect to the shares of Parent Common Stock issuable upon surrender thereof,
and no cash payment in lieu of fractional shares shall be paid to any such
holder pursuant to Section 2.02(e) until the surrender of such Certificate in
accordance with this Article II. Subject to applicable Law, following
surrender of any such Certificate, there shall be paid to the holder of the
Certificate representing whole shares of Parent Common Stock issued in
exchange therefor, without interest, (i) at the time of such surrender, the
amount of any cash payable in lieu of a fractional share of Parent Common
Stock to which such holder is entitled pursuant to Section 2.02(e) and the
amount of dividends or other distributions with a record date after the
Effective Time theretofore paid with respect to such whole shares of Parent
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 such surrender and a payment date subsequent to such surrender
payable with respect to such whole shares of Parent Common Stock.
(d) No Further Ownership Rights in Company Common
Stock. The Merger Consideration paid and/or issued in accordance with the
terms of this Article II upon conversion of any shares of Company Common Stock
shall be deemed to have been paid and/or issued in full satisfaction of all
rights pertaining to such shares of Company Common Stock, subject, however, to
the Surviving Entity's obligation to pay any dividends or make any other
distributions with a record date prior to the Effective Time that may have
been declared or made by the Company on such shares of Company Common Stock in
accordance with the terms of this Agreement or prior to the date of this
Agreement and which remain unpaid at the Effective Time, and after the
Effective Time there shall be no further registration of transfers on the
stock transfer books of the Surviving Entity of shares of Company Common Stock
that were outstanding immediately prior to the Effective Time. If, after the
Effective Time, any Certificates formerly representing shares of Company
Common Stock are presented to the Surviving Entity or the Exchange Agent for
any reason, they shall be canceled and exchanged as provided in this Article
II.
(e) No Fractional Shares.
(1) No certificates or scrip representing
fractional shares of Parent Common Stock shall be issued upon the conversion
of Company Common Stock pursuant to Section 2.01(c), and such fractional share
interests shall not entitle the owner thereof to vote or to any rights of a
holder of Parent Common Stock. For purposes of this Section 2.02(e), all
fractional shares to which a single record holder would be entitled shall be
aggregated and calculations shall be rounded to three decimal places.
(2) In lieu of any such fractional shares, each
holder of Company Common Stock who would otherwise be entitled to such
fractional shares shall be entitled to an amount in cash, without interest,
rounded to the nearest cent, equal to the product of (A) the amount of the
fractional share interest in a share of Parent Common Stock to which such
holder is entitled under Section 2.01(c) (or would be entitled but for this
Section 2.02(e)) and (B) an amount equal to the average of the closing sale
prices for Parent Common Stock on the New York Stock Exchange, as reported in
The Wall Street Journal, Northeastern edition, for each of the ten consecutive
trading days ending with the second complete trading day prior to the
Effective Time.
(f) Termination of Exchange Fund. Any portion of the
Exchange Fund that remains undistributed to the holders of Company Common
Stock for six months after the Effective Time shall be delivered to Parent,
upon demand, and any holder of Company Common Stock who has not theretofore
complied with this Article II shall thereafter look only to Parent and the
Surviving Entity for payment of its claim for Merger Consideration (including
any cash in lieu of fractional shares of Parent Common Stock to which they are
entitled pursuant to Section 2.2(e)) and any applicable dividends or
distributions with respect to any Parent Common Stock constituting Merger
Consideration as provided in Section 2.02(c), in each case, without any
interest thereon.
(g) No Liability. None of Parent, Merger Sub or the
Company or the Exchange Agent shall be liable to any person in respect of any
cash or any shares of Parent Common Stock (or dividends or distributions with
respect thereto) delivered to a public official pursuant to any applicable
abandoned property, escheat or similar Law. If any Certificate has not been
surrendered prior to five years after the Effective Time (or immediately prior
to such earlier date on which Merger Consideration in respect of such
Certificate would otherwise escheat to or become the property of any
Governmental Entity), any such cash, shares, dividends or distributions in
respect of such Certificate shall, to the extent permitted by applicable Law,
become the property of the Surviving Entity, free and clear of all claims or
interest of any person previously entitled thereto.
(h) Investment of Exchange Fund. The Exchange Agent
shall invest any cash included in the Exchange Fund, as directed by Parent, in
direct obligations of the U.S. Treasury or otherwise with the consent of the
Company (which consent shall not be unreasonably withheld or delayed), on a
daily basis. Any interest and other income resulting from such investments
shall be paid to Parent.
(i) Withholding Rights. Parent and the Exchange
Agent shall be entitled to deduct and withhold from the consideration
otherwise payable to any holder of Company Common Stock pursuant to this
Agreement such amounts as may be required to be deducted and withheld with
respect to the making of such payment under the Code, or under any provision
of state, local or foreign tax Law. To the extent that amounts are so withheld
and paid over to the appropriate taxing authority, the Surviving Entity will
be treated as though it withheld an appropriate amount of the type of
consideration otherwise payable pursuant to this Agreement to any holder of
Company Common Stock, sold such consideration for an amount of cash equal to
the fair market value of such consideration at the time of such deemed sale
and paid such cash proceeds to the appropriate taxing authority.
(j) Income Tax Treatment. It is intended by the
parties hereto that the Merger qualify as a "reorganization" within the
meaning of Section 368(a) of the Code. Subject to any revision to the
structure of the transaction as provided under Section 6.12(c) hereof, the
parties hereto hereby adopt this Agreement as a "plan of reorganization"
within the meanings of Sections 1.368-2(g) and 1.368-3(a) of the U.S. Treasury
Regulations promulgated under the Code.
Section 2.03 Elections.
(a) Each person who, on or prior to the Election
Date referred to in paragraph (b) below, is a record holder of shares of
Company Common Stock shall be entitled, with respect to all or any portion of
such shares, to make an unconditional Stock Election on or prior to such
Election Date, on the basis hereinafter set forth.
(b) Parent shall prepare a form of election, which
form shall be subject to the reasonable approval of the Company (the "Form of
Election") and shall be mailed with the Joint Proxy Statement to the record
holders of Company Common Stock as of the record date for the Company
Stockholders Meeting), which Form of Election shall be used by each record
holder of shares of Company Common Stock who wishes to elect to receive the
stock consideration pursuant to Section 2.01(c)(1) for any or all shares of
Company Common Stock held by such holder. The Company shall use all reasonable
efforts to make the Form of Election and the Joint Proxy Statement available
to all persons who become record holders of Company Common Stock during the
period between such record date and the Election Date, including using
reasonable efforts to mail a Form of Election to all such persons who become
record holders prior to the seventh Business Day prior to the Election Date.
Any such holder's election to receive the stock consideration pursuant to
Section 2.01(c)(1) shall have been properly made only if the Exchange Agent
shall have received at its designated office, by 5:00 p.m., Pacific Standard
Time, on the Business Day immediately preceding the Closing Date (the
"Election Date"), a Form of Election properly completed and signed and
accompanied by Certificates for the shares of Company Common Stock to which
such Form of Election relates, duly endorsed in blank or otherwise in form
acceptable for transfer on the books of the Company (or accompanied by an
appropriate guarantee of delivery of such Certificates as set forth in such
Form of Election from a firm which is a member of a registered national
securities exchange or of the National Association of Securities Dealers, Inc.
or a commercial bank or trust company having an office or correspondent in the
United States, provided such Certificates are in fact delivered to the
Exchange Agent within three New York Stock Exchange trading days after the
date of execution of such guarantee of delivery). Failure to deliver
Certificates covered by any guarantee of delivery within three New York Stock
Exchange trading days after the date of execution of such guarantee of
delivery shall be deemed to invalidate any otherwise properly made Stock
Election. Parent and the Company will announce the anticipated Closing Date at
least three Business Days, but not more than ten Business Days, prior thereto.
If the Closing is delayed to a subsequent date, the Election Date shall be
similarly delayed and Parent will promptly announce such rescheduled Election
Date and Closing.
(c) Any Form of Election may be revoked by the
stockholder who submitted such Form of Election to the Exchange Agent only by
written notice received by the Exchange Agent (i) prior to 5:00 p.m., Pacific
Time, on the Election Date or (ii) after such time, if (and only to the extent
that) the Exchange Agent is legally required to permit revocations and only if
the Effective Time shall not have occurred prior to such date. In addition,
all Forms of Election shall automatically be revoked if the Exchange Agent is
notified in writing by Parent and the Company that the Merger has been
abandoned. If a Form of Election is revoked, the Certificate or Certificates
(or guarantees of delivery, as appropriate) for the shares of Company Common
Stock to which such Form of Election relates shall be promptly returned to the
stockholder submitting the same to the Exchange Agent and any such shares
shall be treated as Non-Electing Shares (unless and until another duly
completed Form of Election (and the Certificate or Certificates, or guarantees
of delivery, as applicable, to which such Form of Election relates) has been
submitted to the Exchange Agent in accordance with this Agreement).
(d) The determination of the Exchange Agent in its
sole discretion shall be binding as to whether or not elections to receive the
stock consideration pursuant to Section 2.01(c)(1) have been properly made or
revoked pursuant to this Section 2.03 with respect to shares of Company Common
Stock and when elections and revocations were received by it. If no Form of
Election is received with respect to shares of Company Common Stock, or if the
Exchange Agent determines that any election to receive the stock consideration
pursuant to Section 2.01(c)(1) was not properly made with respect to shares of
Company Common Stock, such shares shall be treated by the Exchange Agent as
Non-Electing Shares at the Effective Time, and such shares shall be converted
into the right to receive the Cash Consideration in accordance with Section
2.01(c)(1)(ii) (subject to Section 2.01(e)). The Exchange Agent shall also
make all computations as to the proration contemplated by Section 2.01(e), and
absent manifest error any such computation shall be conclusive and binding on
the holders of shares of Company Common Stock. The Exchange Agent may, with
the mutual agreement of Parent and the Company, make such rules as are
consistent with this Section 2.03 for the implementation of the elections
provided for herein as shall be necessary or desirable fully to effect such
elections.
Section 2.04 Company Equity Awards.
(a) At the Effective Time, each Company Stock Option
then outstanding under any Company Stock Plan, whether or not then
exercisable, shall be assumed by Parent and converted into an option to
purchase Parent Common Stock in accordance with this Section 2.04(a). Each
Company Stock Option so converted shall continue to have, and be subject to,
the same terms and conditions (acknowledging that the Company Stock Plans
(other than the 1998 Independent Director Stock Option Plan) provide for
accelerated vesting in connection with this Transaction) as set forth in the
applicable Company Stock Plan and any agreements thereunder immediately prior
to the Effective Time, except that, as of the Effective Time, (i) each
unvested Company Stock Option under the 1998 Independent Director Stock Option
Plan shall be fully vested and exercisable, (ii) each Company Stock Option
shall be exercisable for that number of whole shares of Parent Common Stock
equal to the product of the number of shares of Company Common Stock that were
issuable upon exercise of such Company Stock Option immediately prior to the
Effective Time multiplied by the Exchange Ratio (without regard to any
adjustment provided in Section 2.01(e)), rounded down to the nearest whole
number of shares of Parent Common Stock, and (iii) the per share exercise
price for the shares of Parent Common Stock issuable upon exercise of such
Company Stock Option so converted shall be equal to the quotient determined by
dividing the exercise price per share of Company Common Stock at which such
Company Stock Option was exercisable immediately prior to the Effective Time
by the Exchange Ratio, rounded up to the nearest whole cent. Notwithstanding
the foregoing, the conversion of any Company Stock Options which are
"incentive stock options," within the meaning of Section 422 of the Code, into
options to purchase Parent Common Stock shall be made so as not to constitute
a "modification" of such Company Stock Options within the meaning of Section
424 of the Code.
(b) At the Effective Time, each outstanding purchase
right under the Company's Amended and Restated Employee Stock Purchase Plan
(the "Employee Stock Purchase Plan") shall be assumed by Parent in such manner
that Parent is a corporation "issuing or assuming a stock option in a
transaction to which Section 424(a) applies" within the meaning of the Code,
and shall be converted into a right to purchase Parent Common Stock in
accordance with this Section 2.04(b). Each purchase right so assumed and
converted by Parent under this Agreement will continue to have, and be subject
to, the same terms and conditions set forth in the Company's Employee Stock
Purchase Plan and the documents governing the outstanding purchase rights
under the Employee Stock Purchase Plan, immediately prior to the Effective
Time, except that the purchase price of shares of Parent Common Stock and the
number of shares of Parent Common Stock to be issued upon the exercise of such
purchase rights shall be adjusted in accordance with the Exchange Ratio.
(c) At the Effective Time, each RSU shall vest
according to its terms and as promptly as practicable following the Effective
Time, Parent shall cause to be issued to each holder of RSUs, in complete
settlement thereof, a number of shares of Parent Common Stock (net of any
applicable withholding) equal to the product of the number of shares of
Company Common Stock subject to RSUs credited to the holder's account
immediately prior to the Effective Time multiplied by the Exchange Ratio
(without regard to any adjustment provided in Section 2.01(e)), such product
to be rounded to the nearest whole number of shares of Parent Common Stock.
(d) At the Effective Time, the forfeiture conditions
on each Performance Award shall lapse according to its terms and, as promptly
as practicable following the Effective Time, Parent shall cause to be issued
to each holder of a Performance Award, in complete settlement thereof, a
number of shares of Parent Common Stock (net of any applicable withholding)
equal to the product of the number of shares of Company Common Stock issuable
upon achievement of all performance goals set forth in the holder's
Performance Award multiplied by the Exchange Ratio (without regard to any
adjustment provided in Section 2.01(e)), such product to be rounded to the
nearest whole number of shares of Parent Common Stock.
(e) The Company shall take all actions necessary to
terminate the Company Supplemental Retention Plan as of the Effective Time. In
connection with such termination, as promptly as practicable following the
Effective Time, Parent shall cause to be issued to each participant in the
Supplemental Retention Plan, in complete settlement of such participant's
rights with respect to Supplemental Retention Units, a number of shares of
Parent Common Stock (net of any applicable withholding) equal to the product
of the number of shares of Company Common Stock subject to Supplemental
Retention Units credited to such participant's account immediately prior to
the Effective Time multiplied by the Exchange Ratio (without regard to any
adjustment provided in Section 2.01(e)), such product to be rounded down to
the nearest whole number of shares of Parent Common Stock.
(f) Parent shall take all corporate action necessary
to reserve for issuance a sufficient number of shares of Parent Common Stock
for delivery upon exercise or settlement of the Company Equity Awards being
assumed or settled in accordance with this Section 2.04. As soon as reasonably
practicable after the Effective Time, Parent shall file a registration
statement on Form S-8 (or any successor or other appropriate form) with
respect to the shares of Parent Common Stock subject to such Company Equity
Awards and shall use all reasonable efforts to maintain the effectiveness of
such registration statement or registration statements (and maintain the
current status of the prospectus or prospectuses contained therein) for so
long as the Company Stock Options being assumed in accordance with this
Section 2.04 remain outstanding.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as expressly set forth in that certain letter (with
specific reference to the Section or Subsection of this Agreement to which the
information stated in such disclosure relates and such other Sections or
Subsections of this Agreement to the extent a matter is disclosed in such a
way as to make its relevance to the information called for by such other
Section or Subsection readily apparent), dated as of the date of this
Agreement, from the Company to Parent and Merger Sub (the "Company Disclosure
Letter") or in any Company SEC Document filed and publicly available prior to
the date of this Agreement (the "Filed Company SEC Documents"), the Company
represents and warrants to Parent and Merger Sub that:
Section 3.01 Organization, Standing and Power. Each of the
Company and each of its subsidiaries (the "Company Subsidiaries") is duly
organized or formed, validly existing and in good standing under the laws of
the jurisdiction in which it is organized and has full corporate, partnership
or limited liability company power and authority to conduct its businesses as
presently conducted, except where such failure to be in good standing that
would not, individually, or in the aggregate, reasonably be expected to have a
Company Material Adverse Effect. The Company and each Company Subsidiary is
duly qualified to do business in each jurisdiction where the nature of its
business or the ownership or leasing of its properties make such qualification
necessary or the failure to so qualify, individually or in the aggregate, has
had or would reasonably be expected to have a Company Material Adverse Effect.
The Company has delivered or made available to Parent true and complete copies
of the certificate of incorporation of the Company, as amended to the date of
this Agreement (as so amended, the "Company Charter"), and the by-laws of the
Company, as amended to the date of this Agreement (as so amended, the "Company
By-laws"), and the comparable organizational documents of each Company
Subsidiary, in each case as amended to the date of this Agreement. The Company
is not in violation of any of the provision of the Company Charter or the
Company By-laws as of the date hereof.
Section 3.02 The Company Subsidiaries; Equity Interests.
(a) Section 3.02(a) of the Company Disclosure Letter
lists each Company Subsidiary and its jurisdiction of organization or
formation. All the outstanding shares of capital stock of each Company
Subsidiary have been validly issued and are fully paid and nonassessable and
are owned by the Company, by another Company Subsidiary or by the Company and
another Company Subsidiary, free and clear of all Liens.
(b) Except for its interests in the Company
Subsidiaries, the Company does not own, directly or indirectly, any Equity
Interest in any person.
Section 3.03 Capital Structure.
(a) The authorized capital stock of the Company
consists of 400,000,000 shares of Company Common Stock and 100,000,000 shares
of preferred stock, par value $0.01 per share. As of July 13, 2004, (i)
308,571,027 shares of Company Common Stock were issued and outstanding, (ii)
23,081,422 shares of Company Common Stock were held by the Company in its
treasury, (iii) 25,441,914 shares of Company Common Stock were subject to
outstanding Company Equity Awards pursuant to the Company Stock Plans, (iv)
29,120,640 shares of Company Common Stock were reserved for issuance under the
Company Stock Plans and (v) a variable number of shares of Company Common
Stock were subject to outstanding convertible debt. Except as set forth above,
as of July 13, 2004, no shares of capital stock or other voting securities of
the Company were issued, reserved for issuance or outstanding, and since July
13, 2004, no shares of capital stock or other voting securities of the Company
were issued by the Company, except for shares of Company Common Stock issued
upon the exercise or vesting of Company Equity Awards outstanding as of July
13, 2004. There are no outstanding stock appreciation rights linked to the
price of Company Common Stock and granted under the Company Stock Plan or
otherwise. All outstanding shares of Company Common Stock are, and all such
shares that may be issued prior to the Effective Time will be when issued,
duly authorized, validly issued, fully paid and nonassessable and not subject
to or issued in violation of any purchase option, call option, right of first
refusal, preemptive right, subscription right or any similar right under any
provision of the DGCL, the Company Charter, the Company By-laws or any
Contract to which the Company is a party or otherwise bound. There are not any
bonds, debentures, notes or other indebtedness of the Company having the right
to vote (or convertible into, or exchangeable for, securities having the right
to vote) on any matters on which holders of Company Common Stock may vote
("Voting Company Debt"). Except as set forth above and except for the Rights
(as defined in the Company Rights Plan), as of the date of this Agreement,
there are not any options, warrants, rights, convertible or exchangeable
securities, "phantom" stock rights, stock appreciation rights, stock-based
performance units, commitments, Contracts, arrangements or undertakings of any
kind to which the Company or any Company Subsidiary is a party or by which any
of them is bound (i) obligating the Company or any Company Subsidiary to
issue, deliver or sell, or cause to be issued, delivered or sold, additional
shares of capital stock or other Equity Interests in, or any security
convertible or exercisable for or exchangeable into any capital stock of or
other Equity Interests in, the Company or any Company Subsidiary or any Voting
Company Debt, (ii) obligating the Company or any Company Subsidiary to issue,
grant, extend or enter into any such option, warrant, call, right, security,
commitment, Contract, arrangement or undertaking or (iii) that give any person
the right to receive any economic benefit or right similar to or derived from
the economic benefits and rights occurring to holders of Company Common Stock.
As of the date of this Agreement, there are not any outstanding contractual
obligations of the Company or any Company Subsidiary to repurchase, redeem or
otherwise acquire any shares of capital stock of the Company or any Company
Subsidiary.
(b) All outstanding Company Stock Options are
evidenced by stock option award agreements. The Company has provided or made
available to Parent the standard form of stock option award agreement, as well
as those stock option award agreements that are materially different from the
standard form of stock option award agreement.
Section 3.04 Authority; Execution and Delivery;
Enforceability.
(a) The Company has all requisite corporate power
and authority to execute and deliver this Agreement and, subject to the
Company Stockholder Approval, to consummate the Merger and the other
Transactions to be performed or consummated by the Company in accordance with
the terms of this Agreement. The execution and delivery by the Company of this
Agreement and the consummation by the Company of the Merger and the other
Transactions to be performed or consummated by the Company in accordance with
the terms of this Agreement have been duly authorized by all necessary
corporate action on the part of the Company, subject, in the case of the
Merger, to receipt of the Company Stockholder Approval. The Company has duly
executed and delivered this Agreement, and, assuming due authorization,
execution and delivery of this Agreement by Parent and Merger Sub, this
Agreement constitutes its legal, valid and binding obligation, enforceable
against it in accordance with its terms, except that enforcement hereof may be
subject to or limited by (i) bankruptcy, insolvency or other similar laws, now
or hereafter in effect, affecting its creditors' rights generally and (ii) the
affect of general principles of equity (regardless of whether enforceability
is considered in a proceeding at law or in equity).
(b) The Board of Directors of the Company (the
"Company Board"), at a meeting duly called and held, duly and unanimously
adopted resolutions (which resolutions have not been rescinded or modified)
(i) approving this Agreement and approving the Merger and the other
Transactions to be performed or consummated by the Company in accordance with
the terms of this Agreement, (ii) determining that the terms of the Merger and
the other Transactions to be performed or consummated by the Company in
accordance with the terms of this Agreement are advisable and fair to and in
the best interests of the Company and its stockholders, (iii) directing that
this Agreement be submitted to a vote at the Company Stockholders Meeting and
(iv) recommending that the Company's stockholders adopt this Agreement. The
Company has taken all appropriate actions so that the restrictions on business
combinations contained in Section 203 of the DGCL will not apply with respect
to or as a result of this Agreement, the Merger or any other Transactions
contemplated by this Agreement and the transactions contemplated hereby and
thereby, without any further action on the part of the stockholders of the
Company or the Company Board. No other state takeover statute or similar
statute or regulation is applicable to or purports to be applicable to the
Merger or any other Transactions contemplated by this Agreement.
