AGREEMENT AND PLAN OF MERGER
BY AND AMONG
STATION CASINOS, INC.,
FERTITTA COLONY PARTNERS LLC
AND
FCP ACQUISITION SUB
February 23, 2007
AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER (this "Agreement") is made and entered into
as of this 23rd day of February, 2007 by and among Station Casinos, Inc., a Nevada
corporation (the "Company"), Fertitta Colony Partners LLC, a Nevada limited liability
company ("Parent"), and FCP Acquisition Sub, a Nevada corporation and a wholly-owned
subsidiary of Parent ("Merger Sub").
RECITALS
A. The parties intend that Merger Sub be merged with and into the Company (the
"Merger"), with the Company surviving the Merger as a direct or indirect wholly-owned
subsidiary of Parent (the "Surviving Corporation"). The Surviving Corporation shall
retain the name of the Company.
B. The Board of Directors of the Company, acting upon the unanimous recommendation
of the Special Committee, has (i)determined that the Merger and this Agreement are
fair to and in the best interests of the Company and its stockholders, (ii)approved
this Agreement and (iii)resolved to recommend that stockholders of the Company approve
this Agreement.
C. The respective Boards of Directors of Parent and Merger Sub have unanimously
approved this Agreement.
D. In the Merger, subject to the terms of Article II hereof, each share of common
stock, $.01 par value per share, of the Company, including any Rights associated
therewith (the "Shares"), other than those shares held by Parent, will be converted
into the right to receive $90.00 per share in cash.
E. Certain existing stockholders of the Company desire to contribute Shares to
Parent immediately prior to the Effective Time in exchange for equity interests
in Parent.
F. Concurrently with the execution of this Agreement, as a condition and inducement
to the Companys and Parents willingness to enter into this Agreement, the Company,
Parent and the Contributing Stockholders are entering into a voting agreement, of
even date herewith (the "Voting Agreement"), pursuant to which each of the Contributing
Stockholders has agreed, subject to the terms thereof, to vote their respective
Shares in favor of adoption of this Agreement.
G. The Company, Parent and Merger Sub desire to make certain representations,
warranties, covenants and agreements in connection with the Merger and also to prescribe
certain conditions to the Merger, as set forth herein.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing and the representations, warranties,
covenants and agreements contained herein, intending to be legally bound, the parties
hereto agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1. Definitions. For purposes of this Agreement, the following terms
have the respective meanings set forth below:
"6% Notes" has the meaning set forth in Section7.10.
"6% Notes Indenture" has the meaning set forth in Section7.10.
"6% Notes" has the meaning set forth in Section7.10.
"6% Notes Indenture" has the meaning set forth in Section7.10.
"6⅝% Notes" has the meaning set forth in Section7.10.
"6⅝% Notes Indenture" has the meaning set forth in Section7.10.
"6⅞% Notes" has the meaning set forth in Section7.10.
"6⅞% Notes Indenture" has the meaning set forth in Section7.10.
"7% Notes" has the meaning set forth in Section7.10.
"7% Notes Indenture" has the meaning set forth in Section7.10.
"Affiliate" means, with respect to any Person, any other Person, directly or
indirectly, controlling, controlled by, or under common control with, such Person.
For purposes of this definition, the term "control" (including the correlative terms
"controlling", "controlled by" and "under common control with") means the possession,
directly or indirectly, of the power to direct or cause the direction of the management
and policies of a Person, whether through the ownership of voting securities, by
contract or otherwise. For purposes of this Agreement, Parent and Merger Sub shall
be deemed not to be Affiliates of the Company.
"Agreement" has the meaning set forth in the Preamble.
"Articles of Merger" has the meaning set forth in Section2.1(b).
"Book-Entry Share" has the meaning set forth in Section 2.2(c).
"Business Day" means any day other than the days on which banks in Las Vegas,
Nevada or New York, New York are required or authorized to close.
"Certificate" has the meaning set forth in Section2.2(c).
"Closing" has the meaning set forth in Section2.1(d).
"Closing Date" has the meaning set forth in Section2.1(d).
"Code" means the Internal Revenue Code of 1986, as amended.
"Company" has the meaning set forth in the Preamble.
"Company Acquisition Proposal" has the meaning set forth in Section7.4(g)(i).
"Company Benefit Plan" means each Employee Benefit Plan (other than any multiemployer
plan within the meaning of ERISA Section3(37)) and all stock purchase, stock option,
severance, employment, change-in-control, fringe benefit, bonus, incentive, deferred
compensation and other material employee benefit plans, agreements, programs, policies
or other arrangements, whether or not subject to ERISA, under which any Company
Employee has any present or future right to benefits, maintained or contributed
to by the Company or any of its Subsidiaries or under which the Company or any of
its Subsidiaries has any present or future liability.
"Company Disclosure Letter" has the meaning set forth in the preamble to ArticleIV.
"Company Employees" means any current, former or retired employee, officer, consultant,
independent contractor or director of the Company or any of its Subsidiaries.
"Company Equity Awards" means Company Options and Company Restricted Shares.
"Company Joint Venture" means, with respect to the Company, any corporation or
other entity (including partnerships, limited liability companies and other business
associations and joint ventures) in which the Company, directly or indirectly, owns
an equity interest that does not have voting power under ordinary circumstances
to elect a majority of the board of directors or other person performing similar
functions but in which the Company has rights with respect to the management of
such Person.
"Company Options" means outstanding options to acquire Shares from the Company
granted to Company Employees under the Company Stock Plans or otherwise.
"Company Proxy Statement" means the proxy statement, together with any amendments
or supplements thereto and any other related proxy materials, relating to the approval
of this Agreement by the Companys stockholders prepared in accordance with applicable
Law and including the information required to be included in the Schedule13E-3.
"Company Restricted Shares" has the meaning set forth in Section2.2(e).
"Company SEC Reports" has the meaning set forth in Section4.6(a).
"Company Securities" has the meaning set forth in Section4.5(b).
"Company Stockholder Meeting" has the meaning set forth in Section7.1(a).
"Company Stock Plans" means the 2005 Stock Compensation Plan, the Incentive Stock
Option Plan, the Compensatory Stock Option Plan, the Restricted Share Plan, the
Non-employee Director Stock Option Plan, the 1999 Compensatory Stock Option Plan,
and the 1999 Share Plan.
"Compensation" has the meaning set forth in Section7.8(a).
"Confidentiality Agreements" means, collectively, the Confidentiality Agreement,
dated October 12, 2006, between the Company and Colony Capital Acquisitions, LLC,
and the Confidentiality Agreement, dated as of December 1, 2006, between the Company
and Fertitta Colony Partners LLC.
"Contract" has the meaning set forth in Section4.4.
"Contributing Stockholders" means, individually or collectively, Frank J. Fertitta
III, Lorenzo J. Fertitta, Blake L. Sartini and Delise F. Sartini and their respective
Affiliates which contribute Shares to Parent pursuant to the Equity Rollover Commitments.
"Current Employee" has the meaning set forth in Section7.8(a).
"Current Policies" has the meaning set forth in Section7.5(a).
"Damages" has the meaning set forth in Section7.5(a).
"Debt Financing" has the meaning set forth in Section5.7.
"Debt Financing Commitments" has the meaning set forth in Section5.7.
"Debt Tender Offers" has the meaning set forth in Section7.10.
"Disbursing Agent" has the meaning set forth in Section2.3(a).
"Disinterested Director" means a member of the Board of Directors of the Company
who is independent within the meaning of Section303A.02 of the New York Stock Exchange
Listing Standards and who, accordingly, does not have a direct or indirect material
relationship with the Company.
"DOJ" has the meaning set forth in Section7.2(b).
"Effective Time" has the meaning set forth in Section2.1(b).
"Employee Benefit Plan" has the meaning set forth in Section3(3) of ERISA.
"Employment Agreement" means any employment, severance, retention, termination,
indemnification, change in control or similar agreement between the Company or any
of its Subsidiaries, on the one hand, and any current or former employee of the
Company or any of its Subsidiaries, on the other hand.
"End Date" has the meaning set forth in Section9.1(b)(i).
"Equity Financing" has the meaning set forth in Section5.7.
"Equity Financing Commitment" has the meaning set forth in Section5.7.
"Equity Rollover Commitments" has the meaning set forth in Section5.8.
"ERISA" means the Employee Retirement Income Security Act of1974, as amended.
"Exchange Act" means the Securities Exchange Act of1934, as amended, and the
rules and regulations promulgated thereunder.
"Excluded Party" has the meaning set forth in Section7.4(b).
"Expected Date" has the meaning set forth in Section 7.9(a).
"Fertittas" means Frank J. Fertitta III and Lorenzo J. Fertitta.
"Financing" has the meaning set forth in Section5.7.
"Financing Commitments" has the meaning set forth in Section5.7.
"FTC" has the meaning set forth in Section7.2(b).
"Gaming Approvals" has the meaning set forth in Section 7.2(e).
"Gaming Authority" means any Governmental Authority with regulatory control or
jurisdiction over casino or other gaming activities and operations, including, without
limitation, the Nevada Gaming Commission, the Nevada State Gaming Control Board
and the National Indian Gaming Commission.
"Gaming Law" means, with respect to any Person, any Law governing or relating
to any current or contemplated casino or other gaming activities and operations
of such Person and its Subsidiaries, including, without limitation, the rules and
regulations established by any Gaming Authority.
"GAAP" means United States generally accepted accounting principles.
"Governmental Authority" means any nation or government or any agency, public
or regulatory authority, instrumentality, department, commission, court, arbitrator,
ministry, tribunal or board of any nation or government or political subdivision
thereof, in each case, whether foreign or domestic and whether national, supranational,
federal, tribal, provincial, state, regional, local or municipal.
"HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of1976, as amended.
"Indentures" has the meaning set forth in Section7.10.
"Interim LLC Agreement" has the meaning set forth in Section6.2.
"Law" means applicable statutes, common laws, rules, ordinances, regulations,
codes, licensing requirements, orders, judgments, injunctions, writs, decrees, licenses,
governmental guidelines or interpretations having the force of law, permits, rules
and bylaws, in each case, of a Governmental Authority.
"Lease" means the lease of certain real property assets by PropCo to the Company,
as set forth in the form of Master Lease Agreement, to be dated as of the Closing
Date (the "Lease Agreement"), by and between the Company and PropCo.
"Lease Agreement" has the meaning set forth in the definition of "Lease".
"Liens" means, with respect to any asset, any mortgage, lien, pledge, charge,
security interest or encumbrance of any kind in respect of such asset.
"Limited Guarantee" has the meaning set forth in Section 5.13.
"Majority-Minority Vote" has the meaning set forth in Section 4.2(a).
"Marketing Period" has the meaning set forth in Section7.9(a).
