EXECUTION VERSION
AGREEMENT AND PLAN OF MERGER
Dated as of July 14, 2004,
By and Among
Harrah's
Entertainment, Inc.,
Harrah's Operating Company, Inc.
and
Caesars Entertainment, Inc.
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TABLE OF CONTENTS
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ARTICLE I. THE
MERGER......................................................................................
Section 1.01
The
Merger.............................................................
Section 1.02
Closing................................................................
Section 1.03
Effective
Time.........................................................
Section 1.04
Effect of the
Merger...................................................
Section 1.05
Certificate of Incorporation and
By-laws...............................
Section 1.06
Directors..............................................................
Section 1.07
Officers...............................................................
ARTICLE II. EFFECT ON THE CAPITAL STOCK OF
THE CONSTITUENT CORPORATIONS; EXCHANGE OF
CERTIFICATES..........
Section 2.01
Effect on Capital
Stock................................................
Section 2.02
Exchange of
Certificates...............................................
Section 2.03
Elections..............................................................
Section 2.04
Company Equity
Awards..................................................
ARTICLE III. REPRESENTATIONS AND WARRANTIES
OF THE COMPANY.................................................
Section 3.01
Organization, Standing and
Power.......................................
Section 3.02
The Company Subsidiaries; Equity
Interests.............................
Section 3.03
Capital
Structure......................................................
Section 3.04
Authority; Execution and Delivery;
Enforceability......................
Section 3.05
No Conflicts;
Consents.................................................
Section 3.06
Company SEC Documents; Undisclosed
Liabilities.........................
Section 3.07
Information
Supplied...................................................
Section 3.08
Absence of Certain Changes or
Events...................................
Section 3.09
Taxes..................................................................
Section 3.10
Absence of Changes in Benefit
Plans....................................
Section 3.11
ERISA Compliance; Excess Parachute
Payments............................
Section 3.12
Litigation.............................................................
Section 3.13
Compliance With Applicable
Laws........................................
Section 3.14
Assets Other Than Real Property
Interests..............................
Section 3.15
Real
Property..........................................................
Section 3.16
Labor
Matters..........................................................
Section 3.17
Contracts..............................................................
Section 3.18
Environmental
Matters..................................................
Section 3.19
Intellectual
Property..................................................
Section 3.20
Brokers; Schedule of Fees and
Expenses.................................
Section 3.21
Opinion of Financial
Advisor...........................................
ARTICLE IV. REPRESENTATIONS AND WARRANTIES
OF PARENT AND MERGER
SUB........................................
Section 4.01
Organization, Standing and
Power.......................................
Section 4.02
Parent Subsidiaries; Equity
Interests..................................
Section 4.03
Capital
Structure......................................................
Section 4.04
Authority; Execution and Delivery;
Enforceability......................
Section 4.05
No Conflicts;
Consents.................................................
Section 4.06
Parent SEC Documents; Undisclosed
Liabilities..........................
Section 4.07
Information
Supplied...................................................
Section 4.08
Absence of Certain Changes or
Events...................................
Section 4.09
Taxes..................................................................
Section 4.10
Absence of Changes in Benefit
Plans....................................
Section 4.11
ERISA Compliance; Excess Parachute
Payments............................
Section 4.12
Litigation.............................................................
Section 4.13
Compliance With Applicable
Laws........................................
Section 4.14
Assets Other Than Real Property
Interests..............................
Section 4.15
Real
Property..........................................................
Section 4.16
Labor
Matters..........................................................
Section 4.17
Contracts..............................................................
Section 4.18
Environmental
Matters..................................................
Section 4.19
Intellectual
Property..................................................
Section 4.20
Brokers; Schedule of Fees and
Expenses.................................
Section 4.21
Opinion of Financial
Advisor...........................................
Section 4.22
Financing..............................................................
ARTICLE V. COVENANTS RELATING TO CONDUCT OF
BUSINESS.......................................................
Section 5.01
Conduct of
Business....................................................
Section 5.02
No
Solicitation........................................................
ARTICLE VI. ADDITIONAL
AGREEMENTS..........................................................................
Section 6.01
Preparation of the Form S-4 and the Joint
Proxy Statement; Stockholders
Meetings...............................
Section 6.02
Access to Information;
Confidentiality.................................
Section 6.03
Reasonable Efforts;
Notification.......................................
Section 6.04
Benefit
Plans..........................................................
Section 6.05
Indemnification........................................................
Section 6.06
Fees and
Expenses......................................................
Section 6.07
Public
Announcements...................................................
Section 6.08
Transfer
Taxes.........................................................
Section 6.09
Affiliates.............................................................
Section 6.10
Section 16
Matters.....................................................
Section 6.11
Stock Exchange
Listing.................................................
Section 6.12
Tax
Matters............................................................
Section 6.13
Litigation.............................................................
Section 6.14
Parent
Board...........................................................
Section 6.15
Company Rights
Agreement...............................................
Section 6.16
Title Insurance and
Surveys............................................
ARTICLE VII. CONDITIONS
PRECEDENT..........................................................................
Section 7.01
Conditions to Each Party's Obligation to Effect the
Merger.............
Section 7.02
Conditions to Obligations of Parent and Merger
Sub.....................
Section 7.03
Conditions to Obligation of the
Company................................
Section 7.04
Frustration of Closing
Conditions......................................
ARTICLE VIII. TERMINATION, AMENDMENT AND
WAIVER............................................................
Section 8.01
Termination............................................................
Section 8.02
Effect of
Termination..................................................
Section 8.03
Amendment..............................................................
Section 8.04
Extension;
Waiver......................................................
Section 8.05
Procedure for Termination, Amendment, Extension or
Waiver..............
ARTICLE IX. GENERAL
PROVISIONS.............................................................................
Section 9.01
Nonsurvival of Representations and
Warranties..........................
Section 9.02
Notices................................................................
Section 9.03
Definitions............................................................
Section 9.04
Interpretation; Disclosure
Letters.....................................
Section 9.05
Severability...........................................................
Section 9.06
Counterparts;
Facsimile................................................
Section 9.07
Entire Agreement; No Third-Party
Beneficiaries.........................
Section 9.08
Governing
Law..........................................................
Section 9.09
Assignment.............................................................
Section 9.10
Enforcement; Waiver of Jury
Trial......................................
Section 9.11
Mutual
Drafting........................................................
Exhibit A
Form of Affiliate Letter
Exhibit B
Form of Parent Tax Matters Certificate
Exhibit C
Form of Company Tax Matters Certificate
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AGREEMENT AND PLAN OF MERGER (the "Agreement") dated as of
July 14, 2004, by and among Harrah's
Entertainment, Inc., a Delaware
corporation ("Parent"), Harrah's Operating
Company, Inc., a Delaware
corporation and a wholly owned subsidiary
of Parent ("Merger Sub"), and
Caesars Entertainment, Inc., a Delaware
corporation (the "Company").
WHEREAS, the respective Boards of Directors of Parent,
Merger Sub and the Company have approved
the merger (the "Merger") of the
Company into Merger Sub on the terms and
subject to the conditions set forth
in this Agreement, whereby each issued
share of common stock, par value $0.01
per share, of the Company (the "Company
Common Stock") not owned by Parent,
Merger Sub or the Company shall be
converted into the right to receive the
Merger Consideration; and
WHEREAS, Parent, as the sole stockholder of Merger Sub, will
immediately following the execution of this
Agreement approve this Agreement;
WHEREAS, subject to Section 6.12 hereof, for Federal income
tax purposes it is intended that the Merger
qualify as a "reorganization"
within the meaning of Section 368(a) of the
Internal Revenue Code of 1986, as
amended (the "Code"); and
WHEREAS, Parent, Merger Sub and the Company desire to make
certain representations, warranties,
covenants and agreements in connection
with the Merger and also to prescribe
various conditions to the Merger.
NOW, THEREFORE, in consideration of the foregoing and the
respective representations, warranties,
covenants and agreements hereinafter
set forth, the parties hereto agree as
follows:
ARTICLE I.
THE MERGER
Section 1.01 The Merger. Subject to Sections 6.12(c) and
6.12(d) hereof, on the terms and subject to
the conditions set forth in this
Agreement, and in accordance with the
General Corporation Law of the State of
Delaware (the "DGCL"), the Company shall be
merged with and into Merger Sub at
the Effective Time. At the Effective Time
and as a result of the Merger, the
separate corporate existence of the Company
shall cease and Merger Sub shall
continue as the surviving entity (the
"Surviving Entity"). The Merger, the
payment of cash in connection with the
Merger, the issuance by Parent of
shares of common stock, par value $0.10 per
share, of Parent ("Parent Common
Stock") in connection with the Merger (the
"Share Issuance") and the other
transactions contemplated by this Agreement
are referred to in this Agreement
as the "Transactions."
Section 1.02 Closing. The closing (the "Closing") of the
Merger shall take place at the offices of
Latham & Watkins LLP, 650 Town
Center Drive, Suite 2000, Costa Mesa,
California 92626 at 10:00 a.m., Pacific
Time, on the second Business Day following
the satisfaction (or, to the extent
permitted by Law, waiver by the party or
parties entitled to the benefits
thereof) of the conditions set forth in
Article VII (other than those
conditions that by their nature are to be
satisfied at the Closing, but
subject to the fulfillment or waiver of
those conditions), or at such other
place, time and date as shall be agreed in
writing by Parent and the Company.
The date on which the Closing occurs is
referred to in this Agreement as the
"Closing Date."
Section 1.03 Effective Time. Prior to the Closing, Parent
shall prepare, and on the Closing Date, the
Surviving Entity shall file with
the Secretary of State of the State of
Delaware, a certificate of merger or
other appropriate documents (in any such
case, the "Certificate of Merger")
executed in accordance with the relevant
provisions of the DGCL and shall make
all other filings or recordings required
under the DGCL. The Merger shall
become effective at such time as the
Certificate of Merger is duly filed with
such Secretary of State on the Closing
Date, or at such later time as Parent
and the Company shall agree and specify in
the Certificate of Merger (the time
the Merger becomes effective being the
"Effective Time").
Section 1.04 Effect of the Merger. At the Effective Time,
the effect of the Merger shall be as
provided herein and in the applicable
provisions of the DGCL.
Section 1.05 Certificate of Incorporation and By-laws.
(a) The certificate of incorporation of Merger Sub,
as in effect immediately prior to the
Effective Time, shall be the certificate
of incorporation of the Surviving Entity
until thereafter changed or amended
as provided therein or by the DGCL or
applicable Law.
