Exhibit 2.2
CUSTODY AND SECURITY AGREEMENT
THIS CUSTODY AND SECURITY AGREEMENT (this "Agreement") is made and
entered into as of May 19, 2006, by and among Aztar Corporation, a Delaware
corporation ("Aztar"), Columbia Sussex Corporation, a Kentucky corporation
("Sussex"), Wimar Tahoe Corporation, d/b/a Columbia Entertainment, a Nevada
corporation ("Columbia"), and WT-Columbia Development, Inc., a Delaware
corporation ("Merger Sub", together with Sussex, Columbia and Merger Sub,
collectively, the "Columbia Sussex Parties") and Deutsche Bank Trust Company
Americas, as Custodian (the "Custodian").
RECITALS
WHEREAS, Aztar and the Columbia Sussex Parties have entered into that
certain Agreement and Plan of Merger, dated as of May 19, 2006, (the "Merger
Agreement"), pursuant to which Merger Sub will merge with and into Aztar and
Aztar will become a wholly-owned subsidiary of Columbia, a copy of which
agreement has been provided to the Custodian.
WHEREAS, by the terms of the Merger Agreement, the Columbia Sussex
Parties have agreed to have an amount of $313 million credited to a Custody
Account (as defined below) to be established by the Custodian pursuant to the
terms and conditions of this Agreement;
AGREEMENT
NOW, THEREFORE, in consideration of the mutual agreements contained
herein and in the Merger Agreement, and for other good and valuable
consideration, the receipt and adequacy of which are hereby acknowledged, the
parties hereby agree as follows:
1. Defined Terms. Capitalized terms used herein without definition
shall have the meanings ascribed to them in the Merger Agreement. As used
herein, the following terms shall have the following meanings:
"Collateral" shall have the meaning assigned to it in Section 7 hereof.
"Custody Account" means the account number set forth in Annex A, and
any successor account, in the name of the account set forth in Annex B,
maintained at the Custodian.
"Person" means natural persons, corporations, limited partnerships,
general partnerships, limited liability companies, limited liability
partnerships, joint stock companies, joint ventures, associations, companies,
trusts, banks, trust companies, land trusts, business trusts or other
organizations, whether or not legal entities, and governmental authorities.
"Secured Obligations" means all obligations of every nature whatsoever
of the Columbia Sussex Parties from time to time owed to Aztar under this
Agreement or under Section 2.02 and 5.07(d) of the Merger Agreement.
"UCC" means the Uniform Commercial Code as in effect from time to time
in the State of Delaware.
2. Establishment of Custody Account. The Custodian has established the
Custody Account.
3. Appointment of Representatives. Each of Xxxx X. Xxxxxxxxx and Xxxxxx
X. Xxxxxxxxx, Xx., is hereby irrevocably appointed as agent and attorney-in-fact
(each, an "Aztar Agent") of Aztar for all actions or decisions hereunder, and
any action taken by an Aztar Agent shall be binding and conclusive on Aztar, and
may be relied upon by the other parties hereto. In the event of the death or
incapacity of both Aztar Agents, the President of Aztar or such other person as
shall be designated by the President of Aztar shall be an Aztar Agent. An Aztar
Agent shall not be liable for any action taken or omitted by him, or any action
suffered by him to be taken or omitted, in good faith, and in the exercise of
his own business judgment. Each of Xxxxxxx X. Xxxx and Xxxxxxx X. XxxxXxxxxxx is
hereby irrevocably appointed as agent and attorney-in-fact (each, a "Columbia
Sussex Agent") of the Columbia Sussex Parties for all actions or decisions
hereunder, and any action taken by a Columbia Sussex Agent shall be binding and
conclusive on the Columbia Sussex Parties, and may be relied upon by the other
parties hereto. In the event of the death or incapacity of both Columbia Sussex
Agents, the President of Columbia or such other person as shall be designated by
the President of Columbia shall be a Columbia Sussex Agent. A Columbia Sussex
Agent shall not be liable for any action taken or omitted by him, or any action
suffered by him to be taken or omitted, in good faith, and in the exercise of
his own business judgment.
4. Commencement of Duties. On the date hereof, in accordance with
Section 2.02(a) of the Merger Agreement and simultaneously with the execution
and delivery of this Agreement, Sussex will transfer to the Custodian funds
equal to Three Hundred and Thirteen Million United States Dollars ($313,000,000)
(such initial deposit and any subsequent deposit, the "Custodial Assets"). Upon
receipt of the Custodial Assets, the duties and obligations of each of the
parties to this Agreement will commence. In the event Sussex transfers an amount
in excess thereof as part of the initial deposit, the Custodian shall transfer
such excess to Sussex within three (3) business days.