"Material Adverse Effect on the Company" means a material adverse effect on the
assets or liabilities, business, financial condition or results of operations of
the Company and its Subsidiaries, taken as a whole; provided, however, that in no
event shall any of the following, alone or in combination, be deemed to constitute,
nor shall any of the following be taken into account in determining whether there
has been, a Material Adverse Effect on the Company: (A)any fact, change, development,
circumstance, event, effect or occurrence (an "Effect") in general economic or political
conditions, whether locally, nationally or internationally, or in the financial
or securities markets, or any outbreak or escalation of hostilities or declared
or undeclared acts of terrorism; (B)any Effect generally affecting, or resulting
from general changes or developments in, the travel, hospitality or gaming industries;
(C)any failure to meet internal or published projections, forecasts or revenue or
earnings predictions for any period (provided that the underlying causes of such
failures shall not be excluded); (D)any change in the price or trading volume of
the Shares in and of itself (provided that the underlying causes of such changes
shall not be excluded); (E)any Effect that is demonstrated to have resulted from
the announcement of the proposal of the Merger or this Agreement and the transactions
contemplated hereby, or the identity of Parent or any of its Affiliates as the acquiror
of the Company; (F) any Effect arising from any action taken by the Company to comply
with its obligations under this Agreement; or (G) any changes in Law or GAAP (or
the interpretation thereof), except, in the case of clauses(A) and (B), to the extent
such Effects referred to therein have had a materially disproportionate impact on
the assets or liabilities, business, financial condition or results of operations
of the Company and its Subsidiaries, taken as a whole, relative to other participants
in the travel, hospitality or gaming industries.
"Merger" has the meaning set forth in the Recitals.
"Merger Consideration" has the meaning set forth in Section2.2(c).
"Merger Shares" has the meaning set forth in Section2.2(c).
"Merger Sub" has the meaning set forth in the Preamble.
"Merger Sub Shares" means the shares of common stock of Merger Sub, par value
$0.001per share.
"New Financing Commitments" has the meaning set forth in Section7.9(c).
"NewCo" means FCP NewCo, LLC, a Delaware limited liability company and a wholly-owned
subsidiary of the Company.
"Notes" has the meaning set forth in Section7.10.
"No-Shop Period Start Date" has the meaning set forth in Section7.4(a).
"NRS" has the meaning set forth in Section 2.1(a).
"Operating Subsidiaries" has the meaning set forth in the definition of "Sale".
"Parent" has the meaning set forth in the Preamble.
"Parent Disclosure Letter" has the meaning set forth in the preamble to Article
V.
"Parent Expenses" has the meaning set forth in Section9.2(e).
"Parent Plan" has the meaning set forth in Section7.8(b).
"Permits" means any licenses, franchises, permits, certificates, consents, approvals
or other similar authorizations of, from or by a Governmental Authority (including
any Gaming Authority) possessed by or granted to or necessary for the ownership
of the material assets or conduct of the business of the Company or its Subsidiaries.
"Permitted Liens" means (i)Liens for Taxes, assessments and governmental charges
or levies not yet due and payable or that are being contested in good faith and
by appropriate proceedings; (ii)mechanics, carriers, workmens, repairmens, materialmens
or other Liens or security interests that secure a liquidated amount that are being
contested in good faith and by appropriate proceedings or with respect to which
there remains an opportunity to contest; or (iii)leases, subleases and licenses
(other than capital leases and leases underlying sale and leaseback transactions);
(iv)Liens imposed by applicable Law; (v)pledges or deposits to secure obligations
under workers compensation Laws or similar legislation or to secure public or statutory
obligations; (vi)pledges and deposits to secure the performance of bids, trade contracts,
leases, surety and appeal bonds, performance bonds and other obligations of a similar
nature, in each case in the ordinary course of business; (vii)easements, covenants
and rights of way (unrecorded and of record) and other similar restrictions of record,
and zoning, building and other similar restrictions, in each case that do not adversely
affect in any material respect the current use of the applicable property owned,
leased, used or held for use by the Company or any of its Subsidiaries; (viii)Liens
the existence of which are specifically disclosed in the notes to the consolidated financial statements of the Company included in any Company
SEC Report filed prior to the date of this Agreement; and (ix)any other Liens that
do not secure a liquidated amount, that have been incurred or suffered in the ordinary
course of business and that would not, individually or in the aggregate, have a
material adverse effect on the Company or the ability of Parent to obtain the Debt
Financing.
"Person" means any individual, corporation, company, limited liability company,
partnership, association, trust, joint venture or any other entity or organization,
including any government or political subdivision or any agency or instrumentality
thereof.
"PropCo" means FCP PropCo, LLC, a Delaware limited liability company and a wholly
owned-subsidiary of the Company.
"Purchase Agreement" has the meaning set forth in the definition of "Sale".
"Recommendation" has the meaning set forth in Section7.1(a).
"Recommendation Withdrawal" has the meaning set forth in Section7.4(d).
"Regulatory Termination Fee" means $106,000,000.
"Replacement Policies" has the meaning set forth in Section7.5(a).
"Representatives" has the meaning set forth in Section7.4(a).
"Required Financial Information" has the meaning set forth in Section7.9(a).
"Requisite Stockholder Vote" has the meaning set forth in Section4.2(a).
"Restraint" has the meaning set forth in Section8.1(c).
"Rights" has the meaning set forth in the Rights Agreement.
"Rights Agreement" has the meaning set forth in Section 4.12.
"Reverse Termination Fee" means $160,000,000.
"Sale" means the sale of certain real property assets by Boulder Station, Inc.,
Fiesta Station Holdings, LLC, Lake Mead Station Holdings, LLC, Palace Station Hotel
& Casino, Inc., Santa Fe Station, Inc., and Sunset Station, Inc. (collectively,
the "Operating Subsidiaries") to NewCo, as set forth in the Purchase and Sale Agreement,
dated as of even date herewith (the "Purchase Agreement"), by and among the Operating
Subsidiaries and NewCo.
"Sale and Lease-Back Agreements" means, collectively, (i) the Purchase Agreement,
(ii) the Lease Agreement, and (iii) the form of Sublease Agreements, to be dated
as of the Closing Date, by and among the Company and each of the Operating Subsidiaries.
"Schedule13E-3" means a Rule13e-3 Transaction Statement on Schedule13E-3, together
with any amendments or supplements thereto, relating to the Merger.
"SEC" means the United States Securities and Exchange Commission.
"Securities Act" means the Securities Act of1933, as amended, and the rules and
regulations promulgated thereunder.
"Share" has the meaning set forth in the Recitals.
"Special Committee" means a committee of the Companys Board of Directors, the
members of which are not affiliated with Parent or Merger Sub and are not members
of the Companys management, formed for the reasons set forth in the resolution
establishing such committee.
"Subsidiary" means, with respect to any Person, any other Person of which the
first Person owns, directly or indirectly, securities or other ownership interests
having voting power to elect a majority of the board of directors or other persons
performing similar functions (or, if there are no such voting interests, 50% or
more of the equity interests of the second Person).
"Superior Proposal" has the meaning set forth in Section7.4(g)(ii).
"Superior Proposal Effective Time" has the meaning set forth in Section7.13.
"Surviving Corporation" has the meaning set forth in the Recitals.
"Takeover Statute" has the meaning set forth in Section4.12.
"Tax" means (i)all U.S.Federal, state, local, foreign and other taxes (including
withholding taxes), fees and other governmental charges of any kind or nature whatsoever,
together with any interest, penalties or additions imposed with respect thereto,
(ii)any liability for payment of amounts described in clause(i) whether as a result
of transferee liability or joint and several liability for being a member of an
affiliated, consolidated, combined or unitary group for any period, and (iii)any
liability for the payment of amounts described in clause(i) or (ii)as a result of
any tax sharing, tax indemnity or tax allocation agreement or any other express
or implied agreement to pay or indemnify any other Person for the payment of Taxes.
"Tax Return" means any return, declaration, report, statement, information statement
or other document filed or required to be filed with respect to Taxes, including
any amendments or supplements to any of the foregoing.
"Termination Fee" means $160,000,000, except in the event that any third party
has made a bona fide Company Acquisition Proposal before the No-Shop Period Start
Date, which Company Acquisition Proposal then constituted a Superior Proposal, and
this Agreement is terminated by the Company pursuant to Section 9.1(c)(ii) in order
to enter into a definitive agreement with respect to such Company Acquisition Proposal
with such third party, the Termination Fee shall mean $106,000,000.
"Voting Agreement" has the meaning set forth in the Recitals.
Section 1.2. Terms Generally. The definitions in Section1.1 shall apply equally
to both the singular and plural forms of the terms defined. Whenever the context
may require, any pronoun shall include the corresponding masculine, feminine and
neuter forms. The words "include", "includes" and "including" shall be deemed to
be followed by the phrase "without limitation", unless the context expressly provides
otherwise. All references herein to Sections, paragraphs, subparagraphs, clauses,
Exhibits or Schedules shall be deemed references to Sections, paragraphs, subparagraphs
or clauses of, or Exhibits or Schedules to this Agreement, unless the context requires
otherwise. Unless otherwise expressly defined, terms defined in this Agreement have
the same meanings when used in any Exhibit or Schedule hereto, including the Company
Disclosure Letter. Unless otherwise specified, the words "herein", "hereof", "hereto"
and "hereunder" and other words of similar import refer to this Agreement as a whole
(including the Schedules and Exhibits) and not to any particular provision of this
Agreement. The term "or" is not exclusive. The word "extent" in the phrase "to the
extent" shall mean the degree to which a subject or other thing extends, and such
phrase shall not mean simply "if". Any Contract, instrument or Law defined or referred
to herein or in any Contract or instrument that is referred to herein means such
Contract, instrument or Law as from time to time amended, modified or supplemented,
including (in the case of Contracts or instruments) by waiver or consent and (in
the case of Laws) by succession of comparable successor Laws and references to all
attachments thereto and instruments incorporated therein. References to a Person
are also to its permitted successors and assigns.
ARTICLE II
THE MERGER
Section 2.1. The Merger.
(a) At the Effective Time, in accordance with the Nevada Revised Statutes (the
"NRS"), and upon the terms and subject to the conditions set forth in this Agreement,
Merger Sub shall be merged with and into the Company, at which time the separate
existence of Merger Sub shall cease and the Company shall survive the Merger as
a direct or indirect wholly-owned subsidiary of Parent.
(b) Subject to the provisions of this Agreement, with respect to the Merger,
as soon as practicable after 10:00 a.m., Las Vegas time, on the Closing Date, Merger
Sub shall file the Articles of Merger (the "Articles of Merger") executed in accordance
with, and containing such information as is required by, the relevant provisions
of the NRS with the Secretary of State of the State of Nevada. The Merger shall
become effective at such time as the Articles of Merger are duly filed with the
Secretary of State of the State of Nevada or at such other date and time as is agreed
between the parties and specified in the Articles of Merger in accordance with the
relevant provisions of the NRS (such date and time is hereinafter referred to as
the "Effective Time").
(c) The Merger shall generally have the effects set forth in Section 92A.250,
and any other applicable provisions, of the NRS and this Agreement. Without limiting
the generality of the foregoing, and subject thereto, from and after the Effective
Time, all property, rights, privileges, immunities, powers, franchises, licenses
and authority of the Company and Merger Sub shall vest in the Surviving Corporation, and all debts, liabilities,
obligations, restrictions and duties of each of the Company and Merger Sub shall
become the debts, liabilities, obligations, restrictions and duties of the Surviving
Corporation.