(b) The by-laws of Merger Sub, as in effect
immediately prior to the Effective Time,
shall be the by-laws of the Surviving
Entity until thereafter changed or amended
as provided therein or by
applicable Law.
Section 1.06 Directors. The directors of Merger Sub
immediately prior to the Effective Time
shall be the directors of the
Surviving Entity, until the earlier of
their resignation or removal or until
their respective successors are duly
elected and qualified, as the case may
be.
Section 1.07 Officers. The officers of the Merger Sub
immediately prior to the Effective Time
shall be the officers of the Surviving
Entity, until the earlier of their
resignation or removal or until their
respective successors are duly elected or
appointed and qualified, as the case
may be.
ARTICLE II.
EFFECT ON THE CAPITAL STOCK OF THE CONSTITUENT CORPORATIONS;
EXCHANGE OF CERTIFICATES
Section 2.01 Effect on Capital Stock. At the Effective Time,
by virtue of the Merger and without any
action on the part of the holder of
any shares of Company Common Stock or any
shares of capital stock of Merger
Sub:
(a) Capital Stock of Merger Sub. Each issued and
outstanding share of capital stock of
Merger Sub shall continue to be issued
and outstanding and shall constitute the
only issued and outstanding shares of
the Surviving Entity.
(b) Cancellation of Treasury Stock and Parent-Owned
Stock. Each share of Company Common Stock
that is owned by the Company, Parent
or Merger Sub (or any direct or indirect
wholly-owned subsidiary of Parent or
Merger Sub) shall no longer be outstanding
and shall automatically be canceled
and retired and shall cease to exist, and
no cash, Parent Common Stock or
other consideration shall be delivered or
deliverable in exchange therefor.
(c) Conversion of Company Common Stock.
(1) Subject to Sections 2.01(b), 2.01(d) and
2.02(e), each issued and outstanding share
of Company Common Stock outstanding
prior to the Effective Time shall be
converted into the right to receive, at
the election of the holder thereof, one of
the following:
(i) for each such share of Company Common
Stock with respect to which an election to receive stock
consideration (a "Stock Election") has been effectively made, and
not
revoked or lost, pursuant to Section 2.03 (each, an "Electing
Share"), the right to receive (subject to adjustment as provided
in
Section 2.01(e)) 0.3247 (the "Exchange Ratio") shares of Parent
Common Stock (the "Stock Consideration"), including the
associated
special stock purchase rights issued ("Parent Rights") pursuant
to
the Rights Agreement dated as of October 6, 1996 between Parent
and
the Bank of New York, as Rights Agent (the "Parent Rights
Agreement"); and
(ii) for each such share of Company Common
Stock other than Electing Shares (each, a "Non-Electing Share")
the
right to receive (subject to adjustment as provided in Section
2.01(e)) $17.75 in cash, without interest (the "Cash
Consideration"),
and each stockholder of the Company that holds Non-Electing
Shares
shall be deemed to have made a cash election (a "Cash Election")
with
respect to such Non-Electing Shares.
(2) The cash payable, and the shares of Parent
Common Stock to be issued, upon the
conversion of shares of Company Common
Stock pursuant to this Section 2.01(c), and
any cash payable in lieu of
fractional shares of Parent Common Stock as
contemplated by Section 2.02(e),
are referred to collectively as "Merger
Consideration." As of the Effective
Time, all such shares of Company Common
Stock shall no longer be outstanding
and shall automatically be canceled and
retired and shall cease to exist, and
each holder of a certificate representing
any such shares of Company Common
Stock shall cease to have any rights with
respect thereto, except the right to
receive Merger Consideration upon surrender
of such certificate in accordance
with Section 2.02, without interest.
(3) Notwithstanding anything in this Agreement to
the contrary, if, between the date of this
Agreement and the Effective Time,
the outstanding shares of Parent Common
Stock or Company Common Stock shall
have been changed into a different number
of shares or a different class by
reason of any reclassification,
recapitalization, split-up, combination,
exchange of shares or readjustment, or a
stock dividend thereon shall be
declared with a record date within said
period, the Exchange Ratio shall be
correspondingly adjusted.
(d) Dissenter Rights. Notwithstanding anything in
this Agreement to the contrary, shares
("Dissenter Shares") of Company Common
Stock that are outstanding immediately
prior to the Effective Time and that
are held by any person who is entitled to
demand and properly demands payment
for such Dissenter Shares pursuant to, and
who complies in all respects with,
Sections 262 of the DGCL (the "Dissenter
Rights") shall not be converted into
Merger Consideration as provided in Section
2.01(c)(1), but rather the holders
of Dissenter Shares shall be entitled to
payment for such Dissenter Shares in
accordance with the Dissenter Rights;
provided, however, that if any such
holder shall fail to perfect or otherwise
shall waive, withdraw or lose the
right to receive payment under the
Dissenter Rights, then the right of such
holder to be paid in accordance with the
Dissenter Rights shall cease and such
Dissenter Shares shall be deemed to have
been converted as of the Effective
Time into, and to have become exchangeable
solely for the right to receive,
Merger Consideration as provided in Section
2.01(c)(1). The Company shall
serve prompt notice to Parent of any
written notice of intent to demand
payment, or any written demand for payment,
received by the Company in respect
of any shares of Company Common Stock, and
Parent shall have the right to
participate in and direct all negotiations
and proceedings with respect to
such demands. Prior to the Effective Time,
the Company shall not, without the
prior written consent of Parent, make any
payment with respect to, or settle
or offer to settle, any such demands, or
agree to do any of the foregoing.
(e) Proration. Notwithstanding anything in this
Agreement to the contrary:
(1) the total number of shares of Company Common
Stock to be converted into the Stock
Consideration pursuant to Section
2.01(c)(1) shall be equal to the product
obtained by multiplying (x) the
number of shares of Company Common Stock
outstanding immediately prior to the
Effective Time by (y) 0.6642 (the "Stock
Cap"), and all other shares of
Company Common Stock shall be converted
into the Cash Consideration.
(2) if the aggregate number of Electing Shares
exceeds the Stock Cap, then (x) all
Non-Electing Shares of each holder thereof
shall be converted into the right to
receive the Cash Consideration and (y)
the Electing Shares of each holder thereof
will be converted into the right to
receive the Stock Consideration in respect
of that number of Electing Shares
equal to the product obtained by
multiplying (A) the number of Electing Shares
held by such holder by (B) a fraction, the
numerator of which is the Stock Cap
and the denominator of which is the
aggregate number of Electing Shares, with
the remaining number of such holder's
Electing Shares being converted into the
right to receive the Cash Consideration;
and
(3) if the aggregate number of Electing Shares is
less than the Stock Cap (the amount by
which the aggregate number of Electing
Shares is less than the Stock Cap being
referred to herein as the "Shortfall
Number"), then (x) all Electing Shares
shall be converted into the right to
receive the Stock Consideration and (y) the
Non-Electing Shares of each holder
thereof will be converted into the right to
receive the Stock Consideration in
respect of that number of Non-Electing
Shares equal to the product obtained by
multiplying (A) the number of Non-Electing
Shares held by such holder by (B) a
fraction, the numerator of which is the
Shortfall Number and the denominator
of which is the aggregate number of
Non-Electing Shares, with the remaining
number of such holder's Non-Electing Shares
being converted into the right to
receive the Cash Consideration.
Section 2.02 Exchange of Certificates.
(a) Exchange Agent. As soon as practicable following
the date of this Agreement and in any event
not less than three days prior to
dissemination of the Joint Proxy Statement
to the stockholders of the Company
and the stockholders of Parent, Parent
shall select a bank or trust company
reasonably satisfactory to the Company to
act as exchange agent (the "Exchange
Agent") for payment of Merger Consideration
upon surrender of certificates
representing Company Common Stock. The
Exchange Agent shall also act as the
agent for the Company's stockholders for
the purpose of receiving and holding
their Forms of Election and Certificates
and shall obtain no rights or
interests in such shares. Promptly
following the Effective Time, Parent shall
deposit with the Exchange Agent, for the
benefit of the holders of shares of
Company Common Stock, for exchange in
accordance with this Article II, through
the Exchange Agent (i) certificates
representing the number of shares of
Parent Common Stock issuable and (ii) the
amount of cash consideration
payable, in each case, pursuant to Section
2.01(c) in exchange for outstanding
shares of Company Common Stock (such shares
of Parent Common Stock and cash,
together with any dividends or
distributions with respect thereto, being
hereinafter referred to as the "Exchange
Fund"). For the purposes of such
deposit, Parent shall assume that there
will not be any fractional shares of
Parent Common Stock. Parent shall make
available to the Exchange Agent, from
time to time as needed, cash sufficient to
pay cash in lieu of fractional
shares in accordance with Section 2.02(e).
The Exchange Agent shall, pursuant
to irrevocable instructions, deliver Parent
Common Stock contemplated to be
issued pursuant to Section 2.01 out of the
Exchange Fund. The Exchange Fund
may not be used for any other purpose.
(b) Exchange Procedures. As soon as reasonably
practicable after the Effective Time, the
Exchange Agent shall mail to each
holder of record of a certificate or
certificates (the "Certificates") that
immediately prior to the Effective Time
represented outstanding shares of
Company Common Stock whose shares were
converted into the right to receive
Merger Consideration pursuant to Section
2.01(c) who did not complete an Form
of Election pursuant to Section 2.03, (i) a
letter of transmittal (which shall
specify that delivery shall be effected,
and risk of loss and title to the
Certificates shall pass, only upon delivery
of the Certificates to the
Exchange Agent and shall be in such form
and have such other provisions as
Parent may reasonably specify) and (ii)
instructions for use in effecting the
surrender of the Certificates in exchange
for Merger Consideration. Upon
surrender of a Certificate for cancellation
to the Exchange Agent or to such
other agent or agents as may be appointed
by Parent, together with such letter
of transmittal, duly executed, and such
other documents as may reasonably be
required by the Exchange Agent, the holder
of such Certificate shall be
entitled to receive in exchange therefor
the amount of cash, if any, and the
number of whole shares of Parent Common
Stock, if any, into which the
aggregate number of shares of Company
Common Stock previously represented by
such Certificate shall have been converted
pursuant to Section 2.01(c), and
the Certificate so surrendered shall
forthwith be canceled. Thereafter, such
holder shall be treated as a holder of
Parent Common Stock for purposes of
voting or quorum for any meeting of the
stockholders of Parent. In the event
of a transfer of ownership of Company
Common Stock that is not registered in
the transfer records of the Company,
payment may be made to a person other
than the person in whose name the
Certificate so surrendered is registered, if
such Certificate shall be properly endorsed
or otherwise be in proper form for
transfer and the person requesting such
payment shall pay any transfer or
other taxes required by reason of the
payment to a person other than the
registered holder of such Certificate or
establish to the satisfaction of
Parent that such tax has been paid or is
not applicable. Until surrendered as
contemplated by this Section 2.02, each
Certificate shall be deemed at any
time after the Effective Time to represent
only the right to receive upon such
surrender the Merger Consideration into
which the shares of Company Common
Stock theretofore represented by such
Certificate have been converted pursuant
to Section 2.01(c). No interest shall be
paid or accrue on any cash payable
upon surrender of any Certificate.
