Exhibit 2.1
AGREEMENT AND PLAN OF MERGER
by and among
PINNACLE ENTERTAINMENT, INC.,
PNK DEVELOPMENT 1, INC.,
and
AZTAR CORPORATION
Dated as of March 13, 2006 as amended and restated as of April 28, 2006
TABLE OF CONTENTS
ARTICLE I
The Merger
Section 1.01 The Merger...................................................2
Section 1.02 Closing......................................................2
Section 1.03 Effective Time of the Merger.................................2
Section 1.04 Effects of the Merger........................................2
Section 1.05 Organizational Documents.....................................2
Section 1.06 Directors and Officers of Surviving Corporation..............2
ARTICLE II
Effects of the Merger on the Capital Stock of the Constituent Corporations;
Exchange of Certificates
Section 2.01 Effect on Capital Stock......................................3
Section 2.02 Exchange of Certificates.....................................4
Section 2.03 Dissenting Shares............................................7
ARTICLE III
Representations and Warranties
Section 3.01 Representations and Warranties of Aztar......................8
Section 3.02 Representations and Warranties of Pinnacle..................24
ARTICLE IV
Covenants
Section 4.01 Covenants of Aztar Interim Operations.......................32
Section 4.02 Covenants of Pinnacle Interim Operations....................37
Section 4.03 No Solicitation by Aztar....................................38
Section 4.04 Other Actions...............................................40
Section 4.05. Control of the Aztar's Operations...........................40
Section 4.06. Additional Interim Covenants of Pinnacle....................40
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ARTICLE V
Additional Agreements
Section 5.01 Preparation of the Proxy Statement; Stockholders Meeting....41
Section 5.02 Access to Information; Effect of Review.....................42
Section 5.03 Regulatory Matters; Reasonable Best Efforts.................43
Section 5.04 Stock Options; Restricted Stock and Equity Awards;
Stock Plans.................................................46
Section 5.05 Employee Matters............................................47
Section 5.06 Indemnification, Exculpation and Insurance..................48
Section 5.07 Fees and Expenses...........................................49
Section 5.08 Public Announcements........................................50
Section 5.09 Aztar Headquarters..........................................51
Section 5.10 NYSE Listing................................................51
ARTICLE VI
Conditions Precedent
Section 6.01 Conditions to Each Party's Obligation to Effect the Merger..51
Section 6.02 Conditions to Obligations of Aztar..........................52
Section 6.03 Conditions to Obligations of Pinnacle.......................52
Section 6.04 Frustration of Closing Conditions...........................53
ARTICLE VII
Termination, Amendment and Waiver
Section 7.01 Termination.................................................53
Section 7.02 Effect of Termination.......................................55
Section 7.03 Amendment...................................................55
Section 7.04 Extension; Waiver...........................................55
ARTICLE VIII
General Provisions
Section 8.01 Nonsurvival of Representations and Warranties...............56
Section 8.02 Notices.....................................................56
Section 8.03 Definitions.................................................57
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Section 8.04 Interpretation and Other Matters............................61
Section 8.05 Counterparts................................................62
Section 8.06 Entire Agreement; No Third-Party Beneficiaries..............62
Section 8.07 Governing Law...............................................62
Section 8.08 Assignment..................................................62
Section 8.09 Enforcement.................................................63
Section 8.10 Severability................................................63
Section 8.11 WAIVER OF JURY TRIAL........................................63
Section 8.12 Alternative Structure.......................................63
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AGREEMENT AND PLAN OF MERGER, dated as of March 13, 2006, as amended
and restated as of April 28, 2006 (this "Agreement"), by and among Pinnacle
Entertainment, Inc., a Delaware corporation ("Pinnacle"), Aztar Corporation, a
Delaware corporation ("Aztar"), and PNK Development 1, Inc., a Delaware
corporation and a wholly owned subsidiary of Pinnacle ("Merger Sub"). For
purposes of clarification, unless expressly stated herein all references to "the
date hereof" or "the date of this Agreement" and phrases of similar meaning
shall continue to refer to March 13, 2006. All references to this Agreement
shall give effect to the amendments effected hereby and to all prior amendments
hereto.
WHEREAS, the respective Boards of Directors of Pinnacle, Aztar and
Merger Sub had approved the consummation of the business combination provided
for in this Agreement as in effect on March 13, 2006 (the "Original Merger
Agreement");
WHEREAS, the Original Merger Agreement has previously been amended as
of April 18, 2006, and as of April 23,2006;;
WHEREAS, the respective Boards of Directors of Pinnacle, Aztar and
Merger Sub have now approved the consummation of the business combination as
further amended by the terms and conditions set forth in this Agreement,
pursuant to which Merger Sub will merge with and into Aztar, with Aztar
surviving that merger (the "Surviving Corporation") (the "Merger");
WHEREAS, in the Merger, subject to the terms of Article II, each share
of common stock, $.01 par value per share, of Aztar (the "Aztar Common Stock")
will be converted into the right to receive (x) $45.00 per share in cash and (y)
a number of shares of common stock, $.10 par value per share, of Pinnacle (the
"Pinnacle Common Stock") equal to the Exchange Ratio (as defined in Section
8.03);
WHEREAS, in the Merger, subject to the terms of Article II, each share
of Series B ESOP Convertible Preferred Stock, $.01 par value per share (the
"Aztar Preferred Stock") will be converted into the right to receive (x) $475.94
per share in cash, and (y) a number of shares of Pinnacle Common Stock equal to
the product of the Exchange Ratio and 10.576 (such product, the "Preferred
Exchange Ratio"); and
WHEREAS, Pinnacle and Aztar desire to make certain representations,
warranties, covenants and agreements in connection with the Merger and the
transactions contemplated by this Agreement and also to prescribe various
conditions to the Merger;
NOW, THEREFORE, in consideration of the foregoing and of the
representations, warranties, covenants and agreements contained in this
Agreement, the parties agree as follows:
ARTICLE I
The Merger
Section 1.01 The Merger. Upon the terms and subject to the satisfaction
or waiver of the conditions set forth in this Agreement, at the Effective Time
(as defined in Section 1.03), Merger Sub shall be merged with and into Aztar in
accordance with the Delaware General Business Corporation Law (the "DGCL").
Aztar shall be the Surviving Corporation in the Merger and shall continue its
corporate existence under the laws of the State of Delaware and shall succeed to
and assume all of the rights and obligations of Aztar and Merger Sub in
accordance with the DGCL.
Section 1.02 Closing. The closing of the Merger (the "Closing") will
take place at 10:00 a.m., local time, on a date selected by Pinnacle, but not
later than the fifth business day, following the satisfaction or waiver of the
conditions set forth in Article VI (other than those conditions that by their
terms are to be satisfied at the Closing, but subject to the satisfaction or
waiver of such conditions at such time) unless another time or date is agreed to
by the parties hereto. The date on which the Closing occurs is referred to in
this Agreement as the "Closing Date." The Closing shall be held at such location
in The City of New York as is agreed to by the parties hereto.
Section 1.03 Effective Time of the Merger. Subject to the provisions of
this Agreement, with respect to the Merger, as soon as practicable after 10:00
a.m., New York City time, on the Closing Date, the parties thereto shall file a
certificate of merger (the "Certificate of Merger") executed in accordance with,
and containing such information as is required by, the relevant provisions of
Section 251 of the DGCL with the Secretary of State of the State of Delaware.
The Merger shall become effective at such time as the Certificate of Merger is
duly filed with the Secretary of State of the State of Delaware (the "Effective
Time").
Section 1.04 Effects of the Merger. The Merger shall generally have the
effects set forth in this Agreement and the applicable provisions of the DGCL.
Section 1.05 Organizational Documents. At the Effective Time, (A) the
certificate of incorporation of Merger Sub, shall be the certificate of
incorporation of the Surviving Corporation until thereafter changed or amended
as provided therein or by applicable law and (B) the by-laws of Merger Sub shall
be the by-laws of the Surviving Corporation, until thereafter changed or amended
as provided therein, in the certificate of incorporation of the Surviving
Corporation or by applicable law.
Section 1.06 Directors and Officers of Surviving Corporation. The
directors and officers of Merger Sub at the Effective Time shall, from and after
the Effective Time, be the initial directors and officers, respectively, of the
Surviving Corporation until their successors have been duly elected or appointed
and qualified.
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ARTICLE II
Effects of the Merger on the Capital Stock of the Constituent Corporations;
Exchange of Certificates
Section 2.01 Effect on Capital Stock.
At the Effective Time, by virtue of the Merger and without any action
on the part of the holder of any shares of Aztar Common Stock or Aztar Preferred
Stock (together, the "Aztar Capital Stock") or any capital stock of Merger Sub:
(a) Cancellation of Certain Aztar Common Stock and Aztar Preferred
Stock. Each share of Aztar Common Stock or Aztar Preferred Stock that is owned
by Aztar shall automatically be canceled and retired and shall cease to exist,
and no consideration shall be delivered in exchange therefor.
(b) Conversion of Aztar Common Stock. Subject to Section 2.02(e) and
(j), each issued and outstanding share of Aztar Common Stock (other than shares
to be canceled in accordance with Section 2.01(a) and other than Aztar
Dissenting Shares (as defined in Section 2.03(a)) shall be converted into the
right to receive (x) $45.00 per share in cash, and (y)a number of shares of
Pinnacle Common Stock equal to the Exchange Ratio (together, the "Common Stock
Merger Consideration"). As of the Effective Time, all such shares of Aztar
Common Stock shall no longer be outstanding and shall automatically be canceled
and retired and shall cease to exist, and each holder of a certificate
representing any such shares of Aztar Common Stock shall cease to have any
rights with respect thereto, except the right to receive the Common Stock Merger
Consideration to be paid therefor upon the surrender of such certificate in
accordance with Section 2.02, without interest. Notwithstanding the foregoing,
if between the date of this Agreement and the Effective Time, the outstanding
shares of Pinnacle Common Stock or Aztar Common Stock shall have been changed
into a different number of shares or a different class, by reason of the
occurrence or record date of any stock dividend, subdivision, reclassification,
recapitalization, split, combination, exchange of shares or similar transaction,
the Common Stock Merger Consideration shall be appropriately adjusted to reflect
such stock dividend, subdivision, reclassification, recapitalization, split,
combination, exchange of shares or similar transaction.
(c) Conversion of Aztar Preferred Stock. Subject to Section 2.02(e) and
(j), each issued and outstanding share of Aztar Preferred Stock (other than
shares to be canceled in accordance with Section 2.01(a) and other than Aztar
Dissenting Shares) shall be converted into the right to receive (x) $475.94 per
share in cash, and (y) a number of shares of Pinnacle Common Stock equal to the
Preferred Exchange Ratio, provided that with respect to any share of Aztar
Preferred Stock that has elected to receive the liquidation preference plus
accrued and unpaid dividends in accordance with the certification of
designations, preferences and rights of the Aztar Preferred Stock, each such
share shall be converted into the liquidation preference thereof plus accrued
and unpaid dividends as of the Effective Time (together, the "Preferred Stock
Merger Consideration" and together with the Common Stock Merger Consideration,
the "Merger Consideration"). The liquidation preference of a share of Aztar
Preferred Stock is $100. As of the date hereof, the accrued and unpaid dividends
thereon were less than $180,000 in the aggregate. As of the Effective Time, all
such shares of Aztar Preferred Stock shall no longer be
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outstanding and shall automatically be canceled and retired and shall cease to
exist, and each holder of a certificate representing any such shares of Aztar
Preferred Stock shall cease to have any rights with respect thereto, except the
right to receive the Preferred Stock Merger Consideration upon the surrender of
such certificate in accordance with Section 2.02, without interest.
Notwithstanding the foregoing, if between the date of this Agreement and the
Effective Time, the outstanding shares of Pinnacle Common Stock or Aztar
Preferred Stock shall have been changed into a different number of shares or a
different class, by reason of the occurrence or record date of any stock
dividend, subdivision, reclassification, recapitalization, split, combination,
exchange of shares or similar transaction, the Preferred Stock Merger
Consideration shall be appropriately adjusted to reflect such stock dividend,
subdivision, reclassification, recapitalization, split, combination, exchange of
shares or similar transaction.
(d) Conversion of Merger Sub Common Stock. The aggregate of all shares
of the capital stock of Merger Sub issued and outstanding immediately prior to
the Effective Time shall be converted into 100 shares of common stock of the
Surviving Corporation.
Section 2.02 Exchange of Certificates.
(a) Exchange Agent. Prior to the Effective Time, Pinnacle shall enter
into an agreement with such bank or trust company as may be mutually agreed by
Pinnacle and Aztar (the "Exchange Agent"), pursuant to which Pinnacle shall
deposit with the Exchange Agent at the Effective Time, for the benefit of the
holders of shares of Aztar Common Stock and Aztar Preferred Stock, for exchange
in accordance with this Article II, through the Exchange Agent, cash and
securities representing the Common Stock Merger Consideration payable to holders
of shares of Aztar Common Stock and cash and securities representing the
Preferred Stock Merger Consideration payable to holders of shares of Aztar
Preferred Stock (the "Exchange Fund").
(b) Payment Procedures. As soon as reasonably practicable after the
Effective Time, the Exchange Agent shall mail to each holder of record of a
certificate or certificates that immediately prior to the Effective Time
represented outstanding shares of Aztar Common Stock or Aztar Preferred Stock
(the "Certificates") whose shares were converted into the right to receive cash
and securities pursuant to Section 2.01, (i) a letter of transmittal (which
shall specify that delivery shall be effected, and risk of loss and title to the
Certificates shall pass, only upon delivery of the Certificates to the Exchange
Agent and shall be in such form and have such other provisions as Pinnacle may
reasonably specify) and (ii) instructions for use in surrendering the
Certificates in exchange for the applicable Merger Consideration. Upon surrender
of a Certificate for cancellation to the Exchange Agent, together with such
letter of transmittal, duly executed, and such other documents as may reasonably
be required by the Exchange Agent, the holder of such Certificate shall be
entitled to receive in exchange therefor, in the case of Certificates formerly
representing shares of Aztar Common Stock, the Common Stock Merger
Consideration, without interest, and in the case of Certificates formerly
representing shares of Aztar Preferred Stock, the Preferred Stock Merger
Consideration, without interest, in each case that such holder has the right to
receive pursuant to the provisions of this Article II, and, in each case, the
Certificate so surrendered shall forthwith be canceled. In the event of a
transfer of ownership of Aztar Common Stock or Aztar Preferred Stock that is not
registered in the transfer records of Aztar, the applicable Merger Consideration
may be issued to a person other than
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the person in whose name the Certificate so
surrendered is registered only if such Certificate shall be properly endorsed or
otherwise be in proper form for transfer and the person requesting such issuance
shall pay any transfer or other taxes required by reason of the payment or
delivery of the applicable Merger Consideration to a person other than the
registered holder of such Certificate or establish to the satisfaction of
Pinnacle that such tax has been paid or is not applicable. Until surrendered as
contemplated by this Section 2.02, each Certificate shall be deemed at any time
after the Effective Time to represent only the right to receive upon such
surrender the applicable Merger Consideration, which the holder thereof has the
right to receive in respect of such Certificate pursuant to the provisions of
this Article II. No interest shall be paid or will accrue on the Merger
Consideration or any cash or other amounts payable or deliverable to holders of
Certificates pursuant to the provisions of this Article II.
(c) No Further Ownership Rights in Aztar Capital Stock. All payments of
Merger Consideration upon the surrender for exchange of Certificates in
accordance with the terms of this Article II shall be deemed to have been paid
in full satisfaction of all rights pertaining to the shares of Aztar Common
Stock or Aztar Preferred Stock, as the case may be, theretofore represented by
such Certificates, and there shall be no further registration of transfers on
the stock transfer books of Aztar of the shares of Aztar Common Stock or Aztar
Preferred Stock that were outstanding immediately prior to the Effective Time.
If, after the Effective Time, Certificates are presented to Pinnacle, Aztar or
the Exchange Agent for any reason, they shall be canceled and exchanged as
provided in this Article II, except as otherwise provided by law.
(d) Termination of Exchange Fund. Any portion of the Exchange Fund that
remains undistributed to the holders of the Certificates for six months after
the Effective Time shall be delivered to Pinnacle, upon demand, and any holders
of the Certificates who have not theretofore complied with this Article II shall
thereafter look only to Pinnacle for payment of their claims for Merger
Consideration, any dividends or distributions in respect thereto and any cash in
lieu of fractional shares of Pinnacle Common Stock.
(e) No Liability. None of Pinnacle, Aztar or the Exchange Agent or any
of their respective directors, officers, employees and agents shall be liable to
any person in respect of any cash or securities representing the Merger
Consideration, any dividends or distributions in respect thereto and any cash in
lieu of fractional shares of Pinnacle Common Stock or any cash or securities
from the Exchange Fund, in each case delivered to a public official pursuant to
any applicable abandoned property, escheat or similar law. If any Certificate
shall not have been surrendered prior to two years after the Effective Time (or
immediately prior to such earlier date on which any Merger Consideration or
other amounts would otherwise escheat to or become the property of any
Governmental Authority (as defined in Section 3.01(d)), any such Merger
Consideration, any dividends or distributions in respect thereto and any cash in
lieu of fractional shares of Pinnacle Common Stock shall, to the extent
permitted by applicable law, become the property of Pinnacle, free and clear of
all claims or interest of any person previously entitled thereto.
(f) Investment of Exchange Fund. The Exchange Agent shall invest any
cash included in the Exchange Fund, as directed by Pinnacle, on a daily basis,
in Permitted Investments (as defined in Section 8.03) or as otherwise consented
to by Aztar prior to the
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Effective Time (which consent shall not be unreasonably
withheld or delayed). Any interest and other income resulting from such
investments shall be paid to Pinnacle.
(g) Withholding Rights. Pinnacle and the Exchange Agent shall be
entitled to deduct and withhold from any consideration payable pursuant to this
Agreement to any person who was a holder of Aztar Common Stock or Aztar
Preferred Stock, as the case may be, immediately prior to the Effective Time
such amounts as Pinnacle and the Exchange Agent may be required to deduct and
withhold with respect to the making of such payment under the Internal Revenue
Code of 1986, as amended (the "Code") or any other provision of applicable
federal, state, local or foreign tax law. To the extent that amounts are so
withheld by Pinnacle or the Exchange Agent and duly paid over to the applicable
taxing authority, such withheld amounts shall be treated for all purposes of
this Agreement as having been paid to the person to whom such consideration
would otherwise have been paid.
(h) Lost, Stolen or Destroyed Certificates. If any Certificate shall
have 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
and, if required by Pinnacle, the posting by such person of a bond in such
reasonable amount as Pinnacle may direct as indemnity against any claim that may
be made against it with respect to such Certificate, the Exchange Agent shall
issue in exchange for such lost, stolen or destroyed Certificate, the applicable
Merger Consideration pursuant to this Agreement.
(i) Adjustments to Prevent Dilution. In the event that Aztar changes
the number of shares of Aztar Common Stock or securities convertible or
exchangeable into or exercisable for shares of Aztar Common Stock, or shares of
Aztar Preferred Stock or securities convertible or exchangeable into or
exercisable for shares of Aztar Preferred Stock, issued and outstanding prior to
the Effective Time, in each case as a result of a reclassification, stock split
(including a reverse stock split), stock dividend or distribution,
recapitalization, merger, subdivision, issuer tender or exchange offer, or other
transaction, the applicable Merger Consideration shall be equitably adjusted.
(j) No Fractional Shares. No certificates or scrip representing
fractional shares of Pinnacle Common Stock shall be issued upon the surrender
for exchange of Certificates, no dividend or distribution of Pinnacle shall
relate to such fractional share interests and such fractional share interests
will not entitle the owner thereof to vote or to any rights of a shareholder of
Pinnacle. In lieu of a fractional share, the holder of a Certificate duly
exchanged therefor shall be entitled to receive an amount in cash equal to
product of the Pinnacle Amount (as defined in Section 8.03) and the fractional
interest of a share of Pinnacle Common Stock otherwise issuable in respect of
such Certificate, without interest.
(k) Distributions with Respect to Unexchanged Shares. No dividends or
other distributions with respect to Pinnacle Common Stock with a record date
after the Effective Time shall be paid to the holder of any unsurrendered
Certificate with respect to the shares of Pinnacle Common Stock issuable
hereunder in respect thereof and no cash payment in lieu of fractional shares
shall be paid to any such holder pursuant to this Agreement, and all such
dividends, other distributions and cash in lieu of fractional shares of Pinnacle
Common Stock shall be paid by Pinnacle to the Exchange Agent and shall be
included in the Exchange Fund, in each case until
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the surrender of such Certificate in accordance with this Article II. Subject to
the effect of applicable escheat or similar laws, following surrender of any
such Certificate there shall be paid to the holder of the certificate
representing whole shares of Pinnacle Common Stock issued in exchange therefor,
without interest, (i) promptly after the time of such surrender, the amount of
dividends or other distributions with a record date after the Effective Time
theretofore paid with respect to such whole shares of Pinnacle Common Stock and
the amount of any cash payable in lieu of a fractional share of Pinnacle Common
Stock to which such holder is entitled pursuant to this Agreement and (ii) at
the appropriate payment date, the amount of dividends or other distributions
with a record date after the Effective Time but prior to such surrender and with
a payment date subsequent to such surrender payable with respect to such whole
shares of Pinnacle Common Stock.
Section 2.03 Dissenting Shares. Any holder of shares of Aztar Common
Stock or Aztar Preferred Stock who shall have exercised rights to dissent with
respect to the Merger in accordance with the DGCL and who has properly exercised
such holder's rights to demand payment of the "fair value" of the holder's
shares of Aztar Common Stock or Aztar Preferred Stock, as the case may be (the
"Aztar Dissenting Shares") as provided in the DGCL (the "Aztar Dissenting
Stockholder") shall thereafter have only such rights, if any, as are provided a
dissenting stockholder in accordance with the DGCL and shall have no rights to
receive the Merger Consideration pursuant to Section 2.01; provided, however,
that if a Aztar Dissenting Stockholder shall fail to properly demand payment (in
accordance with the DGCL) or shall have effectively withdrawn or lost such
rights to relief as a Aztar Dissenting Stockholder under the DGCL, then such
Aztar Dissenting Stockholder's Aztar Dissenting Shares automatically shall cease
to be Aztar Dissenting Shares and shall be converted into and represent only the
right to receive, upon surrender of the Certificate representing the Aztar
Dissenting Shares, the applicable Merger Consideration pursuant to Section 2.01,
without interest.