(c) The Company Rights Agreement has been amended so
that (A) Parent, Merger Sub and any of their "Affiliates" or "Associates" (as
such terms are defined in the Company Rights Agreement) are exempt from the
definition of "Acquiring Person" contained in the Company Rights Agreement,
and no "Shares Acquisition Date" or "Distribution Date" (as such terms are
defined in the Company Rights Agreement) will occur as a result of the
execution of this Agreement or any other Transactions contemplated by this
Agreement or the consummation of the Merger and (B) the Company Rights
Agreement will terminate and the Company Rights will expire immediately prior
to the Effective Time. The Company Rights Agreement, as so amended, has not
been further amended or modified.
(d) The only vote of holders of any class or series
of the capital stock of the Company necessary to adopt this Agreement and
approve the Merger is the approval of this Agreement by a majority of the
outstanding shares of Company Common Stock entitled to vote (the "Company
Stockholder Approval"). The affirmative vote of the holders of Company Common
Stock, or any of them, is not necessary to consummate any Transaction to be
performed or consummated by the Company in accordance with the terms of this
Agreement other than the Merger.
Section 3.05 No Conflicts; Consents.
(a) The execution and delivery by the Company of
this Agreement do not, and the consummation by the Company of the Merger and
the other Transactions to be performed or consummated by the Company in
accordance with the terms of this Agreement and compliance by the Company with
the terms hereof will not, conflict with, or result in any violation of or
default (with or without notice or lapse of time, or both) under, or give rise
to a right of consent, termination, cancellation or acceleration of any
obligation or to loss of a material benefit under, or to increased,
additional, accelerated or guaranteed rights or entitlements of any person
under, or result in the creation of any Lien upon any of the properties or
assets of the Company or any Company Subsidiary under, any provision of (i)
the Company Charter, the Company By-laws or the comparable organizational
documents of any Company Subsidiary, (ii) any contract, management agreement,
development agreement, consulting agreement, lease, license, indenture, note,
bond, agreement, permit, concession, franchise or other instrument (a
"Contract") to which the Company or any Company Subsidiary is a party or by
which any of their respective properties or assets is bound or (iii) subject
to the filings and other matters referred to in Section 3.05(b), any judgment,
order or decree ("Judgment") or statute, law (including common law),
ordinance, rule or regulation ("Law") applicable to the Company or any Company
Subsidiary or their respective properties or assets, other than, in the case
of clauses (ii) and (iii) above, any such items that, individually or in the
aggregate, have not had and would not reasonably be expected to have a Company
Material Adverse Effect.
(b) No consent, approval, license, order or
authorization ("Consent") of, or registration, declaration or filing with, or
Permit from, any Federal, state, local or foreign government or any court of
competent jurisdiction, administrative agency or commission or other
governmental authority or instrumentality, domestic or foreign (a
"Governmental Entity"), is required to be obtained or made by the Company or
any Company Subsidiary in connection with the execution, delivery and
performance of this Agreement or the consummation of the Merger and the other
Transactions to be performed or consummated by the Company in accordance with
the terms of this Agreement, other than (i) compliance with and filings under
the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976, as amended (the "HSR
Act") and any applicable antitrust or competition laws of foreign
jurisdictions ("Foreign Competition Laws"), (ii) the filing with the
Securities and Exchange Commission (the "SEC") of (A) the Joint Proxy
Statement and (B) such reports under, or other applicable requirements of, the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), as may be
required in connection with this Agreement, the Merger and the other
Transactions to be performed or consummated by the Company in accordance with
the terms of this Agreement, (iii) the filing of the Certificate of Merger
with the Secretary of State of the State of Delaware and appropriate documents
with the relevant authorities of the other jurisdictions in which the Company
is qualified to do business, (iv) compliance with and such filings and
approvals as may be required under applicable Gaming Laws and (v) such other
items that, individually or in the aggregate, have not had and would not
reasonably be expected to have a Company Material Adverse Effect.
Section 3.06 Company SEC Documents; Undisclosed Liabilities.
(a) The Company has filed all reports, schedules,
forms, statements and other documents required to be filed by the Company with
the SEC since January 1, 2001 pursuant to Sections 13(a) and 15(d) of the
Exchange Act (the "Company SEC Documents").
(b) As of its respective date, each Company SEC
Document complied in all material respects with the requirements of the
Exchange Act or the Securities Act of 1933, as amended (the "Securities Act"),
as the case may be, and the rules and regulations of the SEC promulgated
thereunder applicable to such Company SEC Document, and 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. Except
to the extent that information contained in any Filed Company SEC Document has
been revised or superseded by a later filed Filed Company SEC Document, none
of the Company SEC Documents contains any untrue statement of a material fact
or omits 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 were made, not misleading. The consolidated financial statements of
the Company included in the Company SEC Documents comply as to form in all
material respects with applicable accounting requirements and the published
rules and regulations of the SEC with respect thereto, have been prepared in
accordance with generally accepted accounting principles ("GAAP") (except, in
the case of unaudited statements, as permitted by Form 10-Q of the SEC)
applied on a consistent basis during the periods involved (except as may be
indicated in the notes thereto) and fairly present in all material respects
the consolidated financial position of the Company and its consolidated
subsidiaries as of the dates thereof and the consolidated results of their
operations and cash flows for the periods shown (subject, in the case of
unaudited statements, to normal year-end audit adjustments). The books and
records of the Company and the Company Subsidiaries have been, and are being,
maintained in all material respects in accordance with GAAP and any other
applicable legal and accounting requirements.
(c) Except as and to the extent disclosed or
reserved against on the Company's most recent balance sheet (or in the notes
thereto) included in the Filed Company SEC Documents, neither the Company nor
any Company Subsidiary has any Liabilities of any nature (whether accrued,
absolute, contingent or otherwise) required by GAAP to be set forth on a
consolidated balance sheet of the Company and its consolidated subsidiaries or
in the notes thereto, except for Liabilities that, individually or in the
aggregate, would not reasonably be expected to have a Company Material Adverse
Effect.
(d) None of the Company Subsidiaries is, or has at
any time since January 1, 2001 been, subject to the reporting requirements of
Sections 13(a) and 15(d) of the Exchange Act.
Section 3.07 Information Supplied. None of the information
supplied or to be supplied by the Company for inclusion or incorporation by
reference in (i) the registration statement on Form S-4 to be filed with the
SEC by Parent in connection with the Share Issuance (the "Form S-4") will, at
the time the Form S-4 is filed with the SEC, at any time it is amended or
supplemented or at the time it becomes effective under the Securities Act,
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein
not misleading, or (ii) the Joint Proxy Statement will, at the date it is
first mailed to the Company's stockholders or Parent's stockholders or at the
time of the Company Stockholders Meeting or Parent Stockholders Meeting,
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. The Joint Proxy Statement will comply as to form in all
material respects with the requirements of the Exchange Act and the rules and
regulations thereunder, except that no representation is made by the Company
with respect to statements made or incorporated by reference therein based on
information supplied by Parent or Merger Sub in writing for inclusion or
incorporation by reference in the Form S-4 or the Joint Proxy Statement.
Section 3.08 Absence of Certain Changes or Events. Since
December 31, 2003, the Company has conducted its business in all material
respects only in the ordinary course, and since such date there has not been:
(i) any event or development, condition or
occurrence that, individually or in the aggregate, has had
or would reasonably be expected to have a Company Material
Adverse Effect;
(ii) any change in accounting methods,
principles or practices by the Company or any Company
Subsidiary, except insofar as may have been required by a
change in GAAP; or
(iii) any material elections with respect to
Taxes by the Company or any Company Subsidiary or settlement
or compromise by the Company or any Company Subsidiary of
any material Tax Liability or refund.
Section 3.09 Taxes.
(a) Except with respect to any divestitures that may
be undertaken pursuant to Section 6.03(a), none of the Company, the Company
Subsidiaries or any Company affiliates has taken or agreed to take any action
that would prevent the Merger from qualifying as a "reorganization" within the
meaning of Section 368(a) of the Code. Except with respect to any divestitures
that may be undertaken pursuant to Section 6.03(a ), to the Company's
knowledge, there is no agreement, plan or other circumstance that would
prevent the Merger from qualifying as a reorganization within the meaning of
Section 368(a) of the Code.
(b) The Company and the Company Subsidiaries timely
have filed with the appropriate Tax authority or other Governmental Authority
all material Tax Returns required to be filed, taking into account any
extensions of time within which to file such Tax Returns, and all such Tax
Returns are complete and accurate in all material respects, subject to such
exceptions as would not be reasonably expected to have a Company Material
Adverse Effect. The Company and the Company Subsidiaries have paid all Taxes
(other than such Taxes as are being contested in good faith by appropriate
proceedings and for which adequate reserves have been taken) that have become
due, whether or not shown on any Tax Return, subject to such exceptions as are
unlikely to have a Company Material Adverse Effect. The unpaid Taxes of the
Company and the Company Subsidiaries did not, as of the dates of the financial
statements contained in the most recent Company SEC Documents, exceed the
reserve for Tax Liability (excluding any reserve for deferred Taxes
established to reflect timing differences between book and Tax income) set
forth on the face of the balance sheets (rather than in any notes thereto)
contained in such financial statements, subject to such exceptions as are
unlikely to have a Company Material Adverse Effect. Since the date of the
financial statements in the most recent Company SEC Documents, neither the
Company nor any Company Subsidiary has incurred any Liability for Taxes
outside the ordinary course of business or otherwise inconsistent with past
custom and practice, subject to such exceptions as would not be reasonably
expected to have a Company Material Adverse Effect.
(c) There are no audits or other administrative
proceedings or court proceedings currently pending or in progress with regard
to any material Taxes or material Tax Returns of the Company or any Company
Subsidiary, and neither the Company nor any Company Subsidiary has received a
written notice or announcement of any audits or other administrative
proceedings or court proceedings, subject to exceptions for any audits or
proceedings that, if resolved in a manner unfavorable to the Company or any
Company Subsidiary, are unlikely to have a Company Material Adverse Effect.
Neither the Company nor any Company Subsidiary has granted any waivers or
extensions of the time to assess any Taxes.
(d) There are no Tax Liens upon any property or
assets of the Company or any Company Subsidiary except Liens for current Taxes
not yet due and payable and Liens for Taxes that are being contested in good
faith by appropriate proceedings, subject to such exceptions as would not be
reasonably expected to have a Company Material Adverse Effect.
(e) All Taxes required to be withheld, collected or
deposited by or with respect to the Company and each Company Subsidiary have
been timely withheld, collected or deposited as the case may be, and to the
extent required by applicable Law, have been paid to the relevant Tax
authority or other Governmental Entity, subject to such exceptions as are
unlikely to have a Company Material Adverse Effect.
(f) Neither the Company nor any Company Subsidiary
is responsible for the Taxes of any other person (other than the Company or a
Company Subsidiary) under Treasury Regulation Section 1.1502-6 (or any similar
provision of state, local, or foreign Law), as a transferee or by Contract
that would reasonably be expected to have a Company Material Adverse Effect.
Neither the Company nor any Company Subsidiary is a party to, is bound by or
has any obligation under any Tax sharing, Tax allocation or Tax indemnity
agreement or similar Contract or arrangement, subject to such exceptions as
would not be reasonably expected to have a Company Material Adverse Effect.
(g) Neither the Company nor any Company Subsidiary
has been a party to any distribution occurring during the two (2) years
preceding the date of this Agreement in which the parties to such distribution
treated the distribution as one to which Section 355 of the Code is
applicable.
(h) Neither the Company nor any Company Subsidiary
has entered into or participated in any listed transaction within the meaning
of Treasury Regulation Section 1.6011-4(b)(2) or any confidential corporate
tax shelter within the meaning of Treasury Regulation Section 301.6111-2.
Section 3.10 Absence of Changes in Benefit Plans. Except as
would not reasonably be expected to have a Company Material Adverse Effect,
since December 31, 2003, neither the Company nor any Company Subsidiary has
terminated, adopted, amended, modified or agreed to amend or modify (or
announced an intention to amend or modify) any collective bargaining agreement
or any bonus, pension, profit sharing, deferred compensation, incentive
compensation, stock ownership, stock purchase, stock appreciation, restricted
stock, stock option, phantom stock, performance, retirement, thrift, savings,
stock bonus, cafeteria, paid time off, perquisite, fringe benefit, vacation,
severance, disability, death benefit, hospitalization, medical or other
welfare benefit or other plan, program, arrangement or understanding, whether
oral or written, formal or informal, funded or unfunded (whether or not
legally binding) maintained, contributed to or required to be maintained or
contributed to by the Company or any Company Subsidiary or any other person or
entity that, together with the Company or any Company Subsidiary, is treated
as a single employer under Section 414(b), (c), (m) or (o) of the Code (each,
a "Company ERISA Affiliate"), in each case providing benefits to any current
or former employee, officer, director or independent contractor of the Company
or any Company Subsidiary (each, a "Company Participant") and whether or not
subject to United States law (collectively, "Company Benefit Plans") or has
made any change in any actuarial or other assumption used to calculate funding
obligations with respect to any Company Benefit Plan that is a Company Pension
Plan, or any change in the manner in which contributions to any such Company
Pension Plan are made or the basis on which such contributions are determined,
other than changes made pursuant to any collective bargaining agreement to
which the Company or any Company Subsidiary is a party.
Section 3.11 ERISA Compliance; Excess Parachute Payments.
(a) Section 3.11(a) of the Company Disclosure Letter
contains a list of all "employee pension benefit plans" (as defined in Section
3(2) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA")) ("Company Pension Plans"), "employee welfare benefit plans" (as
defined in Section 3(1) of ERISA) and all other material Company Benefit Plans
maintained, or contributed to, by the Company or any Company Subsidiary for
the benefit of any Company Participant. Each Company Benefit Plan (other than
Company Multiemployer Pension Plans), and, to the knowledge of the Company,
each Company Multiemployer Pension Plan has been administered in material
compliance with its terms and applicable Law, and the terms of any applicable
collective bargaining agreements. The Company has delivered or made available,
or will as soon as practicable following the date hereof deliver or make
available, to Parent true, complete and correct copies of (i) each Company
Benefit Plan required to be listed on Section 3.11(a) of the Company
Disclosure Letter (or, in the case of any unwritten Company Benefit Plans,
written descriptions thereof), (ii) the two most recent annual reports
required to be filed, or such similar reports, statements, information returns
or material correspondence filed with or delivered to any Governmental Entity,
with respect to each Company Benefit Plan (including reports filed on Form
5500 with accompanying schedules and attachments), (iii) the most recent
summary plan description prepared for each Company Benefit Plan, (iv) each
trust agreement and group annuity contract and other documents relating to the
funding or payment of benefits under any Company Benefit Plan, (v) the most
recent determination or qualification letter issued by any Governmental Entity
for each Company Benefit Plan intended to qualify for favorable tax treatment,
as well as a true, correct and complete copy of each pending application for a
determination letter, if applicable, and (vi) the two most recent actuarial
valuations for each Company Benefit Plan.
(b) Each Company Benefit Plan (other than any
Company Multiemployer Pension Plan) intended to be "qualified" within the
meaning of Section 401(a) of the Code has been the subject of a determination
letter from the Internal Revenue Service to the effect that such Company
Benefit Plan is qualified and exempt from Federal income taxes under Sections
401(a) and 501(a), respectively, of the Code, and no such determination letter
has been revoked nor, to the knowledge of the Company, has revocation been
threatened, nor has any such Company Benefit Plan (other than any Company
Multiemployer Pension Plan) been amended since the date of its most recent
determination letter or application therefor in any respect that would
adversely affect its qualification or materially increase its costs or require
security under Section 307 of ERISA.
(c) During the past six years neither the Company
nor any Company ERISA Affiliate has maintained, contributed to or been
obligated to maintain or contribute to, or has any actual or contingent
Liability under, any Company Benefit Plan that is subject to Title IV of
ERISA, other than any Company Pension Plan that is a "multiemployer plan"
within the meaning of Section 4001(a)(3) of ERISA (a "Company Multiemployer
Pension Plan"). There have been no non-exempt "prohibited transactions" (as
such term is defined in Section 406 of ERISA or Section 4975 of the Code) or
any other breach of fiduciary responsibility with respect to any Company
Benefit Plan that is subject to ERISA (other than any Company Multiemployer
Pension Plan) and, to the knowledge of the Company, with respect to any
Company Multiemployer Pension Plan that, in each case, could reasonably be
expected to subject the Company, any Company Subsidiary or any officer of the
Company or any Company Subsidiary or any of the Company Benefit Plans which
are subject to ERISA, or, to the knowledge of the Company, any trusts created
thereunder or any trustee or administrator thereof to the tax or penalty on
prohibited transactions imposed by such Section 4975 or to any material
Liability under Section 502(i) or 502(1) of ERISA or to any other material
Liability for breach of fiduciary duty under ERISA or any other applicable
Law. During the six years prior to the date of this Agreement, no Company
Pension Plan or related trust has been terminated. Neither the Company nor any
Company Subsidiary has incurred any material Liability that remains
unsatisfied with respect to a "complete withdrawal" or a "partial withdrawal"
(as such terms are defined in Sections 4203 and 4205, respectively, of ERISA)
since the effective date of such Sections 4203 and 4205 with respect to any
Company Multiemployer Pension Plan.
(d) With respect to any Company Benefit Plan that is
an employee welfare benefit plan, whether or not subject to ERISA, (i) no such
Company Benefit Plan is funded through a "welfare benefits fund" (as such term
is defined in Section 419(e) of the Code), (ii) except as would not reasonably
be expected to have a Company Material Adverse Effect, each such Company
Benefit Plan that is a "group health plan" (as such term is defined in Section
5000(b)(1) of the Code), complies with the applicable requirements of Section
4980B(f) of the Code or any similar state statute, (iii) no such Company
Benefit Plan provides benefits after termination of employment, except where
the cost thereof is borne entirely by the former employee (or his eligible
dependents or beneficiaries) or as required pursuant to any collective
bargaining agreement or by Section 4980B(f) of the Code or any similar state
statute and (iv) Section 3.11(d)(iv) of the Company Disclosure Letter
indicates whether each welfare plan is self-insured or insured through
third-party coverage.
(e) No amount or other entitlement that could be
received (whether in cash or property or the vesting of property) as a result
of any of the transactions contemplated hereby (alone or in combination with
any other event) by any Company Participant who is an executive officer of the
Company who currently has in effect a change of control agreement or has an
employment agreement with change of control provisions under any Company
Benefit Plan or other compensation arrangement currently in effect would be
characterized as an "excess parachute payment" (as such term is defined in
Section 280G(b)(1) of the Code) and no such executive officer is entitled to
receive any additional payment from the Company or any other person in the
event that the excise tax required by Section 4999(a) of the Code is imposed
on such executive officer.
(f) The execution and delivery by the Company of
this Agreement do not, and the consummation of the Transactions and compliance
with the terms hereof will not (either alone or in combination with any other
event) (i) entitle any Company Participant to any additional compensation,
severance or other benefits, (ii) accelerate the time of payment or vesting or
trigger any payment or funding (through a grantor trust or otherwise) of
compensation or benefits under, increase the amount payable or trigger any
other material obligation pursuant to, any Company Benefit Plan or (iii)
result in any breach or violation of, or a default (with or without notice or
lapse of time or both) under, any Company Benefit Plan.
(g) Neither the Company nor any Company Subsidiary
has received notice of any, and, to the knowledge of the Company, there are no
(i) material pending termination proceedings or other suits, claims (except
claims for benefits payable in the normal operation of the Company Benefit
Plans), actions or proceedings against or involving or asserting any rights or
claims to benefits under any Company Benefit Plan or (ii) pending
investigations (other than routine inquiries) by any Governmental Entity with
respect to any Company Benefit Plan. To the knowledge of the Company, all
contributions, premiums and benefit payments under or in connection with the
Company Benefit Plans that are required to have been made by the Company or
any Company Subsidiary have been timely made, accrued or reserved for in all
material respects.
(h) Neither the Company nor any Company Subsidiary
has any material Liability or obligations, including under or on account of a
Company Benefit Plan, arising out of the hiring of persons to provide services
to the Company or any Company Subsidiary and treating such persons as
consultants or independent contractors and not as employees of the Company or
any Company Subsidiary.
Section 3.12 Litigation. There is no suit, claim, action,
investigation or proceeding pending or, to the knowledge of the Company,
threatened against the Company or any Company Subsidiary that, individually or
in the aggregate, has had or would reasonably be expected to have a Company
Material Adverse Effect, nor is there any Judgment outstanding against the
Company or any Company Subsidiary that has had or would reasonably be expected
to have a Company Material Adverse Effect.
Section 3.13 Compliance With Applicable Laws. The Company
and the Company Subsidiaries and their relevant personnel and operations are
in compliance with all applicable Laws, including applicable Gaming Laws and
Laws relating to occupational health and safety, except to the extent that the
failure to be in compliance with any such Law has not had and would not
reasonably be expected to have a Company Material Adverse Effect. Neither the
Company nor any Company Subsidiary has received any written communication
during the past two years from a Governmental Entity that alleges that the
Company or a Company Subsidiary is not in compliance with any applicable Law,
except where such non-compliance has not had and would not reasonably be
expected to have a Company Material Adverse Effect. The Company and the
Company Subsidiaries, and to the knowledge of the Company, each of their
respective directors, officers and persons performing management functions
similar to officers, have in effect all permits, findings of suitability,
licenses, variances, certificates of occupancy, exemptions, authorizations,
operating certificates, franchises, entitlements, consents, orders and
approvals of all Governmental Entities (collectively, "Permits"), necessary or
advisable for them to own, lease or operate their properties and assets and to
carry on their businesses as now conducted or proposed to be conducted, except
for such Permits the absence of which has not had or would not reasonably be
expected to have a Company Material Adverse Effect. There has occurred no
violation of, suspension, reconsideration, imposition of penalties or fines,
imposition of additional conditions or requirements, default (with or without
notice or lapse of time or both) under, or event giving to others any right of
termination, amendment or cancellation of, with or without notice or lapse of
time or both, any such Permit, except for any such violation, default or event
which has not had or would not reasonably be expected to have a Company
Material Adverse Effect. Neither the Company nor any Company Subsidiary has
suffered a suspension or revocation or imposition of penalties or fines with
respect to any Permit held under any Gaming Laws, other than in the ordinary
course. There is no event which, to the knowledge of the Company, would
reasonably be expected to result in the revocation, cancellation, non-renewal
or adverse modification of any such Permit, except for any such event that has
not had or would not reasonably be expected to have a Company Material Adverse
Effect. Notwithstanding the foregoing, this Section 3.13 does not relate to
matters with respect to Taxes (which are the subject of Section 3.09), ERISA
(which are the subject of Section 3.11), labor Laws (which are the subject of
Section 3.16) or Environmental Laws (which are the subject of Section 3.18).