(d) The closing of the Merger (the "Closing") shall take place (i)at the offices
of Milbank, Tweed, Hadley & McCloy LLP, located in Los Angeles, California, or (ii)at
such other place and time or on such other date as the Company and Parent may agree
in writing (the actual date of the Closing, the "Closing Date"), as soon as reasonably
practicable but in any event, no later than the later to occur of (i) the second
Business Day after the day on which the last condition to the Merger set forth in
ArticleVIII is satisfied or validly waived (other than those conditions that by
their nature cannot be satisfied until the Closing Date, but subject to the satisfaction
or valid waiver of such conditions), or (ii) the date of completion of the Marketing
Period (or, if Parent so notifies the Company, a date during the Marketing Period
not less than three Business Days following such notice to the Company).
Section 2.2. Conversion of Securities. At the Effective Time, pursuant to this
Agreement and by virtue of the Merger and without any action on the part of the
Company, Parent, Merger Sub or the holders of the Shares:
(a) Each Share held by the Company as treasury stock or otherwise owned by Parent,
Merger Sub or any wholly-owned Subsidiary of the Company immediately prior to the
Effective Time (including Shares acquired by Parent immediately prior to the Effective
Time), if any, shall be canceled and retired and shall cease to exist, and no payment
or distribution shall be made or delivered with respect thereto.
(b) Each Merger Sub Share issued and outstanding immediately prior to the Effective
Time shall be converted into and become one newly issued, fully paid and non-assessable
share of common stock of the Surviving Corporation.
(c) Each Share (including any Company Restricted Shares) issued and outstanding
immediately prior to the Effective Time (other than Shares to be canceled pursuant
to Section2.2(a)) automatically shall be canceled and converted into the right to
receive $90.00 in cash, without interest (the "Merger Consideration"), payable to
the holder thereof upon surrender of the certificate (a "Certificate") or the book-entry
share (a "Book-Entry Share") formerly representing such Share in the manner provided
in Section2.3. Such Shares (including any Company Restricted Shares), other than
those canceled pursuant to Section2.2(a), sometimes are referred to herein as the
"Merger Shares."
(d) If between the date of this Agreement and the Effective Time the number of
outstanding Shares is changed into a different number of shares or a different class,
by reason of any stock dividend, subdivision, reclassification, recapitalization,
split-up, combination, exchange of shares or the like, other than pursuant to the
Merger, the amount of Merger Consideration payable per Share and any other dependent
items shall be appropriately adjusted to provide the holders of the Shares the same
economic effect as contemplated by this Agreement prior to such action and as so
adjusted shall, from and after the date of such event, be the Merger Consideration
or other dependent items, subject to further adjustment in accordance with this
Section 2.2(d).
(e) Each Share (other than those canceled pursuant to Section 2.2(a)) outstanding
immediately prior to the Effective Time, granted subject to vesting or other
lapse restrictions pursuant to the Company Stock Plans or any applicable restricted
stock award agreements (collectively, the "Company Restricted Shares") shall,
by virtue of this Agreement and in accordance with Section 2.4(b), vest and
become free of such restrictions immediately prior to the Effective Time and
shall be canceled, retired and shall cease to exist and shall be converted into
the right to receive the Merger Consideration in accordance with Section2.2(c).
(f) The Company Options outstanding immediately prior to the Effective Time
shall be treated as provided in Section2.4.
(g) For the avoidance of doubt, the parties acknowledge and agree that the
contribution or sale of Shares (including Company Restricted Shares, if any)
to Parent by the Contributing Stockholders shall be deemed to occur immediately
prior to the Effective Time and prior to any other above-described event and
shall not be converted into the right to receive the Merger Consideration.
Section 2.3. Payment of Cash for Merger Shares and Company Options.
(a) Prior to the Closing Date, Parent shall designate a bank or trust company
that is reasonably satisfactory to the Company to serve as the disbursing agent
for the Merger Consideration and payments, if applicable, in respect of the
Company Options, unless another agent is designated as provided in Section2.4(a)
(the "Disbursing Agent"). Prior to or substantially simultaneously with the
filing of the Articles of Merger with the Secretary of State of the State of
Nevada, Parent will deposit, or will cause to be deposited, with the Disbursing
Agent cash in the aggregate amount sufficient to pay the Merger Consideration
in respect of all Merger Shares outstanding immediately prior to the Effective
Time plus any cash necessary to pay for Company Options outstanding immediately
prior to the Effective Time pursuant to Section2.4 and pay any declared and
unpaid dividends in respect of the Shares. Pending distribution of the cash
deposited with the Disbursing Agent, such cash shall be held in trust for the
benefit of the holders of Merger Shares and Company Options outstanding immediately
prior to the Effective Time and shall not be used for any other purposes; provided,
however, that Parent may direct the Disbursing Agent to invest such cash in
(i)obligations of or guaranteed by the United States of America or any agency
or instrumentality thereof, (ii)money market accounts, certificates of deposit,
bank repurchase agreement or bankers acceptances of, or demand deposits with,
commercial banks having a combined capital and surplus of at least $500,000,000,
or (iii)commercial paper obligations rated P-1 or A-1 or better by Standard
& Poors Corporation or Moodys Investor Services, Inc. Any profit or loss resulting
from, or interest and other income produced by, such investments shall be for
the account of Parent.
(b) As promptly as practicable after the Effective Time, the Surviving Corporation
shall send, or cause the Disbursing Agent to send, to each record holder of
Merger Shares as of immediately prior to the Effective Time a letter of transmittal
and instructions for exchanging their Merger Shares for the Merger Consideration
payable therefor. The letter of transmittal will be in customary form and will
specify that delivery of Certificates or Book-Entry Shares will be effected,
and risk of loss and title will pass, only upon delivery of the Certificates
or Book-Entry Shares to the Disbursing Agent. Upon surrender of such Certificate(s)
or Book-Entry Share(s) to the Disbursing Agent together with a properly completed
and duly executed letter of transmittal and any other documentation that the
Disbursing Agent may reasonably require, the record holder thereof shall be
entitled to receive the Merger Consideration payable in exchange therefor, without
interest. Until so surrendered and exchanged, each such Certificate or Book-Entry
Share shall, after the Effective Time, be deemed to represent only the right
to receive the Merger Consideration and any declared and unpaid dividend in
respect of such Certificate or Book-Entry Share, and until such surrender and
exchange, no cash shall be paid to the holder of such outstanding Certificate
or Book-Entry Share in respect thereof.
(c) If payment is to be made to a Person other than the registered holder
of the Merger Shares formerly represented by the Certificate(s) or Book-Entry
Share(s) surrendered in exchange therefor, it shall be a condition to such payment
that the Certificate(s) or Book-Entry Share(s) so surrendered shall be properly
endorsed or otherwise be in proper form for transfer and that the Person requesting
such payment shall pay to the Disbursing Agent any applicable stock transfer
taxes required as a result of such payment to a Person other than the registered
holder of such Merger Shares or establish to the satisfaction of the Disbursing
Agent that such stock transfer taxes have been paid or are not payable.
(d) After the Effective Time, there shall be no further transfers on the
stock transfer books of the Company of the Shares that were outstanding immediately
prior to the Effective Time. If, after the Effective Time, Certificates or Book-Entry
Shares are presented to the Surviving Corporation, Parent or the Disbursing
Agent, such shares shall be canceled and exchanged for the consideration provided
for, and in accordance with the procedures set forth, in this ArticleII.
(e) If any cash deposited with the Disbursing Agent remains unclaimed twelve
months after the Effective Time, such cash shall be returned to Parent or the
Surviving Corporation upon demand, and any holder who has not surrendered such
holders Certificate(s) or Book-Entry Share(s) for the Merger Consideration
payable in respect thereof prior to that time shall thereafter look only to
the Surviving Corporation for payment of the Merger Consideration. Notwithstanding
the foregoing, none of Parent, Merger Sub, the Company, the Surviving Corporation,
the Disbursing Agent or any of their respective directors, officers, employees
and agents shall be liable to any holder of Certificates or Book-Entry Shares
for an amount paid to a public official pursuant to any applicable unclaimed
property laws. Any amounts remaining unclaimed by holders of Certificates or
Book-Entry Shares as of two years after the Effective Time (or immediately prior
to such earlier date on which such amounts would otherwise escheat to or become
property of any Governmental Authority) shall, to the extent permitted by applicable
Law, become the property of the Surviving Corporation on such date, free and
clear of any claims or interest of any Person previously entitled thereto.
(f) No dividends or other distributions with respect to capital stock of
the Surviving Corporation with a record date after the Effective Time shall
be paid to the holder of any unsurrendered Certificate or Book-Entry Share.
(g) Except as provided in Section2.2(a), from and after the Effective Time,
the holders of Shares outstanding immediately prior to the Effective Time shall
cease to have any rights with respect to such Shares, other than the right to receive the Merger
Consideration as provided in this Agreement.
(h) In the event that any Certificate has been lost, stolen or destroyed,
upon the making of an affidavit of that fact by the Person claiming such Certificate
to be lost, stolen or destroyed, in addition to the posting by such holder of
any bond in such reasonable amount as the Surviving Corporation or the Disbursing
Agent may direct as indemnity against any claim that may be made against the
Surviving Corporation or the Disbursing Agent with respect to such Certificate,
the Disbursing Agent will issue in exchange for such lost, stolen or destroyed
Certificate the Merger Consideration in respect thereof entitled to be received
pursuant to this Agreement.
(i) Notwithstanding the provisions of Section 2.2(c) or 2.2(e), Parent, Surviving
Corporation and the Disbursing Agent shall be entitled to deduct and withhold
from the Merger Consideration otherwise payable hereunder any amounts required
to be deducted and withheld under any applicable Tax Law. To the extent any
amounts are so withheld, such withheld amounts shall be treated for all purposes
as having been paid to the holder from whose Merger Consideration the amounts
were so deducted and withheld.
Section 2.4. Treatment of Company Options.
(a) As of the Effective Time, each Company Option that is outstanding immediately
prior to the Effective Time will be canceled and extinguished, and the holder
thereof will be entitled to receive an amount in cash equal to the product of
(i)the number of Shares subject to such Company Option and (ii)the excess, if
any, of the Merger Consideration over the exercise price per share of such Company
Option, without interest. All payments with respect to canceled Company Options
shall be made by the Disbursing Agent (or such other agent reasonably acceptable
to the Company as Parent shall designate prior to the Effective Time) as promptly
as reasonably practicable after the Effective Time from funds deposited by or
at the direction of Parent for the purpose of paying such amounts in accordance
with Section2.3(a).
(b) Prior to the Effective Time, the Company and Parent will adopt such resolutions
and take such other commercially reasonable actions as are reasonably necessary
in order to effectuate the actions contemplated by Section2.2(e) and this Section2.4,
without paying any consideration or incurring any debts or obligations on behalf
of the Company or the Surviving Corporation, provided that such resolutions
and actions shall expressly be conditioned upon the consummation of the Merger
and the other transactions contemplated hereby and shall be of no effect if
this Agreement is terminated.
(c) Notwithstanding the provisions of Section 2.4(a), Parent, the Surviving
Corporation and the Disbursing Agent (or such other agent designated pursuant
to Section2.4(a) hereof), shall be entitled to deduct and withhold from any
amounts to be paid hereunder in respect of Company Options amounts required
to be deducted and withheld under any applicable Tax Law. To the extent any
amounts are so withheld, such withheld amounts shall be treated for all purposes
as having been paid to the holder of Company Options from whose payments in
respect of Company Options the amounts were so deducted and withheld.