5. Custodial Assets. Upon receipt of the Custodial Assets, the
Custodian shall send a notice to each Aztar Agent and each Columbia Sussex Agent
acknowledging receipt of the Custodial Assets. The Custodian shall immediately
invest the entire balance of the Custodial Assets in the money market fund set
forth in Annex C and credit the investment to the Custody Account. If the
Custodial Assets are received by 4:00 PM (Eastern Standard Time) the Custodian
shall invest them on that day received. Custodial Assets received after 4:00 PM
(Eastern Standard Time) shall be invested on the next succeeding business day.
Investment decisions may be changed through written instructions from an Aztar
Agent provided to a Columbia Sussex Agent and to the Custodian. Such change in
the designation will become effective upon receipt by the Custodian, subject to
the following limitations:
(a) the funds received by the Custodian in connection with the
Custodial Assets shall be invested and reinvested solely
(i) at the risk of the Columbia Sussex Parties and
Aztar;
(ii) in the name of the Custodian or its nominee;
(iii) in a manner which would not result in any
portion of the Custodial Assets not being immediately available for release to
Aztar, the Columbia Sussex Parties or the Paying Agent, as applicable, at
Closing or earlier release pursuant to Section 5.07(f) of the Merger Agreement;
and
(iv) in either of the following:
(1) a money market mutual fund that invests
in U.S. Treasuries, U.S. government agencies or repurchase agreements backed by
those agencies; or
(2) such other instruments as may be
specifically approved in writing by an Aztar Agent and a Columbia Sussex Agent.
(b) For investments made in accordance with Section 5(a)(iv)
hereof, the Custodian may purchase or sell to itself or any affiliate, as
principal or agent, investments authorized by this Section 5. Such investment,
if registerable, shall be registered in the name of the Custodian for the
benefit of Aztar and the Columbia Sussex Parties and held by the Custodian. The
Custodian may act as purchaser or agent in the making or disposing of any
investments. The Custodian shall not be liable for any diminution of any
authorized investments hereunder, other than as a result of the Custodian's
gross negligence or willful misconduct. It is agreed and understood that the
Custodian or its affiliates are permitted to receive additional compensation
that could be deemed in the Custodian's economic self-interest for (1) serving
as an investment advisor, administrator, shareholder servicing agent, custodian
or sub-custodian with respect to certain of the investments, (2) using
affiliates to effect transactions in certain investments and (3) effecting
transactions in investments.
(c) Such investments will be made as soon as possible
following the availability of such funds to the Custodian for investment, taking
into consideration the regulations and requirements (including cut-off times) of
the Federal Reserve wire system, the investment provider and the Custodian, and
compliance with standard operating procedures of such parties.
(d) The Custodian shall be entitled to sell or redeem any such
investment as necessary to make any distributions required under this Agreement
and the Merger Agreement and shall not be liable or responsible for any loss
resulting from any such sale or redemption, other than as a result of the
Custodian's gross negligence or willful misconduct.
(e) Income, if any, resulting from the investment of the
Custodial Assets shall be retained by the Custodian and shall be considered, for
all purposes of this Agreement, to be part of the Custodial Assets.
6. Delivery and Distributions of the Custodial Assets. The Custodial
Assets shall be distributed by the Custodian in accordance with the following:
(a) An amount equal to (i) Fifty Two Million One Hundred Sixty
Thousand Dollars ($52,160,000) (the "Pinnacle Termination Fee"), plus (ii) up to
a maximum of Twenty Five Million Eight Hundred Forty Thousand Dollars
($25,840,000) (the "Pinnacle Termination Expenses") of the Custodial Assets
shall be distributed to Aztar upon receipt by the Custodian of a written
instruction of an Aztar Agent substantially in the form attached hereto as
Exhibit A (the "Reimbursement Notice"), which Reimbursement Notice shall have
also been delivered to Columbia, and which shall state that Aztar has paid the
Pinnacle Termination Fee and certain Pinnacle Termination Expenses to Pinnacle
Entertainment, Inc. The Reimbursement Notice shall set forth the exact amount of
the Pinnacle Termination Expenses, and the part of the Custodial Assets to be
distributed to Aztar pursuant to this Section 6(a) may not exceed Seventy Eight
Million Dollars ($78,000,000).