Section 3.14 Assets Other Than Real Property Interests. The
Company and the Company Subsidiaries have good and valid title to all of their
respective material properties and assets, in each case free and clear of all
Liens, except (i) mechanics', carriers', workmen's, repairmen's or other like
Liens arising or incurred in the ordinary course of business relating to
obligations that are not delinquent or that are being contested in good faith
by the Company or a Company Subsidiary and for which the Company or a Company
Subsidiary has established adequate reserves, (ii) Liens for Taxes that are
not due and payable, are being contested in good faith by appropriate
proceedings or that may thereafter be paid without interest or penalty, (iii)
Liens that are reflected as Liabilities on the balance sheet of the Company
and its consolidated subsidiaries as of March 31, 2004 contained in the Filed
Company SEC Documents and the existence of which is referred to in the notes
to such balance sheet, (iv) Liens arising under original purchase price
conditional sales contracts and equipment leases with third parties entered
into in the ordinary course of business and (v) other imperfections of title
or encumbrances, if any, that, individually or in the aggregate, do not
materially impair, and would not reasonably be expected materially to impair,
the continued use and operation of the assets to which they relate in the
conduct of the business of the Company and the Company Subsidiaries as
presently conducted. This Section 3.14 does not relate to real property or
interests in real property, such items being the subject of Section 3.15, or
to intellectual property, such items being the subject of Section 3.19.
Section 3.15 Real Property. All real property and interests
in real property owned in fee by the Company or any Company Subsidiary
(individually, a "Company Owned Property") and all real property and interests
in real property leased by the Company or any Company Subsidiary and any prime
or underlying leases relating thereto (individually, a "Company Leased
Property") are set forth or described in the Form 10-K filed by the Company
with the SEC for the year ended December 31, 2003 or on Section 3.15 of the
Company Disclosure Letter. The Company or a Company Subsidiary has good and
marketable fee title to all Company Owned Property and good and valid
leasehold title to all Company Leased Property (a Company Owned Property or
Company Leased Property being sometimes referred to herein, individually, as a
"Company Property" and, collectively, the "Company Properties"), in each case
subject only to (i) Liens described in clause (i), (ii), (iii) or (v) of
Section 3.14, (ii) leases, subleases and similar agreements set forth in
Section 3.15 of the Company Disclosure Letter and (iii) easements, covenants,
rights-of-way and other similar restrictions of record, if any, that,
individually or in the aggregate, do not materially impair, and would not
reasonably be expected materially to impair, the continued use and operation
of the assets to which they relate in the conduct of the business of the
Company and the Company Subsidiaries as presently conducted. Any material
reciprocal easements, operating agreements, option agreements, rights of first
refusal or rights of first offer with respect to any Company Property at which
a casino or hotel project is operated are set forth in Section 3.15 of the
Company Disclosure Letter. There are no physical conditions or defects at any
of the Company Owned Properties at which casino or hotel operations are
conducted which materially impair or would be reasonably expected to
materially impair the continued operation and conduct of the casino, hotel and
related businesses as presently conducted at each such Company Owned Property.
Section 3.16 Labor Matters. Since January 1, 2001, neither
the Company nor any Company Subsidiary has experienced any labor strikes or,
to the knowledge of the Company, union organization attempts, requests for
representation, work slowdowns or stoppages or other disputes due to labor
disagreements that would reasonably likely be material to any casino or hotel
operated or owned by the Company or any Company Subsidiary, and, to the
knowledge of the Company, there is currently no such action threatened against
or affecting the Company or any Company Subsidiary. The Company and the
Company Subsidiaries are each in compliance with all applicable Laws with
respect to labor relations, employment and employment practices, occupational
safety and health standards, terms and conditions of employment, wages and
hours, human rights, pay equity and workers compensation, except to the extent
that the failure to be in compliance with any such Law has not had and would
not reasonably be expected to have a Company Material Adverse Effect. The
Company and the Company Subsidiaries are not engaged in any unfair labor
practice, and no unfair labor practice charge or complaint against the Company
or any Company Subsidiary is pending or, to the knowledge of the Company,
threatened before the National Labor Relations Board or any comparable
Federal, state, provincial or foreign agency or authority, except for such
practices, charges or complaints that, individually or in the aggregate, have
not had and would not reasonably be expected to have a Company Material
Adverse Effect. No grievance or arbitration proceeding arising out of a
collective bargaining agreement is pending or, to the knowledge of the
Company, threatened against the Company or any Company Subsidiary that would
reasonably be expected to result in material Liability to the Company.
Contracts. Neither the Company nor any Company Subsidiary is
a party to or bound by, as of the date hereof, any Contract that (i) is a
"material contract" (as such term is defined in Item 601(b)(10) of Regulation
S-K of the SEC) or (ii) limits or otherwise restricts the Company or any
Company Subsidiary or that would, after the Effective Time, limit or restrict
Parent or any of its subsidiaries (including the Surviving Entity and its
subsidiaries) or any successor thereto, from engaging or competing in any line
of business or in any geographic area. Each Contract of the type described in
this Section 3.17, whether or not entered into as of the date hereof and
whether or not set forth in Section 3.17 of the Company Disclosure Letter, is
referred to herein as a "Company Contract." Each Company Contract is valid and
binding on the Company or a Company Subsidiary party thereto and, to the
knowledge of the Company, each other party thereto, and is in full force and
effect, and the Company and each of the Company Subsidiaries have performed
all obligations required to be performed by them to the date hereof under each
Company Contract and, to the knowledge of the Company, each other party to
each Company Contract has performed all obligations required to be performed
by it under such Company Contract, except, in each case, as would not,
individually or in the aggregate, reasonably be expected to have a Company
Material Adverse Effect. Neither the Company nor any Company Subsidiary knows
of, or has received notice of, any violation or default under (or any
condition which with the passage of time or the giving of notice would cause
such a violation of or default under) any Company Contract or any other
Contract to which it is a party or by which it or any of its properties or
assets is bound, except for violations or defaults that would not,
individually or in the aggregate, reasonably be expected to have a Company
Material Adverse Effect.
Section 3.17 Environmental Matters. Except for such matters
that individually or in the aggregate have not had, and would not reasonably
be expected to have, a Company Material Adverse Effect:
(a) the Company and each of the Company Subsidiaries
are, and have been, in compliance with all Environmental Laws, and neither the
Company nor any of the Company Subsidiaries has received any (i) communication
that alleges that the Company or any of the Company Subsidiaries is in
violation of, or has Liability under, any Environmental Law or (ii) written
request for information pursuant to any Environmental Law;
(b) (i) the Company and each of the Company
Subsidiaries have obtained and are in compliance with all Permits, licenses
and governmental authorizations pursuant to Environmental Law (collectively,
"Environmental Permits") necessary for their operations as currently
conducted, (ii) all such Environmental Permits are valid and in good standing
and (iii) neither the Company nor any of the Company Subsidiaries has been
advised by any Governmental Entity of any actual or potential change in the
status or terms and conditions of any Environmental Permit;
(c) there are no Environmental Claims pending or, to
the knowledge of the Company, threatened, against the Company or any of the
Company Subsidiaries;
(d) there have been no Releases of any Hazardous
Material that would reasonably be expected to form the basis of any
Environmental Claim against the Company or any of the Company Subsidiaries or
against any Person whose liabilities for such Environmental Claims the Company
or any of the Company Subsidiaries has, or may have, retained or assumed,
either contractually or by operation of Law;
(e) there are no above-ground or underground storage
tanks or known or suspected asbestos-containing materials on, under or about
property owned, operated or leased by the Company or any Company Subsidiary,
nor, to the knowledge of the Company, were there any underground storage tanks
on, under or about any such property in the past; and
(f) (i) neither the Company nor any of the Company
Subsidiaries has retained or assumed, either contractually or by operation of
Law, any Liabilities or obligations that would reasonably be expected to form
the basis of any Environmental Claim against the Company or any of the Company
Subsidiaries, and (ii) to the knowledge of the Company, no Environmental
Claims are pending against any Person whose liabilities for such Environmental
Claims the Company or any of the Company Subsidiaries has, or may have,
retained or assumed, either contractually or by operation of Law.
(g) Definitions. As used in this Agreement:
(1) "Environmental Claim" means any and all
administrative, regulatory or judicial actions, suits, orders, demands,
directives, claims, liens, judgments, investigations, proceedings or written
or oral notices of noncompliance or violation by or from any Person alleging
Liability of whatever kind or nature (including Liability or responsibility
for the costs of enforcement proceedings, investigations, cleanup,
governmental response, removal or remediation, natural resources damages,
property damages, personal injuries, medical monitoring, penalties,
contribution, indemnification and injunctive relief) arising out of, based on
or resulting from (y) the presence or Release of, or exposure to, any
Hazardous Materials at any location; or (z) the failure to comply with any
Environmental Law;
(2) "Environmental Laws" means all applicable
federal, state, local and foreign laws, rules, regulations, orders, decrees,
judgments, legally binding agreements or Environmental Permits issued,
promulgated or entered into by or with any Governmental Entity, relating to
pollution, natural resources or protection of endangered or threatened
species, human health or the environment (including ambient air, surface
water, groundwater, land surface or subsurface strata);
(3) "Hazardous Materials" means (y) any
petroleum or petroleum products, radioactive materials or wastes, asbestos in
any form, urea formaldehyde foam insulation and polychlorinated biphenyls; and
(z) any other chemical, material, substance or waste that in relevant form or
concentration is prohibited, limited or regulated under any Environmental Law
as a pollutant or contaminant or a hazardous, toxic or dangerous substance,
material or waste; and
(4) "Release" means any actual or, to the
knowledge of the Company or the knowledge of Parent, as the case may be,
threatened release, spill, emission, leaking, dumping, injection, pouring,
deposit, disposal, discharge, dispersal, leaching or migration into or through
the environment (including ambient air, surface water, groundwater, land
surface or subsurface strata) or within any building, structure, facility or
fixture.
Section 3.18 Intellectual Property. The Company and the
Company Subsidiaries own, or are validly licensed or otherwise have the right
to use, all patents, patent rights, inventions and discoveries (whether or not
patentable or reduced to practice), trademarks, trade names, corporate names,
company names, business names, fictitious business names, trade styles,
service marks, logos and other source or business identifiers, copyrights,
trade secrets and all other confidential or proprietary information and
know-how, whether or not reduced to writing or any other tangible form, and
other proprietary intellectual property rights and computer programs arising
under the laws of the United States (including any state or territory), any
other country or group of countries or any political subdivision of any of the
foregoing, whether registered or unregistered (collectively, "Intellectual
Property Rights") used in the business of the Company or a Company Subsidiary
as of the date hereof, other than such Intellectual Property Rights that are
not material (the "Company Intellectual Property"). Except as set forth in
Section 3.19 of the Company Disclosure Letter or except as would not,
individually or in the aggregate, reasonably be expected to have a Company
Material Adverse Effect on the validity or value of the Company Intellectual
Property, (A) no written claim of invalidity or conflicting ownership rights
with respect to any Company Intellectual Property has been made by a third
party and no such Company Intellectual Property is the subject of any pending
or, to the Company's knowledge, threatened action, suit, claim, investigation,
arbitration, interference, opposition or other proceeding, (B) no person has
given written notice to the Company or any Company Subsidiary that the use of
any Company Intellectual Property by the Company, any Company Subsidiary or
any licensee is infringing or has infringed any domestic or foreign registered
patent, trademark, service ▇▇▇▇, trade name, or copyright or design right, or
that the Company, any Company Subsidiary or any licensee has misappropriated
or improperly used or disclosed any trade secret, confidential information or
know-how, (C) the making, using, selling, manufacturing, marketing, licensing,
reproduction, distribution, or publishing of any process, machine, manufacture
or product related to any Company Intellectual Property, does not infringe any
domestic or foreign registered patent, trademark, service ▇▇▇▇, trade name,
copyright or other Intellectual Property Right of any third party, and does
not involve the misappropriation or improper use or disclosure of any trade
secrets, confidential information or know-how of any third party of which the
Company has knowledge, (D) (i) neither the Company nor any Company Subsidiary
has performed prior acts or is engaged in current conduct or use, or (ii) to
the knowledge of the Company, there exists no prior act or current use by any
third party, that would void or invalidate any Company Intellectual Property,
and (E) the execution, delivery and performance of this Agreement and the
Transactions contemplated by this Agreement by the Company and the
consummation of the transactions contemplated hereby and thereby will not
breach, violate or conflict with any instrument or agreement that the Company
is party to and that concerns any Company Intellectual Property, will not
cause the forfeiture or termination or give rise to a right of forfeiture or
termination of any of the Company Intellectual Property or impair the right of
Parent to make, use, sell, license or dispose of, or to bring any action for
the infringement of, any Company Intellectual Property.
Section 3.19 Brokers; Schedule of Fees and Expenses. No
broker, investment banker, financial advisor or other person, other than UBS
Securities LLC, the fees and expenses of which will be paid by the Company, is
entitled to any broker's, finder's, financial advisor's or other similar fee
or commission in connection with the Merger and the other Transactions based
upon arrangements made by or on behalf of the Company. The Company has
furnished to Parent a true and complete copy of all agreements between the
Company and UBS Securities LLC relating to the Merger and the other
Transactions.
Section 3.20 Opinion of Financial Advisor. The Company has
received the written opinion of UBS Securities LLC, dated the date of this
Agreement, to the effect that, as of such date and subject to the
considerations set forth therein, the consideration to be received in the
Merger by the holders of Company Common Stock is fair to such holders from a
financial point of view, a signed copy of which opinion has been delivered to
Parent solely for informational purposes.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
Except as expressly set forth in that certain letter (with
specific reference to the Section or Subsection of this Agreement to which the
information stated in such disclosure relates and such other Sections or
Subsections of this Agreement to the extent a matter is disclosed in such a
way as to make its relevance to the information called for by such other
Section or Subsection readily apparent), dated as of the date of this
Agreement, from Parent and Merger Sub to the Company (the "Parent Disclosure
Letter") or in any Parent SEC Document filed and publicly available prior to
the date of this Agreement (the "Filed Parent SEC Documents"), Parent and
Merger Sub represent and warrant to the Company that:
Section 4.01 Organization, Standing and Power. Each of
Parent and each of its subsidiaries (the "Parent Subsidiaries") is duly
organized or formed, validly existing and in good standing under the laws of
the jurisdiction in which it is organized and has full corporate, partnership
or limited liability company power and authority to conduct its businesses as
presently conducted except where such failures to be in good standing that
would not, individually, or in the aggregate, reasonably be expected to have a
Parent Material Adverse Effect. Parent and each Parent Subsidiary is duly
qualified to do business in each jurisdiction where the nature of its business
or the ownership or leasing of its properties make such qualification
necessary or the failure to so qualify, individually or in the aggregate, has
had or would reasonably be expected to have a Parent Material Adverse Effect.
Parent has delivered or made available to the Company true and complete copies
of the certificate of incorporation of Parent, as amended to the date of this
Agreement (as so amended, the "Parent Charter"), and the by-laws of Parent, as
amended to the date of this Agreement (as so amended, the "Parent By-laws"),
and the comparable organizational documents of each Parent Subsidiary, in each
case as amended to the date of this Agreement. Parent is not in violation of
any of the provision of Parent Charter or Parent By-laws as of the date
hereof. Merger Sub is not in violation of any provision of its certificate of
incorporation or by-laws as of the date hereof.
Section 4.02 Parent Subsidiaries; Equity Interests.
(a) Section 4.02(a) of Parent Disclosure Letter
lists each Parent Subsidiary and its jurisdiction of organization or
formation. All the outstanding shares of capital stock of each Parent
Subsidiary have been validly issued and are fully paid and nonassessable and
are owned by Parent, by another Parent Subsidiary or by Parent and another
Parent Subsidiary, free and clear of all Liens.
(b) Except for its interests in Parent Subsidiaries,
Parent does not own, directly or indirectly, any capital stock, membership
interest, partnership interest, joint venture interest or other Equity
Interest in any person.
(c) All of the outstanding capital stock of Merger
Sub are owned directly by Parent. There are no options, warrants or other
rights (including registration rights), agreements, arrangements or
commitments to which Merger Sub is a party of any character relating to the
issued or unissued capital stock in Merger Sub or obligating Merger Sub to
grant, issue or sell any capital stock in Merger Sub, by sale, lease, license
or otherwise. There are no obligations, contingent or otherwise, of Merger Sub
to repurchase, redeem or otherwise acquire any capital stock of Merger Sub.
Section 4.03 Capital Structure.
(a) The authorized capital stock of Parent consists
of 360,000,000 shares of Parent Common Stock, 150,000 shares of preferred
stock, par value $100.00 per share, and 5,000,000 shares of special stock, par
value $1.12 1/2 per share. As of June 30, 2004, (i) 111,909,727 shares of
Parent Common Stock were issued and outstanding, (ii) 36,121,350 shares of
Parent Common Stock were held by Parent in its treasury, (iii) 10,341,454
shares of Parent Common Stock were subject to outstanding Parent Stock Options
and (vi) 4,347,586 shares of Parent Common Stock were reserved for issuance
pursuant to the Parent Stock Plans. Except as set forth above, as of June 30,
2004, no shares of capital stock or other voting securities of Parent were
issued, reserved for issuance or outstanding, and since June 30, 2004, no
shares of capital stock or other voting securities of Parent were issued by
Parent, except for shares of Parent Common Stock issued upon the exercise of
Parent Stock Options outstanding as of June 30, 2004. There are no outstanding
stock appreciation rights linked to the price of Parent Common Stock and
granted under Parent Stock Plan or otherwise. All outstanding shares of Parent
Common Stock are, and all such shares that may be issued prior to the
Effective Time will be when issued, duly authorized, validly issued, fully
paid and nonassessable and not subject to or issued in violation of any
purchase option, call option, right of first refusal, preemptive right,
subscription right or any similar right under any provision of the DGCL,
Parent Charter, Parent By-laws or any Contract to which Parent is a party or
otherwise bound. There are not any bonds, debentures, notes or other
indebtedness of Parent having the right to vote (or convertible into, or
exchangeable for, securities having the right to vote) on any matters on which
holders of Parent Common Stock may vote ("Voting Parent Debt"). Except as set
forth above and except for the Parent Rights, as of the date of this
Agreement, there are not any options, warrants, rights, convertible or
exchangeable securities, "phantom" stock rights, stock appreciation rights,
stock-based performance units, commitments, Contracts, arrangements or
undertakings of any kind to which Parent or any Parent Subsidiary is a party
or by which any of them is bound (i) obligating Parent or any Parent
Subsidiary to issue, deliver or sell, or cause to be issued, delivered or
sold, additional shares of capital stock or other Equity Interests in, or any
security convertible or exercisable for or exchangeable into any capital stock
of or other Equity Interest in, Parent or any Parent Subsidiary or any Voting
Parent Debt, (ii) obligating Parent or any Parent Subsidiary to issue, grant,
extend or enter into any such option, warrant, call, right, security,
commitment, Contract, arrangement or undertaking or (iii) that give any person
the right to receive any economic benefit or right similar to or derived from
the economic benefits and rights occurring to holders of Parent Common Stock.
As of the date of this Agreement, there are not any outstanding contractual
obligations of Parent or any Parent Subsidiary to repurchase, redeem or
otherwise acquire any shares of capital stock of Parent or any Parent
Subsidiary.
(b) All outstanding Parent Stock Options are
evidenced by stock option award agreements. Parent has provided or made
available to the Company the standard form of stock option award agreement, as
well as those stock option award agreements that are materially different from
the standard form of stock option award agreement.
Section 4.04 Authority; Execution and Delivery;
Enforceability.
(a) Each of Parent and Merger Sub has all requisite
corporate power and authority to execute and deliver this Agreement and,
subject to the Parent Stockholder Approval, to consummate the Merger and the
other Transactions to be performed or consummated by Parent and Merger Sub in
accordance with the terms of this Agreement. The execution and delivery by
Parent and Merger Sub of this Agreement and the consummation by Parent and
Merger Sub of the Merger and the other Transactions to be performed or
consummated by Parent and Merger Sub in accordance with the terms of this
Agreement have been duly authorized by all necessary corporate action on the
part of Parent and Merger Sub, subject, in the case of the Merger, to receipt
of Parent Stockholder Approval. Each of Parent and Merger Sub has duly
executed and delivered this Agreement, and, assuming due authorization,
execution and delivery of this Agreement by the Company, this Agreement
constitutes its legal, valid and binding obligation, enforceable against each
in accordance with its terms, except that enforcement hereof may be subject to
or limited by (i) bankruptcy, insolvency or other similar laws, now or
hereafter in effect, affecting its creditors' rights generally and (ii) the
affect of general principles of equity (regardless of whether enforceability
is considered in a proceeding at law or in equity).
(b) The Board of Directors of Parent (the "Parent
Board"), at a meeting duly called and held, duly and unanimously adopted
resolutions (which resolutions have not been rescinded or modified) (i)
approving this Agreement and approving the Merger and the other Transactions
to be performed or consummated by Parent in accordance with the terms of this
Agreement, (ii) determining that the terms of the Merger and the other
Transactions to be performed or consummated by Parent in accordance with the
terms of this Agreement are advisable and fair to and in the best interests of
Parent and its stockholders, (iii) directing that this Agreement be submitted
to a vote at Parent Stockholders Meeting and (iv) recommending that Parent's
stockholders approve this Agreement.
(c) The only vote of holders of any class or series
of the capital stock of Parent necessary to approve the Share Issuance is the
approval of a majority of the votes cast by the holders of shares of Parent
Common Stock in accordance with the requirements of the New York Stock
Exchange, provided that the total vote cast on the proposal represents over
50% in interest of all securities entitled to vote on the proposal (the
"Parent Stockholder Approval"). The affirmative vote of the holders of Parent
Common Stock, or any of them, is not necessary to consummate any Transaction
to be performed or consummated by Parent in accordance with the terms of this
Agreement other than the Share Issuance.
Section 4.05 No Conflicts; Consents.
(a) The execution and delivery by Parent and Merger
Sub of this Agreement do not, and the consummation by Parent and Merger Sub of
the Merger and the other Transactions to be performed or consummated by Parent
and Merger Sub in accordance with the terms of this Agreement and compliance
by Parent and Merger Sub with the terms hereof will not, conflict with, or
result in any violation of or default (with or without notice or lapse of
time, or both) under, or give rise to a right of consent, termination,
cancellation or acceleration of any obligation or to loss of a material
benefit under, or to increased, additional, accelerated or guaranteed rights
or entitlements of any person under, or result in the creation of any Lien
upon any of the properties or assets of Parent or any Parent Subsidiary under,
any provision of (i) Parent Charter, Parent By-laws or the comparable
organizational documents of any Parent Subsidiary, (ii) any Contract to which
Parent or any Parent Subsidiary is a party or by which any of their respective
properties or assets is bound or (iii) subject to the filings and other
matters referred to in Section 4.05(b), any Judgment or Law applicable to
Parent or any Parent Subsidiary or their respective properties or assets,
other than, in the case of clauses (ii) and (iii) above, any such items that,
individually or in the aggregate, have not had and would not reasonably be
expected to have a Parent Material Adverse Effect.