(c) Distributions With Respect to Unexchanged
Shares. No dividends or other distributions
with respect to Parent Common
Stock with a record date on or after the
Effective Time shall be paid to the
holder of any Certificate formerly
representing Company Common Stock with
respect to the shares of Parent Common
Stock issuable upon surrender thereof,
and no cash payment in lieu of fractional
shares shall be paid to any such
holder pursuant to Section 2.02(e) until
the surrender of such Certificate in
accordance with this Article II. Subject to
applicable Law, following
surrender of any such Certificate, there
shall be paid to the holder of the
Certificate representing whole shares of
Parent Common Stock issued in
exchange therefor, without interest, (i) at
the time of such surrender, the
amount of any cash payable in lieu of a
fractional share of Parent Common
Stock to which such holder is entitled
pursuant to Section 2.02(e) and the
amount of dividends or other distributions
with a record date after the
Effective Time theretofore paid with
respect to such whole shares of Parent
Common Stock, and (ii) at the appropriate
payment date, the amount of
dividends or other distributions with a
record date after the Effective Time
but prior to such surrender and a payment
date subsequent to such surrender
payable with respect to such whole shares
of Parent Common Stock.
(d) No Further Ownership Rights in Company Common
Stock. The Merger Consideration paid and/or
issued in accordance with the
terms of this Article II upon conversion of
any shares of Company Common Stock
shall be deemed to have been paid and/or
issued in full satisfaction of all
rights pertaining to such shares of Company
Common Stock, subject, however, to
the Surviving Entity's obligation to pay
any dividends or make any other
distributions with a record date prior to
the Effective Time that may have
been declared or made by the Company on
such shares of Company Common Stock in
accordance with the terms of this Agreement
or prior to the date of this
Agreement and which remain unpaid at the
Effective Time, and after the
Effective Time there shall be no further
registration of transfers on the
stock transfer books of the Surviving
Entity of shares of Company Common Stock
that were outstanding immediately prior to
the Effective Time. If, after the
Effective Time, any Certificates formerly
representing shares of Company
Common Stock are presented to the Surviving
Entity or the Exchange Agent for
any reason, they shall be canceled and
exchanged as provided in this Article
II.
(e) No Fractional Shares.
(1) No certificates or scrip representing
fractional shares of Parent Common Stock
shall be issued upon the conversion
of Company Common Stock pursuant to Section
2.01(c), and such fractional share
interests shall not entitle the owner
thereof to vote or to any rights of a
holder of Parent Common Stock. For purposes
of this Section 2.02(e), all
fractional shares to which a single record
holder would be entitled shall be
aggregated and calculations shall be
rounded to three decimal places.
(2) In lieu of any such fractional shares, each
holder of Company Common Stock who would
otherwise be entitled to such
fractional shares shall be entitled to an
amount in cash, without interest,
rounded to the nearest cent, equal to the
product of (A) the amount of the
fractional share interest in a share of
Parent Common Stock to which such
holder is entitled under Section 2.01(c)
(or would be entitled but for this
Section 2.02(e)) and (B) an amount equal to
the average of the closing sale
prices for Parent Common Stock on the New
York Stock Exchange, as reported in
The Wall Street Journal, Northeastern
edition, for each of the ten consecutive
trading days ending with the second
complete trading day prior to the
Effective Time.
(f) Termination of Exchange Fund. Any portion of the
Exchange Fund that remains undistributed to
the holders of Company Common
Stock for six months after the Effective
Time shall be delivered to Parent,
upon demand, and any holder of Company
Common Stock who has not theretofore
complied with this Article II shall
thereafter look only to Parent and the
Surviving Entity for payment of its claim
for Merger Consideration (including
any cash in lieu of fractional shares of
Parent Common Stock to which they are
entitled pursuant to Section 2.2(e)) and
any applicable dividends or
distributions with respect to any Parent
Common Stock constituting Merger
Consideration as provided in Section
2.02(c), in each case, without any
interest thereon.
(g) No Liability. None of Parent, Merger Sub or the
Company or the Exchange Agent shall be
liable to any person in respect of any
cash or any shares of Parent Common Stock
(or dividends or distributions with
respect thereto) delivered to a public
official pursuant to any applicable
abandoned property, escheat or similar Law.
If any Certificate has not been
surrendered prior to five years after the
Effective Time (or immediately prior
to such earlier date on which Merger
Consideration in respect of such
Certificate would otherwise escheat to or
become the property of any
Governmental Entity), any such cash,
shares, dividends or distributions in
respect of such Certificate shall, to the
extent permitted by applicable Law,
become the property of the Surviving
Entity, free and clear of all claims or
interest of any person previously entitled
thereto.
(h) Investment of Exchange Fund. The Exchange Agent
shall invest any cash included in the
Exchange Fund, as directed by Parent, in
direct obligations of the U.S. Treasury or
otherwise with the consent of the
Company (which consent shall not be
unreasonably withheld or delayed), on a
daily basis. Any interest and other income
resulting from such investments
shall be paid to Parent.
(i)
Withholding Rights. Parent and the Exchange
Agent shall be entitled to deduct and
withhold from the consideration
otherwise payable to any holder of Company
Common Stock pursuant to this
Agreement such amounts as may be required
to be deducted and withheld with
respect to the making of such payment under
the Code, or under any provision
of state, local or foreign tax Law. To the
extent that amounts are so withheld
and paid over to the appropriate taxing
authority, the Surviving Entity will
be treated as though it withheld an
appropriate amount of the type of
consideration otherwise payable pursuant to
this Agreement to any holder of
Company Common Stock, sold such
consideration for an amount of cash equal to
the fair market value of such consideration
at the time of such deemed sale
and paid such cash proceeds to the
appropriate taxing authority.
(j) Income Tax Treatment. It is intended by the
parties hereto that the Merger qualify as a
"reorganization" within the
meaning of Section 368(a) of the Code.
Subject to any revision to the
structure of the transaction as provided
under Section 6.12(c) hereof, the
parties hereto hereby adopt this Agreement
as a "plan of reorganization"
within the meanings of Sections 1.368-2(g)
and 1.368-3(a) of the U.S. Treasury
Regulations promulgated under the Code.
Section 2.03 Elections.
(a) Each person who, on or prior to the Election
Date referred to in paragraph (b) below, is
a record holder of shares of
Company Common Stock shall be entitled,
with respect to all or any portion of
such shares, to make an unconditional Stock
Election on or prior to such
Election Date, on the basis hereinafter set
forth.
(b) Parent shall prepare a form of election, which
form shall be subject to the reasonable
approval of the Company (the "Form of
Election") and shall be mailed with the
Joint Proxy Statement to the record
holders of Company Common Stock as of the
record date for the Company
Stockholders Meeting), which Form of
Election shall be used by each record
holder of shares of Company Common Stock
who wishes to elect to receive the
stock consideration pursuant to Section
2.01(c)(1) for any or all shares of
Company Common Stock held by such holder.
The Company shall use all reasonable
efforts to make the Form of Election and
the Joint Proxy Statement available
to all persons who become record holders of
Company Common Stock during the
period between such record date and the
Election Date, including using
reasonable efforts to mail a Form of
Election to all such persons who become
record holders prior to the seventh
Business Day prior to the Election Date.
Any such holder's election to receive the
stock consideration pursuant to
Section 2.01(c)(1) shall have been properly
made only if the Exchange Agent
shall have received at its designated
office, by 5:00 p.m., Pacific Standard
Time, on the Business Day immediately
preceding the Closing Date (the
"Election Date"), a Form of Election
properly completed and signed and
accompanied by Certificates for the shares
of Company Common Stock to which
such Form of Election relates, duly
endorsed in blank or otherwise in form
acceptable for transfer on the books of the
Company (or accompanied by an
appropriate guarantee of delivery of such
Certificates as set forth in such
Form of Election from a firm which is a
member of a registered national
securities exchange or of the National
Association of Securities Dealers, Inc.
or a commercial bank or trust company
having an office or correspondent in the
United States, provided such Certificates
are in fact delivered to the
Exchange Agent within three New York Stock
Exchange trading days after the
date of execution of such guarantee of
delivery). Failure to deliver
Certificates covered by any guarantee of
delivery within three New York Stock
Exchange trading days after the date of
execution of such guarantee of
delivery shall be deemed to invalidate any
otherwise properly made Stock
Election. Parent and the Company will
announce the anticipated Closing Date at
least three Business Days, but not more
than ten Business Days, prior thereto.
If the Closing is delayed to a subsequent
date, the Election Date shall be
similarly delayed and Parent will promptly
announce such rescheduled Election
Date and Closing.
(c) Any Form of Election may be revoked by the
stockholder who submitted such Form of
Election to the Exchange Agent only by
written notice received by the Exchange
Agent (i) prior to 5:00 p.m., Pacific
Time, on the Election Date or (ii) after
such time, if (and only to the extent
that) the Exchange Agent is legally
required to permit revocations and only if
the Effective Time shall not have occurred
prior to such date. In addition,
all Forms of Election shall automatically
be revoked if the Exchange Agent is
notified in writing by Parent and the
Company that the Merger has been
abandoned. If a Form of Election is
revoked, the Certificate or Certificates
(or guarantees of delivery, as appropriate)
for the shares of Company Common
Stock to which such Form of Election
relates shall be promptly returned to the
stockholder submitting the same to the
Exchange Agent and any such shares
shall be treated as Non-Electing Shares
(unless and until another duly
completed Form of Election (and the
Certificate or Certificates, or guarantees
of delivery, as applicable, to which such
Form of Election relates) has been
submitted to the Exchange Agent in
accordance with this Agreement).