ARTICLE III
Representations and Warranties
Section 3.01 Representations and Warranties of Aztar. Except as and to
the extent set forth in the letter dated the date of this Agreement and
delivered to Pinnacle by Aztar concurrently with the execution and delivery of
this Agreement (the "Aztar Disclosure Letter") and, to the extent the qualifying
nature of such disclosure is readily apparent therefrom, except as and to the
extent set forth in the Aztar Reports (as defined in Section 3.01(e)) filed on
or after January 1, 2006 and prior to the date hereof or in Aztar's definitive
proxy statement for its 2005 Annual Meeting of Stockholders (excluding, in each
case, any disclosures set forth in any risk factor section, in any section
relating to forward looking statements and any other disclosures included
therein to the extent that they are cautionary, predictive or forward-looking in
nature), Aztar represents and warrants to Pinnacle and Merger Sub as follows:
(a) Organization and Qualification. Each of Aztar and its subsidiaries
is duly organized, validly existing and in good standing under the laws of its
jurisdiction of organization and has full power and authority to conduct its
business as and to the extent
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now conducted and to own, use and lease its assets and properties, except for
such failures to be so organized, existing and in good standing or to have such
power and authority that, individually or in the aggregate, have not had and
would not reasonably be expected to have a material adverse effect (as defined
in Section 8.03) on Aztar. Each of Aztar and its subsidiaries is duly qualified,
licensed or admitted to do business and is in good standing in each jurisdiction
in which the ownership, use or leasing of its assets and properties, or the
conduct or nature of its business, makes such qualification, licensing or
admission necessary, except for such failures to be so qualified, licensed or
admitted and in good standing that, individually or in the aggregate, have not
had and would not reasonably be expected to have a material adverse effect on
Aztar. Except as set forth in Section 3.01(a) of the Aztar Disclosure Letter,
none of Aztar or any of its subsidiaries is a party to any agreement,
arrangement or understanding relating to the securities of Aztar or any of its
subsidiaries, including with respect to the voting, holding, issuance, purchase,
sale or registration thereof or entitling any party to any put or call rights,
rights of first offer, rights of first refusal, tag-along or drag-along rights
or any similar rights or obligations, or to any agreement, arrangement or
understanding providing for any governance, veto or similar rights with respect
to Aztar or any of its subsidiaries.
(b) Capital Stock.
(i) The authorized capital stock of Aztar consists of:
(A) 100,000,000 shares of Aztar Common Stock, of which
35,899,464 shares were issued and outstanding as of the date of
this Agreement; and
(B) 100,000 shares of preferred stock, par value $.01 per
share, of which 44,736.662 shares of Aztar Preferred Stock were
issued or outstanding as of the date of this Agreement.
As of March 10, 2006, 18,824,868 shares of Aztar Common Stock and no
shares of preferred stock were held in the treasury of Aztar.
(ii) A true and correct copy of each of the 1989 Stock Option
and Incentive Plan, 1999 Employee Stock Option and Incentive Plan, 2004
Employee Stock Option and Incentive Plan, 1990 Nonemployee Directors
Stock Option Plan and 2000 Nonemployee Directors Stock Option Plan, in
each case as currently in effect and reflecting all amendments thereto
(collectively, the "Aztar Employee Stock Plans") has been delivered to
Pinnacle prior to the date hereof. As of the date of this Agreement,
(x) 3,592,996 shares of Aztar Common Stock were subject to outstanding
Aztar Employee Stock Options (as defined in Section 5.04(a)) and (y) no
shares of Aztar Common Stock were the subject of other rights (whether
contingent, accrued or otherwise), to acquire or receive shares of
Aztar Common Stock or benefits measured by the value of shares of Aztar
Common Stock or otherwise representing an award of any kind consisting
of shares of Aztar Common Stock under the Aztar Employee Stock Plans
(the items in this clause (y), the "Aztar Awards"). The Aztar Employee
Stock Plans are the only plans or other obligations of Aztar or any of
its subsidiaries with respect to Aztar Awards or Aztar Employee Stock
Options. Aztar has no shares of capital stock reserved for issuance,
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except that, as of March 10, 2006, there were an aggregate of 3,566,647
shares of Aztar Common Stock reserved for issuance pursuant to the
Aztar Employee Stock Plans, including 3,043,494 shares in respect of
Aztar Employee Stock Options and no shares in respect of Aztar Awards,
an aggregate of 473,153 shares of Aztar Common Stock reserved for
issuance upon conversion of the Aztar Preferred Stock and an aggregate
of 50,000 shares of preferred stock reserved for issuance in connection
with the Rights Agreement (as defined in Section 3.01(p)). Section
3.01(b)(ii) of the Aztar Disclosure Letter contains a correct and
complete list as of March 10, 2006 of (i) the number of outstanding
Aztar Employee Stock Options under each of the Aztar Employee Stock
Plans, the holders of such Aztar Employee Stock Options (if such holder
is or was an executive officer of Aztar), the exercise price of all
Aztar Employee Stock Options and the number of shares of Aztar Common
Stock issuable at each such exercise price, and (ii) the number of
outstanding Aztar Awards under each of the Aztar Employee Stock Plans
and the holders of such Aztar Awards. From March 10, 2006 to the date
hereof, Aztar has not issued any shares of Aztar Common Stock except
pursuant to the exercise of Aztar Employee Stock Options and the
settlement of Aztar Awards, in each case outstanding on March 10, 2006,
in accordance with their respective terms. From March 10, 2006 through
the date hereof, neither Aztar nor any of its subsidiaries has granted
or issued any Aztar Employee Stock Options or Aztar Awards. All Aztar
Employee Stock Options vest at the Effective Time pursuant to the terms
of the Aztar Employee Stock Plans as in effect on the date hereof.
(iii) All of the issued and outstanding shares of Aztar Common
Stock are, and all shares reserved for issuance will be, upon issuance
in accordance with the terms specified in the instruments or agreements
pursuant to which they are issuable, duly authorized, validly issued,
fully paid and nonassessable. All of the issued and outstanding shares
of Aztar Preferred Stock are duly authorized, validly issued, fully
paid and nonassessable.
(iv) Except as disclosed in this Section 3.01(b) and except
for this Agreement, as of the date of this Agreement, there are no
outstanding subscriptions, options, warrants, rights (including stock
appreciation rights), preemptive rights, redemption rights, repurchase
rights or other contracts, commitments, understandings or arrangements,
including any put or call right or right of conversion or exchange
under any outstanding security, instrument or agreement (collectively,
"Options"), obligating Aztar or any of its subsidiaries to acquire or
purchase or to issue or sell any shares of capital stock (or to make
payments measured by the value of shares of capital stock) or other
securities of Aztar or any of its subsidiaries or any securities or
obligations convertible or exchangeable into or exercisable for, or
giving any person a right to subscribe for or acquire, any capital
stock (or to make payments measured by the value of shares of capital
stock) or other securities of Aztar or any of its subsidiaries, or to
grant, extend or enter into any Option with respect thereto, and no
securities or obligations evidencing such rights or Options are
authorized, issued or outstanding. No Aztar subsidiary owns any shares
of Aztar Common Stock or Aztar Preferred Stock.
9
(v) Except as disclosed in Section 3.01(b)(v) of the Aztar
Disclosure Letter, all of the outstanding shares of capital stock and
other securities of each subsidiary of Aztar are duly authorized,
validly issued, fully paid and nonassessable and are owned,
beneficially and of record, by Aztar or a wholly owned subsidiary, free
and clear of any liens, claims, mortgages, encumbrances, pledges,
security interests, equities and charges of any kind (each, a "Lien"),
except for any of the foregoing that, individually or in the aggregate,
have not had and would not reasonably be expected to have a material
adverse effect on Aztar. Except as disclosed in Section 3.01(b)(v) of
the Aztar Disclosure Letter, there are no (A) outstanding Options
obligating Aztar or any of its subsidiaries to issue or sell any shares
of capital stock of any subsidiary of Aztar or to grant, extend or
enter into any such Option or (B) voting trusts, proxies or other
commitments, understandings, restrictions or arrangements in favor of
any person other than Aztar or a wholly owned subsidiary of Aztar with
respect to the voting of or the right to participate in dividends or
other earnings on any capital stock of any subsidiary of Aztar.
(vi) No bonds, debentures, notes or other indebtedness or
obligations of Aztar or any of its subsidiaries having the right to
vote (or which are convertible into or exercisable for securities
having the right to vote) (collectively, "Aztar Voting Debt") on any
matters on which Aztar stockholders may vote are issued or outstanding
nor are there any outstanding Options obligating Aztar or any of its
subsidiaries to issue or sell any Aztar Voting Debt or to grant, extend
or enter into any Option with respect thereto. There are no securities
convertible into or exercisable for any such securities and no
commitments or obligations to issue any of the foregoing.
(c) Authority. The Aztar Board of Directors has unanimously (A)
declared that the Merger and the other transactions contemplated hereby are
advisable and has adopted this Agreement; (B) resolved to recommend adoption of
this Agreement to the holders of shares of Aztar Common Stock and Aztar
Preferred Stock; and (C) directed that this Agreement be submitted to the
holders of shares of Aztar Common Stock and Aztar Preferred Stock for their
adoption. Aztar has full corporate power and authority to enter into this
Agreement, to perform its obligations hereunder, and, subject to obtaining
Stockholder Approval (as defined in Section 3.01(p)), to consummate the
transactions contemplated hereby. The execution, delivery and performance of
this Agreement by Aztar and the consummation by Aztar of the transactions
contemplated hereby have been duly and validly adopted and approved by the Board
of Directors of Aztar. No other corporate proceedings on the part of Aztar or
its stockholders are necessary to authorize the execution, delivery and
performance of this Agreement by Aztar and the consummation by Aztar of the
Merger and the other transactions contemplated hereby, other than obtaining
Stockholder Approval. This Agreement has been duly and validly executed and
delivered by Aztar and constitutes a legal, valid and binding obligation of
Aztar enforceable against Aztar in accordance with its terms. Aztar has received
the opinion of Xxxxxxx, Xxxxx & Co., Inc., dated the date of this Agreement, to
the effect that, as of the date of this Agreement, the Common Stock Merger
Consideration is fair from a financial point of view to the holders of Aztar
Common Stock.
10
(d) No Conflicts; Approvals and Consents.
(i) Other than the notices, reports, filings, consents,
registrations, declarations, approvals, permits or authorizations (A)
required by the Secretary of the State of Delaware as contemplated
hereby; (B) required under the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements
Act of 1976, as amended (the "HSR Act") and the Securities Exchange Act
of 1934, as amended (the "Exchange Act"); and (C) by, with, to or from
the Gaming Authorities (as defined in Section 8.03) in New Jersey,
Nevada, Missouri and Indiana with jurisdiction over Aztar's gaming
operations under any Gaming Laws (as defined in Section 8.03)
applicable to Aztar (collectively, the "Aztar Required Gaming
Approvals"), except as set forth in Section 3.01(d)(i) of the Aztar
Disclosure Letter, no notices, declarations, reports or other filings
are required to be made by Aztar with, nor are any consents,
registrations, approvals, permits or authorizations required to be
obtained by Aztar or any of its subsidiaries from, any domestic or
foreign governmental or regulatory authority, agency, commission, body,
court or other legislative, executive or judicial governmental
authority (each, a "Governmental Authority"), in connection with the
execution, delivery and performance of this Agreement by Aztar and the
consummation by Aztar of the Merger and the compliance by Aztar with
the provisions of this Agreement, or in connection with the continuing
operation of the business of Aztar and its subsidiaries following the
Effective Time, except those that the failure to make or obtain,
individually or in the aggregate, have not had and would not reasonably
be expected to have a material adverse effect on Aztar.
(ii) The execution, delivery and performance of this Agreement
by Aztar do not, and the consummation by Aztar of the Merger and the
compliance by Aztar with the provisions of this Agreement will not,
constitute or result in (A) a breach or violation of, or a default
under, the certificate of incorporation or by-laws of Aztar or the
comparable governing documents of any of its subsidiaries; (B) except
as set forth in Section 3.01(d)(ii)(B) of the Aztar Disclosure Letter,
with or without notice, lapse of time or both, a breach or violation
of, a termination (or right of termination) or default under, the
creation or acceleration of any obligations under or the creation of a
Lien on any of the assets of Aztar or any of its subsidiaries pursuant
to any agreement, lease, license, contract, note, mortgage, indenture
or other obligation, whether or not in writing (a "Contract"), binding
upon Aztar or any of its subsidiaries or, assuming (solely with respect
to performance of this Agreement by Aztar and consummation by Aztar of
the Merger) compliance with the matters referred to in Section
3.01(d)(i), any Law (as defined in Section 3.01(j)) or governmental or
non-governmental permit or license to which Aztar or any of its
subsidiaries is subject; or (C) any change in the rights or obligations
of any party under any Contract binding upon Aztar or any of its
subsidiaries (including, without limitation, any change in pricing,
term, put or call rights, rights of first offer, rights of first
refusal, tag-along or drag-along rights or any similar rights or
obligations which may be exercised in connection with the Merger and
the other transactions contemplated hereby), except in the case of
clause (B) and (C) as individually or in the aggregate have not had and
would not reasonably be expected to have a material adverse effect on
Aztar.
11
(iii) Section 3.01(d)(iii) of the Aztar Disclosure Letter sets
forth a correct and complete list of Material Contracts (as defined in
Section 3.01(m)) of Aztar or any of its subsidiaries pursuant to which
consents or waivers are required in connection with the performance by
Aztar of its obligations hereunder.
(e) Aztar SEC Reports; Financial Statements.
(i) Aztar has made available to Pinnacle each registration
statement, report, proxy statement or information statement prepared by
it since December 31, 2002 and filed with the SEC, including Aztar's
Annual Report on Form 10-K for the year ended December 31, 2005, each
in the form (including exhibits, annexes and any amendments thereto)
filed with the Securities and Exchange Commission (the "SEC"). Aztar
has filed or furnished all forms, statements, reports and documents
required to be filed or furnished by it with the SEC pursuant to
applicable securities statutes, regulations, policies and rules since
December 31, 2002 (the forms, statements, reports and documents filed
or furnished with the SEC since December 31, 2002 and those filed or
furnished with the SEC subsequent to the date of this Agreement, if
any, including any amendments thereto, the "Aztar Reports"). Each of
the Aztar Reports filed or furnished on or prior to the date hereof, at
the time of its filing (except and as to the extent such Aztar Report
has been modified or superseded in any subsequent Aztar Report filed
and publicly available prior to the date of this Agreement), complied,
and each of the Aztar Reports filed or furnished after the date hereof
will comply, in all material respects with the applicable requirements
of each of the Exchange Act and the Securities Act of 1933, as amended
(the "Securities Act"), and the rules and regulations thereunder and
complied or will comply, as applicable, in all material respects with
the then applicable accounting standards. As of their respective dates,
except as and to the extent modified or superseded in any subsequent
Aztar Report filed and publicly available prior to the date of this
Agreement, the Aztar Reports did not, and any Aztar Reports filed or
furnished with the SEC subsequent to the date hereof will not, contain
any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements
made therein, in light of the circumstances in which they were made,
not misleading. The Aztar Reports filed or furnished on or prior to the
date hereof included, and if filed or furnished after the date hereof,
will include all certificates required to be included therein pursuant
to Sections 302 and 906 of the Xxxxxxxx-Xxxxx Act of 2002, as amended
(the "SOX Act"), and the internal control report and attestation of
Aztar's outside auditors required by Section 404 of the SOX Act.
(ii) Each of the consolidated balance sheets included in or
incorporated by reference into the Aztar Reports (including the related
notes and schedules) fairly presents, or, in the case of the Aztar
Reports filed or furnished after the date hereof, will fairly present
in all material respects the consolidated financial position of Aztar
and its subsidiaries as of its date, and each of the consolidated
statements of income, changes in shareholders' equity and cash flows
included in or incorporated by reference into the Aztar Reports
(including any related notes and schedules) fairly presents, or in the
case of the Aztar Reports filed or furnished after the date hereof,
will fairly present in all material respects the net income, total
shareholders' equity and net increase (decrease) in cash and
12
cash equivalents, as the case may be, of Aztar and its subsidiaries for
the periods set forth therein (subject, in the case of unaudited
statements, to the absence of notes and normal year-end audit
adjustments that will not be material in amount or effect), in each
case in accordance with U.S. generally accepted accounting principles
("GAAP") consistently applied during the periods involved, except as
may be noted therein.
(iii) The management of Aztar has (x) implemented disclosure
controls and procedures (as defined in Rule 13a-15(e) of the Exchange
Act) that are reasonably designed to ensure that material information
relating to Aztar, including its consolidated subsidiaries, is made
known to the chief executive officer and chief financial officer of
Aztar by others within those entities, and (y) disclosed, based on its
most recent evaluation, to Aztar's outside auditors and the audit
committee of the Board of Directors of Aztar (A) all significant
deficiencies and material weaknesses in the design or operation of
internal controls over financial reporting (as defined in Rule
13a-15(f) of the Exchange Act) which are reasonably likely to adversely
affect in any material respect Aztar's ability to record, process,
summarize and report financial data and (B) any fraud, whether or not
material, that involves management or other employees who have a
significant role in Aztar's internal controls over financial reporting.
Since December 31, 2002, any material change in internal control over
financial reporting required to be disclosed in any Aztar Report has
been so disclosed.
(iv) Since December 31, 2003, to Aztar's knowledge, (x) none
of Aztar or any of its subsidiaries, or any director, officer,
employee, auditor, accountant or representative of Aztar or any of its
subsidiaries, has received or otherwise had or obtained knowledge of
any material complaint, allegation, assertion or claim, whether written
or oral, regarding the accounting or auditing practices, procedures,
methodologies or methods of Aztar or any of its subsidiaries or their
respective internal accounting controls relating to periods after
December 31, 2003, including any material complaint, allegation,
assertion or claim that Aztar or any of its subsidiaries has engaged in
questionable accounting or auditing practices (except for any of the
foregoing that have been resolved without any material impact and
except for any of the foregoing after the date hereof which have no
reasonable basis), and (y) no attorney representing Aztar or any of its
subsidiaries, whether or not employed by Aztar or any of its
subsidiaries, has reported evidence of a material violation of
securities Laws, breach of fiduciary duty or similar violation,
relating to periods after December 31, 2003, by Aztar or any of its
officers, directors, employees or agents to the Board of Directors of
Aztar or any committee thereof or, to the knowledge of the officers of
Aztar, to any director or officer of Aztar.
(v) All filings (other than immaterial filings) required to be
made by Aztar or any of its subsidiaries since December 31, 2002 under
any applicable state laws and regulations relating to gaming or similar
matters, have been filed with the applicable Governmental Authorities,
including all forms, statements, reports, agreements (oral or written)
and all documents, exhibits, amendments and supplements appertaining
thereto so required to be filed, and all such filings complied, as of
their respective dates, with all applicable requirements of the
applicable statute and the rules and regulations thereunder,
13
except for filings the failure of which to make or the failure of which
to make in compliance with all applicable requirements of the
applicable statute and the rules and regulations thereunder,
individually or in the aggregate, have not had and would not reasonably
be expected to have a material adverse effect on Aztar.
(f) Absence of Certain Changes or Events. Since December 31, 2005 (the
"Audit Date"), there has not been any material adverse effect on Aztar or any
change, event or development that, individually or in the aggregate, has had or
would reasonably be expected to have a material adverse effect on Aztar. Since
the Audit Date, Aztar and its subsidiaries have conducted their respective
businesses in all material respects only in, and have not engaged in any
material transaction other than in accordance with, the ordinary course of such
businesses. Since the Audit Date and prior to the date hereof, there has not
been any action or event that if taken on or after the date hereof without the
consent of Pinnacle would violate the provisions of Section 4.01(a) of this
Agreement or any agreement or commitment to do any of the foregoing.
(g) Absence of Undisclosed Liabilities. Except as set forth in Section
3.01(g) of the Aztar Disclosure Letter, there are no liabilities or obligations
of Aztar or any of its subsidiaries, whether or not accrued, contingent or
otherwise and whether or not required to be disclosed, or any other facts or
circumstances that would reasonably be expected to result in any obligations or
liabilities of, Aztar or any of its subsidiaries, other than: (a) liabilities or
obligations to the extent (I) reflected on the consolidated balance sheet of
Aztar included in the most recent audited financial statements included in the
Aztar Reports filed prior to the date hereof (the "Audited Financial
Statements"), or (II) readily apparent in the notes thereto, (b) liabilities or
obligations incurred in the ordinary course of business since December 31, 2005
that individually or in the aggregate, have not had and would not reasonably be
expected to have a material adverse effect on Aztar, (c) other liabilities or
obligations that individually or in the aggregate have not had and would not
reasonably be expected to have a material adverse effect on Aztar, (d)
performance obligations under Material Contracts required in accordance with
their terms, and (e) performance obligations, to the extent required under
applicable Law, in the case of each of clause (d) and (e) to the extent arising
after the date hereof.
(h) Legal Proceedings; Litigation and Liabilities. Except as set forth
in Section 3.01(h) of the Aztar Disclosure Letter, there are no (A) civil,
criminal or administrative actions, suits, claims, hearings, arbitrations,
investigations or proceedings pending or, to the knowledge of Aztar, threatened
against Aztar or any of its subsidiaries or affiliates or (B) litigations,
arbitrations, investigations or other proceedings, or injunctions or final
judgments relating thereto, pending or, to the knowledge of Aztar, threatened
against Aztar or any of its subsidiaries or affiliates before any Governmental
Authority, including any Gaming Authority, except in the case of either clause
(A) or (B), for those that, individually or in the aggregate, have not had and
would not reasonably be expected to have a material adverse effect on Aztar.
None of Aztar or any of its subsidiaries or affiliates is a party to or subject
to the provisions of any judgment, order, writ, injunction, decree or award of
any Governmental Authority, including any Gaming
14
Authority, which, individually or in the aggregate, have had or would reasonably
be expected to have a material adverse effect on Aztar.