(b) No Consent of, or registration, declaration or
filing with, or Permit from, any Governmental Entity, is required to be
obtained or made by Parent or any Parent Subsidiary in connection with the
execution, delivery and performance of this Agreement or the consummation of
the Merger and the other Transactions to be performed or consummated by Parent
in accordance with the terms of this Agreement, other than (i) compliance with
and filings under the HSR Act and Foreign Competition Laws, (ii) the filing
with the SEC of (A) the Joint Proxy Statement and (B) such reports under, or
other applicable requirements of, the Exchange Act, as may be required in
connection with this Agreement, the Merger and the other Transactions to be
performed or consummated by Parent in accordance with the terms of this
Agreement, (iii) the filing of the Certificate of Merger with the Secretary of
State of the State of Delaware and appropriate documents with the relevant
authorities of the other jurisdictions in which Parent is qualified to do
business, (iv) compliance with and such filings and approvals as may be
required under applicable Gaming Laws, and (v) such other items that,
individually or in the aggregate, have not had and would not reasonably be
expected to have a Parent Material Adverse Effect.
Section 4.06 Parent SEC Documents; Undisclosed Liabilities.
(a) Parent has filed all reports, schedules, forms,
statements and other documents required to be filed by Parent with the SEC
since January 1, 2001 pursuant to Sections 13(a) and 15(d) of the Exchange Act
(the "Parent SEC Documents").
(b) As of its respective date, each Parent SEC
Document complied in all material respects with the requirements of the
Exchange Act or the Securities Act, as the case may be, and the rules and
regulations of the SEC promulgated thereunder applicable to such Parent SEC
Document, and 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. Except to the extent that information contained in
any Filed Parent SEC Document has been revised or superseded by a later filed
Filed Parent SEC Document, none of Parent SEC Documents contains any untrue
statement of a material fact or omits 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 were made, not misleading. The
consolidated financial statements of Parent included in Parent SEC Documents
comply as to form in all material respects with applicable accounting
requirements and the published rules and regulations of the SEC with respect
thereto, have been prepared in accordance with GAAP (except, in the case of
unaudited statements, as permitted by Form 10-Q of the SEC) applied on a
consistent basis during the periods involved (except as may be indicated in
the notes thereto) and fairly present in all material respects the
consolidated financial position of Parent and its consolidated subsidiaries as
of the dates thereof and the consolidated results of their operations and cash
flows for the periods shown (subject, in the case of unaudited statements, to
normal year-end audit adjustments). The books and records of Parent and Parent
Subsidiaries have been, and are being, maintained in all material respects in
accordance with GAAP and any other applicable legal and accounting
requirements.
(c) Except as and to the extent disclosed or
reserved against on Parent's most recent balance sheet (or in the notes
thereto) included in the Filed Company SEC Documents, neither Parent nor any
Parent Subsidiary has any Liabilities of any nature (whether accrued,
absolute, contingent or otherwise) required by GAAP to be set forth on a
consolidated balance sheet of Parent and its consolidated subsidiaries or in
the notes thereto, except for Liabilities that, individually or in the
aggregate, would not reasonably be expected to have a Parent Material Adverse
Effect.
(d) None of Parent Subsidiaries is, or has at any
time since January 1, 2001 been, subject to the reporting requirements of
Sections 13(a) and 15(d) of the Exchange Act.
Section 4.07 Information Supplied. None of the information
supplied or to be supplied by Parent for inclusion or incorporation by
reference in (i) the Form S-4 will, at the time the Form S-4 is filed with the
SEC, at any time it is amended or supplemented or at the time it becomes
effective under the Securities Act, contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein not misleading, or (ii) the Joint
Proxy Statement will, at the date it is first mailed to Parent's stockholders
or the Company's stockholders or at the time of Parent Stockholders Meeting or
the Company Stockholders Meeting, 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. The Joint Proxy
Statement will comply as to form in all material respects with the
requirements of the Exchange Act and the rules and regulations thereunder,
except that no representation is made by Parent with respect to statements
made or incorporated by reference therein based on information supplied by the
Company in writing for inclusion or incorporation by reference in the Form S-4
or the Joint Proxy Statement.
Section 4.08 Absence of Certain Changes or Events. Since
December 31, 2003, Parent has conducted its business in all material respects
only in the ordinary course, and since such date there has not been:
(i) any event or development, condition or
occurrence that, individually or in the aggregate, has had
or would reasonably be expected to have a Parent Material
Adverse Effect;
(ii) any change in accounting methods,
principles or practices by Parent or any Parent Subsidiary,
except insofar as may have been required by a change in
GAAP; or
(iii) any material elections with respect to
Taxes by Parent or any Parent Subsidiary or settlement or
compromise by Parent or any Parent Subsidiary of any
material Tax Liability or refund.
Section 4.09 Taxes.
(a) Except with respect to any divestitures that may
be undertaken pursuant to Section 6.03(a ), none of Parent, the Parent
Subsidiaries or any Parent affiliates has taken or agreed to take any action
that would prevent the Merger from qualifying as a "reorganization" within the
meaning of Section 368(a) of the Code. Except with respect to any divestitures
that may be undertaken pursuant to Section 6.03(a), to Parent's knowledge,
there is no agreement, plan or other circumstance that would prevent the
Merger from qualifying as a reorganization within the meaning of Section
368(a) of the Code.
(b) Parent and the Parent Subsidiaries timely have
filed with the appropriate Tax authority or other Governmental Entity all
material Tax Returns required to be filed, taking into account any extensions
of time within which to file such Tax Returns, and all such Tax Returns are
complete and accurate in all material respects, subject to such exceptions as
would not be reasonably expected to have a Parent Material Adverse Effect.
Parent and the Parent Subsidiaries have paid all Taxes (other than such Taxes
as are being contested in good faith by appropriate proceedings and for which
adequate reserves have been taken) that have become due, whether or not shown
on any Tax Return, subject to such exceptions as are unlikely to have a Parent
Material Adverse Effect. The unpaid Taxes of Parent and the Parent
Subsidiaries did not, as of the dates of the financial statements contained in
the most recent Parent SEC Documents, exceed the reserve for Tax Liability
(excluding any reserve for deferred Taxes established to reflect timing
differences between book and Tax income) set forth on the face of the balance
sheets (rather than in any notes thereto) contained in such financial
statements, subject to such exceptions as are unlikely to have a Parent
Material Adverse Effect. Since the date of the financial statements in the
most recent Parent SEC Documents, neither Parent nor any Parent Subsidiary has
incurred any Liability for Taxes outside the ordinary course of business or
otherwise inconsistent with past custom and practice, subject to such
exceptions as would not be reasonably expected to have a Parent Material
Adverse Effect.
(c) There are no audits or other administrative
proceedings or court proceedings currently pending or in progress with regard
to any material Taxes or material Tax Returns of Parent or any Parent
Subsidiary, and neither Parent nor any Parent Subsidiary has received a
written notice or announcement of any audits or other administrative
proceedings or court proceedings, subject to exceptions for any audits or
proceedings that, if resolved in a manner unfavorable to Parent or any Parent
Subsidiary, are unlikely to have a Parent Material Adverse Effect. Neither
Parent nor any Parent Subsidiary has granted any waivers or extensions of the
time to assess any Taxes.
(d) There are no Tax Liens upon any property or
assets of Parent or any Parent Subsidiary except Liens for current Taxes not
yet due and payable and Liens for Taxes that are being contested in good faith
by appropriate proceedings, subject to such exceptions as would not be
reasonably expected to have a Parent Material Adverse Effect.
(e) All Taxes required to be withheld, collected or
deposited by or with respect to Parent and each Parent Subsidiary have been
timely withheld, collected or deposited as the case may be, and to the extent
required by applicable Law, have been paid to the relevant Tax authority or
other Governmental Entity, subject to such exceptions as are unlikely to have
a Parent Material Adverse Effect.
(f) Neither Parent nor any Parent Subsidiary is
responsible for the Taxes of any other person (other than Parent or Parent
Subsidiary) under Treasury Regulation Section 1.1502-6 (or any similar
provision of state, local, or foreign Law), as a transferee or by Contract
that would reasonably be expected to have a Parent Material Adverse Effect.
Neither Parent nor any Parent Subsidiary is a party to, is bound by or has any
obligation under any Tax sharing, Tax allocation or Tax indemnity agreement or
similar Contract or arrangement, subject to such exceptions as would not be
reasonably expected to have a Parent Material Adverse Effect.
(g) Neither Parent nor any Parent Subsidiary has
been a party to any distribution occurring during the two (2) years preceding
the date of this Agreement in which the parties to such distribution treated
the distribution as one to which Section 355 of the Code is applicable.
(h) Neither Parent nor any Parent Subsidiary has
entered into or participated in any listed transaction within the meaning of
Treasury Regulation Section 1.6011-4(b)(2) or any confidential corporate tax
shelter within the meaning of Treasury Regulation Section 301.6111-2.
Section 4.10 Absence of Changes in Benefit Plans. Except as
would not reasonably be expected to have a Parent Material Adverse Effect,
since December 31, 2003, neither Parent nor any Parent Subsidiary has
terminated, adopted, amended, modified or agreed to amend or modify (or
announced an intention to amend or modify) any collective bargaining agreement
or any bonus, pension, profit sharing, deferred compensation, incentive
compensation, stock ownership, stock purchase, stock appreciation, restricted
stock, stock option, phantom stock, performance, retirement, thrift, savings,
stock bonus, cafeteria, paid time off, perquisite, fringe benefit, vacation,
severance, disability, death benefit, hospitalization, medical or other
welfare benefit or other plan, program, arrangement or understanding, whether
oral or written, formal or informal, funded or unfunded (whether or not
legally binding) maintained, contributed to or required to be maintained or
contributed to by Parent or any Parent Subsidiary or any other person or
entity that, together with Parent or any Parent Subsidiary, is treated as a
single employer under Section 414(b), (c), (m) or (o) of the Code (each, a
"Parent ERISA Affiliate"), in each case providing benefits to any current or
former employee, officer, director or independent contractor of Parent or any
Parent Subsidiary (each, a "Parent Participant") and whether or not subject to
United States law (collectively, "Parent Benefit Plans") or has made any
change in any actuarial or other assumption used to calculate funding
obligations with respect to any Parent Benefit Plan that is a Parent Pension
Plan, or any change in the manner in which contributions to any such Parent
Pension Plan are made or the basis on which such contributions are determined,
other than changes made pursuant to any collective bargaining agreement to
which Parent or any Parent Subsidiary is a party.
Section 4.11 ERISA Compliance; Excess Parachute Payments.
(a) All "employee pension benefit plans" (as defined
in Section 3(2) of ERISA) ("Parent Pension Plans"), "employee welfare benefit
plans" (as defined in Section 3(1) of ERISA) and all other material Parent
Benefit Plans maintained, or contributed to, by Parent or any Parent
Subsidiary for the benefit of any Parent Participant (other than Parent
Multiemployer Pension Plans), and, to the knowledge of Parent, each Parent
Multiemployer Pension Plan, have been administered in material compliance with
their terms and applicable Law, and the terms of any applicable collective
bargaining agreements.
(b) Each Parent Benefit Plan (other than any Parent
Multiemployer Pension Plan) intended to be "qualified" within the meaning of
Section 401(a) of the Code has been the subject of a determination letter from
the Internal Revenue Service to the effect that such Parent Benefit Plan is
qualified and exempt from Federal income taxes under Sections 401(a) and
501(a), respectively, of the Code, and no such determination letter has been
revoked nor, to the knowledge of Parent, has revocation been threatened, nor
has any such Parent Benefit Plan (other than any Parent Multiemployer Pension
Plan) been amended since the date of its most recent determination letter or
application therefor in any respect that would adversely affect its
qualification or materially increase its costs or require security under
Section 307 of ERISA.
(c) During the past six years neither Parent nor any
Parent ERISA Affiliate has maintained, contributed to or been obligated to
maintain or contribute to, or has any actual or contingent Liability under,
any Parent Benefit Plan that is subject to Title IV of ERISA, other than any
Parent Pension Plan that is a "multiemployer plan" within the meaning of
Section 4001(a)(3) of ERISA (a "Parent Multiemployer Pension Plan"). There
have been no non-exempt "prohibited transactions" (as such term is defined in
Section 406 of ERISA or Section 4975 of the Code) or any other breach of
fiduciary responsibility with respect to any Parent Benefit Plan that is
subject to ERISA (other than any Parent Multiemployer Pension Plan), and to
the knowledge of Parent, with respect to any Parent Multiemployer Pension
Plan, in each case, that could reasonably be expected to subject Parent, any
Parent Subsidiary or any officer of Parent or any Parent Subsidiary or any of
Parent Benefit Plans which are subject to ERISA, or, to the knowledge of
Parent, any trusts created thereunder or any trustee or administrator thereof
to the tax or penalty on prohibited transactions imposed by such Section 4975
or to any material Liability under Section 502(i) or 502(1) of ERISA or to any
other material Liability for breach of fiduciary duty under ERISA or any other
applicable Law. During the six years prior to the date of this Agreement, no
Parent Pension Plan or related trust has been terminated. Neither Parent nor
any Parent Subsidiary has incurred any material Liability that remains
unsatisfied with respect to a "complete withdrawal" or a "partial withdrawal"
(as such terms are defined in Sections 4203 and 4205, respectively, of ERISA)
since the effective date of such Sections 4203 and 4205 with respect to any
Parent Multiemployer Pension Plan.
(d) With respect to any Parent Benefit Plan that is
an employee welfare benefit plan, whether or not subject to ERISA, (i) no such
Parent Benefit Plan is funded through a "welfare benefits fund" (as such term
is defined in Section 419(e) of the Code), (ii) except as would not reasonably
be expected to have a Parent Material Adverse Effect, each such Parent Benefit
Plan that is a "group health plan" (as such term is defined in Section
5000(b)(1) of the Code), complies with the applicable requirements of Section
4980B(f) of the Code or any similar state statute and (iii) no such Parent
Benefit Plan provides benefits after termination of employment, except where
the cost thereof is borne entirely by the former employee (or his eligible
dependents or beneficiaries) or as required pursuant to any collective
bargaining agreement or by Section 4980B(f) of the Code or any similar state
statute.
(e) No amount or other entitlement that could be
received (whether in cash or property or the vesting of property) as a result
of any of the transactions contemplated hereby (alone or in combination with
any other event) by any Parent Participant who is an executive officer of
Parent who currently has in effect a change of control agreement or has an
employment agreement with change of control provisions under any Parent
Benefit Plan or other compensation arrangement currently in effect would be
characterized as an "excess parachute payment" (as such term is defined in
Section 280G(b)(1) of the Code) and no such executive officer is entitled to
receive any additional payment from Parent or any other person in the event
that the excise tax required by Section 4999(a) of the Code is imposed on such
executive officer.
(f) The execution and delivery by Parent of this
Agreement do not, and the consummation of the Transactions and compliance with
the terms hereof will not (either alone or in combination with any other
event) (i) entitle any Parent Participant to any additional compensation,
severance or other benefits, (ii) accelerate the time of payment or vesting or
trigger any payment or funding (through a grantor trust or otherwise) of
compensation or benefits under, increase the amount payable or trigger any
other material obligation pursuant to, any Parent Benefit Plan or (iii) result
in any breach or violation of, or a default (with or without notice or lapse
of time or both) under, any Parent Benefit Plan.
(g) Neither Parent nor any Parent Subsidiary has
received notice of any, and, to the knowledge of Parent, there are no (i)
material pending termination proceedings or other suits, claims (except claims
for benefits payable in the normal operation of Parent Benefit Plans), actions
or proceedings against or involving or asserting any rights or claims to
benefits under any Parent Benefit Plan or (ii) pending investigations (other
than routine inquiries) by any Governmental Entity with respect to any Parent
Benefit Plan. To the knowledge of Parent, all contributions, premiums and
benefit payments under or in connection with Parent Benefit Plans that are
required to have been made by Parent or any Parent Subsidiary have been timely
made, accrued or reserved for in all material respects.
(h) Neither Parent nor any Parent Subsidiary has any
material Liability or obligations, including under or on account of a Parent
Benefit Plan, arising out of the hiring of persons to provide services to
Parent or any Parent Subsidiary and treating such persons as consultants or
independent contractors and not as employees of Parent or any Parent
Subsidiary.
Section 4.12 Litigation. There is no suit, claim, action,
investigation or proceeding pending or, to the knowledge of Parent, threatened
against Parent or any Parent Subsidiary that, individually or in the
aggregate, has had or would reasonably be expected to have a Parent Material
Adverse Effect, nor is there any Judgment outstanding against Parent or any
Parent Subsidiary that has had or would reasonably be expected to have a
Parent Material Adverse Effect.
Section 4.13 Compliance With Applicable Laws. Parent and
Parent Subsidiaries and their relevant personnel and operations are in
compliance with all applicable Laws, including applicable Gaming Laws and Laws
relating to occupational health and safety, except to the extent that the
failure to be in compliance with any such Law has not had and would not
reasonably be expected to have a Parent Material Adverse Effect. Neither
Parent nor any Parent Subsidiary has received any written communication during
the past two years from a Governmental Entity that alleges that Parent or a
Parent Subsidiary is not in compliance in any material respect with any
applicable Law, except where such non-compliance has not or would not
reasonably be expected to have a Parent Material Adverse Effect. Parent and
Parent Subsidiaries, and to the knowledge of Parent, each of their respective
directors, officers and persons performing management functions similar to
officers, have in effect all Permits, necessary or advisable for them to own,
lease or operate their properties and assets and to carry on their businesses
as now conducted or proposed to be conducted, except for such Permits the
absence of which has not had or would not reasonably be expected to have a
Parent Material Adverse Effect. There has occurred no violation of,
suspension, reconsideration, imposition of penalties or fines, imposition of
additional conditions or requirements, default (with or without notice or
lapse of time or both) under, or event giving to others any right of
termination, amendment or cancellation of, with or without notice or lapse of
time or both, any such Permit, except for any such violation, default or event
which has not had or would not reasonably be expected to have a Parent
Material Adverse Effect. Neither Parent nor any Parent Subsidiary has suffered
a suspension or revocation or imposition of penalties or fines with respect to
any Permit held under the Gaming Laws, other than in the ordinary course.
There is no event which, to the knowledge of Parent, would reasonably be
expected to result in the revocation, cancellation, non-renewal or adverse
modification of any such Permit, except for any such event that has not had or
would not reasonably be expected to have a Parent Material Adverse Effect.
Notwithstanding the foregoing, this Section 4.13(a) does not relate to matters
with respect to Taxes (which are the subject of Section 4.09), ERISA (which
are the subject of Section 4.11), labor Laws (which are the subject of Section
4.16) or Environmental Laws (which are the subject of Section 4.18).
Section 4.14 Assets Other Than Real Property Interests.
Parent and Parent Subsidiaries have good and valid title to all of their
respective material properties and assets, in each case free and clear of all
Liens, except (i) mechanics', carriers', workmen's, repairmen's or other like
Liens arising or incurred in the ordinary course of business relating to
obligations that are not delinquent or that are being contested in good faith
by Parent or a Parent Subsidiary and for which Parent or a Parent Subsidiary
has established adequate reserves, (ii) Liens for Taxes that are not due and
payable, are being contested in good faith by appropriate proceedings or that
may thereafter be paid without interest or penalty, (iii) Liens that are
reflected as Liabilities on the balance sheet of Parent and its consolidated
subsidiaries as of March 31, 2004 contained in the Filed Parent SEC Documents
and the existence of which is referred to in the notes to such balance sheet,
(iv) Liens arising under original purchase price conditional sales contracts
and equipment leases with third parties entered into in the ordinary course of
business and (v) other imperfections of title or encumbrances, if any, that,
individually or in the aggregate, do not materially impair, and would not
reasonably be expected materially to impair, the continued use and operation
of the assets to which they relate in the conduct of the business of Parent
and Parent Subsidiaries as presently conducted. This Section 4.14 does not
relate to real property or interests in real property, such items being the
subject of Section 4.15, or to intellectual property, such items being the
subject of Section 4.19.
Section 4.15 Real Property. All real property and interests
in real property owned in fee by Parent or any Parent Subsidiary
(individually, a "Parent Owned Property") and all real property and interests
in real property leased by Parent or any Parent Subsidiary and any prime or
underlying leases relating thereto (individually, a "Parent Leased Property")
are set forth in the Form 10-K filed by Parent with the SEC for the year ended
December 31, 2003 or on Section 4.15 of the Parent Disclosure Letter. Parent
or a Parent Subsidiary has good and marketable fee title to all Parent Owned
Property and good and valid leasehold title to all Parent Leased Property (a
Parent Owned Property or Parent Leased Property being sometimes referred to
herein, individually, as a "Parent Property" and, collectively, the "Parent
Properties"), in each case subject only to (i) Liens described in clause (i),
(ii), (iii) or (v) of Section 4.14, (ii) leases, subleases and similar
agreements set forth in Section 4.15 of the Parent Disclosure Letter and (iii)
easements, covenants, rights-of-way and other similar restrictions of record,
if any, that, individually or in the aggregate, do not materially impair, and
would not reasonably be expected materially to impair, the continued use and
operation of the assets to which they relate in the conduct of the business of
Parent and Parent Subsidiaries as presently conducted. Any material reciprocal
easements, operating agreements, option agreements, rights of first refusal or
rights of first offer with respect to any Parent Property at which a casino or
hotel project is operated are set forth in Section 4.15 of the Parent
Disclosure Letter. There are no physical conditions or defects at any of the
Parent Owned Properties at which casino or hotel operations are conducted
which materially impair or would be reasonably expected to materially impair
the continued operation and conduct of the casino, hotel and related
businesses as presently conducted at each such Parent Owned Property.