(d) The
determination of the Exchange Agent in its
sole discretion shall be binding as to
whether or not elections to receive the
stock consideration pursuant to Section
2.01(c)(1) have been properly made or
revoked pursuant to this Section 2.03 with
respect to shares of Company Common
Stock and when elections and revocations
were received by it. If no Form of
Election is received with respect to shares
of Company Common Stock, or if the
Exchange Agent determines that any election
to receive the stock consideration
pursuant to Section 2.01(c)(1) was not
properly made with respect to shares of
Company Common Stock, such shares shall be
treated by the Exchange Agent as
Non-Electing Shares at the Effective Time,
and such shares shall be converted
into the right to receive the Cash
Consideration in accordance with Section
2.01(c)(1)(ii) (subject to Section
2.01(e)). The Exchange Agent shall also
make all computations as to the proration
contemplated by Section 2.01(e), and
absent manifest error any such computation
shall be conclusive and binding on
the holders of shares of Company Common
Stock. The Exchange Agent may, with
the mutual agreement of Parent and the
Company, make such rules as are
consistent with this Section 2.03 for the
implementation of the elections
provided for herein as shall be necessary
or desirable fully to effect such
elections.
Section 2.04 Company Equity Awards.
(a) At the Effective Time, each Company Stock Option
then outstanding under any Company Stock
Plan, whether or not then
exercisable, shall be assumed by Parent and
converted into an option to
purchase Parent Common Stock in accordance
with this Section 2.04(a). Each
Company Stock Option so converted shall
continue to have, and be subject to,
the same terms and conditions
(acknowledging that the Company Stock Plans
(other than the 1998 Independent Director
Stock Option Plan) provide for
accelerated vesting in connection with this
Transaction) as set forth in the
applicable Company Stock Plan and any
agreements thereunder immediately prior
to the Effective Time, except that, as of
the Effective Time, (i) each
unvested Company Stock Option under the
1998 Independent Director Stock Option
Plan shall be fully vested and exercisable,
(ii) each Company Stock Option
shall be exercisable for that number of
whole shares of Parent Common Stock
equal to the product of the number of
shares of Company Common Stock that were
issuable upon exercise of such Company
Stock Option immediately prior to the
Effective Time multiplied by the Exchange
Ratio (without regard to any
adjustment provided in Section 2.01(e)),
rounded down to the nearest whole
number of shares of Parent Common Stock,
and (iii) the per share exercise
price for the shares of Parent Common Stock
issuable upon exercise of such
Company Stock Option so converted shall be
equal to the quotient determined by
dividing the exercise price per share of
Company Common Stock at which such
Company Stock Option was exercisable
immediately prior to the Effective Time
by the Exchange Ratio, rounded up to the
nearest whole cent. Notwithstanding
the foregoing, the conversion of any
Company Stock Options which are
"incentive stock options," within the
meaning of Section 422 of the Code, into
options to purchase Parent Common Stock
shall be made so as not to constitute
a "modification" of such Company Stock
Options within the meaning of Section
424 of the Code.
(b) At the Effective Time, each outstanding purchase
right under the Company's Amended and
Restated Employee Stock Purchase Plan
(the "Employee Stock Purchase Plan") shall
be assumed by Parent in such manner
that Parent is a corporation "issuing or
assuming a stock option in a
transaction to which Section 424(a)
applies" within the meaning of the Code,
and shall be converted into a right to
purchase Parent Common Stock in
accordance with this Section 2.04(b). Each
purchase right so assumed and
converted by Parent under this Agreement
will continue to have, and be subject
to, the same terms and conditions set forth
in the Company's Employee Stock
Purchase Plan and the documents governing
the outstanding purchase rights
under the Employee Stock Purchase Plan,
immediately prior to the Effective
Time, except that the purchase price of
shares of Parent Common Stock and the
number of shares of Parent Common Stock to
be issued upon the exercise of such
purchase rights shall be adjusted in
accordance with the Exchange Ratio.
(c) At the Effective Time, each RSU shall vest
according to its terms and as promptly as
practicable following the Effective
Time, Parent shall cause to be issued to
each holder of RSUs, in complete
settlement thereof, a number of shares of
Parent Common Stock (net of any
applicable withholding) equal to the
product of the number of shares of
Company Common Stock subject to RSUs
credited to the holder's account
immediately prior to the Effective Time
multiplied by the Exchange Ratio
(without regard to any adjustment provided
in Section 2.01(e)), such product
to be rounded to the nearest whole number
of shares of Parent Common Stock.
(d) At the Effective Time, the forfeiture conditions
on each Performance Award shall lapse
according to its terms and, as promptly
as practicable following the Effective
Time, Parent shall cause to be issued
to each holder of a Performance Award, in
complete settlement thereof, a
number of shares of Parent Common Stock
(net of any applicable withholding)
equal to the product of the number of
shares of Company Common Stock issuable
upon achievement of all performance goals
set forth in the holder's
Performance Award multiplied by the
Exchange Ratio (without regard to any
adjustment provided in Section 2.01(e)),
such product to be rounded to the
nearest whole number of shares of Parent
Common Stock.
(e) The Company shall take all actions necessary to
terminate the Company Supplemental
Retention Plan as of the Effective Time. In
connection with such termination, as
promptly as practicable following the
Effective Time, Parent shall cause to be
issued to each participant in the
Supplemental Retention Plan, in complete
settlement of such participant's
rights with respect to Supplemental
Retention Units, a number of shares of
Parent Common Stock (net of any applicable
withholding) equal to the product
of the number of shares of Company Common
Stock subject to Supplemental
Retention Units credited to such
participant's account immediately prior to
the Effective Time multiplied by the
Exchange Ratio (without regard to any
adjustment provided in Section 2.01(e)),
such product to be rounded down to
the nearest whole number of shares of
Parent Common Stock.
(f) Parent shall take all corporate action necessary
to reserve for issuance a sufficient number
of shares of Parent Common Stock
for delivery upon exercise or settlement of
the Company Equity Awards being
assumed or settled in accordance with this
Section 2.04. As soon as reasonably
practicable after the Effective Time,
Parent shall file a registration
statement on Form S-8 (or any successor or
other appropriate form) with
respect to the shares of Parent Common
Stock subject to such Company Equity
Awards and shall use all reasonable efforts
to maintain the effectiveness of
such registration statement or registration
statements (and maintain the
current status of the prospectus or
prospectuses contained therein) for so
long as the Company Stock Options being
assumed in accordance with this
Section 2.04 remain outstanding.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as expressly set forth in that certain letter (with
specific reference to the Section or
Subsection of this Agreement to which the
information stated in such disclosure
relates and such other Sections or
Subsections of this Agreement to the extent
a matter is disclosed in such a
way as to make its relevance to the
information called for by such other
Section or Subsection readily apparent),
dated as of the date of this
Agreement, from the Company to Parent and
Merger Sub (the "Company Disclosure
Letter") or in any Company SEC Document
filed and publicly available prior to
the date of this Agreement (the "Filed
Company SEC Documents"), the Company
represents and warrants to Parent and
Merger Sub that:
Section 3.01 Organization, Standing and Power. Each of the
Company and each of its subsidiaries (the
"Company Subsidiaries") is duly
organized or formed, validly existing and
in good standing under the laws of
the jurisdiction in which it is organized
and has full corporate, partnership
or limited liability company power and
authority to conduct its businesses as
presently conducted, except where such
failure to be in good standing that
would not, individually, or in the
aggregate, reasonably be expected to have a
Company Material Adverse Effect. The
Company and each Company Subsidiary is
duly qualified to do business in each
jurisdiction where the nature of its
business or the ownership or leasing of its
properties make such qualification
necessary or the failure to so qualify,
individually or in the aggregate, has
had or would reasonably be expected to have
a Company Material Adverse Effect.
The Company has delivered or made available
to Parent true and complete copies
of the certificate of incorporation of the
Company, as amended to the date of
this Agreement (as so amended, the "Company
Charter"), and the by-laws of the
Company, as amended to the date of this
Agreement (as so amended, the "Company
By-laws"), and the comparable
organizational documents of each Company
Subsidiary, in each case as amended to the
date of this Agreement. The Company
is not in violation of any of the provision
of the Company Charter or the
Company By-laws as of the date hereof.
Section 3.02 The Company Subsidiaries; Equity Interests.
(a) Section 3.02(a) of the Company Disclosure Letter
lists each Company Subsidiary and its
jurisdiction of organization or
formation. All the outstanding shares of
capital stock of each Company
Subsidiary have been validly issued and are
fully paid and nonassessable and
are owned by the Company, by another
Company Subsidiary or by the Company and
another Company Subsidiary, free and clear
of all Liens.
(b) Except for its interests in the Company
Subsidiaries, the Company does not own,
directly or indirectly, any Equity
Interest in any person.
Section 3.03 Capital Structure.
(a) The authorized capital stock of the Company
consists of 400,000,000 shares of Company
Common Stock and 100,000,000 shares
of preferred stock, par value $0.01 per
share. As of July 13, 2004, (i)
308,571,027 shares of Company Common Stock
were issued and outstanding, (ii)
23,081,422 shares of Company Common Stock
were held by the Company in its
treasury, (iii) 25,441,914 shares of
Company Common Stock were subject to
outstanding Company Equity Awards pursuant
to the Company Stock Plans, (iv)
29,120,640 shares of Company Common Stock
were reserved for issuance under the
Company Stock Plans and (v) a variable
number of shares of Company Common
Stock were subject to outstanding
convertible debt. Except as set forth above,
as of July 13, 2004, no shares of capital
stock or other voting securities of
the Company were issued, reserved for
issuance or outstanding, and since July
13, 2004, no shares of capital stock or
other voting securities of the Company
were issued by the Company, except for
shares of Company Common Stock issued
upon the exercise or vesting of Company
Equity Awards outstanding as of July
13, 2004. There are no outstanding stock
appreciation rights linked to the
price of Company Common Stock and granted
under the Company Stock Plan or
otherwise. All outstanding shares of
Company Common Stock are, and all such
shares that may be issued prior to the
Effective Time will be when issued,
duly authorized, validly issued, fully paid
and nonassessable and not subject
to or issued in violation of any purchase
option, call option, right of first
refusal, preemptive right, subscription
right or any similar right under any
provision of the DGCL, the Company Charter,
the Company By-laws or any
Contract to which the Company is a party or
otherwise bound. There are not any
bonds, debentures, notes or other
indebtedness of the Company having the right
to vote (or convertible into, or
exchangeable for, securities having the right
to vote) on any matters on which holders of
Company Common Stock may vote
("Voting Company Debt"). Except as set
forth above and except for the Rights
(as defined in the Company Rights Plan), as
of the date of this Agreement,
there are not any options, warrants,
rights, convertible or exchangeable
securities, "phantom" stock rights, stock
appreciation rights, stock-based
performance units, commitments, Contracts,
arrangements or undertakings of any
kind to which the Company or any Company
Subsidiary is a party or by which any
of them is bound (i) obligating the Company
or any Company Subsidiary to
issue, deliver or sell, or cause to be
issued, delivered or sold, additional
shares of capital stock or other Equity
Interests in, or any security
convertible or exercisable for or
exchangeable into any capital stock of or
other Equity Interests in, the Company or
any Company Subsidiary or any Voting
Company Debt, (ii) obligating the Company
or any Company Subsidiary to issue,
grant, extend or enter into any such
option, warrant, call, right, security,
commitment, Contract, arrangement or
undertaking or (iii) that give any person
the right to receive any economic benefit
or right similar to or derived from
the economic benefits and rights occurring
to holders of Company Common Stock.