ARTICLE III
THE SURVIVING CORPORATION
Section 3.1. Articles of Incorporation. The Amended and Restated Articles
of Incorporation of the Company, as amended to read in its entirety as the articles
of incorporation of Merger Sub as in effect immediately prior to the Effective
Time, shall be the articles of incorporation of the Surviving Corporation until
thereafter amended in accordance with the terms thereof or as provided by applicable
Law; provided, however, that Article I thereof shall read as follows: "The name
of the Corporation is Station Casinos, Inc."
Section 3.2. Bylaws. The bylaws of the Company, as amended to read in its
entirety as the bylaws of Merger Sub as in effect immediately prior to the Effective
Time, shall be the bylaws of the Surviving Corporation until thereafter amended
in accordance with the terms thereof, in the articles of incorporation of the
Surviving Corporation or as provided by applicable Law.
Section 3.3. Directors and Officers. From and after the Effective Time, (i)the
directors of Surviving Corporation at the Effective Time shall be the Fertittas
and Thomas Barrack (and such other directors as may be designated by Parent)
and (ii)the officers of the Company at the Effective Time (other than those
who Parent determines shall not remain as officers of the Surviving Corporation)
shall be the officers of the Surviving Corporation, in each case until their
respective successors are duly elected or appointed and qualified in accordance
with applicable Law or any contractual commitments with respect to the foregoing.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except (x)as set forth in the corresponding sections or subsections of the
disclosure letter delivered to Parent and Merger Sub by the Company concurrently
with the execution and delivery of this Agreement (the "Company Disclosure Letter")
(provided that the listing of an item in one section of the Company Disclosure
Letter shall be deemed to be a listing in each section of the Company Disclosure
Letter to which such item relates only to the extent that it is reasonably apparent
from a reading of such disclosure that it also qualifies or applies to such
other section), (y)as may be disclosed in the Company SEC Reports filed prior
to the date of this Agreement or (z) as otherwise known to any of the Fertittas
on or prior to the date of this Agreement, the Company hereby represents and
warrants to Parent and Merger Sub that:
Section 4.01. Corporate Existence and Power. Each of the Company and its Subsidiaries
is duly organized, validly existing and in good standing under the laws of its
jurisdiction, except, in the case of its Subsidiaries, where the failure to
be so organized, existing and in good standing has not had, and would not reasonably
be expected to have, individually or in the aggregate, a Material Adverse Effect
on the Company. Each of the Company, its Subsidiaries and, to the knowledge
of the Company, the Company Joint Ventures has all corporate or similar powers
and authority required to own, lease and operate its respective properties and
to carry on its business as now conducted, except, in the case of its Subsidiaries,
where the failure to have such power and authority has not had, and would
not reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect on the Company. Each of the Company and its Subsidiaries is duly
licensed or qualified to do business in each jurisdiction in which the nature
of the business conducted by it or the character or location of the properties
and assets owned or leased by it makes such qualification necessary, except
where the failure to be so licensed or qualified has not had, and would not
be reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on the Company. Neither the Company nor any Subsidiary nor, to the Companys
knowledge, any Company Joint Venture, is in violation of its organizational
or governing documents in any material respect.
Section 4.2. Corporate Authorization.
(a) The Company has full corporate power and authority to execute and deliver
this Agreement and, subject to receipt of the Requisite Stockholder Vote, to
consummate the Merger and to perform each of its obligations hereunder. The
execution, delivery and performance by the Company of this Agreement and the
consummation by the Company of the Merger and the transactions contemplated
by the Sale and Lease-Back Agreements have been duly and validly authorized
by the Board of Directors of the Company. Except for the approval of this Agreement
by (i) 662/3% of the outstanding Shares entitled to vote thereon, and (ii) a
majority of the outstanding Shares (excluding the Shares held by Parent, Merger
Sub, the Contributing Stockholders or any of their respective Affiliates) present,
in person or by proxy, and voting at the Company Stockholder Meeting (the "Majority-Minority
Vote" and, together with the approval described in clause (i), the "Requisite
Stockholder Vote"), no other corporate proceedings on the part of the Company
are necessary to approve this Agreement. The Board of Directors of the Company,
acting upon the unanimous recommendation of the Special Committee, at a duly
held meeting has (i)determined that the Merger and this Agreement are fair to
and in the best interests of the Company and its stockholders (other than the
Contributing Stockholders), (ii)approved the Merger and the execution, delivery
and performance of this Agreement, and (iii)resolved to recommend that the Company
stockholders (other than the Contributing Stockholders) approve this Agreement
and directed that such matter be submitted for the consideration of the stockholders
of the Company at the Company Stockholder Meeting.
(b) This Agreement has been duly and validly executed and delivered by the
Company and, assuming the due and valid authorization, execution and delivery
of this Agreement by Parent and Merger Sub, constitutes a legal, valid and binding
agreement of the Company enforceable against the Company in accordance with
its terms, except as such enforceability may be limited by bankruptcy, insolvency,
moratorium, reorganization or similar Laws affecting the enforcement of creditors
rights generally and general equitable principles.
Section 4.3. Governmental Authorization. The execution, delivery and performance
by the Company of this Agreement and the consummation of the Merger by the Company
do not require any consent, approval, authorization or permit of, action by,
filing with or notification to any Governmental Authority, other than (i)those
required by the Secretary of State of the State of Nevada as contemplated hereby;
(ii)compliance with the applicable requirements of the HSR Act; (iii)filings
with, and approvals by, Gaming Authorities; (iv)compliance with the applicable
requirements of the Exchange Act including the filing of the Schedule13E-3;
(v)compliance with the rules and regulations of the New York Stock Exchange; (vi)compliance with any applicable foreign or state securities or Blue Sky
laws; and (vii)any such consent, approval, authorization, permit, action, filing
or notification the failure of which to make or obtain would not (A)be reasonably
likely to have, individually or in the aggregate, a Material Adverse Effect
on the Company or (B)prevent or materially delay the consummation of the Merger
or the Companys ability to observe and perform its material obligations hereunder.
Section 4.4. Non-Contravention. The execution, delivery and performance by
the Company of this Agreement and the consummation by the Company of the Merger
and the other transactions contemplated hereby do not and will not (i)contravene
or conflict with the organizational or governing documents of (A) the Company
or (B) any of its Subsidiaries or Company Joint Ventures; (ii)assuming compliance
with the matters referenced in Section4.3 and the receipt of the Requisite Stockholder
Vote, contravene or conflict with or constitute a violation of any provision
of any Law binding upon or applicable to the Company or any of its Subsidiaries
or Company Joint Ventures or any of their respective properties or assets; (iii)except
as set forth in Section 4.4 of the Company Disclosure Letter, require the consent,
approval or authorization of, or notice to or filing with any third party with
respect to, result in any breach or violation of or constitute a default (or
an event which with notice or lapse of time or both would become a default)
or result in the loss of benefit under, or give rise to any right of termination,
cancellation, amendment or acceleration of any right or obligation of the Company
or any of its Subsidiaries, or result in the creation of any Lien on any of
the properties or assets of the Company or its Subsidiaries under any loan or
credit agreement, note, bond, mortgage, indenture, contract, agreement, lease,
license, permit or other instrument or obligation (each, a "Contract") to which
the Company or any of its Subsidiaries is a party or by which the Company or
any of its Subsidiaries or its or any of their respective properties or assets
are bound, except in the case of clauses(i)(B), (ii) and (iii)above, which would
not (A)be reasonably likely to have, individually or in the aggregate, a Material
Adverse Effect on the Company or (B)prevent or materially delay the consummation
of the Merger or the Companys ability to observe and perform its material obligations
hereunder.
Section 4.5. Capitalization.
(a) As of December 31, 2006, the authorized capital stock of the Company
consists of:
(i) 135,000,000 Shares, of which 57,261,676 shares were issued and outstanding
(including3,027,354 outstanding Company Restricted Shares);
(ii) 5,000,000 shares of preferred stock, par value $.01 per share, none
of which were issued and outstanding; and
(iii) outstanding Company Options to purchase an aggregate of2,187,107 Shares,
with a weighted average exercise price of $12.07 per share.
All outstanding Shares are duly authorized, validly issued, fully paid and
non-assessable, and are not subject to and were not issued in violation of any
preemptive or similar right, purchase option, call or right of first refusal
or similar right. As of December 31, 2006, 23,245,751 Shares were held in the
treasury of the Company.
(b) Except as set forth in Section4.5(a) and except for1,108,632 Shares reserved
for issuance pursuant to the Company Stock Plans and except for the Rights,
as of the date of this Agreement, there have not been reserved for issuance,
and there are no outstanding (i)shares of capital stock or other voting securities
of the Company; (ii)securities of the Company or any of its Subsidiaries convertible
into or exchangeable for shares of capital stock or voting securities of the
Company; (iii)Company Options or other rights or options to acquire from the
Company, or obligations of the Company to issue, any shares of capital stock,
voting securities or securities convertible into or exchangeable for shares
of capital stock or voting securities of the Company; or (iv)equity equivalent
interests in the ownership or earnings of the Company or other similar rights
in respect of the Company (the securities described in clauses(i) through (iv)are
collectively referred to herein as the "Company Securities"). There are no outstanding
obligations of the Company or any Subsidiary to repurchase, redeem or otherwise
acquire any Company Securities. There are no preemptive rights of any kind which
obligate the Company or any of its Subsidiaries to issue or deliver any Company
Securities. There are no stockholder agreements, voting trusts or other agreements
or understandings to which the Company or any of its Subsidiaries is a party
or by which it is bound relating to the voting or registration of any shares
of capital stock of the Company or preemptive rights with respect thereto.
(c) From September 30, 2006 to the date of this Agreement, (i) other than
the issuance of Shares upon the exercise of Company Options, the Company has
not declared or paid any dividend or distribution in respect of any Company
Securities, other than (x) the dividend of $0.2875 per Share paid on December
4, 2006 to stockholders of record on November 13, 2006 and (y) the dividend
of $0.2875 per Share payable on March 12, 2007 to stockholders of record on
February 26, 2007, and (ii) other than, as of January 31, 2007, the redemption
of 8,659 Shares by the Company in lieu of employee tax obligations upon the
vesting of certain Company Restricted Shares, neither the Company nor any Subsidiary
of the Company has issued, sold or repurchased any Company Securities, and their
respective Boards of Directors have not authorized any of the foregoing.
(d) No bonds, debentures, notes or other indebtedness having the right to
vote on any matters on which Company stockholders may vote are outstanding.
Section 4.6. Reports and Financial Statements.