(b) Subject to Sections 6(e) and (f) hereof, the Custodial
Assets shall be distributed to Aztar upon receipt by the Custodian of a written
instruction of an Aztar Agent substantially in the form attached hereto as
Exhibit B (the "Aztar Claim Notice"), which Aztar Claim Notice shall have also
been delivered to Columbia, simultaneously, stating that any of the following
has transpired:
(i) the Merger Agreement has been terminated pursuant
to Section 7.01(b)(i) of the Merger Agreement, if at the time of such
termination, the condition set forth in Section 6.01(c)(ii) of the Merger
Agreement has not been satisfied;
(ii) the Merger Agreement has been terminated
pursuant to Section 7.01(b)(iii) of the Merger Agreement, if the Restraint is
issued by a Governmental Authority and relates to any Required Gaming Approval
or any Gaming Law applicable in any jurisdiction;
(iii) the Merger Agreement has been terminated
pursuant to Section 7.01(b)(iv) of the Merger Agreement, if the condition that
is incapable of satisfaction is the condition set forth in Section 6.01(c)(ii)
of the Merger Agreement or the condition set forth in Section 6.01(b) of the
Merger Agreement (to the extent the Restraint is issued by a Governmental
Authority and relates to any Required Gaming Approval or any Gaming Law);
(iv) the Merger Agreement has been terminated
pursuant to Section 7.01(c) of the Merger Agreement; or
(v) (A) the Merger Agreement has been terminated
pursuant to Section 7.01(b)(ii) or Section 7.01(f)(i) of the Merger Agreement,
(B) at or prior to the time of such termination, Columbia or Sussex has breached
or failed to perform any of its representations, warranties, covenants or other
agreements contained in the Merger Agreement to an extent that would reasonably
be expected to prevent or delay beyond the Termination Date the consummation of
the transactions contemplated by the Merger Agreement, and (C) at or prior to
the time of such termination, Aztar has not breached or failed to perform any of
its representations, warranties, covenants or other agreements contained in the
Merger Agreement to an extent that would reasonably be expected to prevent or
delay beyond the Termination Date the consummation of the transactions
contemplated by the Merger Agreement.
(c) If the Closing occurs and the Custodial Assets are
credited against the Payment Fund, the Custodial Assets shall be distributed to
the Paying Agent upon receipt by the Custodian of a written instruction of an
Aztar Agent or Columbia Sussex Agent substantially in the form attached hereto
as Exhibit C.
(d) Subject to Sections 6(e) and (f) hereof, the Custodial
Assets shall be distributed to Sussex upon receipt by the Custodian of a written
instruction of a Columbia Sussex Agent substantially in the form attached hereto
as Exhibit D (the "Columbia Sussex Claim Notice" and, together with an Aztar
Claim Notice, the "Claim Notice"), which Columbia Sussex Claim Notice shall have
also been delivered to Aztar, simultaneously, stating that any of the following
has transpired:
(i) the Merger Agreement has been terminated pursuant
to Section 7.01(a) of the Merger Agreement;
(ii) the Merger Agreement has been terminated
pursuant to Section 7.01(b)(i) of the Merger Agreement, if at the time of such
termination, the condition set forth in Section 6.01(c)(ii) of the Merger
Agreement has been satisfied;
(iii) the Merger Agreement has been terminated
pursuant to Section 7.01(b)(ii) of the Merger Agreement; provided, however, that
in the event (A) at or prior to the time of such termination, Columbia or Sussex
has breached or failed to perform any of its representations, warranties,
covenants or other agreements contained in the Merger Agreement to an extent
that would reasonably be expected to prevent or delay beyond the Termination
Date the consummation of the transactions contemplated by the Merger Agreement,
and (B) at or prior to the time of such termination, Aztar has not breached or
failed to perform any of its representations, warranties, covenants or other
agreements contained in the Merger Agreement to an extent that would reasonably
be expected to prevent or delay beyond the Termination Date the consummation of
the transactions contemplated by the Merger Agreement, the Custodial Assets
shall be distributed to Aztar pursuant to Section 6(b)(v) of this Agreement;
(iv) the Merger Agreement has been terminated
pursuant to Section 7.01(b)(iii) of the Merger Agreement, unless the Restraint
is issued by a Governmental Authority and relates to any Required Gaming
Approval or any Gaming Law applicable in any jurisdiction;
(v) the Merger Agreement has been terminated pursuant
to Section 7.01(b)(iv) of the Merger Agreement, unless the condition that is
incapable of satisfaction is the condition set forth in Section 6.01(c)(ii) of
the Merger Agreement or the condition set forth in Section 6.01(b) of the Merger
Agreement (to the extent the Restraint is issued by a Governmental Authority and
relates to any Required Gaming Approval or any Gaming Law);
(vi) the Merger Agreement has been terminated
pursuant to Section 7.01(d) of the Merger Agreement;
(vii) the Merger Agreement has been terminated
pursuant to Section 7.01(e) of the Merger Agreement;
(viii) the Merger Agreement has been terminated
pursuant to Section 7.01(f) of the Merger Agreement; provided, however, that in
the event (A) the Merger Agreement has been terminated pursuant to Section
7.01(f)(i) of the Merger Agreement, (B) at or prior to the time of such
termination, Columbia or Sussex has breached or failed to perform any of its
representations, warranties, covenants or other agreements contained in the
Merger Agreement to an extent that would reasonably be expected to prevent or
delay beyond the Termination Date the consummation of the transactions
contemplated by the Merger Agreement, and (C) at or prior to the time of such
termination, Aztar has not breached or failed to perform any of its
representations, warranties, covenants or other agreements contained in the
Merger Agreement to an extent that would reasonably be expected to prevent or
delay beyond the Termination Date the consummation of the transactions
contemplated by the Merger Agreement, the Custodial Assets shall be distributed
to Aztar pursuant to Section 6(b)(v) of this Agreement; or
(ix) the Merger Agreement has been terminated
pursuant to Section 7.01(g) of the Merger Agreement.