As of the date of this Agreement, there are
not any outstanding contractual
obligations of the Company or any Company
Subsidiary to repurchase, redeem or
otherwise acquire any shares of capital
stock of the Company or any Company
Subsidiary.
(b) All outstanding Company Stock Options are
evidenced by stock option award agreements.
The Company has provided or made
available to Parent the standard form of
stock option award agreement, as well
as those stock option award agreements that
are materially different from the
standard form of stock option award
agreement.
Section 3.04 Authority; Execution and Delivery;
Enforceability.
(a) The Company has all requisite corporate power
and authority to execute and deliver this
Agreement and, subject to the
Company Stockholder Approval, to consummate
the Merger and the other
Transactions to be performed or consummated
by the Company in accordance with
the terms of this Agreement. The execution
and delivery by the Company of this
Agreement and the consummation by the
Company of the Merger and the other
Transactions to be performed or consummated
by the Company in accordance with
the terms of this Agreement have been duly
authorized by all necessary
corporate action on the part of the
Company, subject, in the case of the
Merger, to receipt of the Company
Stockholder Approval. The Company has duly
executed and delivered this Agreement, and,
assuming due authorization,
execution and delivery of this Agreement by
Parent and Merger Sub, this
Agreement constitutes its legal, valid and
binding obligation, enforceable
against it in accordance with its terms,
except that enforcement hereof may be
subject to or limited by (i) bankruptcy,
insolvency or other similar laws, now
or hereafter in effect, affecting its
creditors' rights generally and (ii) the
affect of general principles of equity
(regardless of whether enforceability
is considered in a proceeding at law or in
equity).
(b) The Board of Directors of the Company (the
"Company Board"), at a meeting duly called
and held, duly and unanimously
adopted resolutions (which resolutions have
not been rescinded or modified)
(i) approving this Agreement and approving
the Merger and the other
Transactions to be performed or consummated
by the Company in accordance with
the terms of this Agreement, (ii)
determining that the terms of the Merger and
the other Transactions to be performed or
consummated by the Company in
accordance with the terms of this Agreement
are advisable and fair to and in
the best interests of the Company and its
stockholders, (iii) directing that
this Agreement be submitted to a vote at
the Company Stockholders Meeting and
(iv) recommending that the Company's
stockholders adopt this Agreement. The
Company has taken all appropriate actions
so that the restrictions on business
combinations contained in Section 203 of
the DGCL will not apply with respect
to or as a result of this Agreement, the
Merger or any other Transactions
contemplated by this Agreement and the
transactions contemplated hereby and
thereby, without any further action on the
part of the stockholders of the
Company or the Company Board. No other
state takeover statute or similar
statute or regulation is applicable to or
purports to be applicable to the
Merger or any other Transactions
contemplated by this Agreement.
(c) The Company Rights Agreement has been amended so
that (A) Parent, Merger Sub and any of
their "Affiliates" or "Associates" (as
such terms are defined in the Company
Rights Agreement) are exempt from the
definition of "Acquiring Person" contained
in the Company Rights Agreement,
and no "Shares Acquisition Date" or
"Distribution Date" (as such terms are
defined in the Company Rights Agreement)
will occur as a result of the
execution of this Agreement or any other
Transactions contemplated by this
Agreement or the consummation of the Merger
and (B) the Company Rights
Agreement will terminate and the Company
Rights will expire immediately prior
to the Effective Time. The Company Rights
Agreement, as so amended, has not
been further amended or modified.
(d) The only vote of holders of any class or series
of the capital stock of the Company
necessary to adopt this Agreement and
approve the Merger is the approval of this
Agreement by a majority of the
outstanding shares of Company Common Stock
entitled to vote (the "Company
Stockholder Approval"). The affirmative
vote of the holders of Company Common
Stock, or any of them, is not necessary to
consummate any Transaction to be
performed or consummated by the Company in
accordance with the terms of this
Agreement other than the Merger.
Section 3.05 No Conflicts; Consents.
(a) The execution and delivery by the Company of
this Agreement do not, and the consummation
by the Company of the Merger and
the other Transactions to be performed or
consummated by the Company in
accordance with the terms of this Agreement
and compliance by the Company with
the terms hereof will not, conflict with,
or result in any violation of or
default (with or without notice or lapse of
time, or both) under, or give rise
to a right of consent, termination,
cancellation or acceleration of any
obligation or to loss of a material benefit
under, or to increased,
additional, accelerated or guaranteed
rights or entitlements of any person
under, or result in the creation of any
Lien upon any of the properties or
assets of the Company or any Company
Subsidiary under, any provision of (i)
the Company Charter, the Company By-laws or
the comparable organizational
documents of any Company Subsidiary, (ii)
any contract, management agreement,
development agreement, consulting
agreement, lease, license, indenture, note,
bond, agreement, permit, concession,
franchise or other instrument (a
"Contract") to which the Company or any
Company Subsidiary is a party or by
which any of their respective properties or
assets is bound or (iii) subject
to the filings and other matters referred
to in Section 3.05(b), any judgment,
order or decree ("Judgment") or statute,
law (including common law),
ordinance, rule or regulation ("Law")
applicable to the Company or any Company
Subsidiary or their respective properties
or assets, other than, in the case
of clauses (ii) and (iii) above, any such
items that, individually or in the
aggregate, have not had and would not
reasonably be expected to have a Company
Material Adverse Effect.
(b) No consent, approval, license, order or
authorization ("Consent") of, or
registration, declaration or filing with, or
Permit from, any Federal, state, local or
foreign government or any court of
competent jurisdiction, administrative
agency or commission or other
governmental authority or instrumentality,
domestic or foreign (a
"Governmental Entity"), is required to be
obtained or made by the Company or
any Company Subsidiary in connection with
the execution, delivery and
performance of this Agreement or the
consummation of the Merger and the other
Transactions to be performed or consummated
by the Company in accordance with
the terms of this Agreement, other than (i)
compliance with and filings under
the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended (the "HSR
Act") and any applicable antitrust or
competition laws of foreign
jurisdictions ("Foreign Competition Laws"),
(ii) the filing with the
Securities and Exchange Commission (the
"SEC") of (A) the Joint Proxy
Statement and (B) such reports under, or
other applicable requirements of, the
Securities Exchange Act of 1934, as amended
(the "Exchange Act"), as may be
required in connection with this Agreement,
the Merger and the other
Transactions to be performed or consummated
by the Company in accordance with
the terms of this Agreement, (iii) the
filing of the Certificate of Merger
with the Secretary of State of the State of
Delaware and appropriate documents
with the relevant authorities of the other
jurisdictions in which the Company
is qualified to do business, (iv)
compliance with and such filings and
approvals as may be required under
applicable Gaming Laws and (v) such other
items that, individually or in the
aggregate, have not had and would not
reasonably be expected to have a Company
Material Adverse Effect.
Section 3.06 Company SEC Documents; Undisclosed Liabilities.
(a) The Company has filed all reports, schedules,
forms, statements and other documents
required to be filed by the Company with
the SEC since January 1, 2001 pursuant to
Sections 13(a) and 15(d) of the
Exchange Act (the "Company SEC
Documents").
(b) As of its respective date, each Company SEC
Document complied in all material respects
with the requirements of the
Exchange Act or the Securities Act of 1933,
as amended (the "Securities Act"),
as the case may be, and the rules and
regulations of the SEC promulgated
thereunder applicable to such Company SEC
Document, and did not contain any
untrue statement of a material fact or omit
to state a material fact required
to be stated therein or necessary in order
to make the statements therein, in
light of the circumstances under which they
were made, not misleading. Except
to the extent that information contained in
any Filed Company SEC Document has
been revised or superseded by a later filed
Filed Company SEC Document, none
of the Company SEC Documents contains any
untrue statement of a material fact
or omits to state any material fact
required to be stated therein or necessary
in order to make the statements therein, in
light of the circumstances under
which they were made, not misleading. The
consolidated financial statements of
the Company included in the Company SEC
Documents comply as to form in all
material respects with applicable
accounting requirements and the published
rules and regulations of the SEC with
respect thereto, have been prepared in
accordance with generally accepted
accounting principles ("GAAP") (except, in
the case of unaudited statements, as
permitted by Form 10-Q of the SEC)
applied on a consistent basis during the
periods involved (except as may be
indicated in the notes thereto) and fairly
present in all material respects
the consolidated financial position of the
Company and its consolidated
subsidiaries as of the dates thereof and
the consolidated results of their
operations and cash flows for the periods
shown (subject, in the case of
unaudited statements, to normal year-end
audit adjustments). The books and
records of the Company and the Company
Subsidiaries have been, and are being,
maintained in all material respects in
accordance with GAAP and any other
applicable legal and accounting
requirements.
(c) Except as and to the extent disclosed or
reserved against on the Company's most
recent balance sheet (or in the notes
thereto) included in the Filed Company SEC
Documents, neither the Company nor
any Company Subsidiary has any Liabilities
of any nature (whether accrued,
absolute, contingent or otherwise) required
by GAAP to be set forth on a
consolidated balance sheet of the Company
and its consolidated subsidiaries or
in the notes thereto, except for
Liabilities that, individually or in the
aggregate, would not reasonably be expected
to have a Company Material Adverse
Effect.
(d) None of the Company Subsidiaries is, or has at
any time since January 1, 2001 been,
subject to the reporting requirements of
Sections 13(a) and 15(d) of the Exchange
Act.