(i) Information Supplied. None of the information supplied or to be
supplied by Aztar for inclusion or incorporation by reference in the proxy
statement (the "Proxy Statement") to be mailed to Aztar's stockholders in
connection with the Stockholders Meeting (as defined in Section 5.01(b)) or Form
S-4 (as defined below) will, at the date it is first mailed to Aztar's
stockholders or at the time of the Stockholders Meeting contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they are made, not misleading. The Proxy Statement
and Form S-4 will comply as to form in all material respects with the
requirements of the Exchange Act and the rules and regulations thereunder,
except that no representation is made by Aztar with respect to statements made
or incorporated by reference therein based on information supplied by or on
behalf of Pinnacle for inclusion or incorporation by reference in the Proxy
Statement or Form S-4..
(j) Permits; Compliance with Laws and Orders. The businesses of each of
Aztar and its subsidiaries have not been conducted in violation of any federal,
state, local or foreign law, statute or ordinance, common law, or any rule,
regulation, standard, judgment, order, writ, injunction, decree, arbitration
award, agency requirement, license or permit of any Governmental Authority,
including any Gaming Authority (collectively, "Laws"), except for such
violations that, individually or in the aggregate, have not had and would not
reasonably be expected to have a material adverse effect on Aztar. Except as set
forth in Section 3.01(j)(1) of the Aztar Disclosure Letter, no investigation,
review, proceeding, notice of violation, order of forfeiture or complaint by any
Governmental Authority, including any Gaming Authority, with respect to Aztar or
any of its subsidiaries is pending or, to the knowledge of Aztar, threatened,
nor has any Governmental Authority, including any Gaming Authority, indicated an
intention to conduct the same, except for any such investigations or reviews
that, individually or in the aggregate, have not had and would not reasonably be
expected to have a material adverse effect on Aztar. Except as set forth in
Section 3.01(j)(2) of the Aztar Disclosure Letter, each of Aztar and its
subsidiaries has obtained and is in compliance with all permits, licenses,
certifications, approvals, registrations, consents, authorizations, franchises,
variances, exemptions and orders issued or granted by a Governmental Authority,
including any Gaming Authority ("Licenses") necessary to conduct its business as
presently conducted, except for any failures to have or to be in compliance with
such Licenses which, individually or in the aggregate, have not had and would
not reasonably be expected to have a material adverse effect on Aztar. The
actions of the applicable Governmental Authorities, including any Gaming
Authority, granting all Licenses have not been reversed, stayed, enjoined,
annulled or suspended, and there is not pending or, to the knowledge of Aztar,
threatened, any application, petition, objection or other pleading with any
Governmental Authority, including any Gaming Authority, which challenges or
questions the validity of or any rights of the holder under any License, except
for any of the foregoing that, individually or in the aggregate, have not had
and would not reasonably be expected to have a material adverse effect on Aztar.
15
(k) Taxes.
(i) Each of Aztar and its subsidiaries has timely filed, or
has caused to be timely filed on its behalf, all material Tax Returns
(as defined below) required to be filed by it, and all such Tax Returns
are true, complete and accurate in all material respects. All Taxes (as
defined below) shown to be due and owing on such Tax Returns have been
timely paid, except for such amounts as would not, individually or in
the aggregate, be material.
(ii) The most recent financial statements contained in the
Audited Financial Statements delivered to Pinnacle prior to the date of
this Agreement reflect, in accordance with GAAP, an adequate reserve
for all Taxes payable by Aztar and its subsidiaries for all taxable
periods through the date of such financial statements.
(iii) Except as set forth in Section 3.01(k)(iii) of the Aztar
Disclosure Letter, there is no audit, examination, deficiency, refund
litigation, proposed adjustment or matter in controversy with respect
to any material Taxes or material Tax Return of Aztar or its
subsidiaries; to the knowledge of Aztar, neither Aztar nor any of its
subsidiaries has received written notice of any material claim (not
subsequently withdrawn) made by a governmental authority in a
jurisdiction where Aztar or any of its subsidiaries, as applicable,
does not file a Tax Return, that Aztar or such subsidiary is or may be
subject to income taxation by that jurisdiction; no material deficiency
with respect to any Taxes has been proposed, asserted or assessed
against Aztar or any of its subsidiaries; and no requests for waivers
of the time to assess any material amount Taxes are pending.
(iv) The federal income Tax Returns of Aztar and its
subsidiaries have been examined by and settled with the Internal
Revenue Service ("IRS") (or the applicable statutes of limitation have
lapsed) for all years through 2003. All material assessments for Taxes
due with respect to such completed and settled examinations or any
concluded litigation have been fully paid.
(v) Except as set forth in Section 3.01(k)(v) of the Aztar
Disclosure Letter, there are no outstanding written agreements,
consents or waivers to extend the statutory period of limitations
applicable to the assessment of any material Taxes or deficiencies
against Aztar or any of its subsidiaries, and no power of attorney
granted by either Aztar or any of its subsidiaries with respect to any
material Taxes is currently in force.
(vi) Except as set forth in Section 3.01(k)(vi) of the Aztar
Disclosure Letter, neither Aztar nor any of its subsidiaries is a party
to any agreement providing for the allocation or sharing of any
material amount of Taxes imposed on or with respect to any individual
or other person (other than (I) such agreements with customers,
vendors, lessors or the like entered into in the ordinary course of
business and (II) agreements with or among Aztar or any of its
subsidiaries), and neither Aztar nor any of its subsidiaries (A) has
been a member of an affiliated group (or similar state, local or
foreign filing group) filing a consolidated U.S. federal income Tax
Return (other than the group the
16
common parent of which is Aztar) or (B) has any liability for the Taxes
of any person (other than Aztar or any of its subsidiaries) (I) under
Treasury Regulation ss. 1.1502-6 (or any similar provision of state,
local or foreign law), or (II) as a transferee or successor.
(vii) There are no material Liens for Taxes (other than for
current Taxes not yet due and payable) on the assets of Aztar and its
subsidiaries.
(viii) Neither Aztar nor any subsidiary has distributed stock
of another person, or has had its stock distributed by another person,
in a transaction that was purported or intended to be governed in whole
or in part by Code Section 355.
For purposes of this Agreement:
"Taxes" means any and all federal, state, local, foreign or other taxes
of any kind (together with any and all interest, penalties, additions to tax and
additional amounts imposed with respect thereto) imposed by any governmental
authority, including, without limitation, taxes or other charges on or with
respect to income, franchises, windfall or other profits, gross receipts,
property, sales, use, capital stock, payroll, employment, unemployment, social
security, workers' compensation, or net worth, and taxes or other charges in the
nature of excise, withholding, ad valorem or value added.
"Tax Return" means any return, report or similar statement (including
the schedules attached thereto) required to be filed with respect to Taxes,
including, without limitation, any information return, claim for refund, amended
return, or declaration of estimated Taxes.
(l) Employee Benefit Plans; ERISA.
(i) For purposes of this Agreement, (x) "Aztar Employee
Benefit Plans" means any material employee compensation and benefit
policies, arrangements or payroll practices including bonus (including
any retention bonus plan), incentive compensation, deferred
compensation, long term incentive, pension, profit sharing, retirement,
supplemental retirement, stock purchase, stock option, stock ownership,
restricted stock, stock appreciation rights, phantom stock, sick leave,
leave of absence, layoff, vacation, day or dependent care, legal
services, cafeteria, life, health, medical, accident, disability,
workmen's compensation or other insurance, salary continuation for
disability, hospitalization, scholarship programs, retiree medical, or
other material benefit plan, agreement, practice, policy, program,
scheme or arrangement of any kind, whether written or oral, including
any "employee benefit plan" within the meaning of Section 3(3) of ERISA
or other material benefit arrangements that are maintained, contributed
to or sponsored by Aztar or any of its subsidiaries for the benefit of
any current or former employee, officer or director of Aztar or any of
its subsidiaries and all "employee pension benefit plans," as defined
in Section 3(2) of ERISA, maintained or contributed to by Aztar or any
ERISA Affiliate or to which Aztar or any of its subsidiaries or any
ERISA Affiliate contributed or is obligated to contribute thereunder
within six years prior to the Closing; and (y) "Aztar Employment
Agreements" means all individual employment, consulting, termination,
separation, severance, change in control,
17
retention, post-employment and other compensation agreements existing
as of the date of this Agreement, which are between Aztar or any of its
subsidiaries and any current or former director, officer or employee
thereof, including the name of such current or former director, officer
or employee.
(ii) (A) All Aztar Employee Benefit Plans are in compliance in
all material respects with all applicable requirements of law,
including ERISA (as defined below) and the Code, (B) each of Aztar and
its subsidiaries has performed all material obligations required to be
performed by it under any Aztar Employee Benefit Plan and is not in any
material respect in default under or in violation of any Aztar Employee
Benefit Plan, (C) no material action, dispute, suit, claim, arbitration
or legal, administrative or other proceeding or governmental action
(other than claims for benefits in the ordinary course) is pending or,
to the knowledge of Aztar, threatened (x) with respect to any Aztar
Employee Benefit Plan by any current or former employee, officer or
director of Aztar or any of its subsidiaries, (y) alleging any breach
of the material terms of any Aztar Employee Benefit Plan or any
fiduciary duties or (z) with respect to any violation of any applicable
law with respect to any such Aztar Employee Benefit Plan, and (D) there
does not now exist any circumstance that would reasonably be expected
to result in any Controlled Group Liability that would be a material
liability of Aztar or any of its subsidiaries following the Closing.
(iii) As used herein:
(A) "Controlled Group Liability" means any and all liabilities
(i) under Title IV of ERISA, (ii) under Section 302 of ERISA,
(iii) under Sections 412 and 4971 of the Code, and (iv) as a
result of a failure to comply with the continuation coverage
requirements of Section 601 et seq. of ERISA and Section 4980B of
the Code.
(B) "ERISA" means the Employee Retirement and Income Security
Act of 1974, as amended, and the rules and regulations thereunder;
(C) "ERISA Affiliate" means any trade or business (whether or
not incorporated) under common control with a person or any of its
subsidiaries and which, together with such person or any of its
subsidiaries, is treated as a single employer within the meaning
of Section 414(b), (c), (m) or (o) of the Code.
(iv) Each Aztar Employee Benefit Plan that is intended to be
qualified under Section 401(a) of the Code or Section 401(k) of the
Code has received a favorable determination letter from the IRS that it
is so qualified and each related trust that is intended to be exempt
from federal income taxation under Section 501(a) of the Code has
received a determination letter from the IRS that it is so exempt and,
to the knowledge of Aztar, no fact or event has occurred since the date
of such determination letter or letters from the Internal Revenue
Service that would reasonably be expected to affect adversely the
qualified status of any such Aztar Employee Benefit Plan or the exempt
status of any such trust.
18
(v) Neither Aztar nor any of its ERISA Affiliates has
withdrawn in a complete or partial withdrawal from any Aztar Employee
Benefit Plan that is a multiemployer plan (within the meaning of
Section 3(37) or 4001(a)(3) of ERISA) ("Aztar Multiemployer Plan") or
has any unsatisfied material liability arising from a complete or
partial withdrawal, nor has any of them incurred any present or
contingent liability due to the termination or reorganization of any
Aztar Multiemployer Plan, nor are any of them reasonably expected to
incur liability under Section 4063 or 4064 of ERISA with respect to any
such Aztar Multiemployer Plan.
(vi) Neither Aztar nor any ERISA Affiliate has any present or
contingent material liability under Title IV of ERISA to the Pension
Benefit Guaranty Corporation or to a trustee appointed under Section
4042 of ERISA, and no events have occurred and no circumstances exist
that would reasonably be expected to result in any such material
liability to Aztar or any ERISA Affiliate.
(vii) There does not now exist any circumstance that would
reasonably be expected to result in material liability to Aztar or any
of its ERISA Affiliates arising from a breach of fiduciary duty in
connection with the Aztar Employee Benefit Plans or a non-exempt
"prohibited transaction" within the meaning of Section 4975 of the Code
or Section 406 of ERISA.
(viii) All contributions, premiums and other payments required
by law or any Aztar Employee Benefit Plan or applicable collective
bargaining agreement have been made under any such plan to any fund,
trust or account established thereunder or in connection therewith by
the due date thereof; and any and all contributions, premiums and other
payments with respect to compensation or service before and through the
Closing Date, or otherwise with respect to periods before and through
the Closing Date, due from any of Aztar or its subsidiaries to, under
or on account of each Aztar Employee Benefit Plan shall have been paid
prior to the Closing Date or shall have been fully reserved and
provided for or accrued on Aztar's financial statements.
(ix) Except as set forth in Section 3.01(l)(ix) of the Aztar
Disclosure Letter, neither the execution and delivery of this Agreement
nor the consummation of the transactions contemplated by this
Agreement, whether alone, or in connection with any other event will
(A) result in the acceleration of the time of payment of or vesting in,
or an increase in the amount of, compensation or benefits due any
current or former employee, director or officer of Aztar or its
subsidiaries (including any equity compensation), (B) result in any
forgiveness of indebtedness or obligation to fund benefits with respect
to any such employee, director or officer or (C) result in any payment
or any entitlement to payment (including, but not limited to, any
retention bonuses, parachute payments or noncompetition payments)
becoming due to any employee or former employee or group of employees
or former employees or to any director or former director or (D) result
in the payment of any "excess parachute payment" within the meaning of
Section 280G of the Code with respect to a current or former employee
of Aztar or any of its subsidiaries. Section 3.01(l)(ix) of the Aztar
Disclosure Letter sets forth a good-faith estimate of the amount of any
estimated severance payment (including estimated gross-up payments, if
applicable) owed under
19
the Aztar Employment Agreements with the five most highly compensated
Company Employees (as defined in Section 5.05(a)) employed at Aztar's
corporate headquarters due to the transactions contemplated by this
Agreement and any subsequent termination of employment.
(m) Material Contracts. Except as set forth in Section 3.01(m) of the
Aztar Disclosure Letter, neither Aztar nor any of its subsidiaries is a party to
or bound by, as of the date hereof, any of the following (whether or not in
writing), collectively with all exhibits and schedules to such Contracts:
(i) any agreement or series of related agreement providing for
the acquisition or disposition of securities of any person or any
assets, in each case involving more than $1,000,000 individually or in
the aggregate, other than in the ordinary course of business consistent
with past practice or in connection with the capital expenditure
budgets included in Section 4.01(a)(xi) of the Aztar Disclosure Letter;
(ii) any Contract that imposes payment, cancellation penalties
or other obligations in connection with the redevelopment or future
operation (other than ordinary course hotel operations) of all or any
portion of Aztar's property, facility or operations in Las Vegas,
Nevada (the "Las Vegas Site");
(iii) any Contract or commitment relating to indebtedness for
borrowed money or the deferred purchase price of property (in either
case, whether incurred, assumed, guaranteed or secured by any asset) in
excess of $1,000,000; and
(iv) any Contract that would be required to be filed as an
exhibit to an Annual Report on Form 10-K pursuant to Item 601(b)(10) of
Regulation S-K under the Securities Act; (the Contracts described in
clauses (i) - (iv), together with all exhibits and schedules to such
Contracts, being the "Material Contracts").
A true and complete copy of each Material Contract has previously been
delivered or made available to Pinnacle. Except as individually or in the
aggregate has not had and would not reasonably be expected to have a material
adverse effect on Aztar, each Contract by which Aztar or its subsidiaries is
bound is a valid and binding agreement of Aztar or one of its subsidiaries
enforceable against Aztar or one of its subsidiaries, and, to the knowledge of
Aztar, the counterparties thereto in accordance with its terms, subject to the
effects of bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and other similar Laws relating to or affecting creditors rights
generally and to equitable principles (whether considered in a proceeding at law
or in equity). Aztar and its subsidiaries are not (and to the knowledge of
Aztar, no counterparty is) in breach or violation of or in default in the
performance or observance of any term or provision of, and no event has occurred
which, with lapse of time or action by a third party or Aztar, would result in a
default under, any Contract to which Aztar or any of its subsidiaries is a party
or by which any of them is bound or to which any of their property is subject,
other than breaches, violations and defaults which have not had and would not
reasonably be expected, individually or in the aggregate, to have a material
adverse effect on Aztar.
20
(n) Title to Assets. Except as set forth in Section 3.01(n) of the
Aztar Disclosure Letter, Aztar and each of its subsidiaries has good and valid
title in fee simple to all their owned real property, as reflected in the most
recent balance sheet included in the Audited Financial Statements included in
the Aztar Reports, except for properties and assets that have been disposed of
in the ordinary course of business since the date of such balance sheet, free
and clear of all mortgages, liens, pledges, charges or encumbrances of any
nature whatsoever, except (i) liens for current taxes, payments of which are not
yet delinquent or are being disputed in good faith, (ii) such imperfections in
title and easements and encumbrances, if any, as are not substantial in
character, amount or extent and do not materially detract from the value, or
interfere with the present use, or Aztar's intended use as of the date hereof,
of the property subject thereto or affected thereby, or otherwise materially
impair Aztar's business operations (in the manner presently carried on by Aztar
or intended, as of the date hereof, to be carried on by Aztar), or (iii) for
such matters which have not had and would not reasonably be expected,
individually or in the aggregate, to have a material adverse effect on Aztar.
Aztar and each of its subsidiaries have good and valid leasehold interests in
all real property leased by them. All leases under which Aztar or any of its
subsidiaries leases any real or personal property are in good standing, valid
and effective against Aztar, and to Aztar's knowledge the counterparties
thereto, in accordance with their respective terms, is not and there is not,
under any of such leases, any existing default by Aztar, or to Aztar's knowledge
the counterparties thereto, or event which with notice or lapse of time or both
would become a default by Aztar or to Aztar's knowledge the counterparties
thereto other than failures to be in good standing, valid and effective and
defaults under such leases which have not had and would not reasonably be
expected, individually or in the aggregate, to have a material adverse effect on
Aztar.
(o) Environmental Matters. Except for matters set forth in Section
3.01(o) of the Aztar Disclosure Letter and such matters as individually or in
the aggregate, have not had and would not reasonably be expected to result in a
material adverse effect on Aztar: (i) Aztar and its subsidiaries have complied
at all times with all applicable Environmental Laws (as defined below); (ii) no
property currently owned, leased or operated by Aztar or any of its subsidiaries
(including soils, groundwater, surface water, buildings or other structures) is
contaminated with any Hazardous Substance (as defined below) in a manner that is
or would be required to be Remediated or Removed (as such terms are defined
below), that is in violation of any Environmental Law, or that is reasonably
likely to give rise to any Environmental Liability; (iii) Aztar and its
subsidiaries have no information that any property formerly owned, leased or
operated by Aztar or any of its subsidiaries was contaminated with any Hazardous
Substance in a manner requiring Remediation or Removal under applicable
Environmental Law, during or prior to such period of ownership, leasehold, or
operation; (iv) neither Aztar nor any of its subsidiaries nor any prior owner or
operator has incurred in the past or is now subject to any Environmental
Liabilities (as defined below); (v) neither Aztar nor any of its subsidiaries
has received any notice, demand, letter, claim or request for information
alleging that Aztar or any of its subsidiaries may be in violation of or subject
to liability under any Environmental Law; (vi) neither Aztar nor any of its
subsidiaries is subject to any order, decree, injunction or agreement with any
Governmental Authority, or any indemnity or other
21
agreement with any third party, concerning liability or obligations relating to
any Environmental Law or otherwise relating to any Hazardous Substance or any
environmental, health or safety matter; and (vii) to the knowledge of Aztar,
there are no other circumstances or conditions involving Aztar or any of its
subsidiaries that would reasonably be expected to result in any Environmental
Liability.
(A) As used herein, the term "Environmental Laws" means all
Laws (including any common law) relating to: (A) the protection,
investigation or restoration of the environment, health, safety,
or natural resources, (B) the handling, use, presence, disposal,
Release or threatened release of any Hazardous Substance or (C)
noise, odor, indoor air, employee exposure, electromagnetic
fields, wetlands, pollution, contamination or any injury or threat
of injury to persons or property relating to any Hazardous
Substance.
(B) As used herein, the term "Environmental Liability" means
(i) any obligations or liabilities (including any notices, claims,
complaints, suits or other assertions of obligations or
liabilities) that are: (A) related to environment, health or
safety issues (including on-site or off-site contamination by
Hazardous Substances of surface or subsurface soil or water, and
occupational safety and health); and (B) based upon (I) any
provision of Environmental Laws or (II) any order, consent,
decree, writ, injunction or judgment issued or otherwise imposed
by any Governmental Authority. The term "Environmental
Liabilities" includes, without limitation: (A) fines, penalties,
judgments, awards, settlements, losses, damages (including
consequential damages), costs, fees (including attorneys' and
consultants' fees), expenses and disbursements relating to
environmental, health or safety matters; (B) defense and other
responses to any administrative or judicial action (including
notices, claims, complaints, suits and other assertions of
liability) relating to environmental, health or safety matters;
and (C) financial responsibility for (x) cleanup costs and
injunctive relief, including any Removal, Remedial or Response
actions, and natural resource damages, and (y) other Environmental
Laws compliance or remedial measures.
(C) As used herein, the term "Hazardous Substance" means any
"hazardous substance" and any "pollutant or contaminant" as those
terms are defined in the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as amended ("CERCLA");
any "hazardous waste" as that term is defined in the Resource
Conservation and Recovery Act ("RCRA"); and any "hazardous
material" as that term is defined in the Hazardous Materials
Transportation Act (49 U.S.C. ss. 1801 et seq.), as amended
(including as those terms are further defined, construed, or
otherwise used in rules, regulations, standards, orders,
guidelines, directives, and publications issued pursuant to, or
otherwise in implementation of, said Laws); and including, without
limitation, any petroleum product or byproduct, solvent, flammable
or explosive material, radioactive material, asbestos, lead paint,
polychlorinated biphenyls (or PCBs), dioxins, dibenzofurans, heavy
metals, radon gas, toxic mold and mycotoxins.
22
(D) As used herein, the term "Release" means any spilling,
leaking, pumping, pouring, emitting, emptying, discharging,
injecting, escaping, leaching, dumping, placing, discarding,
abandonment, or disposing into the environment (including the
placing, discarding or abandonment of any barrel, container or
other receptacle containing any Hazardous Substance or other
material).
