<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
AZTAR CORPORATION
(Name of Company)
Common Stock, par value $.01 per share
(Title of Class of Securities)
054802103
(CUSIP Number)
Adam Lieberman
c/o Sterling Foster Holding Corp.
125 Baylis Road, Melville, New York 11747
(516) 843-8000
(Name, Address and Telephone Number of Person Authorized to Receive Notices and
Communications)
October 9, 1996
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box [ ].
Check the following box if a fee is being paid with the statement [ ].
<PAGE>
SCHEDULE 13D
CUSIP No. 054802103 Page 2 of 12 Pages
1. NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Adam Lieberman ###-##-####
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ X ]
(b) [ ]
3. SEC USE ONLY
4. SOURCE OF FUNDS
PF
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEM 2(D) OR 2(E) [ ]
6. CITIZENSHIP OR PLACE OF ORGANIZATION
United States
NUMBER OF SHARES 7. SOLE VOTING POWER
BENEFICIALLY OWNED 480,000
BY EACH REPORTING
PERSON WITH 8. SHARED VOTING POWER
2,210,335 (see response to Item 5)
9. SOLE DISPOSITIVE POWER
480,000
10. SHARED DISPOSITIVE POWER
2,210,335 (see response to Item 5)
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
2,690,335
12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
5.99%
14. TYPE OF REPORTING PERSON
IN
<PAGE>
SCHEDULE 13D
CUSIP No. 054802103 Page 3 of 12 Pages
1. NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Sterling Foster Holding Corp. 11-3276688
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ X ]
(b) [ ]
3. SEC USE ONLY
4. SOURCE OF FUNDS
OO (see response to Item 3)
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(D) OR 2(E) [ ]
6. CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
NUMBER OF SHARES 7. SOLE VOTING POWER
BENEFICIALLY OWNED -0-
BY EACH REPORTING
PERSON WITH 8. SHARED VOTING POWER
1,560,335 (see response to Item 5)
9. SOLE DISPOSITIVE POWER
-0-
10. SHARED DISPOSITIVE POWER
1,560,335 (see response to Item 5)
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,560,335
12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
3.47%
14. TYPE OF REPORTING PERSON
CO
<PAGE>
SCHEDULE 13D
CUSIP No. 054802103 Page 4 of 12 Pages
1. NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Sterling Foster & Co., Inc. 22-3270906
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ X ]
(b) [ ]
3. SEC USE ONLY
4. SOURCE OF FUNDS
WC, 00 (see response to Item 3)
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(D) OR 2(E) [ ]
6. CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
NUMBER OF SHARES 7. SOLE VOTING POWER
BENEFICIALLY OWNED -0-
BY EACH REPORTING
PERSON WITH 8. SHARED VOTING POWER
650,000
9. SOLE DISPOSITIVE POWER
-0-
10. SHARED DISPOSITIVE POWER
650,000
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
650,000
12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
1.45%
14. TYPE OF REPORTING PERSON
CO
<PAGE>
Page 5 of 12 Pages
Item 1. Security and Company
The class of equity securities to which this statement relates
is the common stock, par value $.01 per share (the "Common Stock"), of Aztar
Corporation, a Delaware corporation (the "Company"). The address of the
Company's principal executive offices is 2390 East Camelback Road, Suite 400,
Phoenix, Arizona
85016.
Item 2. Identity and Background
This statement is being filed by Adam Lieberman ("Lieberman"),
Sterling Foster Holding Corp., a Delaware corporation ("SFHC"), and Sterling
Foster & Co., Inc., a Delaware corporation ("SFCI" and collectively with
Lieberman and SFHC, the "Reporting Persons"). The principal occupation of
Lieberman is President of each of SFHC and SFCI and his business address is 125
Baylis Road, Melville, New York 11747. Lieberman is a citizen of the United
States. The principal business of SFHC is to function as a holding company and
its address is 125 Baylis Road, Melville, New York 11747. The principal business
of SFCI is investment banking and its address is 125 Baylis Road, Melville, New
York 11747. Lieberman is the sole stockholder, director and officer of each of
SFHC and SFCI.