Section 3.07 Information Supplied. None of the information
supplied or to be supplied by the Company
for inclusion or incorporation by
reference in (i) the registration statement
on Form S-4 to be filed with the
SEC by Parent in connection with the Share
Issuance (the "Form S-4") will, at
the time the Form S-4 is filed with the
SEC, at any time it is amended or
supplemented or at the time it becomes
effective under the Securities Act,
contain any untrue statement of a material
fact or omit to state any material
fact required to be stated therein or
necessary to make the statements therein
not misleading, or (ii) the Joint Proxy
Statement will, at the date it is
first mailed to the Company's stockholders
or Parent's stockholders or at the
time of the Company Stockholders Meeting or
Parent Stockholders Meeting,
contain any untrue statement of a material
fact or omit to state any material
fact required to be stated therein or
necessary in order to make the
statements therein, in light of the
circumstances under which they are made,
not misleading. The Joint Proxy Statement
will comply as to form in all
material respects with the requirements of
the Exchange Act and the rules and
regulations thereunder, except that no
representation is made by the Company
with respect to statements made or
incorporated by reference therein based on
information supplied by Parent or Merger
Sub in writing for inclusion or
incorporation by reference in the Form S-4
or the Joint Proxy Statement.
Section 3.08 Absence of Certain Changes or Events. Since
December 31, 2003, the Company has
conducted its business in all material
respects only in the ordinary course, and
since such date there has not been:
(i) any event or development, condition or
occurrence that, individually or in the aggregate, has had
or would reasonably be expected to have a Company Material
Adverse Effect;
(ii) any change in accounting methods,
principles or practices by the Company or any Company
Subsidiary, except insofar as may have been required by a
change in GAAP; or
(iii) any material elections with respect to
Taxes by the Company or any Company Subsidiary or settlement
or compromise by the Company or any Company Subsidiary of
any material Tax Liability or refund.
Section 3.09 Taxes.
(a) Except
with respect to any divestitures that may
be undertaken pursuant to Section 6.03(a),
none of the Company, the Company
Subsidiaries or any Company affiliates has
taken or agreed to take any action
that would prevent the Merger from
qualifying as a "reorganization" within the
meaning of Section 368(a) of the Code.
Except with respect to any divestitures
that may be undertaken pursuant to Section
6.03(a ), to the Company's
knowledge, there is no agreement, plan or
other circumstance that would
prevent the Merger from qualifying as a
reorganization within the meaning of
Section 368(a) of the Code.
(b) The Company and the Company Subsidiaries timely
have filed with the appropriate Tax
authority or other Governmental Authority
all material Tax Returns required to be
filed, taking into account any
extensions of time within which to file
such Tax Returns, and all such Tax
Returns are complete and accurate in all
material respects, subject to such
exceptions as would not be reasonably
expected to have a Company Material
Adverse Effect. The Company and the Company
Subsidiaries have paid all Taxes
(other than such Taxes as are being
contested in good faith by appropriate
proceedings and for which adequate reserves
have been taken) that have become
due, whether or not shown on any Tax
Return, subject to such exceptions as are
unlikely to have a Company Material Adverse
Effect. The unpaid Taxes of the
Company and the Company Subsidiaries did
not, as of the dates of the financial
statements contained in the most recent
Company SEC Documents, exceed the
reserve for Tax Liability (excluding any
reserve for deferred Taxes
established to reflect timing differences
between book and Tax income) set
forth on the face of the balance sheets
(rather than in any notes thereto)
contained in such financial statements,
subject to such exceptions as are
unlikely to have a Company Material Adverse
Effect. Since the date of the
financial statements in the most recent
Company SEC Documents, neither the
Company nor any Company Subsidiary has
incurred any Liability for Taxes
outside the ordinary course of business or
otherwise inconsistent with past
custom and practice, subject to such
exceptions as would not be reasonably
expected to have a Company Material Adverse
Effect.
(c) There are no audits or other administrative
proceedings or court proceedings currently
pending or in progress with regard
to any material Taxes or material Tax
Returns of the Company or any Company
Subsidiary, and neither the Company nor any
Company Subsidiary has received a
written notice or announcement of any
audits or other administrative
proceedings or court proceedings, subject
to exceptions for any audits or
proceedings that, if resolved in a manner
unfavorable to the Company or any
Company Subsidiary, are unlikely to have a
Company Material Adverse Effect.
Neither the Company nor any Company
Subsidiary has granted any waivers or
extensions of the time to assess any
Taxes.
(d) There are no Tax Liens upon any property or
assets of the Company or any Company
Subsidiary except Liens for current Taxes
not yet due and payable and Liens for Taxes
that are being contested in good
faith by appropriate proceedings, subject
to such exceptions as would not be
reasonably expected to have a Company
Material Adverse Effect.
(e) All Taxes required to be withheld, collected or
deposited by or with respect to the Company
and each Company Subsidiary have
been timely withheld, collected or
deposited as the case may be, and to the
extent required by applicable Law, have
been paid to the relevant Tax
authority or other Governmental Entity,
subject to such exceptions as are
unlikely to have a Company Material Adverse
Effect.
(f) Neither the Company nor any Company Subsidiary
is responsible for the Taxes of any other
person (other than the Company or a
Company Subsidiary) under Treasury
Regulation Section 1.1502-6 (or any similar
provision of state, local, or foreign Law),
as a transferee or by Contract
that would reasonably be expected to have a
Company Material Adverse Effect.
Neither the Company nor any Company
Subsidiary is a party to, is bound by or
has any obligation under any Tax sharing,
Tax allocation or Tax indemnity
agreement or similar Contract or
arrangement, subject to such exceptions as
would not be reasonably expected to have a
Company Material Adverse Effect.
(g) Neither the Company nor any Company Subsidiary
has been a party to any distribution
occurring during the two (2) years
preceding the date of this Agreement in
which the parties to such distribution
treated the distribution as one to which
Section 355 of the Code is
applicable.
(h)
Neither the Company nor any Company Subsidiary
has entered into or participated in any
listed transaction within the meaning
of Treasury Regulation Section
1.6011-4(b)(2) or any confidential corporate
tax shelter within the meaning of Treasury
Regulation Section 301.6111-2.
Section 3.10 Absence of Changes in Benefit Plans. Except as
would not reasonably be expected to have a
Company Material Adverse Effect,
since December 31, 2003, neither the
Company nor any Company Subsidiary has
terminated, adopted, amended, modified or
agreed to amend or modify (or
announced an intention to amend or modify)
any collective bargaining agreement
or any bonus, pension, profit sharing,
deferred compensation, incentive
compensation, stock ownership, stock
purchase, stock appreciation, restricted
stock, stock option, phantom stock,
performance, retirement, thrift, savings,
stock bonus, cafeteria, paid time off,
perquisite, fringe benefit, vacation,
severance, disability, death benefit,
hospitalization, medical or other
welfare benefit or other plan, program,
arrangement or understanding, whether
oral or written, formal or informal, funded
or unfunded (whether or not
legally binding) maintained, contributed to
or required to be maintained or
contributed to by the Company or any
Company Subsidiary or any other person or
entity that, together with the Company or
any Company Subsidiary, is treated
as a single employer under Section 414(b),
(c), (m) or (o) of the Code (each,
a "Company ERISA Affiliate"), in each case
providing benefits to any current
or former employee, officer, director or
independent contractor of the Company
or any Company Subsidiary (each, a "Company
Participant") and whether or not
subject to United States law (collectively,
"Company Benefit Plans") or has
made any change in any actuarial or other
assumption used to calculate funding
obligations with respect to any Company
Benefit Plan that is a Company Pension
Plan, or any change in the manner in which
contributions to any such Company
Pension Plan are made or the basis on which
such contributions are determined,
other than changes made pursuant to any
collective bargaining agreement to
which the Company or any Company Subsidiary
is a party.
Section 3.11 ERISA Compliance; Excess Parachute Payments.
(a) Section 3.11(a) of the Company Disclosure Letter
contains a list of all "employee pension
benefit plans" (as defined in Section
3(2) of the Employee Retirement Income
Security Act of 1974, as amended
("ERISA")) ("Company Pension Plans"),
"employee welfare benefit plans" (as
defined in Section 3(1) of ERISA) and all
other material Company Benefit Plans
maintained, or contributed to, by the
Company or any Company Subsidiary for
the benefit of any Company Participant.
Each Company Benefit Plan (other than
Company Multiemployer Pension Plans), and,
to the knowledge of the Company,
each Company Multiemployer Pension Plan has
been administered in material
compliance with its terms and applicable
Law, and the terms of any applicable
collective bargaining agreements. The
Company has delivered or made available,
or will as soon as practicable following
the date hereof deliver or make
available, to Parent true, complete and
correct copies of (i) each Company
Benefit Plan required to be listed on
Section 3.11(a) of the Company
Disclosure Letter (or, in the case of any
unwritten Company Benefit Plans,
written descriptions thereof), (ii) the two
most recent annual reports
required to be filed, or such similar
reports, statements, information returns
or material correspondence filed with or
delivered to any Governmental Entity,
with respect to each Company Benefit Plan
(including reports filed on Form
5500 with accompanying schedules and
attachments), (iii) the most recent
summary plan description prepared for each
Company Benefit Plan, (iv) each
trust agreement and group annuity contract
and other documents relating to the
funding or payment of benefits under any
Company Benefit Plan, (v) the most
recent determination or qualification
letter issued by any Governmental Entity
for each Company Benefit Plan intended to
qualify for favorable tax treatment,
as well as a true, correct and complete
copy of each pending application for a
determination letter, if applicable, and
(vi) the two most recent actuarial
valuations for each Company Benefit
Plan.
(b) Each Company Benefit Plan (other than any
Company Multiemployer Pension Plan)
intended to be "qualified" within the
meaning of Section 401(a) of the Code has
been the subject of a determination
letter from the Internal Revenue Service to
the effect that such Company
Benefit Plan is qualified and exempt from
Federal income taxes under Sections
401(a) and 501(a), respectively, of the
Code, and no such determination letter
has been revoked nor, to the knowledge of
the Company, has revocation been
threatened, nor has any such Company
Benefit Plan (other than any Company
Multiemployer Pension Plan) been amended
since the date of its most recent
determination letter or application
therefor in any respect that would
adversely affect its qualification or
materially increase its costs or require
security under Section 307 of ERISA.