(E) As used herein, the term "Removal, Remedial or Response"
actions include the types of activities covered by CERCLA, RCRA,
and other comparable Environmental Laws, and whether such
activities are those which might be taken by a Governmental
Authority or those which a Governmental Authority or any other
person might seek to require of waste generators, handlers,
distributors, processors, users, storers, treaters, owners,
operators, transporters, recyclers, reusers, disposers, or other
persons under "removal," "remedial," or other "response" actions.
(p) Vote Required. The affirmative vote of the holders of record of at
least a majority of the outstanding shares of Aztar Common Stock and Aztar
Preferred Stock, voting together as a single class, with respect to the adoption
of this Agreement (the "Stockholder Approval"), is the only vote of the holders
of any class or series of the capital stock of Aztar or its subsidiaries
required to approve this Agreement, the Merger and the other transactions
contemplated hereby. No "fair price", "merger moratorium", "control share
acquisition", or other anti-takeover or similar statute or regulation 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 Aztar prior to the execution and
delivery hereof. Prior to the execution and delivery hereof, the Board of
Directors of Aztar has taken all action necessary to assure that (x) the Rights
Agreement, dated as of December 14, 1999, as amended, between Aztar and Mellon
Investor Services, LLC (as successor to ChaseMellon Shareholder Services,
L.L.C.), as Rights Agent (the "Rights Agreement") exempts Pinnacle and its
affiliates and associates (as defined therein) from the operation of the
provisions of the Rights Agreement, (y) none of Pinnacle, or its affiliates or
associates are or will become an Acquiring Person (as defined in the Rights
Agreement) as a result of the execution, delivery and performance of this
Agreement and (z) the execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby are exempt from the
provisions thereof. Aztar has taken such action as is necessary so that this
Agreement is not subject to the provisions of Article Ninth of its Restated
Certificate of Incorporation, as amended.
(q) Labor and Employment Matters.
(i) Except as set forth on Section 3.01(q)(i) of the Aztar
Disclosure Letter, neither Aztar nor any its subsidiaries is a party to
any material collective bargaining agreement or other current labor
agreement with any labor union or organization nor does Aztar or any of
its subsidiaries have any knowledge of any activity or proceeding of
any labor organization (or representative thereof) or employee group
(or representative thereof) to organize any such employees.
23
(ii) There is no material unfair labor practice charge or
grievance arising out of a collective bargaining agreement or other
grievance procedure pending, or, to the knowledge of Aztar, threatened
against Aztar or any of its subsidiaries.
(iii) Except as set forth on Section 3.01(q)(iii) of the Aztar
Disclosure Letter, there is no material complaint, lawsuit or
proceeding in any forum by or on behalf of any present or former
employee, any applicant for employment or any classes of the foregoing,
alleging breach of any express or implied contract of employment, any
law or regulation governing employment or the termination thereof or
discriminatory, wrongful or tortious conduct in connection with the
employment relationship pending, or, to the knowledge of Aztar,
threatened against Aztar or any of its subsidiaries. There is no
strike, slowdown, work stoppage or lockout pending, or, to the
knowledge of Aztar, threatened, against or involving Aztar or any of
its subsidiaries. Aztar and each of its subsidiaries are in compliance
in all material respects with all applicable laws in respect of
employment and employment practices, terms and conditions of
employment, wages, hours of work and occupational safety and health.
(r) Insurance. Except for failures to maintain insurance or
self-insurance that, individually or in the aggregate, have not had and would
not reasonably be expected to have a material adverse effect on Aztar, since
December 31, 2002, each of Aztar and its subsidiaries has been continuously
insured with financially responsible insurers or has self-insured, in each case,
except as set forth on Section 3.01(r) of the Aztar Disclosure Letter, in such
amounts and with respect to such risks and losses as Aztar in its good faith
judgment believes are reasonable and adequate for companies conducting the
business conducted by Aztar and its subsidiaries. Neither Aztar nor any of its
subsidiaries has received any notice of cancellation or termination or denial of
coverage with respect to any insurance policy of Aztar or any of its
subsidiaries in effect as of the date hereof (or under which Aztar has any
pending claims), except as set forth on Section 3.01(q) of the Aztar Disclosure
Letter and except with respect to any cancellation or termination that,
individually or in the aggregate, has not had and would not reasonably be
expected to have a material adverse effect on Aztar.
(s) Brokers and Finders. Neither Aztar nor any of its subsidiaries nor
any other person has employed any broker or finder or incurred any liability for
any brokerage fees, commissions or finders, fees in connection with the Merger
or the other transactions contemplated in this Agreement, in each case for which
Aztar or any of its subsidiaries will be liable, except that Aztar has employed
Xxxxxxx, Xxxxx & Co., and a true and complete copy of the engagement letter with
such financial advisor has been provided to Pinnacle prior to the date hereof.
Section 3.02 Representations and Warranties of Pinnacle. Except as and
to the extent set forth in the letter dated the date of this Agreement and
delivered to Pinnacle by Aztar concurrently with the execution and delivery of
this Agreement (the "Pinnacle Disclosure Letter") and, to the extent the
qualifying nature of such disclosure is readily apparent therefrom, except as
and to the extent set forth in the Pinnacle Reports (as defined in Section
3.02(f)) filed on or after January 1, 2005 and prior to the date hereof
(excluding any disclosures set forth in
24
any risk factor section, in any section relating to forward looking statements
and any other disclosures included therein to the extent that they are
cautionary, predictive or forward-looking in nature), Pinnacle represents and
warrants to Aztar as follows:
(a) Financing Commitments. Pinnacle has obtained written commitments
(the "Financing Commitments") for the financing necessary to consummate the
Merger and the other transactions contemplated hereby (including any refinancing
of indebtedness of Aztar or Pinnacle or any of their respective subsidiaries
which Pinnacle deems it advisable to refinance in connection with the
consummation of the Merger and the other transactions contemplated hereby) and
to pay all associated fees, costs and expenses (the "Financing"). Pinnacle has
provided true, accurate and complete copies of such commitments to Aztar. None
of the Financing Commitments has been amended, modified or terminated prior to
the date of this Agreement, and the respective commitments contained in the
Financing Commitments have not been withdrawn or rescinded in any respect. As of
the date hereof, the Financing Commitments are in full force and effect and
(based on and assuming the accuracy of the representations and warranties of
Aztar in this Agreement and the compliance by Aztar with its obligations
hereunder) no event has occurred which, with or without notice, lapse of time
(other than the expiration of the term thereof) or both, would constitute a
default on the part of Pinnacle under any of the Financing Commitments. There
are no conditions precedent or other contingencies related to the funding of the
full amount of the Financing, other than as set forth in or contemplated by the
Financing Commitments. The aggregate proceeds to be disbursed pursuant to the
agreements contemplated by the Financing Commitments, together with Pinnacle's
and Aztar's cash and cash equivalents, will be sufficient for Pinnacle to pay
the aggregate Merger Consideration and to consummate the Consent/Tender Offers,
if any (and any other repayment or refinancing of debt contemplated in this
Agreement or the Financing Commitments), and to pay all related fees and
expenses. Based on and assuming the accuracy of the representations and
warranties of Aztar in this Agreement and the compliance by Aztar with its
obligations hereunder, Pinnacle has no reason as of the date hereof to believe
that any of the conditions to the Financing contemplated by the Financing
Commitments will not be satisfied or that the Financing will not be made
available to Pinnacle on or prior the Closing Date. Nothing in this Agreement
shall prevent Pinnacle from amending or modifying the Financing Commitments or
from seeking to raise equity or other alternative sources of funds prior to the
Closing, as long as such amendment or modification or other action does not
prevent, delay or reduce the likelihood of the consummation of the Merger.
(b) Solvency. As of the Effective Time and after giving effect to all
of the transactions contemplated by this Agreement, including the payment of the
aggregate Merger Consideration, the Financing, consummation of the
Consent/Tender Offers, if any (and any other repayment or refinancing of debt
contemplated in this Agreement or the Financing Commitments), and payment of all
related fees and expenses, and assuming the accuracy of the representations and
warranties of Aztar in this Agreement and the compliance by Aztar with its
obligations hereunder, the Surviving Corporation (on a combined basis with its
subsidiaries) will be solvent (as defined in Section 8.03).
(c) Organization. Each of Pinnacle and its subsidiaries is duly
organized, validly existing and in good standing under the laws of its
jurisdiction of organization and has
25
full power and authority to conduct its business as and to the extent now
conducted and to own, use and lease its assets and properties, except for such
failures to be so organized, existing and in good standing or to have such power
and authority that, individually or in the aggregate, have not had and would not
reasonably be expected to have a material adverse effect (as defined in Section
8.03) on Pinnacle. Each of Pinnacle and its subsidiaries is duly qualified,
licensed or admitted to do business and is in good standing in each jurisdiction
in which the ownership, use or leasing of its assets and properties, or the
conduct or nature of its business, makes such qualification, licensing or
admission necessary, except for such failures to be so qualified, licensed or
admitted and in good standing that, individually or in the aggregate, have not
had and would not reasonably be expected to have a material adverse effect on
Pinnacle. As of the date hereof, other than in connection with the Financing,
none of Pinnacle or any of its subsidiaries is a party to any agreement,
arrangement or understanding relating to the securities of Pinnacle or any of
its subsidiaries, including with respect to the voting, holding, issuance,
purchase, sale or registration thereof or entitling any party to any put or call
rights, rights of first offer, rights of first refusal, tag-along or drag-along
rights or any similar rights or obligations, or to any agreement, arrangement or
understanding providing for any governance, veto or similar rights with respect
to Pinnacle or any of its subsidiaries.
(d) Authority. Each of Pinnacle and Merger Sub has full corporate power
and authority to enter into this Agreement, to perform its obligations hereunder
and to consummate the transactions contemplated hereby. The execution, delivery
and performance of this Agreement by Pinnacle and Merger Sub and the
consummation by Pinnacle and Merger Sub of the transactions contemplated hereby
have been duly and validly unanimously adopted and approved by the Board of
Directors of Pinnacle and Merger Sub and by Pinnacle as the sole shareholder of
Merger Sub. No other corporate proceedings on the part of Pinnacle, Merger Sub
or their stockholders are necessary to authorize the execution, delivery and
performance of this Agreement by Pinnacle or Merger Sub and the consummation by
Pinnacle and Merger Sub of the Merger and the other transactions contemplated
hereby. This Agreement has been duly and validly executed and delivered by
Pinnacle and Merger Sub and constitutes a legal, valid and binding obligation of
Pinnacle and Merger Sub enforceable against Pinnacle and Merger Sub in
accordance with its terms.
(e) No Conflicts; Approvals and Consents.
(i) Other than the notices, reports, filings, consents,
registrations, declarations, approvals, permits or authorizations (A)
required by the Secretary of the State of Delaware as contemplated
hereby; (B) required under the HSR Act, the Exchange Act; and (C) by,
with, to or from any Gaming Authority with jurisdiction over Aztar's or
Pinnacle's gaming operations required under any Gaming Law applicable
to Pinnacle, including those set forth in Section 3.02(e)(i)(C) of the
Pinnacle Disclosure Letter (collectively, the "Pinnacle Required Gaming
Approvals" and together with the Aztar Required Gaming Approvals, the
"Required Gaming Approvals"), no notices, declarations, reports or
other filings are required to be made by Pinnacle with, nor are any
consents, registrations, approvals, permits or authorizations required
to be obtained by Pinnacle or any of its subsidiaries from, any
Governmental Authority in connection with
26
the execution, delivery and performance of this Agreement by Pinnacle
and the consummation by Pinnacle of the Merger and the other
transactions contemplated hereby, including the Financing, or in
connection with the continuing operation of the business of Pinnacle
and its subsidiaries following the Effective Time, except those that
the failure to make or obtain, individually or in the aggregate, have
not had and would not reasonably be expected to have a material adverse
effect on Pinnacle.
(ii) The execution, delivery and performance of this Agreement
by Pinnacle do not, and the consummation by Pinnacle of the Merger and
the other transactions contemplated hereby, including the Financing,
will not, constitute or result in (A) a breach or violation of, or a
default under, the certificate of incorporation or by-laws of Pinnacle
or the comparable governing documents of any of its subsidiaries; (B)
with or without notice, lapse of time or both, a breach or violation
of, a termination (or right of termination) or default under, the
creation or acceleration of any obligations under or the creation of a
Lien on any of the assets of Pinnacle or any of its subsidiaries
pursuant to any Contract binding upon Pinnacle or any of its
subsidiaries or, assuming (solely with respect to performance of this
Agreement and consummation by Pinnacle of the Merger and the other
transactions contemplated hereby) compliance with the matters referred
to in Section 3.02(e)(i), any Law or governmental or non-governmental
permit or license to which Pinnacle or any of its subsidiaries is
subject; or (C) any change in the rights or obligations of any party
under any Contract binding upon Pinnacle or any of its subsidiaries
(including, without limitation, any change in pricing, term, put or
call rights, rights of first offer, rights of first refusal, tag-along
or drag-along rights or any similar rights or obligations which may be
exercised in connection with the Merger and the other transactions
contemplated hereby), except in the case of clause (B) and (C) as
individually or in the aggregate, have not had and would not reasonably
be expected to have a material adverse effect on Pinnacle.
(f) Pinnacle SEC Reports; Financial Statements.
(i) Pinnacle has made available to Aztar each registration
statement, report, proxy statement or information statement prepared by
it since December 31, 2002 and filed with the SEC, including Pinnacle's
Annual Report on Form 10-K for the year ended December 31, 2004 and
Pinnacle's Quarterly Reports on Form 10-Q for the quarterly periods
ending March 31, June 30 and September 30, 2005, each in the form
(including exhibits, annexes and any amendments thereto) filed with the
SEC. Pinnacle has filed or furnished all forms, statements, reports and
documents required to be filed or furnished by it with the SEC pursuant
to applicable securities statutes, regulations, policies and rules
since December 31, 2002 (the forms, statements, reports and documents
filed or furnished with the SEC since December 31, 2002 and those filed
or furnished with the SEC subsequent to the date of this Agreement, if
any, including any amendments thereto, the "Pinnacle Reports"). Each of
the Pinnacle Reports filed or furnished on or prior to the date hereof,
at the time of its filing (except as and to the extent such Pinnacle
Report has been modified or superseded in any subsequent Pinnacle
Report filed and publicly available prior to the date of this
Agreement), complied or, in the case of any Pinnacle Reports filed or
furnished after the date hereof, will comply in
27
all material respects with the applicable requirements of each of the
Securities Act and the Exchange Act and the rules and regulations
thereunder and complied in all material respects with the then
applicable accounting standards. As of their respective dates, except
as and to the extent modified or superseded in any subsequent Aztar
Report filed and publicly available prior to the date of this
Agreement, the Pinnacle Reports did not, and any Pinnacle Reports filed
or furnished with the SEC subsequent to the date hereof will not,
contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements made therein, in light of the circumstances in which they
were made, not misleading.
(ii) Each of the consolidated balance sheets included in or
incorporated by reference into the Pinnacle Reports (including the
related notes and schedules) fairly presents, or, in the case of the
Pinnacle Reports filed or furnished after the date hereof, will fairly
present in all material respects the consolidated financial position of
Pinnacle and its subsidiaries as of its date, and each of the
consolidated statements of income, changes in shareholders' equity and
cash flows included in or incorporated by reference into the Pinnacle
Reports (including any related notes and schedules) fairly presents or
in the case of the Pinnacle Reports filed or furnished after the date
hereof, will fairly present in all material respects the net income,
total shareholders' equity and net increase (decrease) in cash and cash
equivalents, as the case may be, of Pinnacle and its subsidiaries for
the periods set forth therein (subject, in the case of unaudited
statements, to the absence of notes and normal year-end audit
adjustments that will not be material in amount or effect), in each
case in accordance with GAAP consistently applied during the periods
involved, except as may be noted therein.
(iii) All filings (other than immaterial filings) required to
be made by Pinnacle or any of its subsidiaries since December 31, 2002
under any applicable state laws and regulations relating to gaming or
similar matters, have been filed with the applicable Governmental
Authorities, including all forms, statements, reports, agreements (oral
or written) and all documents, exhibits, amendments and supplements
appertaining thereto so required to be filed, and all such filings
complied, as of their respective dates, with all applicable
requirements of the applicable statute and the rules and regulations
thereunder, except for filings the failure of which to make or the
failure of which to make in compliance with all applicable requirements
of the applicable statute and the rules and regulations thereunder,
individually or in the aggregate, have not had and would not reasonably
be expected to have a material adverse effect on Pinnacle.
(iv) The management of Pinnacle has (x) implemented disclosure
controls and procedures (as defined in Rule 13a-15(e) of the Exchange
Act) that are reasonably designed to ensure that material information
relating to Pinnacle, including its consolidated subsidiaries, is made
known to the chief executive officer and chief financial officer of
Pinnacle by others within those entities, and (y) disclosed, based on
its most recent evaluation, to Pinnacle's outside auditors and the
audit committee of the Board of Directors of Pinnacle (A) all
significant deficiencies and material weaknesses in the design or
operation of internal controls over financial reporting (as defined in
Rule 13a-15(f) of the Exchange Act) which are reasonably likely to
adversely affect in any
28
material respect Pinnacle's ability to record, process, summarize and
report financial data and (B) any fraud, whether or not material, that
involves management or other employees who have a significant role in
Pinnacle's internal controls over financial reporting. Since December
31, 2002, any material change in internal control over financial
reporting required to be disclosed in any Pinnacle Report has been so
disclosed.
(v) Since December 31, 2003, to Pinnacle's knowledge, (x) none
of Pinnacle or any of its subsidiaries, or any director, officer,
employee, auditor, accountant or representative of Pinnacle or any of
its subsidiaries, has received or otherwise had or obtained knowledge
of any material complaint, allegation, assertion or claim, whether
written or oral, regarding the accounting or auditing practices,
procedures, methodologies or methods of Pinnacle or any of its
subsidiaries or their respective internal accounting controls relating
to periods after December 31, 2003, including any material complaint,
allegation, assertion or claim that Pinnacle or any of its subsidiaries
has engaged in questionable accounting or auditing practices (except
for any of the foregoing that have been resolved without any material
impact and except for any of the foregoing after the date hereof which
have no reasonable basis), and (y) no attorney representing Pinnacle or
any of its subsidiaries, whether or not employed by Pinnacle or any of
its subsidiaries, has reported evidence of a material violation of
securities Laws, breach of fiduciary duty or similar violation,
relating to periods after December 31, 2003, by Pinnacle or any of its
officers, directors, employees or agents to the Board of Directors of
Pinnacle or any committee thereof or, to the knowledge of the officers
of Pinnacle, to any director or officer of Pinnacle.
(g) Absence of Certain Changes or Events. Since September 30, 2005,
there has not been any material adverse effect on Pinnacle or any change, event
or development that, individually or in the aggregate, has had or would
reasonably be expected to have a material adverse effect on Pinnacle. Since
September 30, 2005 and prior to the date hereof, Pinnacle and its subsidiaries
have conducted their respective businesses in all material respects only in, and
have not engaged in any material transaction other than in accordance with, the
ordinary course of such businesses.
(h) Permits; Compliance with Laws and Orders. The businesses of each of
Pinnacle and its subsidiaries have not been conducted in violation of any Laws,
except for such violations that, individually or in the aggregate, have not had
and would not reasonably be expected to have a material adverse effect on
Pinnacle. No investigation, review, proceeding, notice of violation, order of
forfeiture or complaint by any Governmental Authority, including any Gaming
Authority, with respect to Pinnacle or any of its subsidiaries is pending or, to
the knowledge of Pinnacle, threatened, nor has any Governmental Authority,
including any Gaming Authority, indicated an intention to conduct the same,
except for any such investigations or reviews that, individually or in the
aggregate, have not had and would not reasonably be expected to have a material
adverse effect on Pinnacle. Each of Pinnacle and its subsidiaries has obtained
and is in compliance with all Licenses necessary to conduct its business as
presently conducted, except for any failures to have or to be in compliance with
such Licenses which, individually or in the aggregate, have not had and would
not reasonably be expected to have a
29
material adverse effect on Pinnacle. The actions of the applicable Governmental
Authorities, including any Gaming Authority, granting all Licenses have not been
reversed, stayed, enjoined, annulled or suspended, and there is not pending or,
to the knowledge of Pinnacle, threatened in writing, any application, petition,
objection or other pleading with any Governmental Authority, including any
Gaming Authority, which challenges or questions the validity of or any rights of
the holder under any License, except for any of the foregoing that, individually
or in the aggregate, have not had and would not reasonably be expected to have a
material adverse effect on Pinnacle.
(i) Legal Proceedings; Litigation and Liabilities. There are no (A)
civil, criminal or administrative actions, suits, claims, hearings,
arbitrations, investigations or proceedings pending or, to the knowledge of
Pinnacle, threatened against Pinnacle or any of its subsidiaries or affiliates
or (B) litigations, arbitrations, investigations or other proceedings, or
injunctions or final judgments relating thereto, pending or, to the knowledge of
Pinnacle, threatened against Pinnacle or any of its subsidiaries or affiliates
before any Governmental Authority, including any Gaming Authority, except in the
case of either clause (A) or (B), for those that, individually or in the
aggregate, have not had and would not reasonably be expected to have a material
adverse effect on Pinnacle. None of Pinnacle or any of its subsidiaries or
affiliates is a party to or subject to the provisions of any judgment, order,
writ, injunction, decree or award of any Governmental Authority, including any
Gaming Authority, which, individually or in the aggregate, have had or would
reasonably be expected to have a material adverse effect on Pinnacle.
(j) Receipt of Licenses. As of the date hereof, to the knowledge of
Pinnacle, there is no state of facts that would be reasonably likely to prevent
the receipt by Pinnacle of a new gaming license in a jurisdiction in which
Pinnacle is not currently licensed which Pinnacle is required to obtain in
connection with the consummation of the transactions contemplated hereby.
(k) Ownership and Operations of Merger Sub. Pinnacle owns of record and
beneficially owns all outstanding shares of capital stock of Merger Sub. Merger
Sub has engaged in no other business or other activities or incurred any
liabilities, other than in connection with the transactions contemplated hereby.