(a) The Company has filed all forms, reports, statements, certifications
and other documents (including all exhibits, amendments and supplements thereto)
required to be filed by it with the SEC since January 1, 2005 (all such forms,
reports, statements, certificates and other documents filed with or furnished
to the SEC since January 1, 2005, with any amendments thereto, collectively,
the "Company SEC Reports"), each of which, including any financial statements
or schedules included therein, as finally amended prior to the date hereof,
has complied as to form in all material respects with the applicable requirements
of the Securities Act and Exchange Act as of the date filed with the SEC. None
of the Companys Subsidiaries is required to file periodic reports with the
SEC. None of the Company SEC Reports contained, when filed with the SEC and,
if amended, as of the date of such amendment, any untrue statement of a material
fact or omitted to state a material fact required to be stated or incorporated
by reference therein or necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not misleading. As
of the date of this Agreement, (i) there are no outstanding or unresolved comments
in comment letters received from the SEC staff with respect to the Company SEC
Reports, and (ii) to the knowledge of the Company, none of the Company SEC Reports
is the subject of ongoing SEC review, outstanding SEC comment or outstanding
SEC investigation.
(b) Each of the consolidated financial statements of the Company and its
Subsidiaries included (or incorporated by reference) in the Company SEC Reports
(including the related notes and schedules, where applicable) fairly present
in all material respects (subject, in the case of the unaudited statements,
to normal year-end auditing adjustments, none of which are expected to be material
in nature or amount) the results of the consolidated operations and changes
in stockholders equity and consolidated financial position of the Company and
its Subsidiaries for the respective fiscal periods or as of the respective dates
therein set forth. Each of such consolidated financial statements (including
the related notes and schedules, where applicable) complied, as of the date
of filing, in all material respects with applicable accounting requirements
and with the published rules and regulations of the SEC applicable thereto and
each of such financial statements (including the related notes and schedules,
where applicable) were prepared in accordance with GAAP (except, in the case
of unaudited statements, as permitted by the rules and regulations of the SEC)
consistently applied during the periods involved, except in each case as indicated
in such statements or in the notes thereto.
Section 4.7. Undisclosed Liabilities. Except (i)for those liabilities that
are fully reflected or reserved against on the consolidated balance sheets (as
restated, or the related notes thereto) of the Company included in the Company
SEC Reports, (ii)for liabilities incurred in the ordinary course of business
consistent with past practice since the date of such balance sheets, (iii)for
liabilities that have been discharged or paid in full prior to the date hereof
in the ordinary course of business consistent with past practice and (iv) for
transactions contemplated by this Agreement, neither the Company nor any of
its Subsidiaries has incurred any liability of any nature whatsoever (whether
absolute, accrued or contingent or otherwise and whether due or to become due)
that would reasonably be expected to have, individually or in the aggregate,
a Material Adverse Effect on the Company.
Section 4.8. Disclosure Documents. The Schedule13E-3 and the Company Proxy
Statement will not, at the date it is filed with the SEC (in the case of the
Schedule13E-3), at the date it is first mailed to stockholders of the Company
(in the case of the Company Proxy Statement), at the time of any amendments
thereof or supplements thereof, and at the time of the Company Stockholder Meeting
(other than as to information supplied by Parent, Merger Sub or any of their
respective Affiliates, for inclusion therein), 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 Company will cause
the Company Proxy Statement and the Schedule13E-3 to comply as to form in all
material respects with the requirements of the Exchange Act applicable thereto
and any other applicable Law as of the date of such filing. No representation
is made by the Company with respect to statements made in the Company Proxy
Statement or the Schedule13E-3 based on information supplied by Parent, Merger
Sub or their respective Affiliates specifically for inclusion therein.
Section 4.9. Absence of Certain Changes or Events. Since December31, 2005,
no change, circumstance, event or effect has occurred which has had or would
be reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on the Company. Except as disclosed in Section4.9 of the Company Disclosure
Letter, between December31, 2005 and the date hereof the Company and its Subsidiaries
have conducted their respective businesses in all material respects only in
the ordinary course consistent with past practice.
Section 4.10. Finders Fees. No agent, broker, investment banker, financial
advisor or other firm or person retained by the Company, except Bear, Stearns
& Co. Inc. ("Bear Stearns"), is or will be entitled to any brokers or finders
fee or any other similar commission or fee payable by the Company or any Subsidiary
of the Company in connection with any of the transactions contemplated by this
Agreement. Prior to the date hereof, the Company furnished Parent with a true
and complete copy of the engagement letter entered into between Company and
Bear Stearns.
Section 4.11. Opinion of Financial Advisor. Bear Stearns has delivered to
the Special Committee an opinion to the effect that, as of the date of this
Agreement, the Merger Consideration to be received by the stockholders of the
Company (other than the Contributing Stockholders) is fair, from a financial
point of view, to such stockholders.
Section 4.12. Anti-Takeover Provisions. No "fair price," "merger moratorium,"
"control share acquisition," or other anti-takeover or similar statute or regulation
(each, a "Takeover Statute") applies or purports to apply to this Agreement,
the Merger or the other transactions contemplated hereby, except for those which
have been made not applicable to this Agreement, the Merger and the other transactions
contemplated hereby by valid action of the Board of Directors of the Company
prior to the execution and delivery hereof. Prior to the execution and delivery
hereof, the Board of Directors of the Company took all action necessary to ensure
that Parent, Merger Sub and their respective Affiliates and Associates, as defined
in the rights agreement (the "Rights Agreement"), dated as of October 6, 1997,
entered into by and between the Company and Continental Stock Transfer & Trust
Company, are excepted from the definition of Acquiring Person in the Rights
Agreement only to the extent each is a Beneficial Owner (as defined in the Rights
Agreement) as a result of the approval, execution and delivery of this Agreement
or consummation of the transactions contemplated hereby.
Section 4.13. Compliance With Laws.
(a) Except as set forth in Section 4.13 of the Company Disclosure Letter,
the Company and each of its Subsidiaries is in compliance with all Laws (including
Gaming Laws) applicable to the Company, its Subsidiaries and their respective
businesses and activities, except for such noncompliance that has not had, and
would not be reasonably likely to have, individually or in the aggregate, a
Material Adverse Effect on the Company.
(b) The Company and each Subsidiary of the Company has and maintains in full
force and effect, and is in compliance with, all Permits and all orders from
Governmental Authorities necessary for the Company and each Subsidiary to carry
on their respective businesses as currently conducted and currently proposed
to be conducted, except as has not had, and would not be reasonably likely to have, individually or in the aggregate,
a Material Adverse Effect on the Company.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
Except as set forth in the corresponding sections or subsections of the disclosure
letter delivered to the Company by Parent and Merger Sub concurrently with the
execution and delivery of this Agreement (the "Parent Disclosure Letter") (provided
that the listing of an item in one section of the Parent Disclosure Letter shall
be deemed to be a listing in each section of the Parent Disclosure Letter to
which such item relates only to the extent that it is reasonably apparent from
a reading of such disclosure that it also qualifies or applies to such other
section), Parent and Merger Sub jointly and severally hereby represent and warrant
to the Company that:
Section 5.01. Corporate Existence and Power. Each of Parent, a limited liability
company, and Merger Sub, a corporation, is duly organized, validly existing
and in good standing under the laws of Nevada. Parent has all limited liability
company power and authority, and Merger Sub has all corporate power and authority,
required to execute and deliver this Agreement and to consummate the Merger
and the other transactions contemplated hereby and to perform each of its obligations
hereunder.
Section 5.2. Corporate Authorization. The execution, delivery and performance
by Parent and Merger Sub of this Agreement and the consummation by Parent and
Merger Sub of the Merger and the other transactions contemplated hereby have
been duly and validly authorized by the Board of Directors of Parent and Merger
Sub. No other corporate proceedings other than those previously taken or conducted
on the part of Parent or Merger Sub are necessary to approve this Agreement
or to consummate the other transactions contemplated hereby. This Agreement
has been duly and validly executed and delivered by Parent and Merger Sub and,
assuming the due and valid execution and delivery of the Agreement by the Company,
constitutes a legal, valid and binding agreement of Parent and Merger Sub, respectively,
enforceable against Parent and Merger Sub in accordance with its terms, except
as such enforceability may be limited by bankruptcy, insolvency, moratorium,
reorganization or similar Laws affecting the enforcement of creditors rights
generally and general equitable principles.
Section 5.3. Governmental Authorization. The execution, delivery and performance
by Parent and Merger Sub of this Agreement and the consummation by Parent and
Merger Sub of the Merger and other transactions contemplated by this Agreement
do not require any consent, approval, authorization or permit of, action by,
filing with or notification to any Governmental Authority, other than (i)the
filing of the Articles of Merger; (ii)compliance with the applicable requirements
of the HSR Act; (iii)filings with, and approvals by, Gaming Authorities specified
in Section5.3(iii) of the Parent Disclosure Letter, (iv)compliance with the
applicable requirements of the Exchange Act including the filing of the Schedule13E-3;
(v)compliance with any applicable state securities or Blue Sky laws; and (vi)any
such consent, approval, authorization, permit, action, filing or notification
the failure of which to make or obtain would not be reasonably likely to adversely
effect in any material respect, or prevent or materially delay, the consummation of the Merger or Parents or Merger Subs
ability to observe and perform its material obligations hereunder.
Section 5.4. Non-Contravention. The execution, delivery and performance by
Parent and Merger Sub of this Agreement and the consummation by Parent and Merger
Sub of the Merger and the other transactions contemplated hereby do not and
will not (i)contravene or conflict with the organizational or governing documents
of Parent or Merger Sub, (ii)assuming compliance with the items specified in
Section5.3, contravene, conflict with or constitute a violation of any provision
of any Law binding upon or applicable to Parent or Merger Sub or any of their
respective properties or assets, or (iii)require the consent, approval or authorization
of, or notice to or filing with any third party with respect to, result in any
breach or violation of or constitute a default (or an event which with notice
or lapse of time or both would become a default), or give rise to any right
of termination, cancellation, amendment or acceleration of any right or obligation
of Parent or Merger Sub or to a loss of any material benefit to which Parent
or Merger Sub is entitled under any Contract.
Section 5.5. Disclosure Documents. None of the information supplied or to
be supplied by Parent or Merger Sub or any of their respective Affiliates specifically
for inclusion in the Company Proxy Statement or Schedule13E-3 will, at the date
it is filed with the SEC (in the case of the Schedule13E-3), at the date it
is first mailed to stockholders of the Company (in the case of the Company Proxy
Statement), at the time of any amendments thereof or supplements thereof and
at the time of the Company Stockholder 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.
Section 5.6. Finders Fees. No agent, broker, investment banker, financial
advisor or other firm or person except Deutsche Bank Securities Inc. is or will
be entitled to any brokers or finders fee or any other similar commission
or fee payable by Parent or Merger Sub in connection with any of the transactions
contemplated by this Agreement.
Section 5.7. Financing. Parent has delivered to the Company true and complete
copies of (i)the commitment letter with respect to the senior credit facilities,
dated as of the date hereof, among Parent and Deutsche Bank Securities Inc.,
Deutsche Bank Trust Company Americas and JPMorgan Chase Bank and (ii) the commitment
letter with respect to the first lien mortgage loan, dated as of the date hereof,
among Parent and German American Capital Corporation, Deutsche Bank AG, New
York Branch and JPMorgan Chase Bank (collectively, the "Debt Financing Commitments"),
pursuant to which the lenders party thereto committed, subject to the terms
thereof, to lend the amounts set forth therein (the "Debt Financing"), and (iii)the
equity commitment letter, dated as of the date hereof, from FC Investor, LLC
(the "Equity Financing Commitment" and, together with the Debt Financing Commitments,
the "Financing Commitments"), pursuant to which such parties have committed,
subject to the terms thereof, to invest the cash amounts set forth therein (the
"Equity Financing" and, together with the Debt Financing, the "Financing").