(c) During the past six years neither the Company
nor any Company ERISA Affiliate has
maintained, contributed to or been
obligated to maintain or contribute to, or
has any actual or contingent
Liability under, any Company Benefit Plan
that is subject to Title IV of
ERISA, other than any Company Pension Plan
that is a "multiemployer plan"
within the meaning of Section 4001(a)(3) of
ERISA (a "Company Multiemployer
Pension Plan"). There have been no
non-exempt "prohibited transactions" (as
such term is defined in Section 406 of
ERISA or Section 4975 of the Code) or
any other breach of fiduciary
responsibility with respect to any Company
Benefit Plan that is subject to ERISA
(other than any Company Multiemployer
Pension Plan) and, to the knowledge of the
Company, with respect to any
Company Multiemployer Pension Plan that, in
each case, could reasonably be
expected to subject the Company, any
Company Subsidiary or any officer of the
Company or any Company Subsidiary or any of
the Company Benefit Plans which
are subject to ERISA, or, to the knowledge
of the Company, any trusts created
thereunder or any trustee or administrator
thereof to the tax or penalty on
prohibited transactions imposed by such
Section 4975 or to any material
Liability under Section 502(i) or 502(1) of
ERISA or to any other material
Liability for breach of fiduciary duty
under ERISA or any other applicable
Law. During the six years prior to the date
of this Agreement, no Company
Pension Plan or related trust has been
terminated. Neither the Company nor any
Company Subsidiary has incurred any
material Liability that remains
unsatisfied with respect to a "complete
withdrawal" or a "partial withdrawal"
(as such terms are defined in Sections 4203
and 4205, respectively, of ERISA)
since the effective date of such Sections
4203 and 4205 with respect to any
Company Multiemployer Pension Plan.
(d) With respect to any Company Benefit Plan that is
an employee welfare benefit plan, whether
or not subject to ERISA, (i) no such
Company Benefit Plan is funded through a
"welfare benefits fund" (as such term
is defined in Section 419(e) of the Code),
(ii) except as would not reasonably
be expected to have a Company Material
Adverse Effect, each such Company
Benefit Plan that is a "group health plan"
(as such term is defined in Section
5000(b)(1) of the Code), complies with the
applicable requirements of Section
4980B(f) of the Code or any similar state
statute, (iii) no such Company
Benefit Plan provides benefits after
termination of employment, except where
the cost thereof is borne entirely by the
former employee (or his eligible
dependents or beneficiaries) or as required
pursuant to any collective
bargaining agreement or by Section 4980B(f)
of the Code or any similar state
statute and (iv) Section 3.11(d)(iv) of the
Company Disclosure Letter
indicates whether each welfare plan is
self-insured or insured through
third-party coverage.
(e) No amount or other entitlement that could be
received (whether in cash or property or
the vesting of property) as a result
of any of the transactions contemplated
hereby (alone or in combination with
any other event) by any Company Participant
who is an executive officer of the
Company who currently has in effect a
change of control agreement or has an
employment agreement with change of control
provisions under any Company
Benefit Plan or other compensation
arrangement currently in effect would be
characterized as an "excess parachute
payment" (as such term is defined in
Section 280G(b)(1) of the Code) and no such
executive officer is entitled to
receive any additional payment from the
Company or any other person in the
event that the excise tax required by
Section 4999(a) of the Code is imposed
on such executive officer.
(f) The execution and delivery by the Company of
this Agreement do not, and the consummation
of the Transactions and compliance
with the terms hereof will not (either
alone or in combination with any other
event) (i) entitle any Company Participant
to any additional compensation,
severance or other benefits, (ii)
accelerate the time of payment or vesting or
trigger any payment or funding (through a
grantor trust or otherwise) of
compensation or benefits under, increase
the amount payable or trigger any
other material obligation pursuant to, any
Company Benefit Plan or (iii)
result in any breach or violation of, or a
default (with or without notice or
lapse of time or both) under, any Company
Benefit Plan.
(g) Neither the Company nor any Company Subsidiary
has received notice of any, and, to the
knowledge of the Company, there are no
(i) material pending termination
proceedings or other suits, claims (except
claims for benefits payable in the normal
operation of the Company Benefit
Plans), actions or proceedings against or
involving or asserting any rights or
claims to benefits under any Company
Benefit Plan or (ii) pending
investigations (other than routine
inquiries) by any Governmental Entity with
respect to any Company Benefit Plan. To the
knowledge of the Company, all
contributions, premiums and benefit
payments under or in connection with the
Company Benefit Plans that are required to
have been made by the Company or
any Company Subsidiary have been timely
made, accrued or reserved for in all
material respects.
(h) Neither the Company nor any Company Subsidiary
has any material Liability or obligations,
including under or on account of a
Company Benefit Plan, arising out of the
hiring of persons to provide services
to the Company or any Company Subsidiary
and treating such persons as
consultants or independent contractors and
not as employees of the Company or
any Company Subsidiary.
Section 3.12 Litigation. There is no suit, claim, action,
investigation or proceeding pending or, to
the knowledge of the Company,
threatened against the Company or any
Company Subsidiary that, individually or
in the aggregate, has had or would
reasonably be expected to have a Company
Material Adverse Effect, nor is there any
Judgment outstanding against the
Company or any Company Subsidiary that has
had or would reasonably be expected
to have a Company Material Adverse
Effect.
Section 3.13 Compliance With Applicable Laws. The Company
and the Company Subsidiaries and their
relevant personnel and operations are
in compliance with all applicable Laws,
including applicable Gaming Laws and
Laws relating to occupational health and
safety, except to the extent that the
failure to be in compliance with any such
Law has not had and would not
reasonably be expected to have a Company
Material Adverse Effect. Neither the
Company nor any Company Subsidiary has
received any written communication
during the past two years from a
Governmental Entity that alleges that the
Company or a Company Subsidiary is not in
compliance with any applicable Law,
except where such non-compliance has not
had and would not reasonably be
expected to have a Company Material Adverse
Effect. The Company and the
Company Subsidiaries, and to the knowledge
of the Company, each of their
respective directors, officers and persons
performing management functions
similar to officers, have in effect all
permits, findings of suitability,
licenses, variances, certificates of
occupancy, exemptions, authorizations,
operating certificates, franchises,
entitlements, consents, orders and
approvals of all Governmental Entities
(collectively, "Permits"), necessary or
advisable for them to own, lease or operate
their properties and assets and to
carry on their businesses as now conducted
or proposed to be conducted, except
for such Permits the absence of which has
not had or would not reasonably be
expected to have a Company Material Adverse
Effect. There has occurred no
violation of, suspension, reconsideration,
imposition of penalties or fines,
imposition of additional conditions or
requirements, default (with or without
notice or lapse of time or both) under, or
event giving to others any right of
termination, amendment or cancellation of,
with or without notice or lapse of
time or both, any such Permit, except for
any such violation, default or event
which has not had or would not reasonably
be expected to have a Company
Material Adverse Effect. Neither the
Company nor any Company Subsidiary has
suffered a suspension or revocation or
imposition of penalties or fines with
respect to any Permit held under any Gaming
Laws, other than in the ordinary
course. There is no event which, to the
knowledge of the Company, would
reasonably be expected to result in the
revocation, cancellation, non-renewal
or adverse modification of any such Permit,
except for any such event that has
not had or would not reasonably be expected
to have a Company Material Adverse
Effect. Notwithstanding the foregoing, this
Section 3.13 does not relate to
matters with respect to Taxes (which are
the subject of Section 3.09), ERISA
(which are the subject of Section 3.11),
labor Laws (which are the subject of
Section 3.16) or Environmental Laws (which
are the subject of Section 3.18).
Section 3.14 Assets Other Than Real Property Interests. The
Company and the Company Subsidiaries have
good and valid title to all of their
respective material properties and assets,
in each case free and clear of all
Liens, except (i) mechanics', carriers',
workmen's, repairmen's or other like
Liens arising or incurred in the ordinary
course of business relating to
obligations that are not delinquent or that
are being contested in good faith
by the Company or a Company Subsidiary and
for which the Company or a Company
Subsidiary has established adequate
reserves, (ii) Liens for Taxes that are
not due and payable, are being contested in
good faith by appropriate
proceedings or that may thereafter be paid
without interest or penalty, (iii)
Liens that are reflected as Liabilities on
the balance sheet of the Company
and its consolidated subsidiaries as of
March 31, 2004 contained in the Filed
Company SEC Documents and the existence of
which is referred to in the notes
to such balance sheet, (iv) Liens arising
under original purchase price
conditional sales contracts and equipment
leases with third parties entered
into in the ordinary course of business and
(v) other imperfections of title
or encumbrances, if any, that, individually
or in the aggregate, do not
materially impair, and would not reasonably
be expected materially to impair,
the continued use and operation of the
assets to which they relate in the
conduct of the business of the Company and
the Company Subsidiaries as
presently conducted. This Section 3.14 does
not relate to real property or
interests in real property, such items
being the subject of Section 3.15, or
to intellectual property, such items being
the subject of Section 3.19.
Section 3.15 Real Property. All real property and interests
in real property owned in fee by the
Company or any Company Subsidiary
(individually, a "Company Owned Property")
and all real property and interests
in real property leased by the Company or
any Company Subsidiary and any prime
or underlying leases relating thereto
(individually, a "Company Leased
Property") are set forth or described in
the Form 10-K filed by the Company
with the SEC for the year ended December
31, 2003 or on Section 3.15 of the
Company Disclosure Letter. The Company or a
Company Subsidiary has good and
marketable fee title to all Company Owned
Property and good and valid
leasehold title to all Company Leased
Property (a Company Owned Property or
Company Leased Property being sometimes
referred to herein, individually, as a
"Company Property" and, collectively, the
"Company Properties"), in each case
subject only to (i) Liens described in
clause (i), (ii), (iii) or (v) of
Section 3.14, (ii) leases, subleases and
similar agreements set forth in
Section 3.15 of the Company Disclosure
Letter and (iii) easements, covenants,
rights-of-way and other similar
restrictions of record, if any, that,
individually or in the aggregate, do not
materially impair, and would not
reasonably be expected materially to
impair, the continued use and operation
of the assets to which they relate in the
conduct of the business of the
Company and the Company Subsidiaries as
presently conducted. Any material
reciprocal easements, operating agreements,
option agreements, rights of first
refusal or rights of first offer with
respect to any Company Property at which
a casino or hotel project is operated are
set forth in Section 3.15 of the
Company Disclosure Letter. There are no
physical conditions or defects at any
of the Company Owned Properties at which
casino or hotel operations are
conducted which materially impair or would
be reasonably expected to
materially impair the continued operation
and conduct of the casino, hotel and
related businesses as presently conducted
at each such Company Owned Property.