(l) Brokers and Finders. Neither Pinnacle nor any of its subsidiaries
has employed any broker or finder or incurred any liability for any brokerage
fees, commissions or finders, fees in connection with the Merger or the other
transactions contemplated in this Agreement, in each case for which Aztar or any
of its subsidiaries will be liable. Pinnacle has employed Bear, Xxxxxxx & Co.
Inc. and Xxxxxx Brothers Inc. as its financial advisors in connection with the
transactions contemplated by this Agreement.
(m) Pinnacle Common Stock. Each share of Pinnacle Common Stock is, and
when issued in the Merger, shall be, duly authorized, validly issued, fully paid
and nonassessable and not subject to pre-emptive rights and free and clear of
any Liens.
(n) Information Supplied. None of the information supplied or to be
supplied by Pinnacle for inclusion or incorporation by reference in the Proxy
Statement or Form S-4 will,
30
at the date it is first mailed to Aztar's stockholders or at the time of the
Stockholders Meeting contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they are
made, not misleading. The Proxy Statement and Form S-4 will comply as to form in
all material respects with the requirements of the Exchange Act and the
Securities Act and the rules and regulations thereunder, except that no
representation is made by Pinnacle with respect to statements made or
incorporated by reference therein based on information supplied by or on behalf
of Aztar for inclusion or incorporation by reference in the Proxy Statement or
From S-4.
(o) Capital Stock.
(i) As of April 25, 2006, the authorized capital stock of
Pinnacle consists of:
(A) 100,000,000 shares of Pinnacle Common Stock, of which
47,948,417 shares were issued and outstanding as of April 25,
2006; and
(B) 250,000 shares of preferred stock, par value $1.00 per
share, of which no shares were issued or outstanding as of April
25, 2006;
As of April 25, 2006, 2,008,986 shares of Pinnacle Common Stock and no
shares of preferred stock were held in the treasury of Pinnacle.
(ii) As of April 25, 2006, (x) 5,515,798 shares of Pinnacle
Common Stock were subject to outstanding employee stock options (the
"Pinnacle Employee Stock Options") and (y) other than under the
Company's Amended and Restated Directors Deferred Compensation Plan, no
shares of Pinnacle Common Stock were the subject of other rights
(whether contingent, accrued or otherwise), to acquire or receive
shares of Pinnacle Common Stock or benefits measured by the value of
shares of Pinnacle Common Stock or otherwise representing an award of
any kind consisting of shares of Pinnacle Common Stock. As of April 25,
2006, Pinnacle has no shares of capital stock reserved for issuance,
except that, as of April 25, 2006, there were an aggregate of 8,578,174
shares of Pinnacle Common Stock reserved for issuance in respect of
Pinnacle Employee Stock Options and under the Company's Amended and
Restated Directors Deferred Compensation Plan. From April 25, 2006 to
April 27, 2006, Pinnacle has not issued any shares of Pinnacle Common
Stock except pursuant to the exercise of Pinnacle Employee Stock
Options outstanding on April 25, 2006, in accordance with their
respective terms. From April 25, 2006 through April 27, 2006, neither
Pinnacle nor any of its subsidiaries has granted or issued any Pinnacle
Employee Stock Options.
(iii) All of the issued and outstanding shares of Pinnacle
Common Stock are, and all shares reserved for issuance will be, upon
issuance in accordance with the terms specified in the instruments or
agreements pursuant to which they are issuable, duly authorized,
validly issued, fully paid and nonassessable.
31
(iv) Except as disclosed in this Section 4.02(o), except in
connection with the Financing and except for this Agreement, as of
April 25, 2006, there are no outstanding Options obligating Pinnacle or
any of its subsidiaries to acquire or purchase or to issue or sell any
shares of capital stock (or to make payments measured by the value of
shares of capital stock) or other securities of Pinnacle or any
securities or obligations convertible or exchangeable into or
exercisable for, or giving any person a right to subscribe for or
acquire, any capital stock (or to make payments measured by the value
of shares of capital stock) or other securities of Pinnacle, or to
grant, extend or enter into any Option with respect thereto, and no
securities or obligations evidencing such rights or Options are
authorized, issued or outstanding as of April 25, 2006.
(p) Absence of Undisclosed Liabilities. There are no liabilities or
obligations of Pinnacle or any of its subsidiaries, whether or not accrued,
contingent or otherwise and whether or not required to be disclosed, or any
other facts or circumstances that would reasonably be expected to result in any
obligations or liabilities of, Pinnacle or any of its subsidiaries, other than:
(a) liabilities or obligations to the extent (I) reflected on the consolidated
balance sheet of Pinnacle included in the most recent audited financial
statements included in the Pinnacle Reports filed prior to the date hereof, or
(II) readily apparent in the notes thereto, (b) liabilities or obligations
incurred in the ordinary course of business since September 30, 2005 that
individually or in the aggregate, have not had and would not reasonably be
expected to have a material adverse effect on Pinnacle, (c) other liabilities or
obligations that individually or in the aggregate have not had and would not
reasonably be expected to have a material adverse effect on Pinnacle, (d)
performance obligations under material contracts required in accordance with
their terms, and (e) performance obligations, to the extent required under
applicable Law, in the case of each of clause (d) and (e) to the extent arising
after the date hereof.
ARTICLE IV
Covenants
Section 4.01 Covenants of Aztar Interim Operations. (a) Aztar covenants
and agrees as to itself and its subsidiaries that, after the date hereof and
prior to the Effective Time, unless Pinnacle shall otherwise approve in writing
and except as otherwise expressly contemplated by this Agreement or as required
by applicable Laws, the business of it and its subsidiaries shall be conducted
in all material respects in the ordinary and usual course and, to the extent
consistent therewith, it and its subsidiaries shall use their respective
reasonable best efforts to substantially preserve their business organizations
intact and maintain existing relations and goodwill with Governmental
Authorities, customers, suppliers, distributors, creditors, lessors, employees
and business associates and keep available the services of the present employees
and agents of Aztar and its subsidiaries in all material respects. In
furtherance of the foregoing, Aztar agrees to resume and continue the taking of
reservations at its Las Vegas, Nevada hotel and to pursue ordinary course
marketing activities in connection with such facility as promptly as
practicable. Without limiting the generality of the foregoing and in furtherance
thereof, from the date of this Agreement until the Effective Time, subject to
applicable Law, except (A) as otherwise expressly required by this Agreement,
(B) as Pinnacle may approve in
32
writing or (C) as set forth in the applicable subsection of Section 4.01(a) of
Aztar Disclosure Letter, Aztar will not and will not permit its subsidiaries to:
(i) adopt or propose any change in its certificate of
incorporation or by-laws or other applicable governing instruments or
amend any term of the shares of Aztar Common Stock or Aztar Preferred
Stock;
(ii) merge or consolidate Aztar or any of its subsidiaries
with any other person;
(iii) acquire assets outside of the ordinary course of
business from any other person with a value or purchase price in excess
of $1,000,000 in the aggregate, other than acquisitions set forth in
Section 4.01(a)(iii) of Aztar Disclosure Letter, and other than capital
expenditures as set forth in Section 4.01(a)(xi) of Aztar Disclosure
Letter;
(iv) other than in connection with Aztar's application for a
gaming license in Allentown, Pennsylvania, (i) enter into any material
line of business in any geographic area other than the current lines of
business of Aztar or any of its subsidiaries, and in the geographic
areas where they are currently conducted, as of the date hereof or (ii)
engage in the conduct of any business in any new jurisdiction which
would require the receipt of any additional Governmental Consent (as
defined in Section 5.03(f)) in connection with the consummation of the
Merger and the transactions contemplated hereby;
(v) other than upon exercise of Aztar Employee Stock Options
or conversion of Aztar Preferred Stock, issue, sell, pledge, dispose
of, grant, transfer, lease, license, guarantee, encumber, or authorize
the issuance, sale, pledge, disposition, grant, transfer, lease,
license, guarantee or encumbrance of, any shares of capital stock of
Aztar or any its subsidiaries, or securities convertible or
exchangeable into or exercisable for any shares of such capital stock,
or any options, warrants, conversion rights, stock appreciation rights,
redemption rights, repurchase rights, agreements, arrangements, calls,
commitments or other rights of any kind to acquire any shares of such
capital stock or such convertible or exchangeable securities;
(vi) other than as required in accordance with the terms of
Aztar's credit facility as in effect on the date hereof, create or
incur any Lien (other than mechanics', warehousemen's or similar Liens
incurred in accordance with Law in connection with construction
projects in New Jersey and Indiana and routine maintenance, in each
case, permitted by this Section 4.01 for amounts not past due) on any
assets of Aztar or any of its subsidiaries;
(vii) make any loans, advances or capital contributions to or
investments in any person, other than (a) loans, advances, capital
contributions or investments not in excess of $750,000 in the
aggregate, (b) loans, advances, capital contributions or investments
pursuant to commitments set forth on Section 4.01(a)(vii) of
33
the Aztar Disclosure Letter or (c) intercompany loans and advances to
wholly-owned subsidiaries in the ordinary course of business consistent
with past practice;
(viii) other than for regular cash dividends on the Aztar
Preferred Stock at the times and in the amounts required by the terms
thereof, declare, set aside or pay any dividend or distribution
(whether in cash, stock or property or any combination thereof) on (i)
any shares of Aztar Common Stock or (ii) any shares of capital stock of
any subsidiary (other than wholly owned subsidiaries and pro rata
dividends payable to holders of interests in non wholly owned
subsidiaries);
(ix) reclassify, split, combine, subdivide or repurchase,
redeem or otherwise acquire, directly or indirectly, any of its capital
stock or securities convertible or exchangeable into or exercisable for
any shares of its capital stock, except for required redemptions of
Aztar Preferred Stock in the ordinary course of business;
(x) incur, redeem or repurchase any indebtedness for borrowed
money or guarantee such indebtedness of another person, or issue or
sell any debt securities or warrants or other rights to acquire any
debt security of Aztar or any of its subsidiaries, except for the
incurrence of indebtedness for borrowed money incurred under Aztar's
existing revolving credit facility in the ordinary course of business
as long as the aggregate amount outstanding under Aztar's existing
revolving credit facility does not exceed $150 million at any time, and
except for the incurrence of indebtedness for borrowed money in
replacement of existing indebtedness upon maturity thereof for borrowed
money on customary commercial terms;
(xi) without the consent of Pinnacle (such consent not to be
unreasonably withheld or delayed in connection with maintenance and
similar capital expenditures) and except for capital expenditures as
set forth in Section 4.01(a)(xi) of the Aztar Disclosure Letter, make
or authorize any capital expenditure;
(xii) enter into any commitment or Contract with respect to
the redevelopment or future operation of the Las Vegas Site (other than
ordinary course hotel operation); provided, however, that Aztar shall
be permitted to continue design work that is in progress and
substantially complete as of the date of this Agreement in connection
with the redevelopment of the Last Vegas Site in the ordinary course of
business consistent with past practice, the cost of which design work
shall not exceed $2.5 million after the date hereof;
(xiii) except as expressly permitted by Section 4.01(xix),
enter into any Covered Contract (as defined in Section 8.03) other than
in the ordinary course of business consistent with past practice after
consultation with Pinnacle;
(xiv) make any changes with respect to accounting policies or
procedures, except as required by changes in GAAP or by applicable Law
or except as Aztar, based upon the advice of its independent auditors
after prior notice to Pinnacle, determines in good faith is advisable
to conform to best accounting practices;
34
(xv) settle any litigation or other proceedings for an amount
to be paid by Aztar or any of its subsidiaries in excess of $2,000,000
or which would be reasonably likely to have any material adverse impact
on the operations of Aztar or any of its subsidiaries;
(xvi) (i) except as expressly permitted by Section 4.01(xix),
amend or modify in any material respect, or terminate or waive any
material right or benefit under, any Covered Contract, other than in
the ordinary course of business consistent with past practice after
consultation with Pinnacle, or (ii) cancel, modify in any material
respect or waive any debts or claims held by it or waive any rights
having in each case a value in excess of $1,000,000;
(xvii) except as required by Law, make any material Tax
election or take any material position on any Tax Return filed on or
after the date of this Agreement or adopt any method therefor that is
inconsistent with elections made, positions taken or methods used in
preparing or filing similar Tax Returns in prior periods;
(xviii) sell, lease, license or otherwise dispose of any
assets of Aztar or its subsidiaries except (i) in the ordinary course
of business or obsolete assets or (ii) except as set forth on Section
4.01(a)(xviii) of the Aztar Disclosure Letter, sales, leases, licenses
or other dispositions of assets with a fair market value not in excess
of $1,000,000 in respect of any one asset and not in excess of
$10,000,000 in the aggregate;
(xix) except as set forth on Section 4.01(a)(xix) of the Aztar
Disclosure Letter, required pursuant to existing written, binding
agreements in effect prior to the date of this Agreement or as
otherwise required by applicable Law, including without limitation as
may be required to comply with Section 409A of the Code (provided that
any such changes shall be done in a manner as to not increase the
present value of any payments), (A) enter into any commitment to
provide any severance or termination benefits to (or amend any existing
arrangement with) any director, officer, consultant or employee of
Aztar or any of its subsidiaries, (B) increase the compensation or
benefits payable or to become payable to the directors, officers,
consultants or employees of Aztar or any of its subsidiaries other than
in the ordinary course of business consistent with past practice with
respect to base pay for non-officer employees, (C) establish, adopt,
enter into or amend or terminate (except for technical amendments in
the ordinary course of business consistent with past practice, provided
that such amendments do not increase the cost of such arrangements to
Aztar) any collective bargaining agreement, Aztar Employee Stock Plan,
Aztar Employee Benefit Plan or Aztar Employment Agreement (or any such
agreement, plan or arrangement which would otherwise be considered a
Aztar Employee Stock Plan, Aztar Employee Benefit Plan or Aztar
Employment Agreement if established, adopted or entered into after the
date hereof), (D) grant or accelerate the vesting of any awards under
any Aztar Employee Stock Plan, Aztar Employee Benefit Plan or Aztar
Employment Agreement, (E) take any action to fund or in any other way
secure the payment of compensation or benefits under any Aztar Employee
Benefit Plan or Aztar Employment Agreement, (F) materially change any
actuarial or other assumptions used to calculate funding obligations
with respect to any Aztar Employee Benefit Plan or change the manner in
which contributions to such plans are made or the
35
basis on which such contributions are determined, except as may be
required by GAAP, (G) amend the terms of any outstanding equity-based
award, or (H) exercise any discretion to cash out any benefits or
awards, (I) make any material determinations not in the ordinary course
of business consistent with past practice under any collective
bargaining agreement, Aztar Employee Stock Plan, Aztar Employment
Agreement or Aztar Employee Benefit Plan, (J) grant or promise any tax
offset payment award under any Aztar Employee Stock Plan, or (K) make
any loan or cash advance to any current or former director, officer,
employee, consultant or independent contractor; or
(xx) agree or commit to do any of the foregoing.
(b) Prior to the Closing, subject to applicable Law, Aztar agrees to
provide, and shall cause its subsidiaries to provide, and Aztar and its
subsidiaries shall use their reasonable best efforts to cause their respective
officers, employees, representatives and advisors, including legal advisors and
accountants, to provide, to Pinnacle all cooperation reasonably requested by
Pinnacle that is necessary or advisable in connection with the arrangement of
the Financing or any equity Financing in lieu thereof in whole or in part, in
each case as may reasonably be requested by Pinnacle, including, without
limitation, (i) upon reasonable advance notice, participation in meetings,
drafting sessions, due diligence sessions, management presentation sessions,
road shows and sessions with rating agencies, (ii) providing reasonable
assistance with the preparation of materials for rating agency presentations,
business projections and financial statements (including those required by the
SEC), (iii) providing reasonable assistance to Pinnacle in preparing offering
memoranda, private placement memoranda, prospectuses and similar documents, (iv)
furnishing Pinnacle and its financing sources with financial and other pertinent
information regarding Aztar and its subsidiaries as may reasonably be requested
by Pinnacle, including all financial statements and financial data of the type
required by Regulation S-X and Regulation S-K under the Securities Act and of
the type and form customarily included in private placements under Rule 144A or
public offerings under the Securities Act, to consummate the offering of debt
securities contemplated by the Commitment Letter (as defined in Section 4.02(b))
or other financing at the time during Aztar's fiscal year such offerings will be
made, (v) using reasonable best efforts to obtain accountants' comfort letters,
legal opinions, officers' certificates, surveys and title insurance as may be
reasonably requested by Pinnacle; provided that Aztar's officers shall only be
required to deliver certificates and opinions to the extent relating to Aztar or
its subsidiaries on a stand-alone basis without giving effect to the Merger or
Pinnacle's post-Closing plans or any post-Closing projections, (vi) obtaining
any necessary rating agencies' confirmations or approvals for Pinnacle's
financing as may be reasonably requested by Pinnacle and (vii) reasonably
facilitating the pledge of collateral, including taking any actions and
executing any documents reasonably requested by Pinnacle in connection, in each
case to become effective at the Closing. Aztar will use its reasonable best
efforts to provide to Pinnacle and its financing sources as promptly as
practicable (but in no event later than the time periods, if any, specified in
Exhibit D to the Commitment Letter), with the audited, unaudited and pro forma
and other financial information or data that are required as a condition to the
Financing, in each case prepared in accordance with the standards set forth in
such Exhibit D or that are required in connection with any equity offering and
will use its reasonable best efforts to take all other actions required to be
taken by Aztar under the Commitment Letters if reasonably required to obtain the
Financing. Aztar shall cause its
36
officers, in their capacity as officers, to deliver such customary management
representation letters as the accountants may require in connection with any
comfort letters or similar documents as may be required in connection with the
Financing. Notwithstanding anything to the contrary in this Agreement, Aztar
shall not be required to execute and deliver any commitment letters,
underwriting or placement agreements, pledge and security documents, or other
definitive financing documents in connection with the Financing.
(c) Without limiting the foregoing, at the request of Pinnacle, prior
to the Effective Time, Aztar shall use its reasonable best efforts to cooperate
with Pinnacle in obtaining any consents or waivers to, and in respect of, any of
its indebtedness, provided that Aztar shall not be required to permit any of the
foregoing to become effective prior to the Effective Time. At the request of
Pinnacle, Aztar shall, and shall cause its subsidiaries to, use its reasonable
best efforts to commence consent solicitations or issuer tender or exchange
offers with respect to their respective indebtedness as and at the times that
Pinnacle shall request ("Consent/Tender Offers") in each case with the
cooperation of Pinnacle. All Consent/Tender Offers shall be in accordance with
applicable Law and shall be on the terms and conditions reasonably agreed by
Pinnacle and Aztar; provided, that all Consent/Tender Offers (and all
obligations to make any payments to holders of all or any portion of any
indebtedness in connection therewith or to modify the terms or provisions of any
indebtedness) shall be conditioned upon the consummation of the Merger, and
shall terminate immediately upon the termination of this Agreement prior to the
Effective Time. Aztar agrees not to consummate any Consent/Tender Offer unless
Pinnacle consents in writing to such consummation. Aztar agrees to use its
reasonable efforts to cooperate with Pinnacle and to use its reasonable best
efforts to consummate all Consent/Tender Offers, provided that the effectiveness
of any Consent/Tender Offer shall be conditioned on the Closing. Pinnacle shall
indemnify Aztar and its directors and officers for any and all liabilities
arising out of or in connection with any action taken pursuant to this Section
4.01(c) to the maximum extent permitted by Law.
(d) Nothing in Section 4.01(b) or 4.01(c) shall require Aztar and its
subsidiaries to provide any assistance which would interfere unreasonably with
the business or operations of Aztar and its subsidiaries. All reasonable
out-of-pocket expenses incurred by Aztar or any of its subsidiaries, officers,
employees, representatives and advisors in connection with their respective
obligations pursuant to Section 4.01(b) and 4.01(c) shall be borne (or
reimbursed promptly following demand therefor) by Pinnacle. Nothing in Section
4.01(b) or 4.01(c) shall require Aztar or any of its subsidiaries, officers,
employees, representatives or advisors to take any action that might result in
any liability in connection with the Financing unless indemnified by Pinnacle to
the maximum extent permitted by Law or to take any action other than in their
capacity as an officer. Pinnacle hereby agrees and acknowledges that Financing
and the Consent/Tender Offers do not constitute conditions to the consummation
of the transactions contemplated by this agreement.
Section 4.02 Covenants of Pinnacle Interim Operations. Pinnacle will
not take, and will not permit its subsidiaries to take, any action that at the
time of taking such action is reasonably likely to prevent or materially delay
the consummation of the Merger. Pinnacle agrees to use its reasonable best
efforts to obtain the Financing necessary for the consummation of the
transactions contemplated hereby at or prior to the Closing Date. Pinnacle shall
use its
37
reasonable best efforts to keep Aztar informed of the status of its efforts to
obtain the Financing and of any development that Pinnacle believes is reasonably
likely to prevent or delay the receipt of the Financing. Pinnacle shall use its
reasonable best efforts to comply with the covenants in the Commitment Letter
which are within its control.
Section 4.03 No Solicitation by Aztar.