The Financing Commitments are in full force and effect and are legal, valid
and binding obligations of Parent and, to the knowledge of Parent, the other
parties thereto. None of the Financing Commitments has been or will be amended
or modified, except as consistent with Section 7.9(c), and the respective commitments
contained in the Financing Commitments have not been withdrawn or rescinded in any respect
as of the date hereof. As of the date of this Agreement, no event has occurred
which, with or without notice, lapse of time or both, would constitute a default
or breach on the part of Parent or Merger Sub under any Financing Commitment
and subject to the accuracy of the representations and warranties of the Company
set forth in Article IV and the satisfaction of the conditions set forth in
Sections 8.1 and 8.2 hereof, neither Parent nor Merger Sub has any reason to
believe that it will be unable to satisfy on a timely basis any term or condition
of closing to be satisfied by it in any of the Financing Commitments on or prior
to the Closing Date. The funds contemplated to be provided by the Financing
Commitments would be sufficient to enable Parent to make or cause to be made
payments of the Merger Consideration as provided herein (including for the Company
Options as provided herein), all other necessary payments by it, Merger Sub
or the Surviving Corporation in connection with the Merger (including the repayment
of outstanding indebtedness of the Surviving Corporation) and all of the related
fees and expenses. There are no conditions precedent or other contingencies
to the funding of the Financing other than as set forth in the Financing Commitments.
There are no side letters or other agreements, contracts or arrangements (except
for customary fee letters and engagement letters) related to the funding or
investing, as applicable, of the full amount of the Debt Financing other than
as expressly set forth in or contemplated by the Debt Financing Commitments.
As of the date hereof, Parent or Merger Sub has fully paid, or caused to be
fully paid, any and all commitment fees which are due and payable with respect
to the Debt Financing Commitments.
Section 5.8. Equity Rollover Commitments; Management Agreements. Parent has
delivered to the Company true and complete copies of (i) the equity rollover
letters, dated as of the date hereof, from the Contributing Stockholders (the
"Equity Rollover Commitments"), pursuant to which such parties have committed
to contribute to Parent that number of Shares set forth in such letters for
shares of capital stock of Parent immediately prior to the Effective Time, and
(ii) the Voting Agreement. As of the date hereof, other than the Equity Rollover
Commitments, the Voting Agreement and the Interim LLC Agreement, there are no
Contracts between Parent or Merger Sub or any of their Affiliates, on the one
hand, and any member of the Companys management or the Board of Directors of
the Company, on the other hand. On the Closing Date, it is anticipated that
the Interim LLC Agreement will be amended and restated and that Parent will
enter into employment agreements with each of the Fertittas.
Section 5.9. Parent and Merger Sub. Each of Parent and Merger Sub has been
formed solely for the purpose of engaging in the transactions contemplated hereby
and prior to the Effective Time will have engaged in no other material business
activities and will have incurred no liabilities or obligations other than as
contemplated herein or in connection with the transactions contemplated hereby,
including in connection with arranging the Financing. As of the date hereof,
there were 100 shares of common stock of Merger Sub issued and outstanding,
representing the only shares of capital stock of Merger Sub outstanding and
entitled to vote on the Merger.
Section 5.10. Ownership of Shares. Except as disclosed on Schedule 5.10 of
the Parent Disclosure Letter, none of Parent, Merger Sub or their respective
Affiliates owns (directly or indirectly, beneficially or of record) any Shares,
and none of Parent, Merger Sub or their respective Affiliates has any rights
to acquire any Shares except pursuant to this Agreement or the Equity Rollover
Commitments.
Section 5.11. Interest in Competitors. Except as disclosed on Schedule 5.11
of the Parent Disclosure Letter, none of Parent, Merger Sub or the Contributing
Stockholders owns any interest(s), nor do any of their respective Affiliates
insofar as such Affiliate-owned interests would be attributed to Parent or Merger
Sub under the HSR Act or the Gaming Laws, in any entity or Person doing business
in the United States that derives a substantial portion of its revenues from
a line of business within the Companys principal line of business.
Section 5.12. No Other Representations and Warranties. Parent and Merger
Sub acknowledge that the Company makes no representations or warranties as to
any matter whatsoever except as expressly set forth in this Agreement and specifically
(but without limiting the generality of the foregoing) that the Company makes
no representations or warranties with respect to (i) any projections, estimates
or budgets delivered to or made available to Parent or Merger Sub (or any of
their respective Affiliates or Representatives) of future revenues, results
of operations (or any component thereof), cash flows or financial condition
(or any component thereof) of the Company and its Subsidiaries or (ii) the future
business and operations of the Company and its Subsidiaries.
Section 5.13. Guarantee. Concurrently with the execution of this Agreement,
Parent has delivered to the Company the guarantee of Colony Investor VII, L.P.,
a Delaware limited partnership, Colony Investor VIII, L.P., a Delaware limited
partnership, and Colony Parallel Investors VIII, L.P., a Delaware limited partnership,
with respect to certain matters as specified therein (the "Limited Guarantee").
Section 5.14. Solvency. Immediately following the Effective Time and after
giving effect to the Merger, the Surviving Corporation and each of its Subsidiaries
will not (i) be insolvent (either because its financial condition is such that
the sum of its debts, including contingence and unliquidated debts, is greater
than its assets, at a fair valuation, or because the present fair saleable value
of its assets is less than the amount required to pay its probable liability
on its existing debts, including contingent and unliquidated debts, as they
become absolute and matured); (ii) have unreasonably small capital with which
to engage in its business; or (iii) have intended to incur, or believed or reasonably
should have believed that it would incur, debts beyond its ability to pay them
as they become due.
Section 5.15. Disclosure.
(a) No material plans for the business or operations of the Company or any
of its Subsidiaries (including any properties for which the Company or any such
Subsidiaries owns an option, right of first refusal or other similar right to
purchase) have been delivered or made available by or on behalf of the Company
or its Subsidiaries or the Fertittas to Parent and Merger Sub which are not
reflected in the plans or records of the Company or any such Subsidiaries and
which have not been provided to the Board of Directors or the Special Committee.
(b) Parent and Merger Sub have delivered, or caused to be delivered, to the
Special Committee or its Representatives the most current projections, estimates
or forecasts received or prepared by, or for the benefit of, Parent and Merger
Sub, any of their Affiliates or their respective Representatives (including
any projections, estimates or forecasts provided to the Financing sources of Parent) relating to the Company (it being understood
that Parent and Merger Sub need not deliver any information relating to Parents
or Merger Subs pricing of, or expected return on, the Companys securities
or assets).
ARTICLE VI
CONDUCT OF BUSINESS PENDING THE MERGER
Section 6.1. Conduct of the Company and Subsidiaries. Except for matters
(x)set forth in Section6.1 of the Company Disclosure Letter or as otherwise
contemplated by or specifically provided in this Agreement, or (y)consented
to in writing by Parent (which consent shall not be unreasonably withheld, conditioned
or delayed), from the date hereof until the Effective Time, the Company shall,
and shall cause its Subsidiaries to, conduct their respective businesses in
the ordinary and usual course consistent with past practice and use all commercially
reasonable efforts to maintain and preserve intact its business organization,
including the services of its key employees on terms and conditions substantially
comparable to those currently in effect and the goodwill of any Governmental
Authority, customers, lenders, distributors, suppliers and other Persons with
which it has material business relationships. Without limiting the generality
of the foregoing, and except as required by Law or except for matters set forth
in Section6.1 of the Company Disclosure Letter or as otherwise contemplated
by or specifically provided in this Agreement, without the prior written consent
of Parent (which consent shall not be unreasonably withheld, conditioned or
delayed), the Company shall not, and shall not permit its Subsidiaries to:
(a) propose or adopt any change in its organizational or governing documents;
(b) merge or consolidate the Company or any of its Subsidiaries with any
Person, other than the Merger and other than any mergers or consolidations among
the Company and its Subsidiaries or among the Companys Subsidiaries;
(c) sell, lease or otherwise dispose of a material amount of assets or securities,
including by merger, consolidation, asset sale or other business combination
(including formation of a Joint Venture), other than the transactions contemplated
by the Sale and Lease-Back Agreements;
(d) redeem, repurchase, prepay, defease, cancel, incur or otherwise acquire,
or modify in any material respect the terms of, indebtedness for borrowed money
or assume, guarantee or endorse or otherwise become responsible for, whether
directly, contingently or otherwise, the obligations of any Person, other than
the incurrence, assumption or guarantee of indebtedness in the ordinary course
consistent with past practice, including any borrowings under the existing credit
facilities of the Company and its Subsidiaries to fund working capital needs,
and such other actions taken in the ordinary course of business consistent with
past practice;
(e) offer, place or arrange any issue of debt securities or commercial bank
or other credit facilities that could be reasonably expected to compete with
or impede the Debt Financing or cause the breach of any provisions of the Debt Financing Commitments
or cause any condition set forth in the Debt Financing Commitments not to be
satisfied;
(f) make any material loans, advances or capital contributions to, acquisitions
or licenses of, or investments in, any other Person, except as required by existing
Contracts;
(g) authorize any capital expenditures in excess of $25,000,000 per project
or in excess of $30,000,000 per related series of projects, other than expenditures
necessary to maintain existing assets in good repair and expenditures contemplated
by the Companys2007 budget and approved development plans, as delivered to
Parent prior to the date hereof, or the Companys 2008 budget and development
plans approved by the Board of Directors;
(h) pledge or otherwise encumber shares of capital stock or other voting
securities of the Company or any of its Subsidiaries;
(i) mortgage or pledge any of its material assets, tangible or intangible,
or create, assume or suffer to exist any material Lien thereupon (other than
Permitted Liens);
(j) enter into or amend any Contract with any executive officer, director
or other Affiliate of the Company or any of its Subsidiaries or any Person beneficially
owning5% or more of the Shares;
(k) (i) split, combine or reclassify any Company Securities or amend the
terms of any Company Securities, (ii)declare, set aside or pay any dividend
or other distribution (whether in cash, stock or property or any combination
thereof) in respect of Company Securities other than (A) a dividend or distribution
by a wholly owned Subsidiary of the Company to its parent corporation, (B) the
dividend of $0.2875 per share payable on March 12, 2007 to stockholders of record
on February 26, 2007 or (C) commencing with the quarter ending June 30, 2007,
regular quarterly cash dividends in respect of the Shares not to exceed $0.2875
per share (provided that, with respect to the quarter ending September 30, 2007,
the record date and payment date shall not be earlier than September 21 and
October 2, respectively, and, with respect to the quarter ending December 31,
2007, the record date and payment date shall not be earlier than December 21
and January 2, respectively, and with respect to the quarter ending March 31,
2008, the record date and payment date shall not be earlier than March 21 and
April 2, respectively), (iii)issue or offer to issue any Company Securities,
or redeem, repurchase or otherwise acquire or offer to redeem, repurchase, or
otherwise acquire, any Company Securities, other than in connection with (A)the
exercise of Company Options, (B)the withholding of Company Securities to satisfy
Tax obligations with respect to Company Equity Awards, (C)the acquisition by
the Company of Company Securities in connection with the forfeiture of Company
Equity Awards, (D)the acquisition by the Company of Company Securities in connection
with the net exercise of Company Options in accordance with the terms thereof,
and (E)the issuance of Company Securities as required to comply with any Company
Benefit Plan or Employment Agreement as in effect on the date of this Agreement;
(l) except (i)as required pursuant to existing written agreements or any
Company Benefit Plan, Employment Agreement or collective bargaining agreement
in effect on the date hereof, (ii)as effected in the ordinary course of business
or (iii)as required by applicable Law (including Section409A of the Code), (A)adopt, amend or terminate
any Company Benefit Plan or enter into or amend any collective bargaining agreement
or any Employment Agreement with any officer or director of the Company, other
than entry into Employment Agreements with persons who are not executive officers
or directors or (B)take any action to accelerate the vesting or payment, or
fund or in any other way secure the payment, of compensation or benefits under
any Company Benefit Plan;
(m) other than in the ordinary course of business consistent with past practice,
settle or compromise any litigation, or release, dismiss or otherwise dispose
of any claim or arbitration, other than settlements or compromises of litigation,
claims or arbitration that do not exceed $25,000,000 in the aggregate and do
not involve any material injunctive or other non-monetary relief or impose material
restrictions on the business or operations of the Company;
(n) other than in the ordinary course of business and except as are not,
individually or in the aggregate, material to the Company and its Subsidiaries,
taken as a whole, or their respective businesses, make or change any material
Tax election, or settle or compromise any material Tax liability of the Company
or any of its Subsidiaries, agree to an extension of the statute of limitations
with respect to the assessment or determination of Taxes of the Company or any
of its Subsidiaries, file any amended Tax Return with respect to any material
Tax, enter into any closing agreement with respect to any Tax or surrender any
right to claim a Tax refund;
(o) make any change in financial accounting methods or method of Tax accounting,
principles or practices materially affecting the reported consolidated assets,
liabilities or results of operations of the Company and its Subsidiaries, except
insofar as may have been required by a change in GAAP or Law;
(p) adopt a plan of complete or partial liquidation, dissolution, merger,
consolidation, restructuring, recapitalization or other reorganization of the
Company or any of its Subsidiaries (other than the Merger and consolidations,
mergers or reorganizations among the Company and its Subsidiaries or among the
Companys Subsidiaries), or a letter of intent or agreement in principle with
respect thereto;
(q) take any action that is intended to or would result in any of the conditions
to effecting the Merger set forth in Sections8.1 and 8.2 becoming incapable
of being satisfied;
(r) take any action or fail to take any action which would, or would be reasonably
likely to, individually or in the aggregate, prevent, materially delay or materially
impede the ability of the Company to consummate the Merger or the other transactions
contemplated by this Agreement; or
(s) authorize, agree or commit to do any of the foregoing.