During the last five years, none of the Reporting Persons (i)
has been convicted in a criminal proceeding (excluding traffic violations or
similar misdemeanors), or (ii) was a party to a civil proceeding of a judicial
or administrative body of competent jurisdiction and as a result of such
proceeding was or is subject to a judgment, decree, or final order enjoining
future violations of, or prohibiting or mandating activities subject to, federal
or state securities laws or finding any violation with respect to such laws.
The NASD filed a complaint on September 18, 1996 (the
"Complaint") against Lieberman, SFCI and various individuals associated or
formerly associated with SFCI (collectively, the "Respondents") alleging various
violations of the Securities Exchange Act of 1934 and the NASD Rules of Fair
Practice. The Complaint involves three companies whose initial public offerings
were underwritten by SFCI. The Complaint alleges the use of fraudulent and
manipulative devices in connection with the
<PAGE>
Page 6 of 12 Pages
distribution and sale of securities of such companies; failure to comply with
undertakings to submit various documents and information to the NASD's Corporate
Financing Department for review and receipt of unfair and unreasonable
underwriting compensation in connection with transactions involving securities
held by stockholders of such companies; fraudulent sales practices and
unauthorized transactions with customers of SFCI; inadequate supervision of the
activities of sales representatives relating to the various alleged violations;
and inadequate written supervisory procedures to prevent the allegedly violative
conduct. The Respondents have not yet filed an answer to the Complaint; however,
it is the intention of Lieberman and SFCI and, to the knowledge of the Reporting
Persons, all other Respondents to deny all material allegations and alleged
violations and to vigorously contest the proceeding.
Item 3. Source and Amount of Funds
The source and amount of funds or other consideration
(excluding commissions) used or to be used by the Reporting Persons to purchase
the shares of Common Stock reported in Item 5 below are as follows:
Lieberman used his personal funds for the purchase of the
480,000 shares acquired and held by him as well as 400,000 additional shares
acquired by him and subsequently contributed to the capital of SFCI.
SFCI used its working capital for the purchase of 250,000
shares.
SFHC will require financing in order to exercise the options
discussed in Item 5. No such financing is currently in place, there are no
arrangements to obtain such financing and no assurances can be given that any
such financing will be available on commercially reasonable terms or otherwise.
Item 4. Purpose of Transaction
The purpose of the Reporting Persons' acquisition of
beneficial ownership of the shares of Common Stock reported hereby, through
their purchases and the Option Agreements referred to in Item 5 below, was for
the Reporting Persons to acquire a stock position in the Company which could
serve as a base for a possible attempt by the Reporting Persons to acquire
control of the Company,
<PAGE>
Page 7 of 12 Pages
should the Reporting Persons determine to attempt to do so. As of the date
hereof, the Reporting Persons have not determined to attempt to acquire control
of the Company.
The Reporting Persons believe, based upon publicly available
information, that the market value of the Company's securities does not fully
reflect the inherent value of its various operating properties.
The Reporting Persons may in the future determine to seek to
acquire control of the Company. A determination by the Reporting Persons to seek
to acquire control of the Company is dependent upon their ability to arrange for
financing and is subject to a review of relevant factors including,
without limitation, the Company's financial condition, business and prospects,
other developments concerning the Company, current and anticipated future
trading prices of the Common Stock, other opportunities available to the
Reporting Persons, conditions in the securities markets and general economic and
industry conditions, and other business or legal considerations applicable to
the Reporting Persons or the Company. There can be no assurance that the
Reporting Persons will in fact reach any such determination or, if they do reach
such determination, the timing thereof. Currently, no financing has been
arranged for any possible acquisition.
The Reporting Persons may acquire additional shares of Common
Stock in the open market or in privately-negotiated transactions or enter into
additional Option Agreements, but the Reporting Persons have no present
intention of acquiring beneficial ownership of shares of Common Stock
representing more than 9.9% of the number of shares of Common Stock outstanding.
In addition, depending upon, among other things, the factors referred to above,
the Reporting Persons may determine to dispose of all or a portion of their
shares of Common Stock.