(e)(i) Within two (2) business days following its receipt of a
Claim Notice referred to in Section 6(b) or Section 6(d) of this Agreement,
Columbia (in the case of an Aztar Claim Notice) or Aztar (in the case a Columbia
Sussex Claim Notice) shall send a notice to the Custodian and to the party
giving the Claim Notice confirming in writing the date the recipient received
such Claim Notice (a "Receipt Notice"). In the event the Custodian does not
receive the Receipt Notice prior to the close of business of the Custodian on
the second business day following the receipt of the Claim Notice by the
Custodian, the Custodian shall on the next business day following the close of
business of the Custodian on such second business day, deliver to the intended
recipient of the Claim Notice, Aztar or Columbia, as applicable, a copy of the
Claim Notice (the "Custodian Notice").
(ii) "Objection Period Commencement Date" means the
earlier of the date on which the Custodian (a) receives a Receipt Notice or (b)
distributes a Custodian Notice, as applicable. "Objection Period Termination
Date" means the fifth business day following the Objection Period Commencement
Date.
(iii) At any time prior to the close of business of
the Custodian on the Objection Period Termination Date, Columbia (in the case of
an Aztar Claim Notice) or Aztar (in the case a Columbia Sussex Claim Notice) may
send to the Custodian and to the party sending a Claim Notice a written notice
objecting to such Claim Notice stating which portion of the Custodial Assets is
subject to dispute and signed by a Columbia Sussex Agent or an Aztar Agent, as
applicable (an "Objection Notice").
(iv) Subject to Section 6(h), in the event the
Custodian has not received an Objection Notice prior to 1:00 PM (Eastern
Standard Time) on the Objection Period Termination Date, the Custodian shall
promptly distribute, on such date, the Custodial Assets as instructed in the
Claim Notice.
(v) Subject to Section 6(h), in the event the
Custodian has received an Objection Notice prior to the close of business of the
Custodian on the Objection Period Termination Date, the Custodian shall not
distribute the portion of the assets subject to dispute as identified in the
Objection Notice and the Columbia Sussex Parties and Aztar shall use
commercially reasonable efforts to resolve promptly any disputed claims. Subject
to Section 6(h), the undisputed portion of the Custodial Assets, if any, shall
be paid to the party who has sent the Claim Notice to the Custodian, by the
Custodian prior to the close of business of the Custodian on the Objection
Period Termination Date.
(f) Subject to Section 6(h), if the Custodian receives an
Objection Notice prior to 1:00 PM (Eastern Standard Time) on the Objection
Period Termination Date, an Aztar Agent or a Columbia Sussex Agent, as
applicable, provides written notice to the Custodian (x) stating that it has
initiated litigation against Aztar or the Columbia Sussex Parties, as
applicable, in any State or Federal court in the State of Delaware based on a
good faith claim of a breach by Aztar or the Columbia Sussex Parties, as
applicable, of its obligations under the Merger Agreement or this Agreement and
(y) including a copy of the complaint and pleadings of such litigation stamped
as having been filed with such court, the Custodian shall:
(i) hold the portion of the Custodial Assets subject
to dispute and not make payment thereof until a Columbia Sussex Agent and an
Aztar Agent have forwarded joint written instructions to the Custodian
reflecting a resolution of the dispute and authorizing the release of the
affected portion of the Custodial Assets; or
(ii) distribute the Custodial Assets to Aztar,
following receipt of any final judgment of any court of competent jurisdiction
in favor of Aztar that it is entitled to receive the Custodial Assets pursuant
to Section 6(b) hereof; with any court order, judgment or decree to be
accompanied by a certificate by an officer of the presenting party, satisfactory
to the Custodian, to the effect that said order, judgment or decree represents a
final adjudication of the rights of the parties by a court of competent
jurisdiction; or
(iii) distribute the Custodial Assets to Sussex,
following receipt of any final judgment of any court of competent jurisdiction
in favor of the Columbia Sussex Parties that they are entitled to receive the
Custodial Assets pursuant to Section 6(d) hereof; with any court order, judgment
or decree to be accompanied by a certificate by an officer of the presenting
party, satisfactory to the Custodian, to the effect that said order, judgment or
decree represents a final adjudication of the rights of the parties by a court
of competent jurisdiction.
(g) Upon the final distribution of the Custodial Assets in
accordance with the terms of this Agreement, this Agreement shall terminate.
(h) Notwithstanding any of the foregoing provisions of this
Section 6, the Custodian shall deliver or distribute all or any portion of the
Custodial Assets in accordance with (1) any written notice executed and
delivered by an Aztar Agent and a Columbia Sussex Agent or (2) the final order
of any court of competent jurisdiction.