(a) Aztar shall not, nor shall it permit any of its subsidiaries to,
nor shall it authorize or permit any of its directors, officers or employees, or
any investment banker, financial advisor, attorney, accountant or other
representative retained by it or any of its subsidiaries to, directly or
indirectly, (i) solicit, initiate or knowingly encourage (including by way of
furnishing non-public information), or knowingly take any other action designed
to facilitate, any inquiries or the making of any proposal that constitutes a
Takeover Proposal (as defined below) or (ii) participate in any negotiations or
discussions (other than to state that they are not permitted to have
discussions) regarding any Takeover Proposal; provided, however, that if, at any
time prior to receipt of the Stockholder Approval (the "Applicable Period"), the
Board of Directors of Aztar determines in good faith, after consultation with
its legal and financial advisors, that a Takeover Proposal that was not
solicited by it after the date hereof and that did not otherwise result from a
breach of this Section 4.03(a) is, or is reasonably likely to result in, a
Superior Proposal (as defined in Section 4.03(b)), and subject to providing
prior written notice of its decision to take such action to Pinnacle and
compliance with Section 4.03(c), Aztar may (x) furnish information with respect
to Aztar and its subsidiaries to the person making such proposal (and its
representatives) pursuant to a customary confidentiality agreement (provided,
that such confidentiality agreement shall not in any way restrict Aztar from
complying with its disclosure obligations under this Agreement, including with
respect to such proposal; provided further, that any such confidentiality
agreement need not contain a standstill or similar provision) and (y)
participate in discussions or negotiations regarding such proposal. Aztar agrees
to provide Pinnacle with any information provided in writing or orally to the
person making such Takeover Proposal and its representatives substantially
simultaneously with the provision thereof to such other person. Aztar, its
subsidiaries and their representatives immediately shall cease and cause to be
terminated any activities, discussions or negotiations with any parties existing
on the date hereof with respect to any Takeover Proposal. For purposes of this
Agreement, "Takeover Proposal" means any bona fide inquiry, proposal or offer
from any person relating to (i) any direct or indirect acquisition or purchase
of a business (a "Material Business") that constitutes 20% or more of the net
revenues, net income or the assets (including equity securities) of Aztar and
its subsidiaries, taken as a whole, (ii) any direct or indirect acquisition or
purchase of 20% or more of any class of voting securities of Aztar or 20% or
more of the voting power of any class of stock of any subsidiary of Aztar
owning, operating or controlling a Material Business, (iii) any tender offer or
exchange offer (or other offer to purchase or acquire) that if consummated would
result in any person beneficially owning 20% or more of any class of voting
securities of Aztar or 20% or more of the voting power of any class of stock of
any subsidiary of Aztar owning, operating or controlling a Material Business,
(iv) any merger, consolidation, business combination, recapitalization,
liquidation, dissolution or similar transaction involving Aztar or any such
subsidiary of Aztar owning, operating or controlling a Material Business or (v)
any direct or indirect acquisition or purchase of, any joint venture or
partnership or similar
38
arrangement involving, or any recapitalization, restructuring or leveraged
financing or similar transaction involving all or any portion of the Las Vegas
Site (except as expressly specified in Section 4.01(a)(xii), in each case other
than the transactions contemplated by this Agreement.
(b) Except as contemplated by this Section 4.03, neither the Board of
Directors of Aztar nor any committee thereof shall (i) withdraw or modify, or
propose publicly to withdraw or modify, in a manner adverse to Pinnacle, the
approval or recommendation by such Board of Directors or such committee of this
Agreement or the Merger, (ii) approve or recommend, or propose publicly to
approve or recommend, any Takeover Proposal, or (iii) cause Aztar to enter into
any letter of intent, agreement in principle, acquisition agreement or other
similar agreement (other than a confidentiality agreement of the type and under
the circumstances described in Section 4.03(a)) related to any Takeover Proposal
(each, a "Aztar Acquisition Agreement"). Notwithstanding the foregoing, in
response to a Takeover Proposal that was not solicited by it and that did not
otherwise result from a breach of Section 4.03(a), during the Applicable Period,
the Board of Directors of Aztar may, if it determines in good faith, after
consulting with outside counsel, that taking such action is reasonably required
by the Board of Directors' fiduciary obligations under applicable law, (A)
withdraw or modify, or propose publicly to withdraw or modify, the approval or
recommendation by such Board of Directors or any committee thereof of this
Agreement or the Merger, (B) approve or recommend, or propose to approve or
recommend, any Superior Proposal, or (C) terminate this Agreement pursuant to
Section 7.01(d) simultaneously with the payment of the Termination Fee and the
Termination Expenses, but only after (1) such Board of Directors has determined
in good faith that such Takeover Proposal constitutes a Superior Proposal, and
(2) (I) Aztar has notified Pinnacle in writing of the determination that such
Takeover Proposal constitutes a Superior Proposal and (II) at least three
business days following receipt by Pinnacle of such notice, the Board of
Directors of Aztar has determined that such Superior Proposal remains a Superior
Proposal. Notwithstanding the foregoing, other than in connection with a
Takeover Proposal, the Board of Directors of Aztar may, if it determines in good
faith, after consulting with outside counsel, that the failure to take such
action would result in a breach of the Board of Directors' fiduciary obligations
under applicable Law withdraw or modify the approval or recommendation by such
Board of Directors or any committee thereof of this Agreement or the Merger if
Aztar has notified Pinnacle in writing of the decision to do so at least three
business days prior to the taking of such action, which notice shall specify in
writing the reasons therefor.
For purposes of this Agreement, "Superior Proposal" means any written
Takeover Proposal that the Board of Directors of Aztar determines in good faith
(after consultation with a financial advisor of nationally recognized
reputation) to be more favorable (taking into account (i) all financial and
strategic considerations, including relevant legal, financial, regulatory and
other aspects of such Takeover Proposal and the Merger and the other
transactions contemplated by this Agreement deemed relevant by the Board of
Directors, (ii) the identity of the third party making such Takeover Proposal,
(iii) the anticipated timing, conditions and prospects for completion of such
Takeover Proposal, including the prospects for obtaining regulatory approvals
and financing, and any third party shareholder approvals and (iv) the other
terms and conditions of such Takeover Proposal) to Aztar's stockholders than the
Merger and the other transactions contemplated by this Agreement (taking into
account all of the terms of any proposal by Pinnacle to amend or modify the
terms of the Merger and the other transactions
39
contemplated by this Agreement), except that (x) the reference to "20%" in
clauses (i), (ii) and (iii) of the definition of "Takeover Proposal" in Section
4.03(a) shall be deemed to be a reference to "50%", (y) the "Takeover Proposal"
must refer to a transaction involving Aztar as a whole, and not any of its
subsidiaries or Material Businesses or the Las Vegas Site, and (z) the
references to any subsidiary of Aztar owning, operating or controlling a
Material Business in clauses (ii), (iii) and (iv) shall be deemed to be deleted.
(c) In addition to the obligations of Aztar set forth in paragraphs (a)
and (b) of this Section 4.03, Aztar shall as promptly as practicable advise
Pinnacle, orally and in writing, of any request for information or of any
Takeover Proposal (and in any case within 24 hours of such request or the
receipt of such Takeover Proposal), the principal terms and conditions of such
request or Takeover Proposal and the identity of the person making such request
or Takeover Proposal. Aztar shall keep Pinnacle informed of the status and
material details (including amendments or proposed amendments) of any such
request or Takeover Proposal as promptly as practicable.
(d) Nothing contained in this Agreement shall prohibit Aztar from
issuing a "stop-look-and-listen communication" pursuant to Rule 14d-9(f), taking
and disclosing to its stockholders a position as required by Rule 14d-9 or Rule
14e-2 promulgated under the Exchange Act or taking any action required by any
order or decree of a Governmental Authority, in each case, subject to the
provisions of Section 7.01(f).
Section 4.04 Other Actions. Each of Aztar and Pinnacle shall use its
reasonable best efforts not to, and shall use its reasonable best efforts not to
permit any of their respective subsidiaries to, take any action that would, or
that would reasonably be expected to, result in any condition to the Merger set
forth in Article VI not being satisfied.
Section 4.05 Control of Aztar's Operations. Nothing contained in this
Agreement shall give to Pinnacle, directly or indirectly, rights to control or
direct Aztar's operations prior to the Effective Time. Prior to the Effective
Time, Aztar shall exercise, consistent with the terms and conditions of this
Agreement, complete control and supervision of its operations.
Section 4.06 Additional Interim Covenants of Pinnacle. Except as
Pinnacle determines is advisable in order to obtain the Financing or otherwise
consummate the transactions contemplated hereby, Pinnacle agrees to operate in
the ordinary course of business until the Effective Time. Pinnacle covenants and
agrees as to itself and its subsidiaries that, after the date hereof and prior
to the Effective Time, unless Aztar shall otherwise approve in writing, and
except as otherwise expressly contemplated by this Agreement or as required by
applicable Laws, Pinnacle will not and will not permit its subsidiaries to:
(i) adopt or propose any change in its certificate of
incorporation which would amend any term of the shares of Pinnacle
Common Stock;
40
(ii) declare, set aside or pay any dividend or distribution
(whether in cash, stock or property or any combination thereof) on (i)
any shares of Pinnacle Common Stock or (ii) any shares of capital stock
of any subsidiary (other than wholly owned subsidiaries and pro rata
dividends payable to holders of interests in non wholly owned
subsidiaries);
(iii) reclassify, split, combine, subdivide or repurchase,
redeem or otherwise acquire, directly or indirectly, any of its capital
stock or securities convertible or exchangeable into or exercisable for
any shares of its capital stock;
(iv) make any amendment to its by-laws; or
(v) agree or commit to do any of the foregoing.
ARTICLE V
Additional Agreements
Section 5.01 Preparation of the Proxy Statement; Stockholders Meeting.
(a) As soon as practicable, Aztar shall prepare and file with the SEC
the Proxy Statement and Pinnacle shall prepare and file with the SEC a
Registration Statement on Form S-4 (the "Form S-4"), in which the Proxy
Statement will be included. Each of Aztar and Pinnacle shall use its reasonable
best efforts to have the Form S-4 declared effective under the Securities Act as
promptly as practicable after such filing. Aztar will use its reasonable best
efforts to cause the Proxy Statement to be mailed to its stockholders as
promptly as practicable after the Form S-4 is declared effective under the
Securities Act. Each party hereto shall also take any action required to be
taken under any applicable state or provincial securities laws in connection
with the issuance of Pinnacle Common Stock in the Merger and each party shall
furnish all information concerning itself and its stockholders as may be
reasonably requested in connection with any such action. Each party will advise
the others, promptly after it receives notice thereof, of the time when the Form
S-4 has become effective or any supplement or amendment has been filed, the
issuance of any stop order, the suspension of the qualification of the Pinnacle
Common Stock issuable in connection with the Merger for offering or sale in any
jurisdiction, or any request by the SEC for amendment of the Proxy Statement or
the Form S-4 or comments thereon and responses thereto or requests by the SEC
for additional information. If prior to the Effective Time any event occurs with
respect to Aztar, Pinnacle or any of their respectivive subsidiaries, or any
change occurs with respect to information supplied by or on behalf of Aztar or
Pinnacle, respectively, for inclusion in the Proxy Statement or the Form S-4
that, in each case, is required to be described in an amendment of, or a
supplement to, the Proxy Statement or the Form S-4, Aztar or Pinnacle, as
applicable, shall promptly notify the other of such event, and Aztar or
Pinnacle, as applicable, shall cooperate in the prompt filing with the SEC of
any necessary amendment or supplement to the Proxy Statement and the Form S-4
and, as required by law, in disseminating the information contained in such
amendment or supplement to Aztar's stockholders. Aztar shall provide Pinnacle
with a reasonable opportunity to review and comment on any draft Proxy
Statement, any draft amendment thereto, and any
41
correspondence with the SEC concerning the Proxy Statement, and shall file or
submit any of the foregoing only once such draft is in a form reasonably
acceptable to Pinnacle and Aztar.
(b) Aztar shall, as soon as reasonably practicable following the date
of this Agreement, duly call, give notice of, convene and hold a meeting of its
stockholders (the "Stockholders Meeting") for the purpose of obtaining the
Stockholder Approval. Without limiting the generality of the foregoing, Aztar
agrees that its obligations pursuant to the first sentence of this Section
5.01(b) shall not be affected by (i) the commencement, proposal, disclosure or
communication to Aztar of any Takeover Proposal, (ii) the withdrawal or
modification by the Board of Directors of Aztar of its approval or
recommendation of this Agreement, the Merger or the other transactions
contemplated hereby, or (iii) the approval or recommendation of any Superior
Proposal.
Section 5.02 Access to Information; Effect of Review.
(a) Pinnacle Access. To the extent permitted by applicable Law and
confidentiality obligations and upon reasonable advance notice, Aztar shall, and
shall cause each of its respective subsidiaries to afford to Pinnacle and to its
officers, employees, accountants, counsel, financial advisors and other
representatives (and to its potential financing sources and their respective
representatives) reasonable access during normal business hours during the
period prior to the Effective Time to all its Contracts, properties, books,
contracts, commitments, personnel and records and, during such period, to the
extent permitted by applicable law and confidentiality provisions, Aztar shall,
and shall cause its subsidiaries, to, (i) confer on a regular and frequent basis
with one or more representatives of Pinnacle to discuss material operational and
regulatory matters and the general status of its ongoing operations, (ii) advise
Pinnacle of any change or event that has had or would reasonably be expected to
have a material adverse effect on such party, and (iii) furnish to Pinnacle
promptly all other information concerning its business, properties and
personnel, in each case as Pinnacle may reasonably request. Pinnacle shall
schedule and coordinate all inspections with the individual(s) set forth in
Section 5.02(a) of the Aztar Disclosure Letter. Aztar shall be entitled to have
representatives present at all times during any such inspection. Notwithstanding
the foregoing, neither Aztar nor its subsidiaries shall be required to provide
access to or to disclose any information (i) where such access or disclosure
could jeopardize the attorney-client privilege or work product privilege of
Aztar or its subsidiaries or contravene any Law or binding agreement entered
into prior to the date of this Agreement, or (ii) to the extent that outside
counsel to Aztar advises that such access or disclosure should not be disclosed
in order to ensure compliance with any Gaming Law or other applicable Law.
Pinnacle agrees to hold confidential all information which it has received or to
which it has gained access pursuant to this Section 5.02(a) in accordance with
the Confidentiality Agreement, dated as of March 11, 2006 between Aztar and
Pinnacle (the "Confidentiality Agreement").
(b) Aztar Access. To the extent permitted by applicable Law and
confidentiality obligations and upon reasonable advance notice, Pinnacle shall,
and shall cause each of its respective subsidiaries to afford to Aztar and to
its officers, employees, accountants, counsel, financial advisors and other
representatives reasonable access during normal business hours during the period
prior to the Effective Time to all its Contracts, properties, books,
42
contracts, commitments, personnel and records and, during such period, to the
extent permitted by applicable law and confidentiality provisions, Pinnacle
shall, and shall cause its subsidiaries, to, (i) confer on a regular and
frequent basis with one or more representatives of Aztar to discuss material
operational and regulatory matters and the general status of its ongoing
operations, (ii) advise Aztar of any change or event that has had or would
reasonably be expected to have a material adverse effect on such party, and
(iii) furnish to Aztar promptly all other information concerning its business,
properties and personnel, in each case as Aztar may reasonably request. Pinnacle
shall be entitled to have representatives present at all times during any such
inspection. Notwithstanding the foregoing, neither Pinnacle nor its subsidiaries
shall be required to provide access to or to disclose any information (i) where
such access or disclosure could jeopardize the attorney-client privilege or work
product privilege of Pinnacle or its subsidiaries or contravene any Law or
binding agreement entered into prior to the date of this Agreement, or (ii) to
the extent that outside counsel to Pinnacle advises that such access or
disclosure should not be disclosed in order to ensure compliance with any Gaming
Law or other applicable Law. Aztar agrees to hold confidential all information
which it has received or to which it has gained access pursuant to this Section
5.02(b) in accordance with the Confidentiality Agreement, dated as of April 26,
2006 between Aztar and Pinnacle (the "Pinnacle Confidentiality Agreement").
(c) Effect of Review. No investigation or review pursuant to Section
5.02(a) or Section 5.02(b) shall have any effect for the purpose of determining
the accuracy of any representation or warranty given by any of the parties
hereto to any of the other parties hereto.
Section 5.03 Regulatory Matters; Reasonable Best Efforts.
(a) Regulatory Approvals. Each party hereto shall cooperate and
promptly prepare and file all necessary documentation, to effect all necessary
applications, notices, petitions and filings, and shall use reasonable best
efforts to take or cause to be taken all actions, and do or cause to be done all
things in order to obtain all approvals and authorizations of all Governmental
Authorities, necessary or advisable to consummate and make effective, in the
most expeditious manner reasonably practicable, the Merger and the other
transactions contemplated by this Agreement. Pinnacle shall have the
responsibility for the preparation and filing of any required applications,
filings or other materials, including in the State of New Jersey, a trust
agreement necessary to obtain interim casino authorization; provided however
that Aztar shall provide and cause its affiliates to provide Pinnacle with any
information required in connection with such filings as promptly as practicable;
and Aztar shall have the right to review and approve (which comments Aztar shall
provide as promptly as practicable, but in any event within three days of
Pinnacle's request for such approval) in advance all characterizations of the
information relating to Aztar that appear in any application, notice, petition
or filing made in connection with the Merger or the other transactions
contemplated by this Agreement. Aztar and Pinnacle agree that they will consult
and cooperate with each other with respect to the obtaining of all such
necessary approvals and authorizations of Governmental Authorities.
(b) Filings. Each of Pinnacle and Aztar undertakes and agrees to file
as soon as practicable a Notification and Report Form under the HSR Act with the
United States Federal Trade Commission (the "FTC") and the Antitrust Division of
the United States Department of Justice (the "Antitrust Division") and to make
such filings and apply for such approvals and
43
consents as are required under the Gaming Laws as soon as practicable after the
date hereof (and in any event within 45 days), including the filing of all
required applications for Pinnacle and all "key persons" (as defined under
applicable Gaming Laws). Each of Pinnacle and Aztar shall use its reasonable
best efforts to request as soon as practicable an accelerated review (to the
extent available) from any Gaming Authorities in connection with such filings
and in the case of Gaming Approvals required in the State of New Jersey,
Pinnacle shall seek to obtain interim casino authorization at the earliest
practicable date. Each of Pinnacle and Aztar shall respond as promptly as
practicable under the circumstances to any inquiries received from the FTC or
the Antitrust Division or any authority enforcing applicable Gaming Laws for
additional information or documentation and to all inquiries and requests
received from any Governmental Authority in connection with any Law. Pinnacle
shall have the exclusive right to direct and control the process of obtaining
the Governmental Consents (as defined below) required in connection with the
Merger and the transactions contemplated hereby and Aztar agrees to reasonably
cooperate with Pinnacle with respect thereto. Aztar shall agree if, but solely
if, requested by Pinnacle to, in compliance with Gaming Laws, divest, hold
separate or otherwise take or commit to take any action that limits or prohibits
Aztar's or Pinnacle's freedom of action with respect to, or its ability to
retain, any of the businesses, services, employees or assets of Aztar or any of
its subsidiaries, in each case at or after the Effective Time and only in order
to enable Pinnacle to obtain a Governmental Consent, provided that any such
action shall be conditioned upon the consummation of the Merger and the
transactions contemplated hereby.
(c) Cooperation. In addition, each party shall, subject to applicable
law and to the terms and conditions hereof, except as prohibited by any
applicable representative of any applicable governmental entity, (i) promptly
notify the other party of any material communication to that party relating to
the Merger and the transactions contemplated hereby from the FTC, the Antitrust
Division, any Governmental Authority, including any Gaming Authorities, and,
consult with the other party in advance regarding any material proposed written
communication relating to the Merger and the transactions contemplated hereby to
any of the foregoing in response thereto; and (ii) furnish the other party or
its outside counsel with copies of all material correspondence, filings, and
written communications (and memoranda setting forth the substance thereof)
between them and its affiliates and their respective representatives on the one
hand, and any government or regulatory authority or members of their respective
staffs on the other hand, with respect to this Agreement and the Merger,
provided, however, that the parties may redact discussions of the value of the
Merger or any other acquisition, sale, or divestiture; provided, further, that
notwithstanding anything in this Agreement to the contrary, Pinnacle shall not
be required to provide Aztar with copies of any individual gaming applications
and shall be entitled to redact any corporate gaming applications to the extent
reasonable to do so under the circumstances. Aztar will not, and will not permit
any of its representatives to participate in any substantive meeting or
discussion with any Governmental Authority in respect of any filings,
investigation or inquiry concerning this Agreement or the Merger without the
consent of Pinnacle, unless requested by such Governmental Authority and upon
prior written notice by Aztar to Pinnacle of such request.
(d) Objections. In furtherance and not in limitation of the covenants
of the parties contained in Section 5.03(a), (b) and (c), but subject to Section
5.03(g), each of Pinnacle and Aztar shall use its reasonable best efforts to
resolve such objections, if any, as may be
44
asserted by a Governmental Authority or other person with respect to the
transactions contemplated hereby under any Antitrust Law or Gaming Law or by any
Gaming Authority. In connection with the foregoing, if any administrative or
judicial action or proceeding, including any proceeding by a private party, is
instituted (or threatened to be instituted) challenging any transaction
contemplated by this Agreement as violative of any Antitrust Law, Gaming Law or
the rules and regulations of any Gaming Authority, subject to Section 5.03(g),
each of Pinnacle and Aztar shall cooperate in all material respects with each
other and use its respective reasonable best efforts to, as promptly as
practicable, contest and resist any such action or proceeding, to limit the
scope or effect of any proposed action of, or remedy sought to be obtained or
imposed by, any Gaming Authority, 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 the consummation of the transactions contemplated by this Agreement.
(e) Further Actions. Upon the terms and subject to the conditions set
forth in this Agreement, each of the parties agrees to use its reasonable best
efforts to take, or cause to be taken, all actions, and to do, or cause to be
done, and to assist and cooperate with the other parties in doing, all things
reasonably necessary or advisable under applicable Laws (including the HSR Act
and the Gaming Laws) to consummate and make effective, in the most expeditious
manner reasonably practicable, the Merger and the other transactions
contemplated by this Agreement, including (i) obtaining any required third party
consents and Governmental Consents and (ii) the execution and delivery of any
additional instruments necessary to consummate the transactions contemplated by
this Agreement.
(f) Governmental Consents. For purposes of this Agreement, the term
"Governmental Consents" shall mean all notices, reports, filings, consents,
applications, registrations, approvals, permits or authorizations required to be
made prior to the Effective Time by Aztar or Pinnacle or any of their respective
subsidiaries with, or obtained prior to the Effective Time by Aztar or Pinnacle
or any of their respective subsidiaries from, any Governmental Authority in
connection with the execution and delivery of this Agreement and the
consummation of the Merger and the other transactions contemplated hereby (and
shall include the expiration or termination of the waiting period under the HSR
Act).