Section 4.16 Labor Matters. Since January 1, 2001, neither
Parent nor any Parent Subsidiary has experienced any labor strikes, or, to the
knowledge of Parent, union organization attempts, requests for representation,
work slowdowns or stoppages or other disputes due to labor disagreements that
would reasonably likely be material to any casino or hotel operated or owned
by Parent or any Parent Subsidiary, and, to the knowledge of Parent, there is
currently no such action threatened against or affecting Parent or any Parent
Subsidiary. Parent and Parent Subsidiaries are each in compliance with all
applicable Laws with respect to labor relations, employment and employment
practices, occupational safety and health standards, terms and conditions of
employment, wages and hours, human rights, pay equity and workers
compensation, except to the extent that the failure to be in compliance with
any such Law has not had and would not reasonably be expected to have a Parent
Material Adverse Effect. Parent and Parent Subsidiaries are not engaged in any
unfair labor practice, and no unfair labor practice charge or complaint
against Parent or any Parent Subsidiary pending or, to the knowledge of
Parent, threatened before the National Labor Relations Board or any comparable
Federal, state, provincial or foreign agency or authority except for such
practices, charges or complaints that, individually or in the aggregate, have
not had and would not reasonably be expected to have a Parent Material Adverse
Effect. No grievance or arbitration proceeding arising out of a collective
bargaining agreement is pending or, to the knowledge of Parent, threatened
against Parent or any Parent Subsidiary that would reasonably be expected to
result in material Liability to Parent.
Section 4.17 Contracts. Neither Parent nor any Parent
Subsidiary is a party to or bound by, as of the date hereof, any Contract that
(i) is a "material contract" (as such term is defined in Item 601(b)(10) of
Regulation S-K of the SEC) or (ii) limits or otherwise restricts Parent or any
Parent Subsidiary or any successor thereto, from engaging or competing in any
line of business or in any geographic area. Each Contract of the type
described in this Section 4.17, whether or not entered into as of the date
hereof and whether or not set forth in Section 4.17 of the Parent Disclosure
Letter, is referred to herein as a "Parent Contract." Each Parent Contract is
valid and binding on Parent or a Parent Subsidiary party thereto and, to the
knowledge of Parent, each other party thereto, and is in full force and
effect, and Parent and each of the Parent Subsidiaries have performed all
obligations required to be performed by them to the date hereof under each
Parent Contract and, to the knowledge of Parent, each other party to each
Parent Contract has performed all obligations required to be performed by it
under such Parent Contract, except, in each case, as would not, individually
or in the aggregate, reasonably be expected to have a Parent Material Adverse
Effect. Neither the Parent nor any Parent Subsidiary knows of, or has received
notice of, any violation or default under (or any condition which with the
passage of time or the giving of notice would cause such a violation of or
default under) any Parent Contract or any other Contract to which it is a
party or by which it or any of its properties or assets is bound, except for
violations or defaults that would not, individually or in the aggregate,
reasonably be expected to have a Parent Material Adverse Effect.
Section 4.18 Environmental Matters. Except for such matters
that individually or in the aggregate have not had, and would not reasonably
be expected to have, a Parent Material Adverse Effect:
(a) Parent and each of Parent Subsidiaries are, and
have been, in compliance with all Environmental Laws, and neither Parent nor
any of Parent Subsidiaries has received any (i) communication that alleges
that Parent or any of Parent Subsidiaries is in violation of, or has Liability
under, any Environmental Law or (ii) written request for information pursuant
to any Environmental Law;
(b) (i) Parent and each of Parent Subsidiaries have
obtained and are in compliance with all Environmental Permits necessary for
their operations as currently conducted, (ii) all such Environmental Permits
are valid and in good standing and (iii) neither Parent nor any of Parent
Subsidiaries has been advised by any Governmental Entity of any actual or
potential change in the status or terms and conditions of any Environmental
Permit;
(c) there are no Environmental Claims pending or, to
the knowledge of Parent, threatened, against Parent or any of Parent
Subsidiaries;
(d) there have been no Releases of any Hazardous
Material that would reasonably be expected to form the basis of any
Environmental Claim against Parent or any of Parent Subsidiaries or against
any Person whose liabilities for such Environmental Claims Parent or any of
Parent Subsidiaries has, or may have, retained or assumed, either
contractually or by operation of Law;
(e) there are no above-ground or underground storage
tanks or known or suspected asbestos-containing materials on, under or about
property owned, operated or leased by Parent or any Parent Subsidiary, nor, to
the knowledge of Parent, were there any underground storage tanks on, under or
about any such property in the past; and
(f) (i) neither Parent nor any of Parent
Subsidiaries has retained or assumed, either contractually or by operation of
Law, any Liabilities or obligations that would reasonably be expected to form
the basis of any Environmental Claim against Parent or any of Parent
Subsidiaries, and (ii) to the knowledge of Parent, no Environmental Claims are
pending against any Person whose liabilities for such Environmental Claims
Parent or any of Parent Subsidiaries has, or may have, retained or assumed,
either contractually or by operation of Law.
Section 4.19 Intellectual Property. Parent and Parent
Subsidiaries own, or are validly licensed or otherwise have the right to use,
all Intellectual Property Rights used in the business of Parent or a Parent
Subsidiary as of the date hereof, other than such Intellectual Property Rights
that are not material (the "Parent Intellectual Property"). Except as set
forth in Section 4.19 of the Parent Disclosure Letter or except as would not,
individually or in the aggregate, reasonably be expected to have a Parent
Material Adverse Effect on the validity or value of the Parent Intellectual
Property, (A) no written claim of invalidity or conflicting ownership rights
with respect to any Parent Intellectual Property has been made by a third
party and no such Parent Intellectual Property is the subject of any pending
or, to Parent's knowledge, threatened action, suit, claim, investigation,
arbitration, interference, opposition or other proceeding, (B) no person has
given written notice to Parent or any Parent Subsidiary that the use of any
Parent Intellectual Property by Parent, any Parent Subsidiary or any licensee
is infringing or has infringed any domestic or foreign registered patent,
trademark, service ▇▇▇▇, trade name, or copyright or design right, or that
Parent, any Parent Subsidiary or any licensee has misappropriated or
improperly used or disclosed any trade secret, confidential information or
know-how, (C) the making, using, selling, manufacturing, marketing, licensing,
reproduction, distribution, or publishing of any process, machine, manufacture
or product related to any Parent Intellectual Property, does not infringe any
domestic or foreign registered patent, trademark, service ▇▇▇▇, trade name,
copyright or other Intellectual Property Right of any third party, and does
not involve the misappropriation or improper use or disclosure of any trade
secrets, confidential information or know-how of any third party of which
Parent has knowledge, (D) (i) neither Parent nor any Parent Subsidiary has
performed prior acts or is engaged in current conduct or use, or (ii) to the
knowledge of Parent, there exists no prior act or current use by any third
party, that would void or invalidate any Parent Intellectual Property, and (E)
the execution, delivery and performance of this Agreement and the Transactions
contemplated by this Agreement by Parent and the consummation of the
transactions contemplated hereby and thereby will not breach, violate or
conflict with any instrument or agreement that Parent is party to and that
concerns any Parent Intellectual Property, will not cause the forfeiture or
termination or give rise to a right of forfeiture or termination of any of
Parent Intellectual Property or impair the right of the Company to make, use,
sell, license or dispose of, or to bring any action for the infringement of,
any Parent Intellectual Property.
Section 4.20 Brokers; Schedule of Fees and Expenses. No
broker, investment banker, financial advisor or other person, other than
Deutsche Bank Securities Inc., the fees and expenses of which will be paid by
Parent, is entitled to any broker's, finder's, financial advisor's or other
similar fee or commission in connection with the Merger and the other
Transactions based upon arrangements made by or on behalf of Parent. Parent
has furnished to the Company a true and complete copy of all agreements
between Parent and Deutsche Bank Securities Inc. relating to the Merger and
the other Transactions.
Section 4.21 Opinion of Financial Advisor. Parent has
received the written opinion of Deutsche Bank Securities Inc., dated the date
of this Agreement, to the effect that, as of such date and subject to the
considerations set forth therein, the Merger Consideration is fair from a
financial point of view to Parent, a signed copy of which opinion has been
delivered to the Company solely for informational purposes.
Section 4.22 Financing. Parent will have at the Effective
Time sufficient funds available to pay the cash portion of the Merger
Consideration.
ARTICLE V.
COVENANTS RELATING TO CONDUCT OF BUSINESS
Section 5.01 Conduct of Business.
(a) Conduct of Business by the Company. Except for
matters set forth in Section 5.01(a) of the Company Disclosure Letter or
otherwise expressly permitted by this Agreement, from the date of this
Agreement to the Effective Time, the Company shall, and shall cause each
Company Subsidiary to (i) conduct its business in the usual, regular and
ordinary course in substantially the same manner as previously conducted and
use its commercially reasonable efforts to preserve intact its current
business organization and keep available the services of its current officers
and employees, (ii) pay its Taxes when due and (iii) use all commercially
reasonable efforts to keep its relationships with customers, suppliers,
licensors, licensees, distributors and others having business dealings with
them to the end that its goodwill and ongoing business shall be unimpaired at
the Effective Time. In addition, and without limiting the generality of the
foregoing, except for matters set forth in Section 5.01(a) of the Company
Disclosure Letter or otherwise expressly permitted by this Agreement, from the
date of this Agreement to the Effective Time, the Company shall not, and shall
not permit any Company Subsidiary to, do any of the following without the
prior written consent of Parent, which consent shall not be unreasonably
withheld or delayed:
(i) (A) declare, set aside or pay any dividends
on, or make any other distributions in respect of, any of
its capital stock, other than dividends and distributions by
a direct or indirect Company Subsidiary to its security
holders in the ordinary course of business consistent with
past practice, (B) enter into any Contract with respect to
the voting of its capital stock or other Equity Interests
held by the Company or any Company Subsidiary, (C) split,
combine or reclassify any of its capital stock or other
Equity Interests, 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 or other Equity
Interests, or (D) purchase, redeem or otherwise acquire (1)
any shares of capital stock or other Equity Interests of the
Company or any Company Subsidiary, (2) any other securities
thereof or any rights, warrants or options to acquire any
such shares or other securities or (3) any options,
warrants, rights, securities, units, commitments, Contracts,
arrangements or undertakings of any kind that give any
person the right to receive any economic benefits and rights
accruing to holders of capital stock or other Equity
Interests of the Company or any Company Subsidiary, other
than, in respect of any of the foregoing clauses (C) or (D),
(x) pursuant to the terms of the Company Equity Awards
outstanding as of the date hereof or granted in compliance
with subclause (z) of Section 5.01(a)(ii) below (y) pursuant
to the conversion of convertible debt outstanding as of the
date hereof in accordance with their present terms, or (z)
pursuant to the Company's Employee Stock Purchase Plan;
(ii) issue, deliver, sell or grant (A) any
shares of its capital stock or other Equity Interests, (B)
any Voting Company Debt or other voting securities, (C) any
securities convertible into or exchangeable for, or any
options, warrants or rights to acquire, any such shares,
Voting Company Debt, voting securities or convertible or
exchangeable securities, (D) any "phantom" stock, "phantom"
stock rights, stock appreciation rights or stock-based
performance units or (E) any options, warrants, rights,
securities, units, commitments, Contracts, arrangements or
undertakings of any kind that give any person the right to
receive any economic benefits and rights accruing to holders
of capital stock of the Company or any Company Subsidiary,
other than in respect of any of the foregoing clause (A),
(B), (C), (D)or (E), (w) pursuant to the terms of the
Company Equity Awards outstanding as of the date hereof or
granted in compliance with subclause (z) of this Section
5.01(a)(ii), (x) pursuant to the conversion of convertible
debt outstanding as of the date hereof in accordance with
their present terms, (y) pursuant to the Company's Employee
Stock Purchase Plan, and (z) grants of up to an aggregate of
2,000,000 Company Stock Options (with exercise prices at the
fair market value of Company Common Stock on the date of
grant) and other Company Equity Awards with respect to an
aggregate of 500,000 shares of Company Common Stock pursuant
to the Company Stock Plans in the ordinary course of
business consistent with past practice, provided that any
such Company Equity Awards granted pursuant to this clause
(z) shall expressly provide that, except as otherwise
provided in an employment agreement or severance agreement
in effect as of the date hereof, the Transactions, in and of
themselves, shall not result in acceleration of the vesting
of such awards; provided, however, that any such awards may
provide for acceleration of vesting upon the involuntary
termination of employment of the holder thereof without
cause within one year of the Closing; provided, further
that, for purposes of subclauses (x), (y) and (z) of this
Section 5.01(a)(ii), the Company is permitted to also issue
the associated Company Rights with any Company Common Stock
issued pursuant to such subclauses;
(iii) amend or otherwise change its certificate
of incorporation, by-laws or other comparable charter or
organizational documents, other than amendments or changes
to any such documents of Company Subsidiaries in the
ordinary course of business consistent with past practices;
(iv) acquire or agree to acquire (A) by merging
or consolidating with, or by purchasing a substantial
portion of the assets of, or by any other manner, any Equity
Interest in or business of any corporation, partnership,
joint venture, association or other business organization or
division thereof or (B) any assets that are material,
individually or in the aggregate, to the Company and the
Company Subsidiaries, taken as a whole, except in respect of
any of the foregoing clauses (A) and (B), (w) capital
expenditures in accordance with Section 5.01(a)(ix), (x)
purchases of inventory in the ordinary course of business
consistent with past practice, (y) for acquisitions of
assets or equity interests having or involving aggregate
consideration not in excess of $10,000,000 or (z)
development activities having or involving consideration not
in excess of the Development Amount;
(v) (A) grant to any Company Participant any
loan or increase in compensation, benefits, perquisites or
any bonus or award, or pay any bonus to any such person,
except to the extent required under employment agreements in
effect as of the date of this Agreement as set forth in
Section 3.11(a) of the Company Disclosure Letter or in the
ordinary course of business consistent with past practice
(excluding any benefits or bonuses not permitted by
subclauses (B) or (D) of this Section 5.01(a)(v)), (B) grant
to any Company Participant any increase in severance, change
in control or termination pay or benefits, except to the
extent required under any agreement in effect as of the date
of this Agreement as set forth in Section 3.11(a) of the
Company Disclosure Letter, (C) enter into any employment,
loan, retention, consulting, indemnification, termination or
similar agreement with any Company Participant, except in
the ordinary course of business consistent with past
practice, (D) enter into any change of control, severance or
similar agreement with any Company Participant, other than
(x) renewals of any such agreements in effect as of the date
hereof or (y) any such agreements with Company Participants
hired after the date hereof replacing a Company Participant
whose employment has terminated for any reason (provided
that the terms of any such agreements are no more favorable
to the new Company Participant than the terminated Company
Participant), (E) take any action to fund or in any other
way secure the payment of compensation or benefits under any
Company Benefit Plan, except in the ordinary course of
business consistent with past practice, (F) establish,
adopt, enter into, terminate or amend any collective
bargaining agreement, Company Benefit Plan, except in the
ordinary course of business consistent with past practice,
(G) amend, waive or otherwise modify any of the terms of any
employee option, warrant or stock option plan of the Company
or any Company Subsidiary or (H) take any action to
accelerate any rights or benefits, including vesting and
payment, or make any material determinations, under any
collective bargaining agreement or Company Benefit Plan;
(vi) make any change in accounting methods,
principles or practices materially affecting the reported
consolidated assets, liabilities or results of operations of
the Company, other than as may have been required by a
change in GAAP or any Governmental Entity;
(vii) sell, lease, license, transfer, pledge or
otherwise dispose of or subject to any Lien any properties
or assets that have a fair value, individually, in excess of
$5,000,000 or, in the aggregate, in excess of $20,000,000;
(viii) (A) other than debt incurrence pursuant
to any credit facility or line of credit existing prior to
the date of this Agreement (a copy of which has been
previously delivered or made available to Parent) or any
refinancing thereof not to exceed the amount borrowable
thereunder (provided that at no time shall the Company's
aggregate indebtedness on a consolidated basis exceed
$4,600,000,000 (excluding any indebtedness incurred after
the date hereof by non-wholly owned Company Subsidiaries),
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 the Company or any Company Subsidiary,
guarantee any debt securities 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, except for short-term borrowings incurred in the
ordinary course of business consistent with past practice,
or (B) make any loans, advances or capital contributions to,
or investments in, any other person (other than to or in the
Company or any direct or indirect wholly owned Company
Subsidiary), individually, in excess of $5,000,000 or, in
the aggregate, in excess of $20,000,000, other than, in the
case of this clause (B), any of the foregoing in respect of
development activities, in respect of which the only
limitation in this clause (B) shall be an amount equal to
the Development Amount;
(ix) make or agree to make any new capital
expenditure or expenditures such that the aggregate of all
capital expenditures for fiscal years 2004 and 2005 combined
would exceed of $1,311,000,000 (the "Capital Expenditure
Amount") other than capital expenditures for emergency
repairs and other capital expenditures necessary in light of
circumstances not anticipated as of the date of this
Agreement, which are necessary to avoid significant
disruption to the Company's business or operations
consistent with past practices (and, if reasonably
practicable, after consultation with Parent);
(x) make any material Tax election or settle or
compromise any material Tax Liability or refund, other than
tax elections required by Law;
(xi) write up, write down or write off the book
value of any assets, individually or in the aggregate, for
the Company and the Company Subsidiaries taken as a whole,
in excess of $1,000,000, except for depreciation and
amortization in accordance with GAAP consistently applied or
except as required by GAAP or a Governmental Entity;
(xii) except in the ordinary course of business
consistent with past practice, (A) cancel any indebtedness
owed to the Company or waive any claims or rights of
substantial value of the Company or (B) waive the benefits
of, or agree to modify in any manner, any confidentiality,
standstill, non-competition, exclusivity or similar
agreement to which the Company or any Company Subsidiary is
a party;
(xiii) enter into any Contract otherwise
addressed in this Section 5.01(a) (including without
limitation Contracts relating to development activity which
shall not be subject to this clause (xiii)) having a
duration of more than one year and total payment obligations
of the Company in excess of $5,000,000 (other than (A)
Contracts terminable within one year, (B) the renewal, on
substantially similar terms, of any Contract existing on the
date of this Agreement and (C) Contracts entered into in
respect of capital expenditures permitted by Section
5.01(a)(ix));
(xiv) except in the ordinary course of business
consistent with past practice, cancel, terminate or
adversely modify or amend any of the Company Contracts, or
waive, release, assign, settle or compromise any material
rights or claims, or any material litigation or arbitration;
or
(xv) authorize any of, or commit or agree to
take any of, the foregoing actions.
(b) Conduct of Business by Parent. Except for
matters set forth in Section 5.01(b) of the Parent Disclosure Letter or
otherwise expressly permitted by this Agreement, from the date of this
Agreement to the Effective Time, Parent shall, and shall cause each Parent
Subsidiary to (i) conduct its business in the usual, regular and ordinary
course in substantially the same manner as previously conducted and use its
commercially reasonable efforts to preserve intact its current business
organization and keep available the services of its current officers and
employees, (ii) pay its Liabilities and Taxes when due and (iii) use all
commercially reasonable efforts to keep its relationships with customers,
suppliers, licensors, licensees, distributors and others having business
dealings with them to the end that its goodwill and ongoing business shall be
unimpaired at the Effective Time. In addition, and without limiting the
generality of the foregoing, except for matters set forth in Section 5.01(b)
of the Parent Disclosure Letter or otherwise expressly permitted by this
Agreement, from the date of this Agreement to the Effective Time, Parent shall
not do any of the following without the prior written consent of the Company,
which consent shall not be unreasonably withheld or delayed:
(i) amend or otherwise change its certificate of
incorporation or by-laws, except to increase the authorized
number of shares of Parent capital stock (including Parent
Common Stock);
(ii) issue any shares of Parent Common Stock if,
following such issuance, there would be an insufficient
number of shares of Parent Common Stock to pay the Merger
Consideration and to be reserved for issuance in connection
with the other Transactions contemplated;
(iii) issue, deliver, sell or grant (A) any
shares of its capital stock or other Equity Interests, (B)
any Voting Parent Debt or other voting securities, (C) any
securities convertible into or exchangeable for, or any
options, warrants or rights to acquire, any such shares,
Voting Parent Debt, voting securities or convertible or
exchangeable securities, (D) any "phantom" stock, "phantom"
stock rights, stock appreciation rights or stock-based
performance units or (E) any options, warrants, rights,
securities, units, commitments, Contracts, arrangements or
undertakings of any kind that give any person the right to
receive any economic benefits and rights accruing to holders
of capital stock of Parent, other than (x) pursuant to the
terms of Parent equity awards and Parent Stock Options, the
conversion of convertible debt in accordance with their
present terms, in each case, outstanding as of the date
hereof or issued or granted in compliance with subclause (y)
or (z) of this Section 5.01(b)(iii), (y) grants of Parent
equity awards and Parent Stock Options pursuant to Parent
Stock Plans and (z) up to 2,500,000 shares of Parent Common
Stock, including the Parent Rights associated with such
Parent Common Stock, issued in connection with securities
offerings or acquisitions;
(iv) declare, set aside or pay any dividends on,
or make any other distributions in respect of, any of its
capital stock, other than dividends on Parent Common Stock
in the ordinary course of business; or
(v) authorize any of, or commit or agree to take
any of, the foregoing actions.
(c) Other Actions. The Company and Parent shall not,
and shall not permit any of their respective subsidiaries to, except as
expressly permitted by Section 5.02 of this Agreement, take any action that
would, or that would reasonably be expected to, result in (i) any of the
representations and warranties of such party set forth in this Agreement
becoming untrue such that the conditions set forth in, as applicable, Section
7.02(a), in the case of the Company's representations and warranties, or
Section 7.03(a), in the case of Parent's representations and warranties, would
not be satisfied, or (ii) any condition to the Merger set forth in Article VII
not being satisfied.
(d) Advice of Changes. The Company and Parent shall
promptly advise the other orally and in writing of any state of facts, event,
change, effect, development, condition or occurrence that, individually or in
the aggregate, has had or would reasonably be expected to have a Material
Adverse Effect on such party. The Company shall give prompt notice to Parent,
and Parent or Merger Sub shall give prompt notice to the Company, of (i) any
representation or warranty made by it contained in this Agreement that is
qualified as to materiality becoming untrue or inaccurate in any respect or
any such representation or warranty that is not so qualified becoming untrue
or inaccurate in any material respect or (ii) the failure by it to comply with
or satisfy in any material respect any covenant, condition or agreement to be
complied with or satisfied by it under this Agreement; provided, however, that
no such notification shall affect the representations, warranties, covenants
or agreements of the parties or the conditions to the obligations of the
parties under this Agreement.
(e) Control of the Company's Operations. Nothing
contained in this Agreement shall give to Parent, directly or indirectly,
rights to control or direct the Company's operations prior to the Effective
Time. Prior to the Effective Time, the Company shall exercise consistent with
the terms of this Agreement, complete control and supervision of its
operations.
Section 5.02 No Solicitation.