(i) For purposes of sending and receiving instructions or
directions hereunder, all such instructions or directions shall be, and the
Custodian may conclusively rely upon such instructions or directions, delivered,
and executed by the Aztar Agents and the Columbia Sussex Agents designated on
Schedule II attached hereto and made a part hereof which such designation shall
include specimen signatures of such representatives.
7. Grant of Security Interest and Pledge. As security for the prompt
and complete payment and performance in full of all the Secured Obligations,
each of the Columbia Sussex Parties hereby grants to Aztar a security interest
in each of the Columbia Sussex Parties rights, titles and interests in, to and
under the following, in each case, whether now owned or existing or hereafter
acquired or arising, and wherever located (all of which being hereinafter
collectively called the "Collateral"):
(a) the Custody Account and all securities or other property
from time to time credited to the Custody Account; and
(b) all proceeds, distributions, collections, additions,
substitutions, replacements, rents and profits of or in respect of such
securities or other property described in clause (a) above.
8. Representations and Warranties. Each of the Columbia Sussex Parties
hereby represents and warrants to Aztar, which representations and warranties
shall survive execution and delivery of this Agreement, as follows:
(a) Validity, Perfection and Priority. The security interests
in the Collateral granted to Aztar constitute valid and continuing security
interests in the Collateral. Upon the filing of financing statements, copies of
which are attached hereto as Exhibit E, the security interests in the Collateral
granted to Aztar hereunder will constitute perfected security interests therein
superior and prior to all liens, rights or claims of all other Persons. All
actions and consents, including all filings, notices, registrations and
recordings necessary or desirable to create, perfect or ensure that the security
interests granted to Aztar hereunder are superior and prior to all liens, rights
or claims of all other Persons or for the exercise of remedies in respect of the
Collateral have been made or obtained.
(b) No Liens; Other Financing Statements. Except for the
pledge and security interest granted hereunder, the Columbia Sussex Parties own
and will continue to own each item of the Collateral free and clear of any and
all liens, rights or claims of all other Persons, and the Columbia Sussex
Parties shall defend the Collateral against all claims and demands of all
Persons at any time claiming the same or any interest therein by or through any
of the Columbia Sussex Parties or their affiliates adverse to Aztar. No
financing statement or other evidence of any lien covering or purporting to
cover any of the Collateral is on file in any public office other than financing
statements filed or to be filed in connection with the security interests
granted to Aztar.
(c) Custody Account. The Custody Account is a "securities
account" (as defined in Section 8-501 of the UCC). No Person other than the
Columbia Sussex Parties is the sole entitlement holder of the Custody Account
and none of the Columbia Sussex Parties has consented to, and none of the
Columbia Sussex Parties is otherwise aware of, any Person (other than Aztar
pursuant hereto) having "control" (within the meaning of Section 8-106 of the
UCC) over, or any other interest in, the Custody Account or any securities or
other property credited thereto.
9. Covenants. Each of the Columbia Sussex Parties covenants and agrees
with Aztar that, from and after the date of this Custody and Security Agreement
until all the Secured Obligations have been indefeasibly performed and paid in
full:
(a) At any time and from time to time, upon the request of
Aztar, and at the sole expense of the Columbia Sussex Parties, the Columbia
Sussex Parties will promptly and duly execute and deliver any and all such
further instruments and other documents, make such filings, give such notices
and take such further action as Aztar may reasonably deem necessary to perfect
its security interest in or protect its priority in such security interest under
this Custody and Security Agreement, including, without limitation, the filing
of any financing statements, in form acceptable to Aztar under the UCC in effect
in any jurisdiction with respect to the liens and security interests granted
hereby. The Columbia Sussex Parties also hereby authorize Aztar and its counsel
to file any financing or continuation statements and amendments thereto, in all
jurisdictions and with all filing offices as Aztar may determine, in its sole
reasonable discretion, are necessary or advisable to perfect the security
interest granted by this Custody and Security Agreement. Such financing
statements may describe the Collateral in the same manner as described in this
Custody and Security Agreement or may contain an indication or description of
collateral that describes such property in any other manner as Aztar may
determine is necessary, advisable or prudent to ensure the perfection of the
security interest in the Collateral.
(b) Each of the Columbia Sussex Parties shall not change its
name or principal residence until
(i) it shall have given to Aztar not less than 30
days prior written notice of its intention to do so, clearly describing such new
name or principal residence and providing such other information in connection
therewith as Aztar may reasonably request, and
(ii) with respect to such new name or principal
residence, it shall have taken all action satisfactory to Aztar as Aztar may
reasonably request to maintain the security interest of Aztar in the Collateral
intended to be granted hereby at all times fully perfected with the same or
better priority and in full force and effect.
(c) The Columbia Sussex Parties shall not sell, transfer or
assign (by operation of law or otherwise) any portion of the Collateral.
(d) The Columbia Sussex Parties will not take or permit to be
taken any action which could impair Aztar's rights in the Collateral.