(g) Specified Material Adverse Effect. Notwithstanding the foregoing
(but subject to the last sentence of Section 5.03(b)), as used in this Section
5.03, "reasonable best efforts" shall not include nor require any party to (A)
sell, or agree to sell, hold or agree to hold separate, or otherwise dispose, or
agree to dispose of, any asset, in each case other than any hotel casino
property outside the State of Nevada owned by Aztar that represents less than
20% of Aztar's revenue for the year ending December 31, 2005 (the "Specified
Assets")or (B) conduct or agree to conduct its business in any particular
manner, if such conduct has had or would, individually or in the aggregate,
reasonably be expected to (i) have a material adverse effect on Pinnacle (after
giving effect to the consummation of the Merger and reflecting the business,
assets, results of operations and financial condition of Aztar and its
subsidiaries) (clauses (A) or (B), a "Specified Material Adverse Effect") or
(ii) result in either Pinnacle or Aztar or their respective subsidiaries failing
to meet the standards for licensing, suitability or character under any Gaming
Laws relating to the conduct of Pinnacle's or Aztar's business which (after
taking
45
into account the anticipated impact of such failure to so meet such standards on
other authorities) would reasonably be expected to have a Specified Material
Adverse Effect. None of Aztar or any of its subsidiaries may take or agree to
take any action, or consent to or agree to consent to any such restriction
without the consent of Pinnacle. For purposes of clarification, Pinnacle agrees
that if necessary in order to obtain the Required Governmental Consents (as
defined in Section 6.01(c)), Pinnacle will (A) sell, or agree to sell, hold or
agree to hold separate, or otherwise dispose, or agree to dispose of, the
Specified Assets or (B) conduct or agree to conduct its business in a particular
manner unless such conduct has had or would reasonably be expected to result in
a Specified Material Adverse Effect.
(h) State Anti-Takeover Statutes. Without limiting the generality of
Section 5.03(b), Aztar and Pinnacle shall (i) take all reasonable action
necessary to ensure that no state anti-takeover statute or similar statute or
regulation or charter, bylaw or similar provision becomes applicable to the
Merger, this Agreement or any of the other transactions contemplated by this
Agreement and (ii) if any state anti-takeover statute or similar statute or
regulation, charter, bylaw or similar provision becomes applicable to the
Merger, this Agreement or any other transaction contemplated by this Agreement,
take all action necessary to ensure that the Merger and the other transactions
contemplated by this Agreement may be consummated as promptly as reasonably
practicable on the terms contemplated by this Agreement and otherwise to
minimize the effect of such statute or regulation, charter, bylaw or similar
provision on the Merger and the other transactions contemplated by this
Agreement.
Section 5.04 Stock Options; Stock Plans.
(a) Each stock option to purchase Aztar Common Stock (the "Aztar
Employee Stock Options") granted under the Aztar Employee Stock Plans that is
outstanding as of or immediately prior to the Effective Time, shall be converted
into the right to receive an amount in cash as soon as practicable following the
Effective Time equal to the product of (x) the excess, if any, of the Option
Amount (as defined in Section 8.3) over the exercise price per Aztar Common
Stock subject to such Aztar Employee Stock Option and (y) the total number of
shares of Aztar Common Stock subject to such Aztar Employee Stock Option
immediately before the Effective Time, with the aggregate amount of such payment
rounded to the nearest cent, less such amounts as are required to be withheld or
deducted under the Code or any provision of U.S. state, U.S. local or foreign
Tax Law with respect to the making of such payment.
(b) Prior to the Effective Time, the Board of Directors of Aztar (or,
if appropriate, any committee administering the Aztar Employee Stock Plans)
shall adopt such resolutions or take all such other actions as may be required
to effect the foregoing and shall ensure that following the Effective Time no
holder of Aztar Employee Stock Option or any participant in any Aztar Employee
Stock Plan or other Aztar Employee Benefit Plan or Aztar Employment Agreement
shall have any right thereunder to acquire any capital stock (including any
"phantom" stock or stock appreciation rights) of Aztar or the Surviving
Corporation.
Section 5.05 Employee Matters.
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(a) Pinnacle agrees that, during the period commencing at the Effective
Time and ending on the first anniversary of the Effective Time, the employees of
Aztar and any of its subsidiaries who are employed as of the Closing Date and
continue employment (the "Company Employees") will continue to be provided with
salary and benefits under employee benefit and commission or similar plans that
are substantially similar, in the aggregate, to those currently provided by
Aztar or any of its subsidiaries to such employees; provided that discretionary
benefits shall remain discretionary.
(b) For purposes of all employee benefit plans, programs and agreements
maintained by or contributed to by Pinnacle and its subsidiaries (including,
after Closing, the Surviving Corporation), Pinnacle shall, or shall cause its
subsidiaries to cause each such plan, program or arrangement to treat the prior
service with Aztar or any of its subsidiaries immediately prior to the Closing
of any Company Employee (to the same extent such service is recognized under
analogous plans, programs or arrangements of Aztar or any of its subsidiaries
prior to the Effective Time) as service rendered to Pinnacle or any of its
subsidiaries, as the case may be, for all purposes; provided, however, that such
crediting of service shall not (i) operate to duplicate any benefit or the
funding of such benefit under any plan, (ii) require the crediting of past
service for benefit accrual purposes under any defined benefit pension plan or
(iii) be credited if past service credit has not been or will not be provided to
employees of Pinnacle or its subsidiaries participating in such plan. Company
Employees shall also be given credit for any deductible or co-payment amounts
paid in respect of the plan year in which the Closing occurs, to the extent
that, following the Closing, they participate in any other plan for which
deductibles or co-payments are required. Pinnacle shall also cause each Pinnacle
Plan (as defined below) to waive any preexisting condition or waiting period
limitation which would otherwise be applicable to a Company Employee on or after
the Effective Time (to the extent such limitation would not apply under the
corresponding Aztar Employee Benefit Plan). Pinnacle shall recognize any accrued
but unused vacation of the Company Employees as of the Effective Time, and
Pinnacle shall cause Aztar and its subsidiaries to provide such paid vacation.
For purposes of this Agreement, a "Pinnacle Plan" shall mean such employee
benefit plan, as defined in Section 3(3) of ERISA, or a nonqualified employee
benefit or deferred compensation plan, stock option, bonus or incentive plan or
other employee benefit or fringe benefit program, that may be in effect
generally for employees of Pinnacle and its subsidiaries from time to time.
(c) Except as provided specifically in this Section 5.05, nothing in
this Agreement shall limit or restrict the rights of Pinnacle or Aztar to
modify, amend, terminate or establish employee benefit plans or arrangements, in
whole or in part, at any time after the Effective Time.
(d) No provision of this Section 5.05 shall create any third party
beneficiary rights in any Company Employee or any current or former director or
consultant
of Aztar or its subsidiaries in respect of continued employment (or resumed
employment) or any other matter.
(e) Notwithstanding anything in this Agreement to the contrary,
Pinnacle shall or shall cause its affiliates to honor and perform all
obligations under any collective bargaining agreements pertaining to any Company
Employees.
(f) Notwithstanding any provision of this Agreement to the contrary,
Pinnacle
47
shall not, for at least six months following the Closing cause there to be
adopted any amendment to any Aztar Employee Benefit Plan that is a severance or
retention plan, program, policy or agreement that would result in a diminution
of benefits thereunder.
Section 5.06 Indemnification, Exculpation and Insurance.
(a) Each of Aztar and Pinnacle agrees that, to the fullest extent
permitted under applicable law, all rights to indemnification and exculpation
from liabilities for acts or omissions occurring at or prior to the Effective
Time now existing in favor of the current or former directors, officers,
employees or fiduciaries under benefit plans currently indemnified of Aztar and
its subsidiaries as provided in their respective certificate or articles of
incorporation, by-laws (or comparable organizational documents) or other
agreements providing indemnification shall survive the Merger and shall continue
in full force and effect in accordance with their terms. The certificate of
incorporation and by-laws of the Surviving Corporation shall continue to contain
provisions no less favorable with respect to indemnification, advancement of
expenses and exculpation of former or present directors and officers than are
presently set forth in the Aztar's certificate of incorporation and by-laws,
which provisions shall not be amended, repealed or otherwise modified for a
period of six years from the Effective Time in any manner that would adversely
affect the rights thereunder of any such individuals.
(b) For six years after the Effective Time, the Surviving Corporation
shall maintain in effect the directors' and officers' liability (and fiduciary)
insurance policies covering acts or omissions occurring on or prior to the
Effective Time with respect to those persons who are currently covered by
Aztar's respective directors' and officers' liability (and fiduciary) insurance
policies on terms with respect to such coverage and in amounts at least as
favorable as those set forth in the relevant policy in effect on the date of
this Agreement, except in no event shall the Surviving Corporation be required
to make annual premium payments in connection therewith in excess of the amount
set forth on Section 5.06(b) of the Aztar Disclosure Letter (the "Maximum
Amount"), and if the Surviving Corporation is unable to obtain the insurance
required by this Section 5.06(b), the Surviving Corporation shall maintain the
most advantageous policies of directors' and officers' insurance otherwise
obtainable for an annual premium equal to the Maximum Amount. Notwithstanding
the foregoing, either Pinnacle or Aztar may elect in lieu of the foregoing
insurance, prior to the Effective Time, to obtain and fully pay for a policy
(providing only for the Side A coverage for the Aztar Indemnified Parties (as
defined in clause (c) below) with a claims period of at least six years from the
Effective Time from an insurance carrier with the same or better credit rating
as Aztar's current insurance carrier with respect to directors' and officers'
liability insurance in an amount and scope the same as Aztar's existing policies
with respect to matters existing or occurring at or prior to the Effective Time;
provided that the cost thereof does not exceed $4,435,000.
(c) From and after the Effective Time, Pinnacle agrees to cause the
Surviving Corporation to indemnify and hold harmless each present or former
director and officer of Aztar or any of its subsidiaries (in each case, for acts
or failures to act in such capacity), determined as of the date hereof, and any
person who becomes such a director or officer between the date hereof and the
Effective Time (collectively, the "Aztar Indemnified Parties"), against any
costs
48
or expenses (including reasonable attorneys' fees), judgments, fines, losses,
claims, damages or liabilities (collectively, "Costs") incurred in connection
with any claim, action, suit, proceeding or investigation, whether civil,
criminal, administrative or investigative, arising out of matters existing or
occurring at or prior to the Effective Time, whether asserted or claimed prior
to, at or after the Effective Time (including any matters arising in connection
with the transactions contemplated by this Agreement), to the fullest extent
permitted by applicable law (and the Surviving Corporation shall also advance
expenses as incurred to the fullest extent permitted under applicable law,
provided that if required by applicable law the person to whom expenses are
advanced provides an undertaking to repay such advances if it is ultimately
determined that such person is not entitled to indemnification).
(d) The obligations of the Surviving Corporation under this Section
5.06 shall not be terminated or modified by such parties in a manner so as to
adversely affect any Aztar Indemnified Party or any other person entitled to the
benefit of Sections 5.06(a) and (b), as the case may be, to whom this Section
5.06 applies without the consent of the affected Aztar Indemnified Party or such
other person, as the case may be. If the Surviving Corporation (i) shall
consolidate with or merge into any other corporation or entity and shall not be
the continuing or surviving corporation or entity of such consolidation or
merger or (ii) shall transfer all or substantially all of its properties and
assets to any individual, corporation or other entity, then, and in each such
case, proper provisions shall be made so that the successors and assigns of the
Surviving Corporation, as the case may be, shall assume all of the obligations
set forth in Section 5.06.
(e) The provisions of Section 5.06 are (i) intended to be for the
benefit of, and will be enforceable by, each indemnified party, his or her heirs
and his or her representatives and (ii) in addition to, and not in substitution
for, any other rights to indemnification or contribution that any such person
may have by contract or otherwise.
Section 5.07 Fees and Expenses.
(a) Except as provided in this Section 5.07 or Section 4.01(d), all
fees and expenses incurred in connection with the Merger, this Agreement and the
transactions contemplated by this Agreement shall be paid by the party incurring
such fees or expenses, whether or not the Merger is consummated.
(b) In the event that (i) following the Stockholder Approval, a
Takeover Proposal (or the intention of any person to make one), whether or not
conditional, shall have been made known to Aztar or shall have been publicly
disclosed and thereafter (x) this Agreement is terminated by Aztar or Pinnacle
pursuant to Section 7.01(b)(i) and (y) within 6 months of such termination Aztar
or any of its subsidiaries enters into any Aztar Acquisition Agreement or any
person consummates any Takeover Proposal, (ii) prior to or during the
Stockholders Meeting (or any subsequent meeting of Aztar stockholders at which
it is proposed that the Merger be approved), a Takeover Proposal (or the
intention of any person to make one), whether or not conditional, shall have
been publicly disclosed, and thereafter (x) this Agreement is terminated by
either Aztar or Pinnacle pursuant to Section 7.01(b)(ii) and (y) within 9 months
of such termination Aztar or any of its subsidiaries enters into any Aztar
Acquisition Agreement
49
or any person consummates any Takeover Proposal, (iii) this Agreement is
terminated by Aztar pursuant to Section 7.01(d), (iv) this Agreement is
terminated by Pinnacle pursuant to Section 7.01(f)(i) and within 9 months of
such termination Aztar or any of its subsidiaries enters into any Aztar
Acquisition Agreement or any person consummates any Takeover Proposal, (v) this
Agreement is terminated by Pinnacle pursuant to Section 7.01(f)(ii), or (vi)
this Agreement is terminated by Pinnacle pursuant to Section 7.01(g) as a result
of a material and intentional breach by Aztar, then in each case Aztar shall pay
Pinnacle a fee equal to $49.575 million (the "Termination Fee") and shall
reimburse Pinnacle for its fees and expenses incurred in connection with the
transactions contemplated hereby up to a maximum of $16 million (the
"Termination Expenses"), payable by wire transfer of same day funds; (for the
purposes of the foregoing the terms "Aztar Acquisition Agreement" and "Takeover
Proposal" shall have the meanings assigned to such terms in Section 4.03 except
that the references to "20%" in the definition of "Takeover Proposal" in Section
4.03(a) shall be deemed to be references to "50%". Payment of the Termination
Fee and Termination Expenses to Pinnacle pursuant to (A) clauses (i), (ii) or
(iv) above shall be made concurrently with the earlier of the consummation of
the Takeover Proposal or the entry of the Aztar Acquisition Agreement, (B)
clause (iii) above shall be made concurrently with termination of this Agreement
or (C) clause (v) or (vi) above shall be made within two business days of
termination of this Agreement.
(c) Aztar acknowledges that the agreement contained in Section 5.07(b)
is an integral part of the transactions contemplated by this Agreement, and
that, without this agreement, Pinnacle would not enter into this Agreement;
accordingly, if Aztar fails promptly to pay any amount due pursuant to Section
5.07, and, in order to obtain such payment, Pinnacle commences a suit that
results in a judgment against Aztar for the payments set forth in Section 5.07,
Aztar shall pay to Pinnacle its costs and expenses (including attorneys' fees
and expenses) in connection with such suit, together with interest on the amount
of the fee at the prime rate plus 2% per annum of Citibank N.A. in effect on the
date such payment was required to be made.
Section 5.08 Public Announcements. Aztar and Pinnacle will consult with
each other before issuing, and provide each other the reasonable opportunity to
review, comment upon and concur with, any press release or other public
statements with respect to the transactions contemplated by this Agreement,
including the Merger, and shall not issue any such press release or make any
such public statement prior to such consultation, except as any party, after
consultation with counsel, determines is required by applicable law or
applicable rule or regulation of the NYSE.
Section 5.09 Aztar Headquarters. For a period of not less than 9 months
following the Effective Time, Pinnacle shall maintain the current headquarters
of Aztar in Phoenix, Arizona as a divisional headquarters. For the avoidance of
doubt, nothing contained herein, shall be deemed to obligate Pinnacle or any of
its subsidiaries to employ any individual or group of individuals at such
location after the Closing.
Section 5.10 NYSE Listing. Pinnacle shall use its reasonable best
efforts to cause the shares of Pinnacle Common Stock issuable to Aztar's
stockholders as contemplated by
50
this Agreement to be approved for listing on the NYSE, subject to official
notice of issuance prior to the Closing Date.
ARTICLE VI
Conditions Precedent
Section 6.01 Conditions to Each Party's Obligation to Effect the
Merger. The respective obligation of each party to effect the Merger is subject
to the satisfaction or waiver on or prior to the Closing Date of the following
conditions:
(a) Stockholder Approvals. The Stockholder Approval shall have been
obtained.
(b) No Injunctions or Restraints. (i) No (x) temporary restraining
order or preliminary or permanent injunction or other order by any Federal or
state court of competent jurisdiction preventing consummation of either of the
Merger or the other transactions contemplated hereby or (y) applicable Federal
or state law prohibiting consummation of either of the Merger or the other
transactions contemplated hereby (collectively, "Restraints") shall be in
effect. (ii) No Governmental Authority shall have instituted (or if instituted,
shall not have withdrawn) any proceeding seeking any Order the issuance of which
would be reasonably likely to result in the failure of the condition set forth
in Section 6.01(b)(i).
(c) Statutory Approvals. (i) The waiting period applicable to the
consummation of the Merger and the other transactions contemplated hereby under
the HSR Act shall have expired or been earlier terminated, and (ii) all Required
Gaming Approvals required to be obtained for the consummation of the Merger and
the other transactions contemplated hereby from Gaming Authorities in Nevada,
New Jersey, Missouri, Indiana, and Louisiana, shall have been obtained and
remain in full force and effect (including by way of obtaining an interim casino
authorization from the State of New Jersey in the case of New Jersey) (the
foregoing Governmental Consents described in clauses (i) and (ii) collectively,
the "Required Governmental Consents"). In the case of the obligation of
Pinnacle, all Required Governmental Consents that have been obtained shall have
been obtained without the imposition of any term, condition or consequence the
acceptance of which would, individually or in the aggregate, reasonably be
expected to have or result in a Specified Material Adverse Effect.
(d) Form S-4. The Form S-4 shall have become effective under the
Securities Act and shall not be the subject of any stop order or proceedings
seeking a stop order.
(e) NYSE Listing. The shares of Pinnacle Common Stock issuable to Aztar
stockholders as contemplated by this Agreement shall have been approved for
listing on the NYSE, subject to official notice of issuance.
51
Section 6.02 Conditions to Obligations of Aztar. The obligation of
Aztar to effect the Merger is further subject to satisfaction or waiver of the
following conditions:
(a) Representations and Warranties. (i) The representations and
warranties of Pinnacle contained in Sections 3.02(d), 3.02(o) and 3.02(m) of
this Agreement that are qualified as to materiality or by reference to material
adverse effect shall be true and correct, and such representations and
warranties of Pinnacle that are not so qualified shall be true and correct in
all material respects, in each case both when made and at and as of the Closing
Date, as if made at and as of such time (except to the extent expressly made as
of an earlier date, in which case as of such date) and (ii) all other
representations and warranties of Pinnacle set forth herein shall be true and
correct both when made and at and as of the Closing Date, as if made at and as
of such time (except to the extent expressly made as of an earlier date, in
which case as of such date), except where the failure of such representations
and warranties to be so true and correct (without giving effect to any
limitation as to "materiality" or "material adverse effect" set forth therein)
does not have, and would not reasonably be expected to have, individually or in
the aggregate, a material adverse effect on Pinnacle.
(b) Performance of Obligations of Pinnacle. Pinnacle shall have
performed in all material respects all obligations required to be performed by
it under this Agreement at or prior to the Closing Date.
(c) Closing Certificates. Aztar shall have received a certificate
signed by an executive officer of Pinnacle, dated the Effective Time, to the
effect that, to such officer's knowledge, the conditions set forth in Sections
6.02(a) and 6.02(b) have been satisfied.
Section 6.03 Conditions to Obligations of Pinnacle. The obligation of
Pinnacle to effect the Merger is further subject to satisfaction or waiver of
the following conditions:
(a) Representations and Warranties. (i) The representations and
warranties of Aztar contained in Sections 3.01(b), 3.01(c), 3.01(m)(ii), and
3.01(p) of this Agreement that are qualified as to materiality or by reference
to material adverse effect shall be true and correct, and such representations
and warranties of Aztar that are not so qualified shall be true and correct in
all material respects, in each case both when made and at and as of the Closing
Date, as if made at and as of such time (except to the extent expressly made as
of an earlier date, in which case as of such date) and (ii) all other
representations and warranties of Aztar set forth herein shall be true and
correct both when made and at and as of the Closing Date, as if made at and as
of such time (except to the extent expressly made as of an earlier date, in
which case as of such date), except where the failure of such representations
and warranties to be so true and correct (without giving effect to any
limitation as to "materiality" or "material adverse effect" set forth therein)
does not have, and would not reasonably be expected to have, individually or in
the aggregate, a material adverse effect on Aztar.
52
(b) Performance of Obligations of Aztar. Aztar shall have performed in
all material respects all obligations required to be performed by it under this
Agreement at or prior to the Closing Date.
(c) Closing Certificates. Pinnacle shall have received a certificate
signed by an executive officer of Aztar, dated the Effective Time, to the effect
that, to such officer's knowledge, the conditions set forth in Sections 6.03(a)
and 6.03(b) have been satisfied.
Section 6.04 Frustration of Closing Conditions. Neither Aztar nor
Pinnacle may rely on the failure of any condition set forth in Section 6.01,
6.02 or 6.03, as the case may be, to be satisfied if such failure was caused by
such party's failure to use reasonable best efforts to consummate the Merger and
the other transactions contemplated by this Agreement, to the extent required by
and subject to Section 5.03.