Article TWELFTH of the Certificate of Incorporation of the
Company ("Article TWELFTH") provides that, for so long as the Company or any of
its subsidiaries holds any licenses or other regulatory approvals necessary for
the lawful operation of gaming and related businesses (the "Gaming Licenses"),
except as otherwise approved by the Board of Directors of the Company, no
stockholder who (1) "Beneficially Owns" (as defined in Article NINTH of the
<PAGE>
Page 8 of 12 Pages
Company's Certificate of Incorporation) 5% or more of the outstanding capital
stock of the Company and has neither been qualified by nor obtained a waiver of
qualification from each of the Gaming Authorities (as defined in Article
TWELFTH) requiring qualification with
respect to each Gaming License (an "Unqualified Stockholder") or (2) has been
found unsuitable or disqualified with respect to any Gaming License by any
Gaming Authority and such finding has not been reversed, vacated or superseded
(a "Disqualified Stockholder"), shall be entitled to vote, directly or
indirectly, any shares of capital stock Beneficially Owned by such stockholder
on any matter, and no shares of capital stock Beneficially Owned by an
Unqualified Stockholder or a Disqualified Stockholder shall be considered
outstanding stock entitled to vote for any purpose.
Article TWELFTH provides that, if a stockholder becomes a
Disqualified Stockholder, then at any time after the date of such occurrence,
the Company may call for redemption all or any part of the capital stock of the
Company Beneficially Owned by such Disqualified Stockholder at a price per share
equal to the average closing sale price of such stock on the New York Stock
Exchange during the 20-day period immediately preceding the date that written
notice of redemption is given to the Disqualified Stockholder. In addition,
Article TWELFTH provides that all publicly-traded securities of the Company and
any subsidiary are held subject to the condition that any stockholder who is
found to be disqualified or unsuitable with respect to any Gaming License, which
finding has not been reversed, vacated or superseded, must dispose of such
securities within 10 days after the Company provides such stockholder with
written notice to such effect.
The Reporting Persons believe that, by virtue of their own
holdings and SFHC's entry into the Option Agreements referred to in Item 5
below, the Reporting Persons "Beneficially Own" more than 5% of the Company's
Common Stock for purposes of Article TWELFTH. Each such Option Agreement
provides that it shall expire automatically in the event that SFHC* is found
unsuitable or disqualified with respect to any Gaming License by any Gaming
Authority. In such case, the
* The Option Agreements state that they shall automatically expire in the event
that the grantor of the option, as opposed to SFHC, the grantee, is so found
unsuitable or disqualified. The Reporting Persons believe that it was the clear
intent of the parties to the Option Agreements that such reference should have
been to SFHC, the grantee.
<PAGE>
Page 9 of 12 Pages
Reporting Persons would no longer "Beneficially Own" 5% or more of the Company's
Common Stock for purposes of Article TWELFTH (provided that the Reporting
Persons do not at such time Beneficially Own 5% or more of the Common Stock
through other means). If and when required under applicable gaming laws and
regulations, the Reporting Persons intend to make such filings and seek such
approvals or waivers as may be necessary from the relevant Gaming Authorities
with respect to the Reporting Persons' beneficial ownership of the Common Stock
(including Common Stock subject to the Option Agreements). As of the date of
this statement on Schedule 13D, the Reporting Persons have not made any such
filings.
Except as set forth above, the Reporting Persons have no
present plans or proposals which would result in or relate to any of the
transactions described in subparagraphs (a) through (j) of Item 4 of Schedule
13D. However, the Reporting Persons intend to review their interest in the
Company on a continuing basis and reserve the right to change their plans or
intentions at any time depending upon their evaluation of then existing
circumstances including, without limitation, the factors referred to above.
Item 5. Interest in Securities of the Company
(a) and (b) The Reporting Persons beneficially own in the
aggregate 2,690,335 shares of Common Stock as described further below,
representing approximately 5.99% of the outstanding shares of Common Stock of
the Company (based on information received from the Company to the effect that
there were 44,928,419 shares outstanding at September 26, 1996).
Of such amount, (i) Lieberman directly owns 480,000 shares
(approximately 1.07%), (ii) SFCI directly owns 650,000 shares (approximately
1.45%), and (iii) SFHC has the right to acquire 1,560,335 shares (approximately
3.47%) at a price of $16.00 per share pursuant to Option Agreements (the "Option
Agreements") entered into between SFHC and certain clients of SFCI
(collectively, the "Grantors").