(a) The Company shall not, nor shall it authorize or
permit any Company Subsidiary to, and shall use its reasonable best efforts to
cause any officer, director or employee of, or any investment banker, attorney
or other advisor or representative (collectively, "Representatives") of, the
Company or any Company Subsidiary to, directly or indirectly, (i) solicit,
initiate or encourage the submission of, any Company Takeover Proposal, (ii)
enter into any agreement (other than a confidentiality agreement entered into
in accordance with the provisions hereof) with respect to any Company Takeover
Proposal or (iii) other than informing persons of the existence of the
provisions contained in this Section 5.02, participate in any discussions or
negotiations regarding, or furnish to any person any non-public information
with respect to the Company in connection with, or take any other action to
facilitate any inquiries or the making of any proposal that constitutes, or
may reasonably be expected to lead to, any Company Takeover Proposal;
provided, however, that prior to receipt of the Company Stockholder Approval,
the Company may, in response to an unsolicited bona fide Company Takeover
Proposal which did not result from a breach of this Section 5.02(a) and which
the Company Board determines, in good faith, after consultation with outside
counsel and financial advisors, would reasonably be expected to lead to a
Superior Company Proposal, and subject to compliance with Section 5.02(c), (x)
furnish information with respect to the Company to the person making such
Company Takeover Proposal and its Representatives pursuant to a customary
confidentiality agreement not less restrictive of the other party than the
Confidentiality Agreement and (y) participate in discussions or negotiations
with such person and its Representatives regarding any Company Takeover
Proposal.
(b) Neither the Company Board nor any committee
thereof shall (i) withdraw or modify in a manner adverse to Parent or Merger
Sub, or publicly propose to withdraw or modify in a manner adverse to Parent
or Merger Sub, the approval or recommendation by the Company Board of this
Agreement or the Merger, (ii) approve any letter of intent, agreement in
principle, acquisition agreement or similar agreement relating to any Company
Takeover Proposal or (iii) approve or recommend, or publicly propose to
approve or recommend, any Company Takeover Proposal. Notwithstanding the
foregoing provisions of Section 5.02(a) and this Section 5.02(b), if, prior to
receipt of the Company Stockholder Approval, (w) the Company Board shall have
determined in good faith, after consultation with outside counsel, that it is
required for the purpose of fulfilling its fiduciary duties under applicable
Law, (x) the Company Board has notified Parent in writing of the determination
described in clause (w) above, (y) at least three Business Days following
receipt by Parent of the notice received in clause (x) above, and taking into
account any revised proposal made by Parent since receipt of the notice
referred to in clause (x) above, the Company Board maintains its determination
described in clause (w) above, and (z) the Company is in compliance with this
Section 5.02, the Company Board may (A) withdraw or modify its approval or
recommendation of the Merger and this Agreement and/or (B) upon termination of
this Agreement in accordance with Section 8.01(f) and concurrent payment of
the Break Up Fee in accordance with Section 6.06(b), approve and enter into an
agreement relating to a Company Takeover Proposal that constitutes a Superior
Company Proposal.
(c) The Company promptly shall advise Parent orally
and in writing of any Company Takeover Proposal, any inquiry with respect to
or that would reasonably be expected to lead to any Company Takeover Proposal,
the identity of the person making any such Company Takeover Proposal or
inquiry and the material terms of any such Company Takeover Proposal or
inquiry. The Company shall (i) keep Parent informed promptly of the status
(including any change to the terms thereof) of any such Company Takeover
Proposal or inquiry and (ii) provide to Parent as soon as practicable after
receipt or delivery thereof with copies of the Company Takeover Proposal
(including any amendments or supplements thereto) and all such other material
information provided in writing to the Company by the party making such
Company Takeover Proposal.
(d) Nothing contained in this Section 5.02 shall
prohibit the Company from taking and disclosing to its stockholders a position
contemplated by Rule 14d-9 or Rule 14e-2(a) promulgated under the Exchange Act
or from making any required disclosure to the Company's stockholders if, in
the good faith judgment of the Company Board, after consultation with outside
counsel, failure so to disclose would be inconsistent with the fulfillment of
its fiduciary duties or any other obligations under applicable Law.
ARTICLE VI.
ADDITIONAL AGREEMENTS
Section 6.01 Preparation of the Form S-4 and the Joint Proxy
Statement; Stockholders Meetings.
(a) As soon as practicable following the date of
this Agreement, the Company and Parent shall prepare and file with the SEC a
joint proxy statement (the "Joint Proxy Statement") in preliminary form and
Parent shall prepare and file with the SEC the Form S-4, in which the Joint
Proxy Statement will be included as a prospectus, and each of the Company and
Parent shall use its reasonable efforts to respond as promptly as practicable
to any comments of the SEC with respect thereto. Each of the Company and
Parent shall use its reasonable efforts to have the Form S-4 declared
effective under the Securities Act as promptly as practicable after such
filing and to maintain the effectiveness of the S-4 through the Effective Time
and to ensure that it complies in all material respects with the applicable
provisions of the Exchange Act or Securities Act. Parent shall also take any
action (other than qualifying to do business in any jurisdiction in which it
is not now so qualified) required to be taken under any applicable state
securities laws in connection with the issuance of Parent Common Stock in the
Merger and under the Company Stock Plans and the Company shall furnish all
information concerning the Company and the holders of the Company Common Stock
and rights to acquire Company Common Stock pursuant to the Company Stock Plans
as may be reasonably requested in connection with any such action. The parties
shall notify each other promptly of the receipt of any comments from the SEC
or its staff and of any request by the SEC or its staff for amendments or
supplements to the Joint Proxy Statement or the Form S-4 or for additional
information and shall supply each other with copies of all correspondence
between such or any of its representatives, on the one hand, and the SEC or
its staff, on the other hand, with respect to the Joint Proxy Statement, the
Form S-4 or the Merger.
(b) If, at any time prior to the receipt of the
Company Stockholder Approval or Parent Stockholder Approval, any event occurs
with respect to the Company or any Company Subsidiary, or any change occurs
with respect to other information supplied by the Company for inclusion in the
Joint Proxy Statement or the Form S-4, which is required to be described in an
amendment of, or a supplement to, the Joint Proxy Statement or the Form S-4,
the Company shall promptly notify Parent of such event, and the Company and
Parent shall cooperate in the prompt filing with the SEC of any necessary
amendment or supplement to the Joint Proxy Statement and the Form S-4 and, as
required by Law, in disseminating the information contained in such amendment
or supplement to Parent's or the Company's stockholders.
(c) If, at any time prior to the receipt of the
Company Stockholder Approval or Parent Stockholder Approval, any event occurs
with respect to Parent or any Parent Subsidiary, or change occurs with respect
to other information supplied by Parent for inclusion in the Joint Proxy
Statement or the Form S-4, which is required to be described in an amendment
of, or a supplement to, the Joint Proxy Statement or the Form S-4, Parent
shall promptly notify the Company of such event, and Parent and the Company
shall cooperate in the prompt filing with the SEC of any necessary amendment
or supplement to the Joint Proxy Statement and the Form S-4 and, as required
by Law, in disseminating the information contained in such amendment or
supplement to Parent's or the Company's stockholders.
(d) The Company shall, as soon as practicable
following the date of this Agreement, duly call, give notice of, convene and
hold a meeting of its stockholders (the "Company Stockholders Meeting") for
the purpose of seeking the Company Stockholder Approval. The Company shall use
its reasonable efforts to cause the Joint Proxy Statement to be mailed to the
Company's stockholders as promptly as practicable after the date of this
Agreement. The Company shall, through the Company Board, recommend to its
stockholders that they give the Company Stockholder Approval (the "Company
Recommendation"), except to the extent that the Company Board shall have
withdrawn or modified its approval or recommendation of this Agreement or the
Merger as permitted by and determined in accordance with the last sentence of
Section 5.02(b).
(e) Parent shall, as soon as practicable following
the date of this Agreement, duly call, give notice of, convene and hold a
meeting of its stockholders (the "Parent Stockholders Meeting") for the
purpose of seeking Parent Stockholder Approval. Parent shall use its
reasonable efforts to cause the Joint Proxy Statement to be mailed to Parent's
stockholders as promptly as practicable after the date of this Agreement.
Parent shall, through Parent Board, recommend to its stockholders that they
give Parent Stockholder Approval (the "Parent Recommendation").
(f) The Company shall use all reasonable efforts to
cause to be delivered to Parent a letter of Deloitte & Touche LLP, the
Company's independent public accountants, dated a date within two Business
Days before the date on which the Form S-4 shall become effective and
addressed to Parent, in form and substance reasonably satisfactory to Parent
and customary in scope and substance for letters delivered by independent
public accountants in connection with registration statements similar to the
Form S-4.
(g) Parent shall use all reasonable efforts to cause
to be delivered to the Company a letter of Deloitte & Touche LLP, Parent's
independent public accountants, dated a date within two Business Days before
the date on which the Form S-4 shall become effective and addressed to the
Company, in form and substance reasonably satisfactory to the Company and
customary in scope and substance for letters delivered by independent public
accountants in connection with registration statements similar to the Form
S-4.
Section 6.02 Access to Information; Confidentiality. The
Company shall, and shall cause each of its subsidiaries to, afford to Parent
and its Representatives reasonable access during normal business hours during
the period prior to the Effective Time to all their respective properties,
books, contracts, commitments, personnel and records and, during such period,
the Company shall, and shall cause each of its subsidiaries to, furnish
promptly to Parent all information concerning its business, properties and
personnel as Parent may reasonably request. Parent shall, and shall cause each
of its subsidiaries to, afford to the Company and its Representatives
reasonable access during normal business hours during the period prior to the
Effective Time to all of their respective properties, books, contracts,
commitments, personnel and records and, during such period, the Company shall,
and shall cause each of its subsidiaries to, furnish promptly to the Company
all information concerning its business, properties and personnel as the
Company may reasonably request. All information exchanged pursuant to this
Section 6.02 shall be subject to the confidentiality agreement dated July 9,
2004 between the Company and Parent (the "Confidentiality Agreement").
Notwithstanding the foregoing or Section 6.03, the Company shall not be
required to provide any information which it reasonably believes it may not
provide to Parent by reason of contractual or legal restrictions, including
applicable Laws, or which it believes is competitively sensitive information.
In addition, the Company may designate any competitively sensitive information
provided to the other under this Agreement as "outside counsel only." Such
information shall be given only to outside counsel of the recipient. Each
party will use reasonable best efforts to minimize any disruption to the
businesses of the other party and its subsidiaries which may result from the
requests for access, data and information hereunder.
Section 6.03 Reasonable Efforts; Notification.
(a) Upon the terms and subject to the conditions set
forth in this Agreement, each of the parties shall use its reasonable best
efforts to take, or cause to be taken, all actions, and to do, or cause to be
done, and to assist and cooperate with the other parties in doing, all things
necessary, proper or advisable to consummate and make effective, as promptly
as practicable, but in no event later than the Outside Date, the Merger and
the other Transactions to be performed or consummated by such party in
accordance with the terms of this Agreement, including (i) in the case of
Parent, the obtaining of all necessary approvals under any applicable Gaming
Laws required in connection with this Agreement, the Merger and the other
Transactions, (ii) the obtaining of all necessary actions or nonactions,
waivers, consents and approvals from Governmental Entities and the making of
all necessary registrations and filings (including filings with Governmental
Entities, if any) and the taking of all reasonable steps as may be necessary
to obtain an approval or waiver from, or to avoid an action or proceeding by,
any Governmental Entity, (iii) the obtaining of all necessary consents,
approvals or waivers from third parties, (iv) the defending of any lawsuits or
other legal proceedings, whether judicial or administrative, challenging this
Agreement or the consummation of the Transactions to be performed or
consummated by such party in accordance with the terms of this Agreement,
including seeking to have any stay or temporary restraining order entered by
any court or other Governmental Entity vacated or reversed and (v) the
execution and delivery of any additional instruments necessary to consummate
the Merger and other Transactions to be performed or consummated by such party
in accordance with the terms of this Agreement and to fully carry out the
purposes of this Agreement. For the avoidance of doubt and notwithstanding
anything to the contrary contained in this Agreement, Parent and its
subsidiaries shall commit to any and all divestitures, licenses or hold
separate or similar arrangements with respect to its assets or conduct of
business arrangements as a condition to obtaining any and all approvals from
any Governmental Entity for any reason in order to consummate and make
effective, as promptly as practicable, but in no event later than the Outside
Date, the Merger and the other Transactions to be performed or consummated by
Parent and its subsidiaries, including taking any and all actions necessary in
order to ensure that (x) no requirement for non-action, a waiver, consent or
approval of the United States Federal Trade Commission (the "FTC"), the
Antitrust Division of the United States Department of Justice (the "Antitrust
Division"), any authority enforcing applicable Gaming Laws, any State Attorney
General or other Governmental Entity, (y) no decree, judgment, injunction,
temporary restraining order or any other order in any suit or proceeding, and
(z) no other matter relating to any antitrust or competition Law or regulation
or relating to any Gaming Law, would preclude consummation of the Merger by
the Outside Date, unless any such action would, individually or in the
aggregate, have a Parent Material Adverse Effect (for purposes of this clause,
after giving effect to the Merger). The Company shall agree if, but solely if,
requested by Parent to divest, hold separate or otherwise take or commit to
take any action with respect to the businesses, services, or assets of the
Company or any of its subsidiaries in furtherance of this Section 6.03;
provided, however, that any such action may be conditioned upon the
consummation of the Merger and other Transactions contemplated hereby. In
addition, subject to the terms and conditions herein provided, none of the
parties hereto shall knowingly take or cause to be taken any action which
would reasonably be expected to materially delay or prevent the satisfaction
by the Outside Date of the condition set forth in Section 7.01(d). Each of
Parent and the Company undertakes and agrees to file as soon as practicable a
Notification and Report Form under the HSR Act with the FTC and the Antitrust
Division and to make such filings and apply for such approvals and consents as
are required under the Gaming Laws.
(b) Each of Parent and the Company shall (i) respond
as promptly as practicable under the circumstances to any inquiries received
from the FTC or the Antitrust Division or any authority enforcing applicable
Gaming Laws for additional information or documentation and to all inquiries
and requests received from any State Attorney General or other Governmental
Entity in connection with antitrust matters or Gaming Laws, and (ii) not
extend any waiting period under the HSR Act or enter into any agreement with
the FTC or the Antitrust Division not to consummate the transactions
contemplated by this Agreement, except with the prior written consent of the
other parties hereto, which consent shall not be unreasonably withheld or
delayed.
(c) In connection with and without limiting the
foregoing, the Company and the Company Board shall (x) take all reasonable
action necessary to ensure that no state takeover statute or similar statute
or regulation is or becomes applicable to any Transaction or this Agreement
and (y) if any state takeover statute or similar statute or regulation becomes
applicable to any Transaction or this Agreement, take all reasonable action
necessary to ensure that the Merger and the other Transactions may be
consummated as promptly as practicable on the terms contemplated by this
Agreement and otherwise to minimize the effect of such statute or regulation
on the Merger and the other Transactions.
(d) In addition, each party shall, subject to
applicable Law and except as prohibited by any applicable representative of
any applicable Governmental Entity, (i) promptly notify the other party of any
written communication to that party from the FTC, the Antitrust Division, any
State Attorney General or any other Governmental Entity, including regulatory
or gaming authorities, and, permit the other party to review in advance any
proposed written communication to any of the foregoing; (ii) not agree to
participate in any substantive meeting or discussion with any Governmental
Entity in respect of any filings, investigation or inquiry concerning this
Agreement or the Merger unless it consults with the other party in advance
and, to the extent permitted by such Governmental Entity, gives the other
party the opportunity to attend and participate thereat; and (iii) furnish the
other party with copies of all correspondence, filings, and written
communications (and memoranda setting forth the substance thereof) between
them and its affiliates and their respective representatives on the one hand,
and any Governmental Entity, including regulatory or gaming authority, or
members or their respective staffs on the other hand, with respect to this
Agreement and the Merger.
Section 6.04 Benefit Plans.
(a) Subject to the terms of any collective
bargaining agreement currently in effect or which may be in effect in the
future, Parent shall cause the Surviving Entity to maintain for a period of
one year after the Effective Time the Company Benefit Plans as in effect on
the date of this Agreement as set forth on the Company Disclosure Letter or to
provide benefits (excluding benefits attributable to equity-based plans or
grants) to each current employee of the Company and the Company Subsidiaries
that are at least as favorable in the aggregate to such employees as those in
effect on the date of this Agreement. With respect to benefits attributable to
equity-based plans or grants, Parent shall, or shall cause the Surviving
Entity to, provide that each Company employee shall be eligible to receive
grants in the same manner as similarly situated employees of Parent or any
Parent Subsidiary.
(b) From and after the Effective Time, Parent shall,
and shall cause the Surviving Entity to honor in accordance with their
respective terms (as in effect on the date of this Agreement), all the
Company's employment, severance and termination agreements, plans and policies
disclosed in the Company Disclosure Letter.
(c) With respect to any employee benefit plan,
program or arrangement maintained by Parent or any Parent Subsidiary
(including any severance plan), for all purposes of determining eligibility to
participate and vesting but not for purposes of benefit accrual, service with
the Company or any Company Subsidiary shall be treated as service with Parent
or any Parent Subsidiary; provided, however, that such service need not be
recognized to the extent that such recognition would result in any duplication
of benefits.
(d) Parent shall waive, or cause to be waived, any
pre-existing condition limitation under any welfare benefit plan maintained by
Parent or any of its affiliates (other than the Company) in which employees of
the Company and the Company Subsidiaries (and their eligible dependents) will
be eligible to participate from and after the Effective Time, except to the
extent that such pre-existing condition limitation would have been applicable
under the comparable Company welfare benefit plan immediately prior to the
Effective Time. Parent shall recognize, or cause to be recognized, the dollar
amount of all expenses incurred by each Company employee (and his or her
eligible dependents) during the calendar year in which the Effective Time
occurs for purposes of satisfying such year's deductible and co-payment
limitations under the relevant welfare benefit plans in which they will be
eligible to participate from and after the Effective Time.
Section 6.05 Indemnification.
(a) Parent shall, to the fullest extent permitted by
Law, cause the Surviving Entity to honor all the Company's obligations to
indemnify (including any obligations to advance funds for expenses) the
current or former directors or officers of the Company for acts or omissions
by such directors and officers occurring prior to the Effective Time to the
extent that such obligations of the Company exist on the date of this
Agreement, whether pursuant to the Company Charter, the Company By-laws,
individual indemnity agreements or otherwise, and such obligations shall
survive the Merger. The certificate of incorporation of the Surviving Entity
shall contain, and Parent shall cause the certificate of incorporation of the
Surviving Entity to contain, provisions no less favorable with respect to
indemnification and exculpation of present and former directors and officers
of the Company than are presently set forth in the Company Charter and Company
By-laws.
(b) For a period of six years after the Effective
Time, Parent shall cause to be maintained in effect the current policies of
directors' and officers' liability insurance maintained by the Company
(provided that Parent may substitute therefor policies with reputable and
financially sound carriers of at least the same coverage and amounts
containing terms and conditions which are no less advantageous) with respect
to claims arising from or related to facts or events which occurred at or
before the Effective Time; provided, however, that Parent shall not be
obligated to make annual premium payments for such insurance to the extent
such premiums exceed 300% of the annual premiums paid as of the date hereof by
the Company for such insurance (such 300% amount, the "Maximum Premium");
provided, further, if such insurance coverage cannot be obtained at all, or
can only be obtained at an annual premium in excess of the Maximum Premium,
Parent shall maintain the most advantageous policies of directors' and
officers' insurance obtainable for an annual premium equal to the Maximum
Premium, provided, further, if the Company in its sole discretion elects, by
giving written notice to Parent at least 60 days prior to the Effective Time,
then, in lieu of the foregoing insurance, effective as of the Effective Time,
the Company shall purchase a directors' and officers' liability insurance
"tail" or "runoff" insurance program for a period of six years after the
Effective Time with respect to wrongful acts and/or omissions committed or
allegedly committed at or prior to the Effective Time (such coverage shall
have an aggregate coverage limit over the term of such policy in an amount not
to exceed the annual aggregate coverage limit under the Company's existing
directors and officers liability policy, and in all other respects shall be
comparable to such existing coverage), provided that the premium for such
"tail" or "runoff" coverage shall not exceed an amount equal to the Maximum
Premium. The Company represents to Parent that the Maximum Premium is as set
forth in Section 6.05 of the Company Disclosure Letter.
(c) In the event that Parent or the Surviving Entity
or any of their respective successors or assigns (i) consolidates with or
merges into any other person and is not the continuing or surviving
corporation or entity of such consolidation or merger or (ii) transfers or
conveys all or substantially all its properties and assets to any person,
then, and in each such case, Parent shall cause proper provisions to be made
so that the successors and assigns of Parent or the Surviving Entity, as the
case may be, assume the obligations set forth in this Section 6.05. The
obligations of Parent and the Surviving Entity under this Section 6.05 shall
not be terminated or modified in such a manner as to adversely affect any
indemnitee to whom this Section 6.05 applies without the express written
consent of such affected indemnitee (it being expressly agreed that the
indemnitees to whom this Section 6.05 applies shall be third party
beneficiaries of this Section 6.05).
Section 6.06 Fees and Expenses.
(a) Except as provided below, all fees and expenses
incurred in connection with the Merger shall be paid by the party incurring
such fees or expenses, whether or not the Merger is consummated, except that
expenses incurred in connection with filing, printing and mailing the Joint
Proxy Statement and the Form S-4 shall be shared equally by Parent and the
Company.
(b) In the event that this Agreement is terminated
pursuant to Section 8.01(e) or 8.01(f), then the Company shall pay to Parent,
within two Business Days following written notice of such termination in the
case of termination pursuant to Section 8.01(e) and concurrently with
termination in the case of termination pursuant to Section 8.01(f), in each
case, by wire transfer of same-day funds a fee of $180,000,000 (the "Break-up
Fee").
(c) If (i) after the date of this Agreement, any
person publicly announces a Company Takeover Proposal which has not been
expressly and bona fide publicly withdrawn, (ii) this Agreement is terminated
by either the Company or Parent pursuant to Section 8.01(b)(iii) and at such
time of termination Parent is not in breach in any material respect of any of
its representations, warranties and covenants contained in this Agreement, and
(iii) within 12 months after the date of this Agreement the Company enters
into a definitive agreement to consummate, or consummates, the transactions
contemplated by a Company Takeover Proposal, then, if such Company Takeover
Proposal is consummated, the Company shall pay to Parent by wire transfer of
same-day funds the Break-up Fee on the date of consummation of such Company
Takeover Proposal. Solely for the purposes of this Section 6.06(c), the term
"Company Takeover Proposal" shall have the meaning assigned to such term in
Section 9.3(a), except that all references to "20%" shall be changed to "50%".