(e) The Columbia Sussex Parties will advise Aztar promptly, in
reasonable detail, in accordance with the provisions hereof:
(i) of any lien on, or claim asserted against, any of
the Collateral; and
(ii) of the occurrence of any other event which could
reasonably be expected to have a material adverse effect on the Collateral or on
the liens created hereunder.
(f) The Columbia Sussex Parties will not create, incur or
permit to exist any pledge of or any lien or claim on or to any of the
Collateral by or through the Columbia Sussex Parties, and will defend the
Collateral against, and will take such other action as is necessary to remove,
any other lien or claim on or to any of the Collateral by or through the
Columbia Sussex Parties or their affiliates, other than the liens created
hereby, and the Columbia Sussex Parties will defend the right, title and
interest of Aztar against the claims and demands of all Persons whomsoever
(other than Aztar or a Person claiming by or through Aztar), and the Columbia
Sussex Parties shall not authorize the filing of any financing statement with
respect to any Collateral other than the financing statements filed by Aztar
pursuant to this Agreement.
10. Tax Matters.
(a) Each of the Columbia Sussex Parties and Aztar shall
provide a completed IRS Form W-9 to the Custodian at the signing of this
Agreement. The Custodian may delay accepting the Custodial Assets until the IRS
forms have been provided. All income earned by the Custodial Assets shall be
reported as taxable income of the Columbia Sussex Parties prior to any
distribution thereof to Aztar or the Paying Agent. Each of the Columbia Sussex
Parties covenants and agrees to indemnify and hold the Custodian harmless
against all liability for tax withholding and/or reporting for any payments made
by the Custodian to any party pursuant to this Agreement.
(b) The party to whom the Custodial Assets is distributed in
accordance with Section 6 hereof shall bear in full all federal, state and local
taxes based on or measured by net or gross income arising from the Custodial
Assets after such distribution and shall provide the Custodian with sufficient
information so that the Custodian can comply with reporting obligations imposed
under any laws relating to taxes.
11. Duties of the Custodian.
(a) The Custodian shall have no duties or responsibilities
other than those expressly set forth in this Agreement, and no implied duties or
obligations shall be read into this Agreement against the Custodian. The
Custodian shall have no duty to enforce any obligation of any person, other than
as provided herein. The Custodian shall be under no liability to anyone by
reason of any failure on the part of any party hereto or any maker, endorser or
other signatory of any document or any other person to perform such person's
obligations under any such document.
(b) In the event that the Custodian has, or subsequently
obtains, by agreement, by operation of law or otherwise a security interest in
the Custody Account (or any portion thereof), the Custodian hereby agrees that
any such security interest shall be subordinate to the security interest of
Aztar.
(c) The financial assets, money and other items credited to
the Custody Account will not be subject to deduction, set-off, recoupment,
banker's lien, or any other right in favor of any Person other than Aztar, and
the Custodian waives any such right it may have.
(d) The Custodian hereby agrees that each item of property
(whether investment property, financial asset, security, instrument or cash)
credited to the Collateral Account shall be treated as a "financial asset"
within the meaning of Section 8-102(a)(9) of the UCC.
(e) The Custodian hereby acknowledges the security interest
granted to Aztar by the Columbia Sussex Parties and that this Agreement
constitutes written notification to the Custodian, pursuant to Articles 8 and 9
of the UCC and applicable federal regulations for the Federal Reserve Book Entry
System, of Aztar's security interest in the Collateral. The Columbia Sussex
Parties, Aztar and the Custodian are also entering into this Agreement to
provide for Aztar's control of the Collateral and to perfect, and confirm the
priority of, Aztar's security interest in the Collateral. The Custodian agrees
to promptly make all necessary entries or notations in its books and records to
reflect Aztar's security interest in the Collateral. The Custodian hereby agrees
that it will not obtain a lien on the Collateral for its own benefit, nor will
it agree with any third party that it will comply with any entitlement orders,
instructions or directions of any kind concerning the Collateral originated by
such third party without the prior written consent of Aztar. Except for the
claims and interests of Aztar and the Columbia Sussex Parties in the Collateral,
the Custodian does not know of any claim to or interest in the Collateral. The
Custodian will use reasonable efforts to promptly notify Aztar and the Columbia
Sussex Parties if the Custodian is notified in writing that any other person
claims that it has a property interest in any of the Collateral, but the
Custodian shall have no liability for failing to provide such notice.
12. Liability of the Custodian; Withdrawal.
(a) The Custodian shall not be liable for any action taken or
omitted by it, or any action suffered by it to be taken or omitted, in good
faith, and in the exercise of its own best judgment, and may rely conclusively
and shall be protected in acting upon any order, notice, demand, certificate,
opinion or advice of counsel (including counsel chosen by the Custodian),
statement, instrument, report or other paper or document (not only as to its due
execution and the validity and effectiveness of its provisions, but also as to
the truth and acceptability of any information therein contained) which is
believed by the Custodian to be genuine and to be signed or presented by the
proper person(s). The Custodian shall not be held liable for any error in
judgment made in good faith by an officer of the Custodian unless it shall be
proved that the Custodian was grossly negligent or acted intentionally in bad
faith. The Custodian shall not be bound by any notice of demand, or any waiver,
modification, termination or rescission of this Agreement or any of the terms
hereof, unless it shall give its prior written consent thereto.