SFHC may exercise the related options (the "Options") (i)
immediately, with respect to only such number of shares subject to the Options
(the "Option Shares") as may be purchased without regard to any waiting period
under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the
"HSR Act"), and without prior approval by any Gaming Authority, and (ii) with
respect to
<PAGE>
Page 10 of 12 Pages
the remainder of the Option Shares, if any, on the date that (a) any applicable
waiting period under the HSR Act shall have expired and (b) all required
approvals from Gaming Authorities shall have been obtained.
The Option Agreements and Options shall expire automatically
upon the earlier of (i) 90 days from the dates of the respective Option
Agreements (which dates range from September 26, 1996 to October 7, 1996,
although the executed Option Agreements were received by SFHC between September
28, 1996 and October 14, 1996, as reflected on Schedule A attached hereto) or
(ii) if applicable, a finding by any Gaming Authority that SFHC* is disqualified
or unsuitable with respect to any Gaming License, as described in Item 4 above.
In the event of an expiration as a result of (i) above, SFHC may seek to obtain
an extension of the expiration date.
Pursuant to the Option Agreements, among other things, (i)
each Grantor has acknowledged that there is no assurance that SFHC will exercise
such Option and (ii) each Grantor has the right at any time and from time to
time to sell any or all of the shares subject to such Option in an open market
transaction. The form of Option Agreement is attached hereto as Exhibit 1. The
foregoing description is qualified in its entirety by reference to such form.
With respect to the shares of Common Stock reported in this
Item 5, (i) Lieberman has the sole power to vote or direct the vote, and sole
power to dispose or direct the disposition, of 480,000 shares, (ii) Lieberman
and SFCI share the power to vote or direct the vote, and share the power to
dispose or direct the disposition, of 650,000 shares and (iii) in the event of
the exercise of the Options in full, Leiberman and SFHC would share the power to
vote or direct the vote, and would share the power to dispose or direct the
disposition, of 1,560,335 shares.
Except as set forth above, none of the Reporting Persons
beneficially owns any shares of Common Stock of the Company.
(c) Certain information concerning the transactions in the
Common Stock effected during the past 60 days by the Reporting Persons is set
forth on Schedule A hereto. Except as set forth on Schedule A, none of the
Reporting Persons has engaged in any transactions in the Common Stock that were
effected during the past 60 days.
(d) Except for the Grantors with respect to the shares of
Common Stock subject to the Options, no other person is known by the Reporting
Persons to have the right to receive or the power to
<PAGE>
Page 11 of 12 Pages
direct the receipt of dividends from, or the profits from the sale of, the
shares of Common Stock beneficially owned by the Reporting Persons.
Item 6. Contracts, Arrangements, Understandings or Relationships
With Respect to Securities of the Company
As set forth in Item 5, SFHC has entered into Option
Agreements with certain persons. Except as set forth in Item 5 or described
elsewhere in this statement on Schedule 13D, none of the Reporting Persons has
any contracts, arrangements, understandings or relationships (legal or
otherwise) with respect to any securities of the Company, including, but not
limited to, transfer or voting of any of the securities, finder's fees, joint
ventures, loan or option agreements, puts or calls, guarantees of profits,
division of profits or loss, or the giving or withholding of proxies.
Item 7. Material To Be Filed as Exhibits
Exhibit Number Title
-------------- -----
1 Form of Option Agreement
<PAGE>
Page 12 of 12 Pages
SIGNATURES
----------
After reasonable inquiry and to the best knowledge and belief
of each person or entity set forth below, each such person or entity certifies
that the information set forth in this Statement is true, complete, and correct.
Dated: October 21, 1996
/s/ Adam Lieberman
Adam Lieberman
STERLING FOSTER HOLDING CORP.
By:/s/ Adam Lieberman
Adam Lieberman, President
STERLING FOSTER & CO., INC.