Notwithstanding the foregoing, in no event shall any action taken by, with
the written consent of, or at the written direction of, any of the Fertittas
(and not also at the direction or with the concurrence of the Board of Directors
of the Company (acting with the concurrence of the Special Committee) or the
Special Committee) constitute a violation by the Company of this Section 6.1.
Section 6.2. Conduct of Parent and Merger Sub.
Each of Parent and Merger Sub agrees that, from the date hereof to the Effective
Time, it shall not (i)take any action (including by way of amendment to the
First Amended and Restated Operating Agreement, dated as of the date hereof,
among Parent and the investors named therein (the "Interim LLC Agreement"))
that is intended to or would reasonably be likely to result in any of the conditions
to effecting the Merger set forth in Sections8.1 and 8.3 becoming incapable
of being satisfied; or (ii)take any action or fail to take any action which
would, or would reasonably be likely to, individually or in the aggregate, prevent,
materially delay or materially impede the ability of Parent and Merger Sub to
consummate the Merger or the other transactions contemplated by this Agreement.
Section 6.3. No Control of Other Partys Business. Nothing contained in this
Agreement is intended to give Parent, directly or indirectly, the right to control
or direct the Companys or its Subsidiaries operations prior to the Effective
Time, and nothing contained in this Agreement is intended to give the Company,
directly or indirectly, the right to control or direct Parents or its Subsidiaries
operations. Prior to the Effective Time, each of Parent and the Company shall
exercise, consistent with the terms and conditions of this Agreement, complete
control and supervision over its and its Subsidiaries respective operations.
ARTICLE VII
ADDITIONAL AGREEMENTS
Section 7.01. Stockholder Meeting; Proxy Material.
(a) The Company shall (i)take all action necessary to duly call, give notice
of, convene and hold a meeting of its stockholders (the "Company Stockholder
Meeting") for the purpose of obtaining the approval of this Agreement by the
Company stockholders in accordance with applicable Law as promptly as reasonably
practicable after the SEC confirms that it has no further comments on the Company
Proxy Statement and the Schedule13E-3, (ii)subject to Section 7.4, use commercially
reasonable efforts to solicit the approval of this Agreement by the Company
stockholders, and (iii)except to the extent that the Board of Directors of the
Company (acting through the Special Committee, if such committee still exists)
shall have withdrawn or modified its approval or recommendation of this Agreement
as permitted by Section7.4, include in the Company Proxy Statement the recommendation
of the Board of Directors of the Company that the stockholders of the Company
approve this Agreement (the "Recommendation"). Notwithstanding the foregoing,
the Company shall not be obligated to convene the Company Stockholders Meeting
in the event that the Board of Directors shall have effected a Recommendation
Withdrawal.
(b) In connection with the Company Stockholder Meeting, the Company will
(i)as promptly as reasonably practicable prepare the Company Proxy Statement
and the Schedule13E-3 and file, jointly with Parent and Merger Sub, the Schedule13E-3
with the SEC as promptly as reasonably practicable, (ii)respond as promptly
as reasonably practicable to any comments received from the SEC with respect
to such filing and will provide copies of such comments to Parent and Merger
Sub promptly upon receipt and copies of proposed responses to Parent and Merger Sub a reasonable time prior to filing to allow meaningful
comment, (iii)as promptly as reasonably practicable prepare and file (after
Parent and Merger Sub have had a reasonable opportunity to review and comment
on) any amendments or supplements necessary to be filed in response to any SEC
comments or as required by Law, (iv)use commercially reasonable efforts to mail
to the Company stockholders as promptly as reasonably practicable the Company
Proxy Statement and all other customary proxy or other materials for meetings
such as the Company Stockholder Meeting (provided that the Company shall be
under no obligation to mail the Company Proxy Statement to its stockholders
prior to the No-Shop Period Start Date), (v)to the extent required by applicable
Law, as promptly as reasonably practicable prepare, file and distribute to the
Company stockholders any supplement or amendment to the Company Proxy Statement
if any event shall occur which requires such action at any time prior to the
Company Stockholder Meeting and (vi)otherwise use commercially reasonable efforts
to comply with all requirements of Law applicable to the Company Stockholder
Meeting. Parent and Merger Sub shall cooperate with the Company in connection
with the preparation of the Company Proxy Statement and the preparation and
filing of the Schedule13E-3, including promptly furnishing the Company upon
request with any and all information as may be required to be set forth in the
Company Proxy Statement and the Schedule13E-3 under applicable Law. The Company
will provide Parent and Merger Sub a reasonable opportunity to review and comment
upon the Company Proxy Statement and the Schedule13E-3, or any amendments or
supplements thereto, prior to mailing the Company Proxy Statement to its stockholders
and filing the Schedule13E-3 with the SEC.
Section 7.2. Reasonable Best Efforts.
(a) Subject to the terms and conditions of this Agreement, each party will
use its reasonable best efforts to take, or cause to be taken, all actions,
to file, or cause to be filed, all documents and to do, or cause to be done,
all things necessary, proper or advisable to consummate the transactions contemplated
by this Agreement, including preparing and filing as promptly as practicable
all documentation to effect all necessary filings, consents, waivers, approvals,
authorizations, Permits or orders from all Governmental Authorities (including
Gaming Authorities) or other Persons and, in the case of Parent, using reasonable
best efforts to enforce any remedies available to Parent in the Interim LLC
Agreement; provided, however, that in no event shall the Company or any of its
Subsidiaries be required to pay, prior to the Effective Time, any fee, penalty
or other consideration to obtain any consent, approval or waiver required for
the consummation of the Merger under any Contract other than de minimis
amounts or amounts that are advanced or substantially simultaneously reimbursed
by Parent. In furtherance and not in limitation of the foregoing, each party
hereto agrees to make an appropriate filing of a Notification and Report Form
pursuant to the HSR Act with respect to the transactions contemplated by this
Agreement as promptly as reasonably practicable after the date hereof (and in
any event within 10 Business Days) and to supply as promptly as reasonably practicable
any additional information and documentary material that may be requested pursuant
to the HSR Act and use its reasonable best efforts to take or cause to be taken
all other actions necessary, proper or advisable consistent with this Section7.2
to cause the expiration or termination of the applicable waiting periods, or
receipt of required authorizations, as applicable, under the HSR Act; provided
that in no event shall any member of Parent, or any Affiliate of any member
of Parent, as of the date of this Agreement, be required to divest any stock,
partnership, membership or other ownership interest in any entity, or agree
to undertake any divestiture or restrict its conduct with regard to any business to the extent such action
or restriction relates to the Las Vegas Hilton. Subject to the foregoing, Parent
agrees, and shall cause any member of Parent or any Affiliate of any member
of Parent, to undertake any divestiture or restrict the conduct with respect
to its business to obtain any necessary approvals under the HSR Act. Without
limiting the foregoing, the parties shall request and shall use their respective
reasonable best efforts to obtain early termination of the waiting period under
the HSR Act.
(b) Each of Parent and Merger Sub, on the one hand, and the Company, on the
other hand, shall, in connection with the efforts referenced in Section7.2(a)
to obtain all requisite approvals and authorizations for the transactions contemplated
by this Agreement, use its reasonable best efforts to (i)cooperate in all respects
with each other in connection with any filing or submission and in connection
with any investigation or other inquiry, including any proceeding initiated
by a private party; (ii)keep the other party reasonably informed of any communication
received by such party from, or given by such party to, the Federal Trade Commission
(the "FTC"), the Antitrust Division of the Department of Justice (the "DOJ")
or any other Governmental Authority and of any communication received or given
in connection with any proceeding by a private party, in each case regarding
any of the transactions contemplated hereby; and (iii)permit the other party
to review any communication given by it to, and consult with each other in advance
of any meeting or conference with, the FTC, the DOJ or any other Governmental
Authority or, in connection with any proceeding by a private party, with any
other person, and to the extent permitted by the FTC, the DOJ or such other
applicable Governmental Authority or other person, give the other party the
opportunity to attend and participate in such meetings and conferences.