ARTICLE VII
Termination, Amendment and Waiver
Section 7.01 Termination. This Agreement may be terminated at any time
prior to the Effective Time, whether before or (other than pursuant to clauses
(d) below) after the Stockholder Approval:
(a) by mutual written consent of Aztar and Pinnacle;
(b) by either Aztar or Pinnacle:
(i) if the Merger shall not have been consummated by the
12-month anniversary of the date of this Agreement (the "Termination
Date"); provided, however, that the right to terminate this Agreement
pursuant to this Section 7.01(b)(i) shall not be available to any party
whose failure to perform any of its obligations under this Agreement
results in the failure of the Merger to be consummated by such time;
provided, further, that if Aztar reasonably determines that additional
time is necessary in connection with obtaining any Required Gaming
Approval referred to in Section 6.01(c)(ii) or in order to comply with
the terms of any such Required Gaming Approval to the extent that such
compliance is required to occur prior to the Effective Time, Aztar may
extend the Termination Date for an additional period of up to three
months;
(ii) if the Stockholder Approval shall not have been obtained
at a Stockholders Meeting duly convened therefor or at any adjournment
or postponement thereof;
(iii) if any Restraint having the permanent effects set forth
in Section 6.01(b)(i) shall be in effect and shall have become final
and nonappealable; provided that the party seeking to terminate this
Agreement pursuant to this
53
Section 7.01(b)(iii) shall have used its reasonable best efforts to
prevent the entry of and to remove such Restraint; or
(iv) if any condition to the obligation of such party to
consummate the Merger set forth in Section 6.02 (in the case of Aztar)
or in Section 6.03 (in the case of Pinnacle) becomes incapable of
satisfaction prior to the Termination Date; provided that the failure
of any such condition to be capable of satisfaction is not the result
of a material breach of this Agreement by the party seeking to
terminate this Agreement;
(c) by Aztar, if Pinnacle shall have breached or failed to perform in
any material respect any of its representations, warranties, covenants or other
agreements contained in this Agreement, which breach or failure to perform (A)
would give rise to the failure of a condition set forth in Section 6.02(a) or
(b), and (B) is incapable of being cured by Pinnacle or is not cured by Pinnacle
within 120 days following receipt of written notice from Aztar of such breach or
failure to perform;
(d) by Aztar in accordance with Section 4.03(b); provided, that, in
order for the termination of this Agreement pursuant to this paragraph (d) to be
deemed effective, Aztar shall have complied with Section 4.03 and with
applicable requirements, including the payment of the Termination Fee and
Termination Expenses, of Section 5.07;
(e) by Pinnacle, if Aztar shall have breached or failed to perform in
any material respect any of its representations, warranties, covenants or other
agreements contained in this Agreement, which breach or failure to perform (A)
would give rise to the failure of a condition set forth in Section 6.03(a) or
(b), and (B) is incapable of being cured by Aztar or is not cured by Aztar
within 120 days following receipt of written notice from Pinnacle of such breach
or failure to perform;
(f) by Pinnacle, if the Board of Directors of Aztar (or any committee
thereof) (i) shall have withdrawn or modified, or proposed publicly to withdraw
or modify, the approval or recommendation by such Board of Directors of this
Agreement or the Merger, or (ii) shall have approved or recommended, or proposed
to approve or recommend, a Takeover Proposal (it being understood and agreed
that any "stop-look-and-listen" communication by the Board of Directors of Aztar
to the stockholders of Aztar limited to the matters specified in Rule 14d-9(f)
of the Exchange Act, or any similar communication to the stockholders of Aztar
in connection with the commencement of a tender offer or exchange offer limited
to the "stop-look-and-listen" matters specified in Rule 14d-9(f), shall not be
deemed to constitute an approval or recommendation of a Takeover Proposal); and
(g) by Pinnacle, in the event of a material breach of Section 4.03 or
Section 5.01(b).
Section 7.02 Effect of Termination. In the event of termination of this
Agreement by either Pinnacle or Aztar as provided in Section 7.01, this
Agreement shall forthwith become null and void and have no effect, without any
liability or obligation on the part
54
of Aztar or Pinnacle, other than the fee and indemnity provisions of Section
4.01(b), Section 4.01(c), and Section 4.01(d), and the confidentiality
provisions of Section 5.02, Section 5.07, this Section 7.02 and Article VIII,
which provisions shall survive such termination, and except to the extent that
such termination results from the willful and material breach by a party of any
of its representations, warranties, covenants or agreements set forth in this
Agreement, in which case such termination shall not relieve any party of any
liability or damages resulting from its willful and material breach of this
Agreement or in the case of Pinnacle, if all of the conditions to Pinnacle's
obligation to consummate the Merger are satisfied (other than the condition set
forth in Section 6.03(c)) (and, in the case of the condition set forth in
Section 6.03(c), either such condition has been satisfied or Aztar confirms to
Pinnacle in writing that it is willing and able to deliver the certificate
referred to in Section 6.03(c) as of the Closing Date) and Pinnacle fails to
consummate the Merger in accordance with the terms and conditions hereof as a
result of its failure to obtain the Financing.
Section 7.03 Amendment. This Agreement may be amended by the parties at
any time before or after the Stockholder Approval; provided, however, that after
any such approval, there shall not be made any amendment that by law requires
further approval by the stockholders of Aztar without the further approval of
such stockholders. This Agreement may not be amended except by an instrument in
writing signed on behalf of each of the parties.
Section 7.04 Extension; Waiver. At any time prior to the Effective
Time, a party may (a) extend the time for the performance of any of the
obligations or other acts of the other parties, (b) waive any inaccuracies in
the representations and warranties of the other parties contained in this
Agreement or in any document delivered pursuant to this Agreement or (c) subject
to the proviso of Section 7.03, waive compliance by the other parties with any
of the agreements or conditions contained in this Agreement. Any agreement on
the part of a party to any such extension or waiver shall be valid only if set
forth in an instrument in writing signed on behalf of such party. The failure of
any party to this Agreement to assert any of its rights under this Agreement or
otherwise shall not constitute a waiver of such rights.
ARTICLE VIII
General Provisions
Section 8.01 Nonsurvival of Representations and Warranties. None of the
representations and warranties in this Agreement or in any instrument delivered
pursuant to this Agreement shall survive the Effective Time. This Section 8.01
shall not limit any covenant or agreement of the parties that by its terms
contemplates performance after the Effective Time and such provisions shall
survive the Effective Time.
Section 8.02 Notices. All notices, requests, claims, demands and other
communications under this Agreement shall be in writing and shall be deemed
given (as of the time of delivery or, in the case of a telecopied communication,
of electronic confirmation) if
55
delivered personally, telecopied (which is electronically confirmed) or sent by
overnight courier (providing proof of delivery) to the parties at the following
addresses (or at such other address for a party as shall be specified by like
notice):
(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 Pinnacle, to:
Pinnacle Entertainment, Inc.
0000 Xxxxxx Xxxxxx Xxxxxxx
Xxxxx 0000
Xxx Xxxxx, Xxxxxx 00000
Telecopy No.: (000) 000-0000
Attention: Xxxx X. Xxxxxxx
with a copy to:
Wachtell, Lipton, Xxxxx & Xxxx
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopy No.: (000) 000-0000
Attention: Xxxxxx X. Xxxx
Xxxxxxxxx X. Xxxxxxxx
Xxxx Xxxxxx
and to:
Irell & Xxxxxxx LLP
0000 Xxxxxx xx xxx Xxxxx
Xxxxx 000 Xxx Xxxxxxx, Xxxxxxxxxx 00000-0000
Telecopy No.: (000) 000-0000
56
Attention: Xxxxx Xxxxx
C. Xxxxx XxXxxxxx
Section 8.03 Definitions. For purposes of this Agreement:
(a) an "affiliate" of any person means another person that directly or
indirectly, through one or more intermediaries, controls, is controlled by, or
is under common control with, such first person, where "control" means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management policies of a person, whether through the ownership
of voting securities, by contract, as trustee or executor, or otherwise;
(b) "capital stock" or "shares of capital stock" means (a) with respect
to a corporation, as determined under the laws of the jurisdiction of
organization of such entity, capital stock or such shares of capital stock; (b)
with respect to a partnership, limited liability company, or similar entity, as
determined under the laws of the jurisdiction of organization of such entity,
units, interests, or other partnership or limited liability company interests;
or (c) any other equity ownership or participation;
(c) "Gaming Authority" means any Governmental Authority with
jurisdiction over any person's gaming operations; for the avoidance of doubt, in
all cases, the term Governmental Authority includes Gaming Authorities whether
or not so specified;
(d) "Gaming Laws" means the Federal, state, local or foreign statute,
ordinance, rule, regulation, permit, consent, approval, license, judgment,
order, decree, injunction or other authorization governing or relating to the
current or contemplated casino and gaming activities and operations of any
person;
(e) "material adverse change" or "material adverse effect" means, when
used in connection with Aztar or Pinnacle, as the case may be, any change,
effect, event or occurrence or state of facts (i) that is materially adverse to
the business, assets, properties, financial condition or results of operations
of such person and its subsidiaries taken as a whole but excluding any of the
foregoing resulting from (A) changes in international or national political or
regulatory conditions generally (in each case, to the extent not
disproportionately affecting the applicable person as compared to other gaming
companies), or (B) changes or conditions generally affecting the U.S. economy or
financial markets or generally affecting the industry in which the applicable
person or any of its subsidiaries operates (in each case, to the extent not
disproportionately affecting the applicable person as compared to other gaming
companies), (C) changes in tax rates in any state in which the applicable person
or its subsidiaries operates, (D) the introduction of gaming in any state
adjoining any state in which the applicable person or its subsidiaries operates,
(E) any change in Law that legalizes other forms of gaming in any state in which
the applicable person operates, as long as such change in Law does not reduce or
alter the scope, manner of operation, type, nature or timing of any permitted
gaming activities which the applicable person or its subsidiaries are permitted
to conduct, (F) any change in state Law, as long as such change in Law does not
reduce or alter the scope, manner of operation, type, nature or timing of any
permitted gaming activities
57
which the applicable person or its subsidiaries are permitted to conduct and as
long as such change in Law does not disproportionately affect the applicable
person as compared to other gaming companies in the state and (G) any matters
disclosed in Section 8.03(e) of the Aztar Disclosure Letter or (ii) that
prevents or materially delays such person from performing its material
obligations under this Agreement or consummation of the transactions
contemplated hereby;
(f) "Covered Contracts" means any of the following Contracts (whether
or not in writing) collectively with all exhibits and schedules to such
Contracts:
(i) any lease of real or personal property providing for
annual rentals of $500,000 or more;
(ii) any agreement or series of related agreements involving
aggregate commitments over the term thereof of, by or to Aztar or in
the aggregate of $2,500,000 or more;
(iii) any agreement or series of related agreements that may
involve payments or other consideration to or from Aztar or any of its
subsidiaries in excess of $2,500,000 over the term thereof;
(iv) any agreement or agreements containing material
indemnification or similar obligations on the part of Aztar or any of
its subsidiaries;
(v) any neutrality agreements;
(vi) any agreement or series of related agreement providing
for the acquisition or disposition of securities of any person or any
assets, in each case involving more than $2,500,000 individually or in
the aggregate;
(vii) any partnership, joint venture or other similar
agreement or arrangement relating to the formation, creation,
operation, management or control of any partnership or joint venture
material to Aztar or any of its subsidiaries or in which Aztar or any
of its subsidiaries owns any interest valued at more than $2,500,000
without regard to percentage voting or economic interest (unless
pursuant to such agreement or arrangement, Aztar and its subsidiaries
do not have a future funding obligation reasonably likely to require
funding of more than $2,500,000);
(viii) any Material Contract;
(ix) any non-competition Contract or other Contract that (I)
purports to limit either the type of business in which Aztar or its
subsidiaries (or, after the Effective Time, Pinnacle or its Affiliates)
may engage or the manner or locations in which any of them may so
engage in any business or contains exclusivity, most favored nation,
preferred provider or similar provisions that affect the operation of
Aztar and its subsidiaries (or, after the Effective Time, Pinnacle or
its Affiliates) or (II) would require
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the disposition of any material assets or line of business of Pinnacle
or its subsidiaries or, after the Effective Time, Pinnacle or its
Affiliates;
(x) any Contract that contains a put, call or similar right
pursuant to which Aztar or any of its subsidiaries would be required to
purchase or sell, as applicable, any equity interests of any person or
assets that have a fair market value or purchase price of more than
$500,000; or
(xi) any other Contract or group of Contracts with a single
counterparty (including its affiliates) that, if terminated or subject
to a default by any party thereto, individually or in the aggregate,
would have or would reasonably be expected to have a material adverse
effect on Aztar.
(g) "person" means an individual, corporation, partnership, limited
liability company, joint venture, association, trust, unincorporated
organization or other entity; and
(h) "Permitted Investments" shall mean:
a. direct obligations of the United States of America or any member of the
European Union or any agency thereof or obligations guaranteed by the
United States of America or any member of the European Union or any
agency thereof, in each case with maturities not exceeding two years;
b. time deposit accounts, certificates of deposit and money market
deposits issued by a bank or trust company that is organized under the
laws of the United States of America, any state thereof or any foreign
country recognized by the United States of America having capital,
surplus and undivided profits in excess of $250 million and whose
long-term debt, or whose parent holding company's long-term debt, is
rated A (or such similar equivalent rating or higher by at least one
nationally recognized statistical rating organization (as defined in
Rule 436 under the Securities Act);
c. repurchase obligations for underlying securities of the types described
in clause (a) above entered into with a bank meeting the qualifications
described in clause (b) above;
d. commercial paper issued by a corporation (other than an affiliate of
Pinnacle) organized and in existence under the laws of the United
States of America or any foreign country recognized by the United
States of America with a rating at the time as of which any investment
therein is made of P-1 (or higher) according to Xxxxx'x, or A-1 (or
higher) according to S&P;
e. securities issued or fully guaranteed by any State, commonwealth or
territory of the United States of America, or by any political
subdivision or taxing authority thereof, and rated at least A by S&P or
A by Xxxxx'x;
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f. shares of mutual funds whose investment guidelines restrict 95% of such
funds' investments to those satisfying the provisions of clauses (a)
through (e) above; and
g. money market funds that (i) comply with the criteria set forth in Rule
2a-7 under the Investment Company Act of 1940, (ii) are rated AAA by
S&P and Aaa by Xxxxx'x and (iii) have portfolio assets of at least
$5,000.0 million.
(i) "solvent" means that, as of any date of determination, (a) the
amount of the "fair saleable value" of the assets of Pinnacle and its
subsidiaries (including Aztar and its subsidiaries) will, as of such date,
exceed the value of all "liabilities of Pinnacle and its subsidiaries (including
Aztar and its subsidiaries), including contingent and other liabilities," as of
such date, as such quoted terms are generally determined in accordance with
applicable federal laws governing determinations of the insolvency of debtors,
and, (b) Pinnacle and its subsidiaries (including Aztar and its subsidiaries)
will not have, as of such date, an unreasonably small amount of capital for the
operation of the businesses in which it is engaged or proposed to be engaged
following such date, and (c) Pinnacle and its subsidiaries (including Aztar and
its subsidiaries) reasonably believes it will be able to pay its liabilities,
including contingent and other liabilities, as they mature. For purposes of this
definition, (i) "not have ...an unreasonably small amount of capital for the
operation of the businesses in which it is engaged or proposed to be engaged"
and "able to pay its liabilities, including contingent and other liabilities, as
they mature" means that Pinnacle and its subsidiaries (including Aztar and its
subsidiaries) reasonably believes it will be able to generate enough cash from
operations, asset dispositions or refinancing, or a combination thereof, to meet
its obligations as they become due.
(j) "subsidiary" means, with respect to any person, any other person,
whether incorporated or unincorporated, of which more than 50% of either the
equity interests in, or the voting control of, such other person is, directly or
indirectly through subsidiaries or otherwise, beneficially owned by such first
person.
(k) "Exchange Ratio" means $3.00 divided by the Pinnacle Amount;
provided however that in no event shall the Exchange Ratio be greater than
0.12976 or less than 0.08651.
(l) "Determination Period" means 20 Trading Days randomly selected by
lot during the 30 Trading Days ending on the 5th Trading Day prior to the
Effective Time. The selection of the 20 Trading Days comprising the
Determination Period shall be made by Pinnacle and Aztar after the 5th Trading
Day prior to the Effective Time.
(m) "Pinnacle Amount" shall mean the volume weighted average (rounded
to the nearest 1/10,000) of Trading Values during the Determination Period.
(n) "Trading Value" means on any given Trading Day, the volume weighted
trading price (rounded to the nearest 1/10,000) of a share of Pinnacle Common
Stock on the NYSE, as reported by Bloomberg Financial Markets (or such other
source as Pinnacle and Aztar shall agree in writing) for that Trading Day.
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(o) "Trading Day" means any day on which shares of Pinnacle Common
Stock are traded on the NYSE.
(p) "Option Amount" means the sum of (x) $45.00 and (y) the product of
the Exchange Ratio and the Pinnacle Amount.
Section 8.04 Interpretation and Other Matters. (a) When a reference is
made in this Agreement to an Article, Section or Exhibit, such reference shall
be to an Article or Section of, or an Exhibit to, this Agreement unless
otherwise indicated. The table of contents and headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement. Whenever the words "include,"
"includes" or "including" are used in this Agreement, they shall be deemed to be
followed by the words "without limitation." The words "hereof", "herein" and
"hereunder" and words of similar import when used in this Agreement shall refer
to this Agreement as a whole and not to any particular provision of this
Agreement. All terms defined in this Agreement shall have the defined meanings
when used in any certificate or other document made or delivered pursuant hereto
unless otherwise defined therein. The definitions contained in this Agreement
are applicable to the singular as well as the plural forms of such terms and to
the masculine as well as to the feminine genders of such term. Any agreement,
instrument or statute defined or referred to herein or in any agreement or
instrument that is referred to herein means such agreement, instrument or
statute as from time to time amended, modified or supplemented, including (in
the case of agreements or instruments) by waiver or consent and (in the case of
statutes) by succession of comparable successor statutes and references to all
attachments thereto and instruments incorporated therein. References to a person
are also to its permitted successors and assigns. "Knowledge" of a person and
similar terms shall mean the actual knowledge of the executive officers of such
person.
(b) Each of Aztar and Pinnacle has or may have set forth information in
its respective disclosure letter in a section thereof that corresponds to the
section of this Agreement to which it relates. A matter set forth in one section
of a disclosure letter need not be set forth in any other section of the
disclosure letter so long as its relevance to the latter section of the
disclosure letter or section of the Agreement is readily apparent on the face of
the information disclosed in the disclosure letter to the person to which such
disclosure is being made. The fact that any item of information is disclosed in
a disclosure letter to this Agreement shall not be construed to mean that such
information is required to be disclosed by this Agreement. Such information and
the dollar thresholds set forth herein shall not be used as a basis for
interpreting the terms "material," "material adverse effect" or other similar
terms in this Agreement.
(c) Pinnacle agrees to cause Merger Sub to comply with its respective
obligations under this Agreement.
Section 8.05 Counterparts. This Agreement may be executed in one or
more counterparts, all of which shall be considered one and the same agreement
and shall become effective when one or more counterparts have been signed by
each party and delivered to the other parties.
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Section 8.06 Entire Agreement; No Third-Party Beneficiaries. This
Agreement (including the documents and instruments referred to herein), the
Confidentiality Agreement and the Pinnacle Confidentiality Agreement (i)
constitute the entire agreement, and supersede all prior agreements and
understandings, both written and oral, among the parties with respect to the
subject matter of this Agreement and (ii) except for the provisions of Section
5.06 (which shall be enforceable by the Indemnified Parties), are not intended
to and shall not confer upon any person other than the parties any rights or
remedies.
Section 8.07 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.
Section 8.08 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 party. Any attempted or purported assignment
in violation of the preceding sentence shall be null and void and of no effect
whatsoever. Subject to the preceding two sentences, this Agreement shall be
binding upon, inure to the benefit of, and be enforceable by, the parties and
their respective successors and assigns.
Section 8.09 Enforcement. The parties agree that irreparable damage
would occur and that the parties would not have any adequate remedy at law in
the event that any of the provisions of this Agreement were not performed in
accordance with their specific terms or were otherwise breached. It is
accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions of this Agreement in any federal or state court located
in the State of Delaware, this being in addition to any other remedy to which
they are entitled at law or in equity. In addition, each of the parties hereto
(a) consents to submit itself to the personal jurisdiction of the federal and
state courts located in the State of Delaware in the event any dispute arises
out of this Agreement or any of the transactions contemplated by this Agreement,
(b) agrees that it will not attempt to deny or defeat such personal jurisdiction
by motion or other request for leave from any such court, and (c) agrees that it
will not bring any action relating to this Agreement or any of the transactions
contemplated by this Agreement in any court other than a federal or state court
in the State of Delaware.
Section 8.10 Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of law
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect. Upon such determination that any
term or other provision is invalid, illegal or incapable of being enforced, the
parties hereto shall negotiate in good faith to modify this Agreement so as to
effect the original intent of the parties as closely as possible to the fullest
extent permitted by applicable law in an acceptable manner to the end that the
transactions contemplated hereby are fulfilled to the extent possible.
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Section 8.11 WAIVER OF JURY TRIAL. EACH PARTY TO THIS AGREEMENT WAIVES,
TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A
TRIAL BY JURY IN RESPECT OF ANY ACTION, SUIT OR PROCEEDING ARISING OUT OF OR
RELATING TO THIS AGREEMENT.
Section 8.12 Alternative Structure. The parties agree to cooperate in
the consideration of alternative structures to implement the transactions
contemplated by this Agreement as long as there is no change in the economic
terms thereof and such change does not impose any material delay on, or
condition to, the consummation of the Merger, or adversely affect Aztar, prior
to the Effective Time, or Aztar's stockholders or result in liability to Aztar's
directors or officers. Any such alternative structure shall constitute a "change
of control" with respect to the Aztar Employee Benefit Plans and Aztar
Employment Agreements to the same extent that the transactions contemplated
hereby constitute a "change of control" with respect to the applicable Plan or
Agreement.
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IN WITNESS WHEREOF, Pinnacle, Aztar and Merger Sub have caused this
Agreement to be signed by their respective officers thereunto duly authorized,
all as of the date first written above.
PINNACLE ENTERTAINMENT, INC.
By: /s/ Xxxxxx X. Xxx
---------------------------------------
Name: Xxxxxx X. Xxx
Title: CEO & President
PNK DEVELOPMENT 1, INC.
By: /s/ Xxxxxx X. Xxx
---------------------------------------
Name: Xxxxxx X. Xxx
Title: CEO & President
AZTAR CORPORATION
By: /s/ Xxxx X. Xxxxxxxxx
---------------------------------------
Name: Xxxx X Xxxxxxxxx
Title: CFO, Vice-President & Treasurer
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