By:/s/ Adam Lieberman
Adam Lieberman, President
<PAGE>
SCHEDULE A
----------
Transactions in Common Stock
Purchases and Sales
During the 60 day period prior to the filing of this Schedule 13D,
the following open market transactions in the shares of Common Stock of the
Company were effected by SFCI on the New York Stock Exchange:
Date of Nature of Number of Price Per
Transaction Transaction Shares Share
- ----------- ----------- ------ -----
10/08/96 Purchase 5,800 $ 8.50
10/07/96 Sale 5,800 $ 8.625
10/04/96 Purchase 2,500 $11.25
10/04/96 Purchase 5,000 $12.75
10/04/96 Purchase 3,000 $ 9.875
10/04/96 Purchase 1,500 $11.125
10/04/96 Sale 5,000 $ 9.50
10/04/96 Sale 7,000 $ 8.625
10/03/96 Purchase 25,000 $ 8.875
10/02/96 Sale 1,000 $ 8.50
10/02/96 Purchase 990 $ 9.125
10/01/96 Purchase 10 $10.875
09/30/96 Sale 10,000 $ 8.625
09/27/96 Purchase 10,000 $13.50
09/27/96 Sale 1,300 $ 9.75
09/27/96 Sale 650 $ 9.75
09/27/96 Sale 170 $ 9.75
09/27/96 Purchase 2,300 $ 8.75
09/27/96 Purchase 25,000 $ 8.75
09/27/96 Purchase 25,000 $ 8.875
09/27/96 Purchase 25,000 $ 8.75
09/27/96 Purchase 25,000 $ 8.50
09/27/96 Purchase 25,000 $ 9.125
09/27/96 Purchase 50,000 $ 9.00
09/27/96 Purchase 50,000 $ 8.75
09/26/96 Purchase 820 $10.875
09/25/96 Sale 1,000 $10.875
09/24/96 Purchase 1,000 $11.00
09/24/96 Sale 1,500 $11.00
09/24/96 Purchase 500 $10.125
09/23/96 Purchase 500 $11.00
09/23/96 Purchase 1,000 $10.25
09/20/96 Purchase 1,000 $10.875
<PAGE>
Date of Nature of Number of Price Per
Transaction Transaction Shares Share
- ----------- ----------- ------ -----
09/20/96 Sale 375 $ 9.875
09/20/96 Sale 125 $10.875
09/20/96 Sale 2,000 $10.375
09/19/96 Purchase 200 $11.125
09/19/96 Purchase 500 $11.00
09/19/96 Sale 10,900 $10.50
09/18/96 Purchase 100 $10.875
09/18/96 Purchase 180 $10.875
09/18/96 Sale 280 $10.50
09/17/96 Purchase 200 $11.125
09/17/96 Purchase 10,000 $10.875
09/17/96 Sale 200 $11.00
09/12/96 Purchase 200 $10.875
08/29/96 Purchase 15,000 $13.00
08/29/96 Sale 15,000 $12.50
08/28/96 Sale 815 $11.00
08/27/96 Sale 1,185 $ 9.625
08/27/96 Purchase 1,500 $13.50
08/27/96 Sale 2,000 $13.625
08/27/96 Purchase 2,500 $13.625
08/23/96 Purchase 100 $10.00
08/23/96 Purchase 2,000 $12.00
08/23/96 Sale 100 $10.625
08/23/96 Sale 2,000 $10.625
Options
During the period from September 28, 1996 through October 14,
1996, SFHC received executed Option Agreements providing for the grant to SFHC
of Options to purchase the number of shares of Common Stock of the Company
indicated below at an exercise price of $16.00 per share:
Date of Receipt by SFHC Number of Shares
of Option Agreement Subject to Option
------------------- -----------------
10/14/96 80,000
10/10/96 117,100
10/10/96 10,000
10/09/96 10,000
10/09/96 10,000
10/09/96 303,735
10/08/96 11,240
10/08/96 10,000
10/08/96 10,000
10/07/96 20,000
10/05/96 10,000
10/05/96 20,000
10/05/96 10,000
<PAGE>
Date of Receipt by SFHC Number of Shares
of Option Agreement Subject to Option
------------------- -----------------
10/05/96 10,000
10/05/96 20,000
10/05/96 10,000
10/05/96 10,000
10/05/96 11,800
10/05/96 12,600
10/05/96 19,000
10/04/96 20,000
10/04/96 10,000
10/04/96 10,000
10/04/96 20,000
10/04/96 20,000
10/04/96 10,000
10/04/96 12,000
10/04/96 20,000
10/04/96 10,000
10/04/96 20,000
10/04/96 12,000
10/03/96 12,000
10/03/96 30,000
10/03/96 10,000
10/03/96 10,000
10/03/96 10,000
10/02/96 13,000
10/02/96 10,000
10/02/96 10,000
10/02/96 10,000
10/02/96 45,000
10/02/96 20,000
10/02/96 35,000
10/01/96 35,000
10/01/96 14,000
10/01/96 10,000
10/01/96 11,000
10/01/96 22,000
10/01/96 24,000
10/01/96 20,000
10/01/96 23,000
10/01/96 10,000
10/01/96 20,000
10/01/96 10,000
10/01/96 20,000
10/01/96 40,000
09/30/96 37,910
<PAGE>
Date of Receipt by SFHC Number of Shares
of Option Agreement Subject to Option
------------------- -----------------
09/28/96 75,000
09/28/96 82,000
09/28/96 10,000
09/28/96 10,000
------
1,568,385**
=========
** Of such aggregate number of shares initially subject to the Options, a
total of 8,050 shares were sold by the owners of the shares and, pursuant
to the terms of the Option Agreements, are no longer subject to the
Options.