(c) In furtherance and not in limitation of the covenants of the parties
contained in Sections 7.2(a) and (b), if any objections are asserted with respect
to the transactions contemplated hereby under any Law or if any suit is instituted
(or threatened to be instituted) by the FTC, the DOJ or any other applicable
Governmental Authority or any private party challenging any of the transactions
contemplated hereby as violative of any Law or which would otherwise prevent,
materially impede or materially delay the consummation of the transactions contemplated
hereby, each of Parent, Merger Sub and the Company shall use its reasonable
best efforts to resolve any such objections or suits so as to permit consummation
of the transactions contemplated by this Agreement; provided, however, that
no party is required to, and the Company may not, without the prior written
consent of Parent, become subject to, consent or agree to, or otherwise take
any action with respect to any requirement, condition, limitation, understanding,
agreement, order to sell, hold separate or otherwise dispose of, or to conduct,
restrict, operate, invest or otherwise change the assets or business of the
Company or any Subsidiary in any manner which, individually or in the aggregate,
could reasonably be expected to have a Material Adverse Effect on the Company
at or after the Effective Time; and provided further that the Company will,
upon the request of Parent, become subject to, consent or agree to, or otherwise
take any action with respect to any requirement, condition, limitation, understanding,
agreement, order to sell, hold separate or otherwise dispose of, or to conduct,
restrict, operate, invest or otherwise change the assets or business of the
Company or any Subsidiary, so long as such requirement, condition, limitation,
understanding, agreement, order is binding on the Company and such Subsidiary
only in the event that the Closing occurs; and provided further that in no event
shall any member of Parent, or any Affiliate of any member of Parent, as of
the date of this Agreement, be required to divest any stock, partnership, membership or other ownership interest in any entity, or agree to undertake
any divestiture or restrict its conduct with regard to any business to the extent
such action or restriction relates to the Las Vegas Hilton. Without excluding
other possibilities, the transactions contemplated by this Agreement shall be
deemed to be materially delayed if unresolved objections or suits delay or would
reasonably be expected to delay the consummation of the transactions contemplated
hereby beyond the End Date.
(d) Subject to the obligations under Section7.2(c), in the event that any
administrative or judicial action or proceeding is instituted (or threatened
to be instituted) by a Governmental Authority or private party challenging the
Merger or any other transaction contemplated by this Agreement, or any other
agreement contemplated hereby, each of Parent, Merger Sub and the Company shall
cooperate in all respects with each other and use its respective reasonable
best efforts to contest and resist any such action or proceeding and to have
vacated, lifted, reversed or overturned any decree, judgment, injunction or
other order, whether temporary, preliminary or permanent, that is in effect
and that prohibits, prevents or restricts consummation of the transactions contemplated
by this Agreement.
(e) In furtherance and not in limitation of the covenants of the parties
contained in Section 7.2(a), Parent and Merger Sub each hereby agrees to use
commercially reasonable efforts (i) to as promptly as practicable after the
date hereof, obtain all licenses, permits, approvals, authorizations, registrations,
findings of suitability, franchises, entitlements, waivers and exemptions issued
by any Gaming Authority required to permit the parties hereto to consummate
the transactions contemplated by this Agreement or necessary to permit Parent
to own and operate the Company (collectively, "Gaming Approvals"), (ii) to avoid
any action or proceeding by any Gaming Authority challenging the consummation
of the transactions contemplated hereby, (iii) to make or cause to be made all
necessary filings, and thereafter make or cause to be made any other required
submissions with respect to this Agreement and the transactions contemplated
hereby, as required under the Gaming Laws, (iv) to schedule and attend (or cause
to be scheduled and attended) any hearings or meetings with Gaming Authorities
to obtain the Gaming Approvals as promptly as possible and (v) to comply with
the terms and conditions of any and all of the foregoing in all material respects
as necessary to obtain the Gaming Approvals. Parent and its Representatives
and Affiliates shall (i) file or cause to be filed (x) within 60 calendar days
after the date hereof all required initial applications and documents in respect
of officers and directors and Affiliates in connection with obtaining the Gaming
Approvals (including where appropriate indications of further information to
come by supplementary filing) and (y) as promptly as practicable after the date
hereof all other required applications and documents in connection with obtaining
the Gaming Approvals, (ii) request or cause to be requested an accelerated review
from the Gaming Authorities in connection with such filings, (iii) act diligently
and promptly to pursue the Gaming Approvals, (iv) cooperate with the Company
in connection with the making of all filings referenced in the preceding sentence
and (v) keep the Company reasonably informed of the status of Parents application
for Gaming Approvals and its activities related to obtaining the Gaming Approvals,
as applicable, including promptly advising the Company upon receiving any communication
from any Gaming Authority that causes Parent or Merger Sub to believe that there
is a reasonable likelihood that any Gaming Approval required from such Gaming
Authority will not be obtained or that the receipt of any such approval will
be materially delayed.
Section 7.3. Access to Information.
(a) Subject to the restrictions imposed by the Gaming Laws, the HSR Act,
federal and state securities Laws and other applicable Laws, the Company will
provide and will cause its Subsidiaries and its and their respective Representatives
to provide Parent and Merger Sub and their respective authorized Representatives,
during normal business hours and upon reasonable advance notice (i)such access
to the offices, properties, books and records of the Company and such Subsidiaries
(so long as such access does not unreasonably interfere with the operations
of the Company or any of its Subsidiaries) as Parent or Merger Sub reasonably
may request and (ii)all documents that Parent or Merger Sub reasonably may request.
Notwithstanding the foregoing, Parent, Merger Sub and their Representatives
shall not have access to any books, records, documents and other information
(i)to the extent that books, records, documents or other information is subject
to the terms of a confidentiality agreement with a third party (provided that
the Company shall use commercially reasonable efforts to obtain waivers under
such agreements or implement requisite procedures to enable reasonable access
without violating such agreement), (ii)to the extent that the disclosure thereof
would result in the loss of attorney-client privilege or (iii)to the extent
required by applicable Law (provided that the Company shall use its reasonable
best efforts to enable the provision of reasonable access without violating
such Law). All information exchanged pursuant to this Section7.3(a) shall be
subject to the Confidentiality Agreements.
(b) No investigation by any of the parties or their respective Representatives
shall affect the representations or warranties of the other set forth herein.
Section 7.4. Solicitation.
(a) Notwithstanding any other provision of this Agreement to the contrary,
during the period beginning on the date of this Agreement and continuing until
11:59 p.m. (PST)on the 30thBusiness Day thereafter (the "No-Shop Period Start
Date"), the Company and its Subsidiaries and their respective officers, directors,
employees, consultants, agents, advisors, Affiliates and other representatives
("Representatives") shall have the right (acting under the direction of the
Special Committee) to:
(i) initiate, solicit and encourage, whether publicly or otherwise, Company
Acquisition Proposals (as hereinafter defined), including by way of providing
access to non-public information pursuant to (but only pursuant to) one or more
confidentiality agreements that are consistent with the Companys past practice
for transactions involving unaffiliated third-parties; and
(ii) enter into and maintain discussions or negotiations with respect to
Company Acquisition Proposals or otherwise cooperate with or assist or participate
in, or facilitate any such inquiries, proposals, discussions or negotiations
or the making of any Company Acquisition Proposal.
(b) Subject to Section7.4(c), from the No-Shop Period Start
Date until the Effective Time or, if earlier, the termination of this Agreement
in accordance with ArticleIX, none of the Company, the Companys Subsidiaries
nor any of their respective Representatives shall, directly or indirectly, (A)initiate, solicit or knowingly encourage
(including by way of providing information) the submission of any inquiries,
proposals or offers that constitute or may reasonably be expected to lead to,
any Company Acquisition Proposal or engage in any discussions or negotiations
with respect thereto or otherwise cooperate with or assist or participate in,
or knowingly facilitate any such inquiries, proposals, discussions or negotiations,
or (B)approve or recommend, or publicly propose to approve or recommend, a Company
Acquisition Proposal or enter into any merger agreement, letter of intent, agreement
in principle, share purchase agreement, asset purchase agreement or share exchange
agreement, option agreement or other similar agreement providing for or relating
to a Company Acquisition Proposal or enter into any agreement or agreement in
principle requiring the Company to abandon, terminate or fail to consummate
the transactions contemplated hereby or breach its obligations hereunder or
propose or agree to do any of the foregoing. Subject to Section7.4(c) and except
with respect to any Company Acquisition Proposal received prior to the No-Shop
Period Start Date which constitutes a Superior Proposal or could reasonably
be expected to result in a Superior Proposal (the Person making such Company
Acquisition Proposal being referred to as an "Excluded Party") (provided, that
any Excluded Party shall cease to be an Excluded Party for all purposes under
this Agreement at such time as the Company Acquisition Proposal made by such
party fails to constitute a Superior Proposal and could not reasonably be expected
to result in a Superior Proposal), on the No-Shop Period Start Date, the Company
shall immediately cease and cause to be terminated any solicitation, encouragement,
discussion or negotiation with any Persons conducted theretofore by the Company,
its Subsidiaries or any Representatives with respect to any Company Acquisition
Proposal and shall use its (and will cause its Representatives to use their)
reasonable best efforts to require the other parties thereto to promptly return
or destroy in accordance with the terms of such agreement any confidential information
previously furnished by the Company, the Companys Subsidiaries or their respective
Representatives thereunder. Within one Business Day of the No-Shop Period Start
Date, the Company shall notify Parent of whether or not the Company is participating
in discussions or negotiations with an Excluded Party.
(c) Notwithstanding anything to the contrary contained in Section7.4(b),
if at any time on and following the No-Shop Period Start Date and prior to obtaining
the Requisite Stockholder Vote, (i)the Company has otherwise complied in all
material respects with its obligations under this Section7.4 and the Company
has received a written Company Acquisition Proposal from a third party (including
a Company Acquisition Proposal prior to the No-Shop Start Period from an Excluded
Party) that the Board of Directors of the Company (acting through the Special
Committee, if such committee still exists, or otherwise by resolution of a majority
of its Disinterested Directors) believes in good faith to be bona fide and (ii)the
Board of Directors of the Company (acting through the Special Committee, if
such committee still exists, or otherwise by resolution of a majority of its
Disinterested Directors) determines in good faith, after consultation with its
independent financial advisors and outside counsel, that such Company Acquisition
Proposal constitutes or could reasonably be expected to result in a Superior
Proposal, then the Company may (A)furnish information with respect to the Company
and its Subsidiaries to the Person making such Company Acquisition Proposal
and (B)participate in discussions or negotiations with the Person making such
Company Acquisition Proposal regarding such Company Acquisition Proposal; provided,
that the Company will not, and will not allow Company Representatives to, disclose
any non-public information to such Person without entering into a confidentiality
agreement that is consistent with the Companys past practice for transactions involving unaffiliated third-parties. From
and after the No-Shop Period Start Date, the Company shall promptly (within
one Business Day) notify Parent and Merger Sub in the event (x) it has received
a Company Acquisition Proposal from an Excluded Party or (y) it receives a Company
Acquisition Proposal from a Person or group of related Persons (other than an
Excluded Party), which notice shall include the material terms and conditions
thereof and the identity of the party (other than an Excluded Party) making
such proposal or inquiry, and shall keep Parent and Merger Sub reasonably apprised
as to the status and any material developments, discussions and negotiations
concerning the same. Notwithstanding anything to the contrary contained in Section
7.4(b) or this Section 7.4(c), prior to obtaining the Requisite Stockholder
Vote, the Company will in any event be permitted to take the actions described
in clauses (A) and (B) above with respect to any Excluded Party.
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