Section 3.16
Labor Matters. Since January 1, 2001, neither
the Company nor any Company Subsidiary has
experienced any labor strikes or,
to the knowledge of the Company, union
organization attempts, requests for
representation, work slowdowns or stoppages
or other disputes due to labor
disagreements that would reasonably likely
be material to any casino or hotel
operated or owned by the Company or any
Company Subsidiary, and, to the
knowledge of the Company, there is
currently no such action threatened against
or affecting the Company or any Company
Subsidiary. The Company and the
Company Subsidiaries are each in compliance
with all applicable Laws with
respect to labor relations, employment and
employment practices, occupational
safety and health standards, terms and
conditions of employment, wages and
hours, human rights, pay equity and workers
compensation, except to the extent
that the failure to be in compliance with
any such Law has not had and would
not reasonably be expected to have a
Company Material Adverse Effect. The
Company and the Company Subsidiaries are
not engaged in any unfair labor
practice, and no unfair labor practice
charge or complaint against the Company
or any Company Subsidiary is pending or, to
the knowledge of the Company,
threatened before the National Labor
Relations Board or any comparable
Federal, state, provincial or foreign
agency or authority, except for such
practices, charges or complaints that,
individually or in the aggregate, have
not had and would not reasonably be
expected to have a Company Material
Adverse Effect. No grievance or arbitration
proceeding arising out of a
collective bargaining agreement is pending
or, to the knowledge of the
Company, threatened against the Company or
any Company Subsidiary that would
reasonably be expected to result in
material Liability to the Company.
Contracts. Neither the Company nor any Company Subsidiary is
a party to or bound by, as of the date
hereof, any Contract that (i) is a
"material contract" (as such term is
defined in Item 601(b)(10) of Regulation
S-K of the SEC) or (ii) limits or otherwise
restricts the Company or any
Company Subsidiary or that would, after the
Effective Time, limit or restrict
Parent or any of its subsidiaries
(including the Surviving Entity and its
subsidiaries) or any successor thereto,
from engaging or competing in any line
of business or in any geographic area. Each
Contract of the type described in
this Section 3.17, whether or not entered
into as of the date hereof and
whether or not set forth in Section 3.17 of
the Company Disclosure Letter, is
referred to herein as a "Company Contract."
Each Company Contract is valid and
binding on the Company or a Company
Subsidiary party thereto and, to the
knowledge of the Company, each other party
thereto, and is in full force and
effect, and the Company and each of the
Company Subsidiaries have performed
all obligations required to be performed by
them to the date hereof under each
Company Contract and, to the knowledge of
the Company, each other party to
each Company Contract has performed all
obligations required to be performed
by it under such Company Contract, except,
in each case, as would not,
individually or in the aggregate,
reasonably be expected to have a Company
Material Adverse Effect. Neither the
Company nor any Company Subsidiary knows
of, or has received notice of, any
violation or default under (or any
condition which with the passage of time or
the giving of notice would cause
such a violation of or default under) any
Company Contract or any other
Contract to which it is a party or by which
it or any of its properties or
assets is bound, except for violations or
defaults that would not,
individually or in the aggregate,
reasonably be expected to have a Company
Material Adverse Effect.
Section 3.17 Environmental Matters. Except for such matters
that individually or in the aggregate have
not had, and would not reasonably
be expected to have, a Company Material
Adverse Effect:
(a) the Company and each of the Company Subsidiaries
are, and have been, in compliance with all
Environmental Laws, and neither the
Company nor any of the Company Subsidiaries
has received any (i) communication
that alleges that the Company or any of the
Company Subsidiaries is in
violation of, or has Liability under, any
Environmental Law or (ii) written
request for information pursuant to any
Environmental Law;
(b) (i) the Company and each of the Company
Subsidiaries have obtained and are in
compliance with all Permits, licenses
and governmental authorizations pursuant to
Environmental Law (collectively,
"Environmental Permits") necessary for
their operations as currently
conducted, (ii) all such Environmental
Permits are valid and in good standing
and (iii) neither the Company nor any of
the Company Subsidiaries has been
advised by any Governmental Entity of any
actual or potential change in the
status or terms and conditions of any
Environmental Permit;
(c) there are no Environmental Claims pending or, to
the knowledge of the Company, threatened,
against the Company or any of the
Company Subsidiaries;
(d) there have been no Releases of any Hazardous
Material that would reasonably be expected
to form the basis of any
Environmental Claim against the Company or
any of the Company Subsidiaries or
against any Person whose liabilities for
such Environmental Claims the Company
or any of the Company Subsidiaries has, or
may have, retained or assumed,
either contractually or by operation of
Law;
(e) there are no above-ground or underground storage
tanks or known or suspected
asbestos-containing materials on, under or about
property owned, operated or leased by the
Company or any Company Subsidiary,
nor, to the knowledge of the Company, were
there any underground storage tanks
on, under or about any such property in the
past; and
(f) (i) neither the Company nor any of the Company
Subsidiaries has retained or assumed,
either contractually or by operation of
Law, any Liabilities or obligations that
would reasonably be expected to form
the basis of any Environmental Claim
against the Company or any of the Company
Subsidiaries, and (ii) to the knowledge of
the Company, no Environmental
Claims are pending against any Person whose
liabilities for such Environmental
Claims the Company or any of the Company
Subsidiaries has, or may have,
retained or assumed, either contractually
or by operation of Law.
(g) Definitions. As used in this Agreement:
(1) "Environmental Claim" means any and all
administrative, regulatory or judicial
actions, suits, orders, demands,
directives, claims, liens, judgments,
investigations, proceedings or written
or oral notices of noncompliance or
violation by or from any Person alleging
Liability of whatever kind or nature
(including Liability or responsibility
for the costs of enforcement proceedings,
investigations, cleanup,
governmental response, removal or
remediation, natural resources damages,
property damages, personal injuries,
medical monitoring, penalties,
contribution, indemnification and
injunctive relief) arising out of, based on
or resulting from (y) the presence or
Release of, or exposure to, any
Hazardous Materials at any location; or (z)
the failure to comply with any
Environmental Law;
(2) "Environmental Laws" means all applicable
federal, state, local and foreign laws,
rules, regulations, orders, decrees,
judgments, legally binding agreements or
Environmental Permits issued,
promulgated or entered into by or with any
Governmental Entity, relating to
pollution, natural resources or protection
of endangered or threatened
species, human health or the environment
(including ambient air, surface
water, groundwater, land surface or
subsurface strata);
(3) "Hazardous Materials" means (y) any
petroleum or petroleum products,
radioactive materials or wastes, asbestos in
any form, urea formaldehyde foam insulation
and polychlorinated biphenyls; and
(z) any other chemical, material, substance
or waste that in relevant form or
concentration is prohibited, limited or
regulated under any Environmental Law
as a pollutant or contaminant or a
hazardous, toxic or dangerous substance,
material or waste; and
(4) "Release" means any actual or, to the
knowledge of the Company or the knowledge
of Parent, as the case may be,
threatened release, spill, emission,
leaking, dumping, injection, pouring,
deposit, disposal, discharge, dispersal,
leaching or migration into or through
the environment (including ambient air,
surface water, groundwater, land
surface or subsurface strata) or within any
building, structure, facility or
fixture.
Section 3.18 Intellectual Property. The Company and the
Company Subsidiaries own, or are validly
licensed or otherwise have the right
to use, all patents, patent rights,
inventions and discoveries (whether or not
patentable or reduced to practice),
trademarks, trade names, corporate names,
company names, business names, fictitious
business names, trade styles,
service marks, logos and other source or
business identifiers, copyrights,
trade secrets and all other confidential or
proprietary information and
know-how, whether or not reduced to writing
or any other tangible form, and
other proprietary intellectual property
rights and computer programs arising
under the laws of the United States
(including any state or territory), any
other country or group of countries or any
political subdivision of any of the
foregoing, whether registered or
unregistered (collectively, "Intellectual
Property Rights") used in the business of
the Company or a Company Subsidiary
as of the date hereof, other than such
Intellectual Property Rights that are
not material (the "Company Intellectual
Property"). Except as set forth in
Section 3.19 of the Company Disclosure
Letter or except as would not,
individually or in the aggregate,
reasonably be expected to have a Company
Material Adverse Effect on the validity or
value of the Company Intellectual
Property, (A) no written claim of
invalidity or conflicting ownership rights
with respect to any Company Intellectual
Property has been made by a third
party and no such Company Intellectual
Property is the subject of any pending
or, to the Company's knowledge, threatened
action, suit, claim, investigation,
arbitration, interference, opposition or
other proceeding, (B) no person has
given written notice to the Company or any
Company Subsidiary that the use of
any Company Intellectual Property by the
Company, any Company Subsidiary or
any licensee is infringing or has infringed
any domestic or foreign registered
patent, trademark, service mark, trade
name, or copyright or design right, or
that the Company, any Company Subsidiary or
any licensee has misappropriated
or improperly used or disclosed any trade
secret, confidential information or
know-how, (C) the making, using, selling,
manufacturing, marketing, licensing,
reproduction, distribution, or publishing
of any process, machine, manufacture
or product related to any Company
Intellectual Property, does not infringe any
domestic or foreign registered patent,
trademark, service mark, trade name,
copyright or other Intellectual Property
Right of any third party, and does
not involve the misappropriation or
improper use or disclosure of any trade
secrets, confidential information or
know-how of any third party of which the
Company has knowledge, (D) (i) neither the
Company nor any Company Subsidiary
has performed prior acts or is engaged in
current conduct or use, or (ii) to
the knowledge of the Company, there exists
no prior act or current use by any
third party, that would void or invalidate
any Company Intellectual Property,
and (E) the execution, delivery and
performance of this Agreement and the
Transactions contemplated by this Agreement
by the Company and the
consummation of the transactions
contemplated hereby and thereby will not
breach, violate or conflict with any
instrument or agreement that the Company
is party to and that concerns any Company
Intellectual Property, will not
cause the forfeiture or termination or give
rise to a right of forfeiture or
termination of any of the Company
Intellectual Property or impair the right of
Parent to make, use, sell, license or
dispose of, or to bring any action for
the infringement of, any Company
Intellectual Property.
Section 3.19 Brokers; Schedule of Fees and Expenses. No
broker, investment banker, financial
advisor or other person, other than UBS
Securities LLC, the fees and expenses of
which will be paid by the Company, is
entitled to any broker's, finder's,
financial advisor's or other similar fee
or commission in connection with the Merger
and the other Transactions based
upon arrangements made by or on behalf of
the Company. The Company has
furnished