(b) The Custodian shall not be responsible, may conclusively
rely upon and shall be protected, indemnified and held harmless by the Columbia
Sussex Parties for the sufficiency or accuracy of the form of, or the execution,
validity, value or genuineness of any document or property received, held or
delivered by it hereunder, or of the signature or endorsement thereon, or for
any description therein; nor shall the Custodian be responsible or liable in any
respect on account of the identity, authority or rights of the persons executing
or delivering or purporting to execute or deliver any document, property or this
Agreement.
(c) In the event that the Custodian shall become involved in
any arbitration or litigation relating to the Custodial Assets, the Custodian is
authorized to comply with any decision reached through such arbitration or
litigation.
(d) The Custodian may resign at any time and be discharged
from its duties or obligations hereunder by giving sixty (60) days' notice in
writing of such resignation specifying a date when such resignation shall take
effect. Upon such resignation, Aztar shall appoint a successor Custodian, which
shall be reasonably satisfactory to the Columbia Sussex Parties. If, within such
sixty (60) day notice period, Aztar provides to the Custodian written
instructions with respect to the appointment of a successor Custodian and
directions for the transfer of the Custodial Assets to such successor, the
Custodian shall act in accordance with such instructions and promptly transfer
the amounts in the Custodial Assets to such designated successor. If no
successor Custodian is named as provided in this Section 9 prior to the date on
which the resignation of the Custodian is properly to take effect, the
Custodian, Aztar Agent or a Columbia Sussex Agent may apply to a court of
competent jurisdiction for appointment of a successor Custodian.
(e) The Custodian shall not incur any liability for not
performing any act or fulfilling any duty, obligation or responsibility
hereunder by reason of any occurrence beyond the control of the Custodian
(including but not limited to any act or provision of any present or future law
or regulation or governmental authority, any act of God or war, civil unrest,
local or national disturbance or disaster, any act of terrorism, or the
unavailability of the Federal Reserve Bank wire or facsimile or other wire or
communication facility).
(f) In the event of any ambiguity or uncertainty hereunder or
in any notice, instruction or other communication received by the Custodian
hereunder, the Custodian may, in its sole discretion, refrain from taking any
action other than to retain possession of the Custodial Assets, unless the
Custodian receives written instructions, signed by an Aztar Agent and a Columbia
Sussex Agent, which eliminates such ambiguity or uncertainty.
13. Custodian's Fee. The Custodian's fees shall be as set forth on
Schedule 1 hereto, and shall be paid by the Columbia Sussex Parties concurrently
with the execution and delivery of this Agreement.
14. Indemnification. The Columbia Sussex Parties, on the one hand, and
Aztar, on the other hand, shall severally, but not jointly, equally indemnify
the Custodian for, and hold it harmless against, any loss, liability or
reasonable expense incurred without gross negligence, willful misconduct or bad
faith on the part of the Custodian, including, without limitation, legal or
other fees arising out of or in connection with its entering into this Agreement
and carrying out its duties hereunder, including, without limitation, the costs
and expenses of defending itself against any claim of liability in the premises
or any action for interpleader. The Custodian shall be under no obligation to
institute or defend any action, suit or legal proceeding in connection herewith,
unless first indemnified and held harmless to its satisfaction in accordance
with the foregoing, except that the Custodian shall not be indemnified against
any loss, liability or expense arising out of its gross negligence, willful
misconduct or bad faith. Such indemnity shall survive the termination or
discharge of this Agreement or resignation of the Custodian. The Custodian shall
be reimbursed by the Columbia Sussex Parties for any reasonable expenses or
disbursements incurred in connection with the performance of the Custodian's
obligations hereunder including, without limitation, the actual cost of legal
services should the Custodian deem it necessary to retain an attorney.
15. Inspection. Any party hereto may at any time during the Custodian's
business hours (with reasonable notice) inspect any records or reports relating
to the Custody Account.
16. Controlling Document. To the extent provisions of the Merger
Agreement are inconsistent with the provisions contained herein, the Merger
Agreement shall supersede this Agreement and be the controlling document;
provided, however, that this Agreement shall control for the purposes of the
Custodian's duties and rights.