<PAGE>
Exhibit 1
FORM OF OPTION AGREEMENT
OPTION AGREEMENT, dated as of ________________, 1996, between
("Grantor"), and Sterling Foster Holding Corp. a Delaware
corporation ("Grantee").
WHEREAS, Grantor is the sole record and beneficial owner of
_________ shares of common stock, par value $0.01 per share (the "Common Stock")
of Aztar Corporation, a Delaware corporation (the "Company") set forth opposite
the signature of Grantor at the end of this Option Agreement (the "Option
Shares"); and
WHEREAS, Grantee desires to acquire an option to purchase the
Option Shares and Grantor desires to grant to Grantee an option to purchase the
Option Shares, in each case, on the terms and conditions contained herein.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements set forth herein, Grantor and Grantee hereby agree as follows:
1. Grant of Option.
Grantor hereby grants to Grantee an irrevocable option (the
"Option") to purchase the Option Shares at a price per share equal to $16.00
(the "Price Per Share"). The product of the number of the Option Shares and the
Price Per Share is the "Purchase Price." In the event of any increase or
decrease or other change in the Common Stock by reason of any stock dividend,
split-up, recapitalization, combination, or other change in the Common Stock
affecting all stockholders of the Company on a pro rata basis (a "Pro Rata
Transaction"), the number of Option Shares subject to this Option Agreement and
the Price Per Share shall be adjusted appropriately.
2. Commencement Date.
The period during which Grantee may exercise the Option shall
commence (the "Commencement Date") (i) immediately, with respect to only such
number of Option Shares as may be purchased without regard to any waiting period
under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the
"HSR Act"), and without prior approval by any Gaming Authority (as defined
below), and (ii) with respect to the remainder of the Option Shares, if any, on
the date that (a) any applicable waiting period under the HSR Act shall have
expired and (b) all required approvals from Gaming Authorities shall have been
obtained.
3 . Expiration Time.
This Option Agreement and the Option shall expire
automatically upon the earlier of (i) 5:00 P.M. (New York City time) on the 90th
day after the date hereof, or (ii) if applicable, a finding by any Gaming
Authority (as defined in Article TWELFTH of the Company's Certificate of
Incorporation) that Grantor is disqualified or unsuitable with respect to any
"Gaming License" (as defined in Article TWELFTH of the Company's Certificate of
Incorporation) (such earlier time is
<PAGE>
referred to herein as the "Expiration Time"); provided, however, that paragraph
9 hereof shall survive termination of this Option Agreement.
4. Exercise of Option.
The Option may be exercised by Grantee, at any time on or
after the Commencement Date and prior to the Expiration Time, by 24 hours
written notice given to Grantor (the "Notice of Closing"), specifying the date
and time when the closing (the "Closing") of the sale of the Option Shares shall
take place. The Option may be exercised only with respect to all of the Option
Shares, except that it may be exercised with respect to such number of Option
Shares as may be purchased without (x) regard to any applicable waiting period
under the HSR Act during such waiting period and (y) prior approval by any
Gaming Authority, in which event the Option shall be exercised with respect to
all of the remaining Option Shares as promptly as practicable after the
expiration of such waiting period to the extent permitted by law and the receipt
of all required approvals from Gaming Authorities. The Closing or Closings shall
be held at Grantee's offices at 125 Baylis Road, Melville, New York, or at any
other place mutually acceptable to Grantor and Grantee.