(d) The Company acknowledges that the agreements
contained in Sections 6.06(b) and 6.06(c) are an integral part of the
transaction contemplated by this Agreement, and that, without these
agreements, Parent would not enter into this Agreement; accordingly, if the
Company fails promptly to pay the Break-up Fee, and, in order to obtain such
payment, Parent commences a suit that results in a judgment against the
Company for the Break-up Fee, the Company shall pay to Parent interest on the
Break-up Fee from and including the date payment of the Break-up Fee was due
to but excluding the date of actual payment at the prime rate of Bank of
America, National Association in effect on the date such payment was required
to be made. If applicable, the Break-Up Fee shall not be payable more than
once pursuant to this Section 6.06.
Section 6.07 Public Announcements. Parent and Sub, on the
one hand, and the Company, on the other hand, shall consult with each other
before issuing, and provide each other reasonable opportunity to review and
comment upon, any press release or other public statements with respect to the
Merger and the other Transactions and shall not issue any such press release
or make any such public statement prior to such consultation, except as may be
required by applicable Law, court process or by obligations pursuant to any
listing agreement with any national securities exchange.
Section 6.08 Transfer Taxes. All stock transfer, real estate
transfer, documentary, stamp, recording and other similar Taxes (including
interest, penalties and additions to any such Taxes) ("Transfer Taxes")
incurred in connection with the Transactions shall be paid by either Merger
Sub or the Surviving Entity (provided any such payments shall not be funded,
directly or indirectly, by the Company or the Company Subsidiaries), and the
Company shall cooperate with Merger Sub and Parent in preparing, executing and
filing any Tax Returns with respect to such Transfer Taxes.
Section 6.09 Affiliates. Prior to Closing, the Company shall
deliver to Parent a letter identifying all persons who, to the knowledge of
the Company, were, at the date of the Company Stockholders Meeting,
"affiliates" of the Company for purposes of Rule 145 under the Securities Act.
The Company shall use all reasonable efforts to cause each such person to
deliver to Parent on or prior to Closing a written agreement substantially in
the form attached as Exhibit A.
Section 6.10 Section 16 Matters. Parent and the Company
agree that, in order to most effectively compensate and retain Company
Insiders in connection with the Merger, both prior to and after the Effective
Time, it is desirable that Company Insiders not be subject to a risk of
liability under Section 16(b) of the Exchange Act, to the fullest extent
permitted by applicable Law in connection with the conversion of shares of
Company Common Stock and Company Equity Awards into shares of Parent Common
Stock and options to purchase Parent Common Stock in the Merger, and for that
compensatory and retentive purpose agree to the provisions of this Section
6.10. Assuming that the Company delivers to Parent the Section 16 Information
in a timely fashion, the Parent Board, or a committee of Non-Employee
Directors (as such term is defined for purposes of Rule 16b-3(d) under the
Exchange Act) thereof, shall adopt a resolution providing that the receipt by
Company Insiders of Parent Common Stock in exchange for shares of Company
Common Stock, RSUs, Performance Awards and Supplemental Retention Units,
options to purchase Parent Common Stock upon conversion of Company Stock
Options and rights to purchase Parent Common Stock upon conversion of purchase
rights under the Company Employee Stock Purchase Plan, in each case pursuant
to the transactions contemplated by this Agreement and to the extent such
securities are listed in the Section 16 Information, are intended to be exempt
from liability pursuant to Section 16(b) under the Exchange Act. In addition,
the Company Board, or a committee of Non-Employee Directors (as such term is
defined for purposes of Rule 16b-3(d) under the Exchange Act) thereof, shall
adopt a resolution providing that the disposition by Company Insiders of
Company Common Stock, RSUs, Performance Awards and Supplemental Retention
Units, other than Company Stock Options, in exchange for shares of Parent
Common Stock, Company Stock Options in exchange for options to purchase Parent
Common Stock and purchase rights under the Company Employee Stock Purchase
Plan in exchange for rights to purchase Parent Common Stock, in each case
pursuant to the transactions contemplated by this Agreement, are intended to
be exempt from liability pursuant to Section 16(b) under the Exchange Act.
"Section 16 Information" shall mean information accurate in all material
respects regarding Company Insiders, the number of shares of Company Common
Stock held by each such Company Insider and expected to be exchanged for
Parent Common Stock in the Merger, the number and description of the Company
Stock Options held by each such Company Insider and expected to be converted
into options to purchase Parent Common Stock in connection with the Merger.
"Company Insiders" shall mean those officers and directors of Company who are
subject to the reporting requirements of Section 16(a) of the Exchange Act and
who are listed in the Section 16 Information. Such actions described in this
Section 6.10 shall be taken in accordance with the interpretative letter,
dated January 12, 1999, issued by the SEC to Skadden, Arps, Slate, ▇▇▇▇▇▇▇ &
▇▇▇▇ LLP.
Section 6.11 Stock Exchange Listing. Parent shall use all
reasonable efforts to cause the shares of Parent Common Stock to be issued in
the Merger to be approved for listing on the New York Stock Exchange, subject
to official notice of issuance, prior to the Closing Date.
Section 6.12 Tax Matters.
(a) Parent and the Company shall use their
commercially reasonable efforts, and shall cause their respective subsidiaries
to use their commercially reasonable efforts, to take or cause to be taken any
action necessary for the Merger (or, if applicable, a merger pursuant to
Section 6.12(d) hereof) to qualify as a reorganization within the meaning of
Section 368(a) of the Code or alternatively, if applicable, to take or cause
to be taken any action necessary for the Alternative Transaction described in
Section 6.12(c) hereof to qualify as a transaction described in Section 351 of
the Code. The parties hereto shall cooperate and use their commercially
reasonable efforts in order for Parent to obtain the opinion of ▇▇▇▇▇▇ &
▇▇▇▇▇▇▇ LLP described in Section 7.02(d) and for the Company to obtain the
opinion of Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP described in Section
7.03(d). Except with respect to any divestitures that may be undertaken
pursuant to Section 6.03(a), neither Parent nor the Company shall, nor shall
they permit any of their respective Subsidiaries to, take or cause to be taken
any action that would disqualify the Merger (or, if applicable, a merger
pursuant to Section 6.12(d) hereof) as a reorganization within the meaning of
Section 368(a) of the Code or alternatively, if applicable, take or cause to
be taken any action that would disqualify the Alternative Transaction
described in Section 6.12(c) hereof as a transaction described in Section 351
of the Code.
(b) This Agreement is intended to constitute, and
the parties hereto hereby adopt this Agreement as, a "plan of reorganization"
within the meaning Treasury Regulation Section 1.368-2(g) and 1.368-3(a). Each
of Parent and the Company shall report the Merger as a reorganization within
the meaning of Section 368 of the Code, unless otherwise required pursuant to
a "determination" within the meaning of Section 1313(a) of the Code.
(c) In the event that either of ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇
LLP, counsel to Parent, or Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP, counsel
to the Company, acting in good faith, is unable to render its opinion pursuant
to Section 7.02(d) or Section 7.03(d), respectively, because the total fair
market value of the Parent Common Stock received by the Company Stockholders
in exchange for their Company Common Stock is less than 45% of the aggregate
fair market value of the Parent Common Stock and cash received in the Merger
or for other reasons, then at the option of either Parent or the Company, each
acting reasonably, the structure of the Merger shall be revised to provide for
(i) the formation by Parent and the Company of a new corporation ("Newco"),
(ii) the formation by Newco of two (2) wholly-owned corporations ("Newco
Subs") and (iii) the merger of one Newco Sub with and into Parent with Parent
being the surviving entity and the merger of the other Newco Sub with and into
the Company with the Company being the surviving entity, in a series of
transactions that qualify as a transaction described in Section 351 of the
Code (such transactions, collectively, the "Alternative Transaction").
(d) In the event that at the Effective Time, the
total fair market value of the Parent Common Stock that would be received by
the Company Stockholders in exchange for their Company Common Stock is greater
than or equal to 80% of the aggregate fair market value of the Company Common
Stock outstanding immediately before the Effective Time, then at the option of
either Parent or the Company, each acting reasonably, the structure of the
Merger shall be revised to provide for the merger of a first-tier newly formed
corporate Subsidiary of Parent with and into the Company with the Company
being the surviving entity in a transaction that qualifies as a reorganization
within the meaning of Section 368(a) of the Code.
(e) Notwithstanding anything to the contrary set
forth in subsections (c) and (d) of this Section 6.12, no revision to the
structure of the Merger shall (i) result in any change in the Merger
Consideration, (ii) be materially adverse to the interests of Parent, the
Company, Merger Sub, the holders of shares of Parent Common Stock or the
holders of shares of Company Common Stock or (iii) unreasonably impede or
delay consummation of the Merger. If the structure of the Merger is so
revised, this Agreement and Exhibits B and C shall be amended by the parties
as appropriate to give effect to the revised structure of the Merger with each
party executing a written amendment to this Agreement and Exhibits B and C as
necessary to reflect the foregoing. The parties agree to amend this Agreement
to the extent necessary to provide for more specific mechanics of the
alternative structures described in this Section 6.12.
Section 6.13 Litigation.
(a) The Company shall give Parent the opportunity to
participate in the defense or settlement of any stockholder litigation against
the Company and its directors relating to the Merger or any other Transaction;
provided, however, that no such settlement shall be agreed to without Parent's
consent, which consent shall not be unreasonably withheld or delayed.
(b) Parent shall give the Company the opportunity to
participate in the defense or settlement of any stockholder litigation against
Parent and its directors relating to the Merger or any other Transaction;
provided, however, that no such settlement shall be agreed to without the
Company's consent, which consent shall not be unreasonably withheld or
delayed.
Section 6.14 Parent Board. At or prior to the Effective
Time, Parent Board shall take all action necessary so that, effective
immediately following the Effective Time, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇▇▇ shall be appointed to Parent Board, with ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
being placed in Class I (with a term expiring in 2006) and ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇▇▇ being placed in Class II (with a term expiring in 2007). In
addition, as soon as practicable after the date hereof (but in any event prior
to the Closing Date), the Nominating/Corporate Governance Committee of the
Parent Board shall consider recommending an additional Company director for
appointment to the Parent Board. Parent Board shall also consider the
nomination of one further additional Company director to the Parent Board.
Section 6.15 Company Rights Agreement. Except for any such
actions permitted to be taken by this Agreement, including Section 5.02, the
Company covenants and agrees that it will not (a) redeem the Company Rights,
(b) amend the Company Rights Agreement or (c) take any action which would
allow any "Person" (as defined in the Company Rights Agreement) other than
Parent, Merger Sub or any Parent Subsidiary to become a "Beneficial Owner"
(for purposes of this Section 6.15, as defined in the Company Rights
Agreement) of 15% or more of the outstanding shares of Company Common Stock
without causing a "Shares Acquisition Date," or a "Distribution Date" (as each
such term is defined in the Company Rights Agreement) to occur. The Company
Board shall not make a determination that Parent, Merger Sub or any of their
respective "Affiliates" or "Associates" (as such terms are defined in the
Company Rights Agreement) is an "Acquiring Person" for purposes of the Company
Rights Agreement. The Company shall not adopt stockholder rights plan or
"poison pill."
Section 6.16 Title Insurance and Surveys. Not later than 30
days after the date hereof, (A) the Company shall use commercially reasonable
efforts to deliver to Parent (i) all existing surveys for the Company Owned
Properties (other than a licensed property) and each Company Leased Property
ground leased by the Company or any Company Subsidiary, in each case to the
extent available and in the Company's or any Company Subsidiary's possession
and (ii) all existing title policies for the Company Owned Properties and each
Company Leased Property ground leased by the Company or any Company
Subsidiary, together with copies of the underlying documents referenced in
each such title policy, in each case to the extent available and in the
Company's or any Company Subsidiary's possession and (B) Parent shall use
commercially reasonable efforts to deliver to the Company (i) all existing
surveys for the Parent Owned Properties (other than a licensed property) and
each Parent Leased Property ground leased by the Parent or any Parent
Subsidiary, in each case to the extent available and in Parent's or any Parent
Subsidiary's possession and (ii) all existing title policies for the Parent
Owned Properties and each Parent Leased Property ground leased by the Parent
or any Parent Subsidiary, together with copies of the underlying documents
referenced in each such title policy, in each case to the extent available and
in Parent's or any Parent Subsidiary's possession. In addition, the Company
shall reasonably cooperate with Parent to obtain any new survey or new title
policy relating to the Company Owned Properties and any Company Leased
Property ground leased by the Company that Parent reasonably determines
advisable to obtain, provided that the costs of such surveys and title
policies shall be borne solely by Parent. Notwithstanding anything to the
contrary herein, the obligation of the parties under this Section 6.16 shall
be deemed not to be a condition to Closing under Article VII hereof.
ARTICLE VII.
CONDITIONS PRECEDENT
Section 7.01 Conditions to Each Party's Obligation to Effect
the Merger. The respective obligation of each party to effect the Merger is
subject to the satisfaction or waiver on or prior to the Closing Date of the
following conditions:
(a) Stockholder Approvals. The Company shall have
obtained the Company Stockholder Approval and Parent shall have obtained
Parent Stockholder Approval.
(b) Form S-4. The Form S-4 shall have become
effective under the Securities Act and shall not be the subject of any stop
order or proceedings seeking a stop order, and Parent shall have received all
state securities or "blue sky" authorizations necessary to issue Parent Common
Stock pursuant to the Merger.
(c) NYSE Listing. The shares of Parent Company Stock
issuable to the Company's stockholders pursuant to this Agreement shall have
been approved for listing on the New York Stock Exchange, subject to official
notice of issuance.
(d) Consents, Approvals and Authorizations. All
material consents, approvals, orders or authorizations from, and all material
declarations, filings and registrations with, any Governmental Entity,
including all necessary approvals under any applicable Gaming Laws, required
to consummate the Merger and the other Transactions shall have been obtained
or made and the waiting period (and any extension thereof) applicable to the
Merger under the HSR Act shall have expired or been terminated.
(e) No Injunctions or Restraints. No temporary
restraining order, preliminary or permanent injunction or other order issued
by any court of competent jurisdiction or other legal restraint or prohibition
preventing the consummation of the Merger shall be in effect; provided,
however, that prior to asserting this condition, subject to Section 6.03, each
of the parties shall have used its reasonable efforts to prevent the entry of
any such injunction or other order and to appeal as promptly as possible any
such injunction or other order that may be entered.
(f) No Litigation. There shall not be pending any
suit, action or proceeding by any Governmental Entity in any court of
competent jurisdiction seeking to restrain or prohibit the consummation of the
Merger or any other Transaction or that would otherwise cause a Parent
Material Adverse Effect (after giving effect to the Merger); provided that, if
the court of competent jurisdiction dismisses or renders a final decision
denying a Governmental Entity's request for an injunction in such suit, action
or proceeding, then four Business Days following such dismissal or decision,
this condition to closing shall, with respect to such suit, action or
proceeding, thereafter be deemed satisfied whether or not such Governmental
Entity appeals the decision of such court or files an administrative complaint
before the Federal Trade Commission.
Section 7.02 Conditions to Obligations of Parent and Merger
Sub. The obligations of Parent and Merger Sub to effect the Merger are further
subject to the following conditions:
(a) Representations and Warranties. The
representations and warranties of the Company contained in this Agreement
shall be true and correct (without giving effect to any limitation as to
"materiality" or "Company Material Adverse Effect" set forth therein, except
as set forth in Section 3.08(i)) at and as of the Effective Time as if made at
and as of such time (except to the extent expressly made as of an earlier
date, in which case as of such earlier date), except where the failure of such
representations and warranties to be true and correct (without giving effect
to any limitation as to "materiality" or "Company Material Adverse Effect" set
forth therein, except as set forth in Section 3.08(i)) would not, individually
or in the aggregate, result in a Company Material Adverse Effect. Parent shall
have received a certificate signed on behalf of the Company by an executive
officer of the Company to such effect.
(b) Performance of Obligations of the Company. The
Company shall have performed in all material respects all obligations required
to be performed by it under this Agreement at or prior to the Closing Date,
and Parent shall have received a certificate signed on behalf of the Company
by an executive officer of the Company to such effect.
(c) Absence of Company Material Adverse Effect.
Except as disclosed in the Company Disclosure Letter, since the date of this
Agreement, there shall not have been any state of facts, event, change,
effect, development, condition or occurrence that, individually or in the
aggregate, has had or would reasonably be expected to have a Company Material
Adverse Effect.
(d) Tax Opinion. Parent shall have received the
opinion of ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP dated the date of the Effective Time, to the
effect that, for federal income tax purposes, the Merger will qualify as a
reorganization within the meaning of Section 368(a) of the Code or
alternatively, if applicable, the Alternative Transaction will qualify as a
transaction described in Section 351 of the Code. In rendering such opinion,
▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP shall receive and rely upon representations contained in
letters of Parent and the Company to be delivered as of the Effective Time
substantially in the form attached hereto as Exhibit B and Exhibit C,
respectively (as may be amended pursuant to Section 6.12(e)). The condition
set forth in this Section 7.02(d) shall not be waivable after receipt of the
Company Stockholder Approval or the Parent Stockholder Approval referred to in
Section 7.01(a), unless further stockholder approval is obtained with
appropriate disclosure.
Section 7.03 Conditions to Obligation of the Company. The
obligation of the Company to effect the Merger is further subject to the
following conditions:
(a) Representations and Warranties. The
representations and warranties of Parent and Merger Sub contained in this
Agreement shall be true and correct (without giving effect to any limitation
as to "materiality" or "Parent Material Adverse Effect" set forth therein
except as set forth in Section 4.08(i)) at and as of the Effective Time as if
made at and as of such time (except to the extent expressly made as of an
earlier date, in which case as of such earlier date), except where the failure
of such representations and warranties to be true and correct (without giving
effect to any limitation as to "materiality" or "Parent Material Adverse
Effect" set forth therein except as set forth in Section 4.08(i)) would not,
individually or in the aggregate, result in a Parent Material Adverse Effect.
The Company shall have received a certificate signed on behalf of Parent by an
executive officer of Parent to such effect.
(b) Performance of Obligations of Parent and Sub.
Parent and Merger Sub shall have performed in all material respects all
obligations required to be performed by them under this Agreement at or prior
to the Closing Date, and the Company shall have received a certificate signed
on behalf of Parent by an executive officer of Parent to such effect.
(c) Absence of Parent Material Adverse Effect..
Except as disclosed in the Parent Disclosure Letter, since the date of this
Agreement there shall not have been any state of facts, event, change, effect,
development, condition or occurrence that, individually or in the aggregate,
has had or would reasonably be expected to have a Parent Material Adverse
Effect.
(d) Tax Opinion. The Company shall have received the
opinion of Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP dated the date of the
Effective Time, to the effect that, for federal income tax purposes, the
Merger will qualify as a reorganization within the meaning of Section 368(a)
of the Code or alternatively, if applicable, the Alternative Transaction will
qualify as a transaction described in Section 351 of the Code. In rendering
such opinion, Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP shall receive and rely
upon representations contained in letters of Parent and the Company to be
delivered as of the Effective Time substantially in the form attached hereto
as Exhibit B and Exhibit C, respectively (as may be amended pursuant to
Section 6.12(e)). The condition set forth in this Section 7.03(d) shall not be
waivable after receipt of the Company Stockholder Approval or the Parent
Stockholder Approval referred to in Section 7.01(a), unless further
stockholder approval is obtained with appropriate disclosure.
Section 7.04 Frustration of Closing Conditions. None of the
Company, Parent or Merger Sub may rely on the failure of any condition set
forth in Section 7.01, 7.02 or 7.03, as the case may be, to be satisfied if
such failure was caused by such party's failure to use all reasonable efforts
to consummate the Merger and the other Transactions to be performed or
consummated by such party in accordance with the terms of this Agreement as
required by and subject to Section 6.03.
ARTICLE VIII.
TERMINATION, AMENDMENT AND WAIVER
Section 8.01 Termination. This Agreement may be terminated
at any time prior to the Effective Time, whether before or after receipt of
the Parent Stockholder Approval or the Company Stockholder Approval:
(a) by mutual written consent of Parent and the
Company;
(b) by written notice of either Parent or the
Company:
(i) if the Merger is not consummated on or
before July 14, 2005; provided, however, that such date may
be extended by either party (by written notice thereof to
the other party) up to and including October 14, 2005 in the
event all conditions to effect the Merger other than one or
more conditions set forth in Sections 7.01(d) and 7.01(e)
have been or are capable of being satisfied at the time of
each such extension (the latest applicable dates shall be
referred to herein as the "Outside Date"); provided further
that the right to terminate this Agreement under this
Section 8.01(b) shall not be available to any party whose
failure to fulfill any obligation under this Agreement,
including without limitation Sections 6.01(d) and 6.03
hereof, has been the cause of, or results in, the failure of
the Merger to occur on or before such date;
(ii) if any Governmental Entity issues an order,
decree or ruling or takes any other action permanently
enjoining, restraining or otherwise prohibiting the Merger
and such order, decree, ruling or other action shall have
become final and nonappealable;
(iii) if, upon a vote at a duly held meeting (or
at any adjournment or postponement thereof) to obtain the
Company Stockholder Approval, the Company Stockholder
Approval is not obtained; or
(iv) if, upon a vote at a duly held meeting (or
at any adjournment or postponement thereof) to obtain Parent
Stockholder Approval, Parent Stockholder Approval is not
obtained;
(c) by written notice of Parent, if the Company
breaches or fails to perform in any material respect any of its
representations, warranties or covenants contained in this Agreement, which
breach or failure to perform (i) would give rise to the failure of a condition
set forth in Section 7.02(a) or 7.02(b), and (ii) cannot be or has not been
cured within 60 days after the giving of written notice to the Company of such
breach;
(d) by written notice of the Company, if Parent or
Merger Sub breaches or fails to perform in any material respect of any of its
representations, warranties or covenants contained in this Agreement, which
breach or failure to perform (i) would give rise to the failure of a condition
set forth in Section 7.03(a) or 7.03(b), and (ii) cannot be or has not been
cured within 60 days after the giving of written notice to Parent of such
breach;
(e) by written notice of Parent, if (i) the Company
Board shall have withdrawn or adversely modified, or shall have resolved to
withdraw or adversely modify, the Company Recommendation; or (ii) the Company
Board shall have approved or recommended, or shall have resolved to approve or
recommend, to the stockholders of the Company, a Company Takeover Proposal
(other than the Merger); and
(f) by the Company, if, prior to receipt of the
Company Stockholder Approval, the Company (i) receives an unsolicited Superior
Company Proposal, (ii) resolves to accept such Superior Company Proposal,
(iii) shall have given Parent three Business Days' prior written notice of its
intention to terminate pursuant to this provision, and (iv) such proposal
continues to constitute a Superior Company Proposal taking into account any
revised proposal made by Parent during such three Business Day period;
provided, however, that such termination shall not be effective until such
time as payment of the Break-Up Fee required by Section 6.06(b) shall have
been made by the Company; provided, further, that the Company's right to
terminate this Agreement under this Section 8.01(f) shall not be available if
the Company is then in breach of Section 5.02.