17. Notices. All notices, claims, demands, objections and requests
required or permitted to be given under the provisions hereof must be in writing
and shall be deemed to have been sufficiently given when received if personally
delivered or sent by telecopy or if mailed by registered or certified mail, with
return receipt requested, on the third day after mailing, addressed as follows:
(a) if to Aztar, to:
Aztar Corporation
0000 Xxxx Xxxxxxxxx Xxxx, Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
Telecopy No.: 000-000-0000
Attention: Xxxxxx X. Xxxxxxxxx, Xx.
with a copy to:
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
Xxxx Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopy No.: (000) 000-0000
Attention: Xxxxx Xxx
Xxxxxx X. Xxxxxxxxx
(b) if to the Columbia Sussex Parties, to:
Wimar Tahoe Corporation d/b/a Columbia Entertainment
000 Xxxxxxxxx Xxxxx
Xx. Xxxxxxxx, XX 00000 Telecopy No.: (859)
578-1190
Attention: Xxxxxxx X. XxxxXxxxxxx, Vice President,
Chief Financial Officer
with a copy to:
Katz, Teller, Xxxxx & Xxxx
000 Xxxx Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxxx, XX 00000-0000
Telecopy No.: (000) 000-0000
Attention: Xxxxxx X. Xxxxxx
and to:
Columbia Sussex Corporation
000 Xxxxxxxxx Xxxxx
Xx. Xxxxxxxx, XX 00000
Telecopy No.: (000) 000-0000
Attention: Xxxxxx X. Xxxx, Chief Legal Counsel
(c) If to the Custodian, addressed to:
Deutsche Bank Trust Company Americas
00 Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Telecopy No.: (000) 000-0000
Attention: Manager, Escrow Team
18. Governing Law. This Agreement shall be governed by, and construed
in accordance with, the laws of the State of Delaware, regardless of the laws
that might otherwise govern under applicable principles of conflict of laws.
19. Binding Effect; Benefit. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their successors, assigns and
representatives.
20. Modification. This Agreement shall not be amended except by a
written instrument making specific reference to this Agreement signed by a
Columbia Sussex Agent, an Aztar Agent and the Custodian.
21. Counterparts. This Agreement may be signed in multiple
counterparts, with each having the same force and effect as if this single
instrument were executed by all of the parties hereto and delivered (including
by facsimile) to the other parties.
22. Headings. The subject headings or captions of paragraphs in this
Agreement are inserted for convenience of reference only and shall not affect
the meaning, construction or interpretation of any provisions contained herein.
All capitalized terms defined herein are equally applicable to both singular and
plural forms of such terms.
23. Third Party Beneficiaries. There are no third-party beneficiaries
to this Agreement.
24. Severability and Further Assurances. If any provision of this
Agreement shall be held invalid, illegal or unenforceable, the validity,
legality and enforceability of the other provisions of this Agreement shall not
be affected thereby, and there shall be deemed substituted for the provision at
issue a valid, legal and enforceable provision as similar as possible to the
provision at issue. With respect to the subject matter hereof, this Agreement,
together with the Merger Agreement, constitutes the entire agreement among the
parties and supersedes all prior and contemporaneous agreements and undertakings
of the parties in connection herewith. No failure or delay of the Custodian in
exercising any right, power or remedy may be, or may be deemed to be, a waiver
thereof; nor may any single or partial exercise of any right, power or remedy
preclude any other or future exercise of any right, power or remedy. Each of the
parties hereto shall, at the request of any other party hereto, deliver to the
requesting party all further documents or other assurances as may reasonably be
necessary or desirable in connection with this Agreement.
25. Assignment. Neither this Agreement nor any of the rights, interests
or obligations under this Agreement shall be assigned, in whole or in part, by
operation of law or otherwise by any of the parties hereto without the prior
written consent of the other parties. Any attempted or purported assignment in
violation of the preceding sentence shall be null and void and of no effect
whatsoever.
SIGNATURE PAGE FOLLOWS
IN WITNESS WHEREOF, the undersigned have caused this Custody and
Security Agreement to be executed as of the day and year first written above.
COLUMBIA SUSSEX CORPORATION
By: /s/ Xxxxxxx X. Xxxx, III
--------------------------------
Name: Xxxxxxx X. Xxxx, III
--------------------------------
Title: President
--------------------------------
WIMAR TAHOE CORPORATION
D/B/A COLUMBIA ENTERTAINMENT
By: /s/ Xxxxxxx X. Xxxx, III
--------------------------------
Name: Xxxxxxx X. Xxxx, III
--------------------------------
Title: President
--------------------------------
WT-COLUMBIA DEVELOPMENT, INC.
By: /s/ Xxxxxxx X. Xxxx, III
--------------------------------
Name: Xxxxxxx X. Xxxx, III
--------------------------------
Title: President
--------------------------------
AZTAR CORPORATION
By: /s/ Xxxx X. Xxxxxxxxx
--------------------------------
Name: Xxxx X. Xxxxxxxxx
--------------------------------
Title: Chief Financial Officer
--------------------------------
DEUTSCHE BANK TRUST COMPANY AMERICAS
By: /s/ Xxxxxxx X. Xxxxxxxxxx
--------------------------------
Name: Xxxxxxx X. Xxxxxxxxxx
--------------------------------
Title: Vice President
--------------------------------
By: /s/ Xxxxx Xxxxxxx
--------------------------------
Name: Xxxxx Xxxxxxx
--------------------------------
Title: Vice President
--------------------------------