5. Closing.
At any Closing, (x) Grantee shall deliver to Grantor a
certified or bank cashier's check payable to the order of Grantor and in the
amount of the Purchase Price (or portion thereof in the event the Option is
exercised with respect to less than all of the Option Shares) and (y) the
Grantor shall deliver to Grantee the certificates, free of any legend or
restrictive language that would preclude the sale of any of the Option Shares
pursuant to this Option, representing the Option Shares, duly endorsed in blank
or accompanied by separate instruments of assignment duly executed in blank,
with signatures guaranteed by a commercial bank, trust company or registered
broker-dealer, and with all necessary stock transfer tax stamps attached (the
"Certificates").
6. Representations and Warranties.
Grantor hereby represents and warrants to Grantee that:
(a) Grantor is legally competent and has the power and
authority to execute, deliver and perform this Option Agreement and to
consummate the transactions contemplated hereby. This Option Agreement has been
duly executed and delivered by Grantor, constitutes a valid and binding
obligation of Grantor, enforceable against Grantor in accordance with its terms,
except as enforceability may be limited by bankruptcy, insolvency, moratorium,
reorganization and other laws affecting creditors rights generally, and does not
conflict with any agreement or instrument to which Grantor is a party or by
which Grantor or Grantor's assets are bound, or any Law, regulation, judgment,
order or decree to which Grantor is subject.
(b) Grantor is, and until the Closing or Closings will be, the
sole record and beneficial owner of the Option Shares, with sole power to vote
and to dispose of the Option Shares. The Option Shares are. and until the
Closing or Closings will be, owned by Grantor free and clear of all security
interests. Liens, claims, encumbrances, restrictions on transfer, proxies and
voting and other agreements, other than pursuant to this Option Agreement.
<PAGE>
(c) At each Closing, Grantee will acquire from Grantor full
valid and marketable title to the Option Shares (by delivery of the Certificates
by Grantor to Grantee), free and clear of all security interests, liens, claims,
encumbrances, restrictions on transfer, proxies and voting and other agreements.
(d) Grantor has not taken any of the actions set forth in
paragraph 7(a)(ii) hereof at any time following commencement of discussions
between Grantor and Grantee and/or their respective representatives regarding
Grantor's entry into this Option Agreement.
(e) Grantor acknowledges that Grantee is not acting as a
broker, dealer or agent for Grantor in connection with the transactions
contemplated by this Option Agreement and Grantee is not responsible to Grantor
for providing the protections afforded under any federal or state securities
laws or advice of any kind, including legal, tax and investment, in relation to
the transactions contemplated by this Option Agreement.
(f) At each Closing, all representations and warranties of
Grantor will be accurate as of such time as though such representations and
warranties were then made by Grantor.
7. Covenants
Grantor hereby covenants and agrees that:
(a) Neither Grantor nor any of its "affiliates" or
"associates" (as such terms are defined under the Securities Exchange Act of
1934, as amended) shall, without the prior written consent of Grantee, directly
or indirectly:
(i) sell, assign, pledge, grant any option or proxy
with respect to, or otherwise transfer or dispose of or
encumber any of, or enter into any voting or other agreements
with respect to, the Option Shares, or deposit the Option
Shares in a voting trust, or take or permit any action which
would or might result in any of the foregoing or otherwise
prevent or disable Grantor from performing its obligations
hereunder; PROVIDED, HOWEVER, THAT GRANTOR AND ITS AFFILIATES
AND ASSOCIATES MAY AT ANY TIME AND FROM TIME TO TIME SELL ANY
OR ALL OF THE OPTION SHARES IN AN OPEN MARKET TRANSACTION; or
(ii) acquire or seek to acquire, by purchase or
otherwise, any shares of Common Stock or any right or option
to acquire, or securities convertible into or exchangeable
for, any shares of Common Stock (except upon a Pro Rata
Transaction) until Grantee notifies Grantor in writing that
this paragraph 7(a)(ii) no longer applies.
<PAGE>
(b) Within one business day following the sale of Option
Shares in an OPEN MARKET transaction in accordance with Section 7(a)(i), Grantor
shall provide written notice of such sale (including the number of Option Shares
sold and the selling price) to Grantee. For purposes of this Option Agreement, a
"business day" is any day on which the New York Stock Exchange is open for
business.