Section 8.02 Effect of Termination. In the event of
termination of this Agreement by either the Company or Parent as provided in
Section 8.01, this Agreement shall forthwith become void and have no effect,
without any Liability or obligation on the part of Parent, Merger Sub or the
Company, other than the last sentence of Section 6.02, Section 6.06, this
Section 8.02 and Article IX, which provisions shall survive such termination,
and except to the extent that such termination results from the willful and
material breach by a party of any representation, warranty or covenant set
forth in this Agreement.
Section 8.03 Amendment. This Agreement may be amended by the
parties at any time before or after receipt of the Company Stockholder
Approval or Parent Stockholder Approval; provided, however, that (i) after
receipt of the Company Stockholder Approval or Parent Stockholder Approval,
there shall be made no amendment that by law (or, in the case of Parent
Stockholder Approval, by the regulations established by the New York Stock
Exchange) requires further approval by the stockholders of the Company or
Parent without the further approval of such stockholders, (ii) no amendment
shall be made to this Agreement after the Effective Time and (iii) except as
provided above no amendment of this Agreement by the Company shall require the
approval of the stockholders of the Company. This Agreement may not be amended
except by an instrument in writing signed on behalf of each of the parties.
Section 8.04 Extension; Waiver. At any time prior to the
Effective Time, the parties may (a) extend the time for the performance of any
of the obligations or other acts of the other parties, (b) waive any
inaccuracies in the representations and warranties of the other parties
contained in this Agreement or in any document delivered pursuant to this
Agreement or (c) subject to the proviso in Section 8.03, waive compliance by
the other parties with any of the agreements or conditions contained in this
Agreement. Subject to the proviso in Section 8.03, no extension or waiver by
the Company shall require the approval of the stockholders of the Company. Any
agreement on the part of a party to any such extension or waiver shall be
valid only if set forth in an instrument in writing signed on behalf of such
party. The failure of any party to this Agreement to assert any of its rights
under this Agreement or otherwise shall not constitute a waiver of such
rights.
Section 8.05 Procedure for Termination, Amendment, Extension
or Waiver. A termination of this Agreement pursuant to Section 8.01, an
amendment of this Agreement pursuant to Section 8.03 or an extension or waiver
pursuant to Section 8.04 shall, in order to be effective, require in the case
of Merger Sub or the Company, action by its Board of Directors or, to the
extent permitted by Law, the duly authorized designee of its Board of
Directors. Termination of this Agreement prior to the Effective Time shall not
require the approval of the stockholders of the Company.
ARTICLE IX.
GENERAL PROVISIONS
Section 9.01 Nonsurvival of Representations and Warranties.
None of the representations and warranties in this Agreement or in any
instrument delivered pursuant to this Agreement shall survive the Effective
Time. This Section 9.01 shall not limit any covenant or agreement of the
parties which by its terms contemplates performance after the Effective Time.
Section 9.02 Notices. All notices, requests, claims, demands
and other communications under this Agreement shall be in writing and shall be
deemed given (i) upon personal delivery, (ii) one Business Day after being
sent via a nationally recognized overnight courier service if overnight
courier service is requested or (iii) upon receipt of electronic or other
confirmation of transmission if sent via facsimile, in each case at the
addresses or fax numbers (or at such other address or fax number for a party
as shall be specified by like notice) set forth below:
(a) if to Parent or Merger Sub, to
▇▇▇▇▇▇'▇ Entertainment, Inc.
▇▇▇ ▇▇▇▇▇▇'▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: General Counsel
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
R. ▇▇▇▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
(b) if to the Company, to
Caesars Entertainment, Inc.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: General Counsel
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Section 9.03 Definitions.
(a) For purposes of this Agreement:
An "affiliate" of any person means another person that
directly or indirectly, through one or more intermediaries, controls, is
controlled by, or is under common control with, such first person.
"Business Day" means any day, other than (i) a Saturday or a
Sunday or (ii) a day on which banking and savings and loan institutions are
authorized or required by Law to be closed.
"Company Equity Award" means any equity-based award granted
under any Company Stock Plan, including but not limited to any Company Stock
Option, RSU, Performance Award, Supplemental Retention Unit, restricted stock,
phantom stock, stock appreciation right or purchase right.
"Company Material Adverse Effect" means a Material Adverse
Effect on the Company.
"Company Rights" means those certain rights associated with
the Company Rights Agreement.
"Company Rights Agreement" means that certain Rights
Agreement dated as of December 29, 1998, by and among the Company and ▇▇▇▇▇
Fargo Bank, N.A. (as successor to ChaseMellon Shareholder Services, L.L.C.),
as Rights Agent.
"Company Stock Option" means any option to purchase Company
Common Stock granted under the Company Stock Plan or otherwise.
"Company Stock Plans" means the Company's 1998 Stock
Incentive Plan, 1998 Independent Director Stock Option Plan, 2004 Long Term
Incentive Plan, Supplemental Retention Plan, Employee Stock Purchase Plan and
any other plan or arrangement under which the Company grants equity-based
awards.
"Company Title Policy" means true correct and complete
copies of the title policies and commitments with respect to Company Property.
"Company Takeover Proposal" means (i) any proposal or offer
for a merger, consolidation, dissolution, recapitalization or other business
combination involving the Company or any Significant Subsidiary (as defined in
Rule 1-02 of Regulation S-X, but substituting "20%" for the references to
"10%" therein), (ii) any proposal for the issuance by the Company of over 20%
of its equity securities, (iii) any proposal or offer to acquire in any
manner, directly or indirectly, over 20% of the equity securities or
consolidated total assets of the Company, or (iii) any combination of the
foregoing, in each case other than the Merger.
"Development Amount" shall mean $25,000,000 per development,
or $50,000,000 in the aggregate, which limits shall apply in respect of
amounts to be expended following the date hereof; provided, however, such
$50,000,000 amount may be increased, at the option of the Company in its sole
discretion, in which case the Capital Expenditure Amount shall be
correspondingly reduced by the amount of any such increase; provided further,
no such reduction to the Capital Expenditure Amount shall reduce the amount to
be expended in respect of the hotel tower expansion at Caesars Palace in Las
Vegas or the Atlantic City Caesars parking garage. Notwithstanding the
foregoing, for the purposes of calculating such $25,000,000 and $50,000,000
amounts, any amounts already budgeted for in the 2004 and 2005 budget provided
to Parent on or prior to the date hereof shall not be considered. For purposes
of calculating the Development Amount, any amounts incurred pursuant to
Section 5.01(a)(iv) or 5.01(a)(viii) shall be aggregated.
"Equity Interest" means any share, capital stock,
partnership, member or similar interest in any entity, and any option,
warrant, right or security (including debt securities) convertible,
exchangeable or exercisable therefor.
"Gaming Laws" means, with respect to any person, any
Federal, state, local or foreign statute, Law, ordinance, rule, regulation,
permit, consent, approval, license, judgment, order, decree, injunction,
finding of suitability or other authorization governing or relating to the
current or contemplated casino, hotel and gaming activities and operations of
such person and its subsidiaries, including Laws relating to related
activities such as liquor, cabaret and the like.
"knowledge of the Company" means, with respect to any matter
in question, the actual knowledge of the Company's executive officers.
"knowledge of Parent" means, with respect to any matter in
question, the actual knowledge of Parent's executive officers.
"Liabilities" mean any direct or indirect liability,
indebtedness, obligation, commitment, expense, claim, deficiency, guaranty or
endorsement of or by any person of any type, whether accrued, absolute,
contingent, matured, unmatured, liquidated, unliquidated, known or unknown.
"Liens" means any mortgage, deed of trust, deed to secure
debt, title retention agreement, pledge, lien, encumbrance, security interest,
conditional or installment sale agreement, charge or other claims of third
parties of any kind.
"Material Adverse Effect" on a person means a material
adverse effect on (i) the business, assets, financial condition or results of
operations of such person and its subsidiaries, taken as a whole, (ii) the
ability of such person to perform its obligations under this Agreement or
(iii) the ability of such person to consummate the Merger and the other
Transactions to be performed or consummated by such person, other than in the
case of (i), (ii) or (iii) any state of facts, event, change, effect,
development, condition or occurrence relating to (A) the economy in general in
the U.S. or in any state in which such person or any of its subsidiaries
operates, which events, changes, effects, developments, conditions or
occurrences do not disproportionately affect such person relative to the other
participants in the travel, hospitality or gaming industries, (B) the travel,
hospitality or gaming industries in general in the U.S. or in any state in
which such person or any of its subsidiaries operates, which events, changes,
effects, developments, conditions or occurrences do not disproportionately
affect such person relative to the other participants in the travel,
hospitality or gaming industries, (C) the execution of this Agreement or (D)
any change in such person's stock price or trading volume, in and of itself
(for the avoidance of doubt this clause (D) shall not preclude either party
from asserting that the underlying cause of any such change in stock price or
trading volume is a Material Adverse Effect). For the avoidance of doubt,
compliance with (and the consequences thereof) the terms of this Agreement
(including Section 6.03) shall not be taken into account in determining
whether a Material Adverse Effect shall have occurred or shall be expected to
occur for any and all purposes of this Agreement.
"Parent Material Adverse Effect" means the means a Material
Adverse Effect on Parent.
"Parent Rights Agreement" means that certain Rights
Agreement dated as of October 5, 1996, by and among Parent and The Bank of New
York, as Rights Agent.
"Parent Stock Option" means any option to purchase Parent
Common Stock granted under the Parent Stock Plan or otherwise.
"Parent Stock Plans" means the ▇▇▇▇▇▇'▇ Entertainment, Inc.
2004 Equity Incentive Award Plan, the ▇▇▇▇▇▇'▇ Entertainment, Inc. 1996
Non-Management Director's Stock Incentive Plan, the ▇▇▇▇▇▇'▇ Entertainment,
Inc. 1990 Stock Option Plan, the ▇▇▇▇▇▇'▇ Entertainment, Inc. 1990 Restricted
Stock Plan, TARSAP Deferral Plan dated July 28, 1999, Time Accelerated
Restricted Stock Award Plan II (TARSAP II) dated April 26, 2000, the ▇▇▇▇▇▇'▇
Entertainment, Inc. 2001 Executive Stock Incentive Plan, the 2001 Broad Based
Stock Incentive Plan and any other plan or arrangement under which Parent
grants equity-based awards.
"Performance Award" means a performance award granted under
the Company's 2004 Long Term Incentive Plan and outstanding immediately prior
to the Effective Time.
A "person" means any individual, firm, corporation,
partnership, company, limited liability company, trust, joint venture,
association, Governmental Entity or other entity.
"RSU" means a restricted stock unit granted under the
Company's 2004 Long Term Incentive Plan and outstanding immediately prior to
the Effective Time.
A "subsidiary" of any person means another person, an amount
of the voting securities, other voting ownership or voting partnership
interests of which is sufficient to elect at least a majority of its board of
directors or other governing body (or, if there are no such voting interests,
50% or more of the equity interests of which) is owned directly or indirectly
by such first person.
"Superior Company Proposal" means any proposal made by a
third party to acquire substantially all the equity securities or assets of
the Company, pursuant to a tender or exchange offer, a merger, a
consolidation, a liquidation or dissolution, a recapitalization, a sale of all
or substantially all its assets or otherwise, on terms which the Company Board
determines in good faith, after consultation with the Company's outside legal
counsel and financial advisors, (i) to be more favorable from a financial
point of view to the holders of the Company Common Stock than the Merger,
taking into account all the terms and conditions of such proposal and this
Agreement (including any proposal by Parent to amend the terms of the Merger)
and the Transactions and (ii) is reasonably likely to be consummated.
"Supplemental Retention Unit" means a right granted under
the Company's Supplemental Retention Plan.
"Taxes" means any and all taxes, charges, fees, levies,
tariffs, duties, liabilities, impositions or other assessments of any kind
(together with any and all interest, penalties, additions to tax and
additional amounts imposed with respect thereto) imposed by any Tax authority
or other Governmental Authority, including, without limitation, income, gross
receipts, profits, gaming, excise, real or personal property, environmental,
sales, use, value-added, ad valorem, withholding, social security, retirement,
employment, unemployment, workers' compensation, occupation, service, license,
net worth, capital stock, payroll, franchise, gains, stamp, transfer and
recording taxes, and shall include any Liability for the Taxes of any other
Person under Treasury Regulation Section 1.1502-6 (or any similar provision of
state, local, or foreign Law), or as a transferee or successor, by contract,
or otherwise.
"Tax Return" means any report, return (including any
information return), claim for refund, election, estimated Tax filing or
payment, request for extension, document, declaration or other information or
filing required to be supplied to any Governmental Entity with respect to
Taxes, including attachments thereto and amendments thereof.
(b) The following are defined elsewhere in this
Agreement, as indicated below:
Agreement Preamble
Alternative Transaction Section 6.12(c)
Antitrust Division Section 6.03
Break-up Fee Section 6.06(b)
Capital Expenditures Amount Section 5.01(a)(ix)
Cash Consideration Section 2.01(c)(1)(ii)
Cash Election Section 2.01(c)(1)(ii)
Certificate of Merger Section 1.03
Certificates Section 2.02(b)
Closing Section 1.02
Closing Date Section 1.02
Code Recitals
Company Preamble
Company Benefit Plans Section 3.10
Company Board Section 3.04(b)
Company By-laws Section 3.01
Company Charter Section 3.01
Company Common Stock Recitals
Company Contract Section 3.17
Company Disclosure Letter Article III
Company Stock Option Section 6.04(c)
Company ERISA Affiliate Section 3.10
Company Insiders Section 6.10
Company Intellectual Property Section 3.19
Company Leased Property Section 3.15
Company Multiemployer Pension Plan Section 3.11(c)
Company Owned Property Section 3.15
Company Participant Section 3.10
Company Pension Plans Section 3.11(a)
Company Property Section 3.15
Company Recommendation Section 6.01(d)
Company SEC Documents Section 3.06(a)
Company Stockholder Approval Section 3.04(d)
Company Stockholders Meeting Section 6.01(d)
Company Subsidiaries Section 3.01
Confidentiality Agreement Section 6.02
Consent Section 3.05(b)
Contract Section 3.05(a)
DGCL Section 1.01
Dissenter Rights Section 2.01(d)
Dissenter Shares Section 2.01(d)
Effective Time Section 1.03
Electing Share Section 2.01(c)(1)(i)
Election Date Section 2.03(b)
Employee Stock Purchase Plan Section 2.04(b)
Environmental Claim Section 3.18(g)(1)
Environmental Laws Section 3.18(g)(2)
Environmental Permits Section 3.18(b)
ERISA Section 3.11(a)
Exchange Act Section 3.05(b)
Exchange Agent Section 2.02(a)
Exchange Fund Section 2.02(a)
Exchange Ratio Section 2.01(c)(1)(i)
Filed Company SEC Documents Article III
Filed Parent SEC Documents Article IV
Foreign Competition Laws Section 3.05(b)
Form of Election Section 2.03(b)
Form S-4 Section 3.07
FTC Section 6.03(a)
GAAP Section 3.06(b)
Governmental Entity Section 3.05(b)
Hazardous Materials Section 3.18(g)(3)
HSR Act Section 3.05(b)
Intellectual Property Rights Section 3.19
Joint Proxy Statement Section 6.01(a)
Judgment Section 3.05(a)
Law Section 3.05(a)
Maximum Premium Section 6.05(b)
Merger Recitals
Merger Consideration Section 2.01(c)(2)
Merger Sub Preamble
Newco Section 6.12(c)
Newco Subs Section 6.12(c)
Non-Electing Share Section 2.01(c)(1)(ii)
Outside Date Section 8.01(b)(i)
Parent Preamble
Parent Benefit Plans Section 4.10
Parent Board Section 4.04(b)
Parent By-laws Section 4.01
Parent Charter Section 4.01
Parent Common Stock Section 1.01
Parent Contract Section 4.17
Parent Disclosure Letter Article IV
Parent ERISA Affiliate Section 4.10
Parent Intellectual Property Section 4.19
Parent Leased Property Section 4.15
Parent Multiemployer Pension Plan Section 4.11(c)
Parent Owned Property Section 4.15
Parent Participant Section 4.10
Parent Pension Plans Section 4.11(a)
Parent Property Section 4.15
Parent Recommendation Section 6.01(e)
Parent Rights Section 2.01(c)(1)(i)
Parent Rights Agreement Section 2.01(c)(1)(i)
Parent SEC Documents Section 4.06(a)
Parent Stockholder Approval Section 4.04(c)
Parent Stockholders Meeting Section 6.01(e)
Parent Subsidiaries Section 4.01
Permits Section 3.13
Release Section 3.18(g)(4)
Representatives Section 5.02(a)
SEC Section 3.05(b)
Section 16 Information Section 6.10
Securities Act Section 3.06(b)
Share Issuance Section 1.01
Shortfall Number Section 2.01(e)(3)
Stock Cap Section 2.01(e)(1)
Stock Consideration Section 2.01(c)(1)(i)
Stock Election Section 2.01(c)(1)(i)
Surviving Entity Section 1.01
Transactions Section 1.01
Transfer Taxes Section 6.08
Voting Company Debt Section 3.03(a)
Voting Parent Debt Section 4.03(a)
Section 9.04 Interpretation; Disclosure Letters. When a
reference is made in this Agreement to a Section or Subsection, such reference
shall be to a Section or Subsection 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."
Section 9.05 Severability. If any term or other provision of
this Agreement is invalid, illegal or incapable of being enforced by any rule
or Law, or public policy, all other conditions and provisions of this
Agreement shall nevertheless remain in full force and effect so long as the
economic or legal substance of the transactions contemplated hereby is not
affected in any manner materially adverse to any party. Upon such
determination that any term or other provision is invalid, illegal or
incapable of being enforced, the parties hereto shall negotiate in good faith
to modify this Agreement so as to effect the original intent of the parties as
closely as possible in an acceptable manner to the end that transactions
contemplated hereby are fulfilled to the extent possible.
Section 9.06 Counterparts; Facsimile. This Agreement may be
executed in one or more counterparts, all of which shall be considered one and
the same agreement and shall become effective when one or more counterparts
have been signed by each of the parties and delivered to the other parties.
Facsimile transmission of any signed original document and/or retransmission
of any signed facsimile transmission will be deemed the same as delivery of an
original. At the request of any party, the parties will confirm facsimile
transmission by signing a duplicate original document.
Section 9.07 Entire Agreement; No Third-Party Beneficiaries.
This Agreement (including the documents and instruments relating to the Merger
referred to herein) and the Confidentiality Agreement, taken together with the
Company Disclosure Letter and Parent Disclosure Letter, (a) constitute the
entire agreement and supersede all prior agreements and understandings,
whether written or oral, among the parties with respect to the Merger and (b)
except for Section 6.05, are not intended to confer upon any person other than
the parties hereto any rights or remedies hereunder. Notwithstanding clause
(b) of the immediately preceding sentence, following the Effective Time the
provisions of Article II shall be enforceable by holders of Certificates.
Section 9.08 Governing Law. This Agreement shall be governed
by, and construed in accordance with, the laws of the State of Delaware,
without regard to the principles of conflicts of laws thereof.
Section 9.09 Assignment. Neither this Agreement nor any of
the rights, interests or obligations under this Agreement shall be assigned,
in whole or in part, by operation of law or otherwise by any of the parties
without the prior written consent of the other parties, except that Merger Sub
may assign, in its sole discretion, any of or all its rights, interests and
obligations under this Agreement to Parent or to any direct or indirect wholly
owned subsidiary of Parent, but no such assignment shall relieve Merger Sub of
any of its obligations under this Agreement. Any purported assignment without
such consent shall be void. Subject to the preceding sentences, this Agreement
will be binding upon, inure to the benefit of, and be enforceable by, the
parties and their respective successors and assigns.
Section 9.10 Enforcement; Waiver of Jury Trial.
(a) The parties agree that irreparable damage would
occur in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms or were otherwise breached.
It is accordingly agreed that the parties shall be entitled to the fullest
extent permitted by Law to an injunction or injunctions to prevent or restrain
breaches, violations, defaults or threatened breaches, violations or defaults
of this Agreement and to enforce specifically the terms and provisions of this
Agreement in the Court of Chancery of Delaware in the State of Delaware, this
being in addition to any other remedy to which they are entitled at law or in
equity. In addition, each of the parties hereto (a) consents to submit itself
to the personal jurisdiction of the state court located in the State of
Delaware, and that the Court of Chancery shall be the exclusive jurisdiction
in the event any dispute arises out of this Agreement or the Merger, (b)
agrees that it will not attempt to deny or defeat such personal jurisdiction
by motion or other request for leave from any such court and (c) agrees that
it will not bring any action relating to this Agreement or the Merger in any
court other than the Court of Chancery of Delaware in the State of Delaware.
Each of the parties agrees that a final non-appealable judgment in any action
or proceeding shall be conclusive and may be enforced in other jurisdictions
by suit on the judgment or in any other manner permitted by Law.
(b) EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY
CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE
COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE IT HEREBY IRREVOCABLY AND
UNCONDITIONALLY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF
ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS
AGREEMENT AND ANY OF THE AGREEMENTS DELIVERED IN CONNECTION HEREWITH OR THE
TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY. EACH PARTY CERTIFIES AND
ACKNOWLEDGES THAT (A) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY
HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN
THE EVENT OF LITIGATION, SEEK TO ENFORCE EITHER OF SUCH WAIVERS, (B) IT
UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF SUCH WAIVERS, (C) IT MAKES
SUCH WAIVERS VOLUNTARILY, AND (D) IT HAS BEEN INDUCED TO ENTER INTO THIS
AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN
THIS SECTION 9.10(b).
Section 9.11 Mutual Drafting. Each party hereto has
participated in the drafting of this Agreement, which each party acknowledges
is the result of extensive negotiations between the parties.
[SIGNATURE PAGE FOLLOWS]
SIGNATURE PAGE TO AGREEMENT AND PLAN OF MERGER
IN WITNESS WHEREOF, Parent, Merger Sub and the Company have
duly executed this Agreement, all as of the date first written above.
▇▇▇▇▇▇'▇ ENTERTAINMENT, INC., a
Delaware corporation
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: President and Chief Executive
Officer
▇▇▇▇▇▇'▇ OPERATING COMPANY, INC., a
Delaware corporation
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: President and Chief Executive
Officer
CAESARS ENTERTAINMENT, INC., a
Delaware corporation
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
---------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
Title: President and Chief Executive
Officer