8. Rights in Option Shares.
On and after any Closing, Grantee shall be entitled to all the
rights of beneficial ownership of the Option Shares purchased at such Closing,
including, without limitation, the right to exercise any and all voting rights
pertaining to such Option Shares at any meeting of stockholders of the Company
held at or after such Closing and to receive any and all dividends and other
distributions with respect to such Option Shares, the record date for which is
at or after such Closing. In furtherance of the foregoing, Grantor agrees to
deliver to Grantee, promptly upon receipt by Grantor, any dividend or other
distribution with respect to Common Stock, received by Grantor on or after any
Closing with respect to the Option Shares purchased at such Closing, the record
date for which is at or after such Closing.
9. Confidentiality. Without the prior written consent of Grantee,
Grantor shall not (i) disclose to any person or entity any information in any
way related directly or indirectly to this Option Agreement, the terms hereof,
or any other information relating to Grantee's plans or intentions, including,
without limitation, the fact that Grantor has been approached by Grantee or its
representatives and any negotiation or discussion with respect thereto, or (ii)
utilize in any manner any of such information.
10. Miscellaneous.
(a) Binding Effect. This Option Agreement may not be assigned
by either party, except that Grantee may assign this Option Agreement to one of
its affiliates. This Option Agreement shall inure to the benefit of, and be
binding upon, the parties and their respective heirs, personal representatives,
successors and permitted assigns.
(b) Expenses. Each party will pay its own expenses in
connection with this Option Agreement and the transactions contemplated hereby.
Grantor shall pay all stock transfer and other taxes in connection with the sale
of the Option Shares to Grantee.
(c) Specific Performance. Grantor acknowledges that the Option
Shares are unique and that Grantee will not have an adequate remedy at law if
Grantor fails to perform any of its obligations hereunder, and Grantor agrees
that Grantee will have the right, in addition to other rights and remedies that
may be available to Grantee, to specific performance or equitable relief by way
of injunction if Grantor shall fail to perform any of its obligations hereunder.
(d) Amendments. This Option Agreement may not be modified,
amended, altered or supplemented in any way except upon the execution and
delivery of a written agreement by the parties hereto.
(e) Further Assurances. Grantor will, upon the reasonable
request by Grantee, execute and deliver any additional documents or instruments
necessary or desirable to complete the sale, conveyance, transfer and assignment
of the Option Shares, and the consummation of the other transactions
contemplated by this Option Agreement.
<PAGE>
(f) Survival. The warranties, representations, covenants and
agreements made pursuant to this Option Agreement will survive the Closing and
continue irrespective of any investigation made by or on behalf of either party.
(g) Notices. All notices, requests, consents and other
communications hereunder shall be given in writing and shall be deemed to have
been duly given if personally delivered or sent by certified or registered mail,
return receipt requested, with postage prepaid, to the addresses for the parties
set forth below, or at such other addresses as the parties may designate by
written notice in the manner aforesaid. All such notices, requests, consents and
other communications shall be deemed to have been received if personally
delivered at the time and on the date of delivery thereof or, if mailed, on the
third day following the date of mailing.
(h) Governing Law. This Agreement will be governed by and
construed in accordance with the laws of the State of New York, without giving
effect to its conflict of law provisions.
(i) Entire Agreement. This Option Agreement constitutes the
complete, final and exclusive agreement between the parties with respect to the
subject matter hereof and supersedes all other prior agreements and
understandings, both written and oral, between the parties with respect to the
subject matter hereof.
(j) Counterparts. This Agreement may be executed in
counterparts, each of which shall be original, but all of which shall constitute
one and the same instrument.
(k) No Assurances. GRANTOR UNDERSTANDS THAT THERE IS NO
ASSURANCE THAT GRANTEE WILL EXERCISE THE OPTION AND THAT GRANTOR
MAY SELL THE OPTION SHARES AT ANY TIME IN THE OPEN MARKET AS PROVIDED
IN SECTION 7 HEREOF.
IN WITNESS WHEREOF, the undersigned have caused this Option
Agreement to be duly executed on the day and year first above written.
GRANTOR:
Number of
Option Shares:
Name:
Title:
GRANTEE: Sterling Foster Holding Corp.
125 Baylis Road
Melville, NY 11747
Name:
Title:
