SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) APRIL 17, 2000
HARVEYS CASINO RESORTS
-----------------------
(Exact name of registrant as specified in its charter)
NEVADA 1-12802 88-0066882
- ------------------------------ ------------ -------------------
(State or other jurisdiction of (Commission (I.R.S. Employer
incorporation or organization) File Number) Identification No.)
HIGHWAY 50 AND STATELINE AVENUE, P.O. BOX 128
Lake Tahoe, Nevada 89449
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (775) 588-2411
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(Former Name or Former Address, if Changed Since Last Report)
ITEM 5. OTHER.
On April 17, 2000, Harveys Casino Resorts, a Nevada corporation
(the "Company"), entered into two merger agreements (the "Merger
Agreements") as part of a single transaction whereby the Company will
acquire Pinnacle Entertainment, Inc., a Delaware corporation ("Pinnacle").
As permitted under Item 601(b) of Regulation S-K, the Merger
Agreements are filed herewith without the disclosure schedules. The Company
will supply a copy of any omitted schedule or similar attachment to the
Commission upon request.
In addition, the joint press release of the Company and Pinnacle, dated
April 17, 2000, is filed as Exhibit 99.1 hereto and is incorporated herein
by reference.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION
AND EXHIBITS.
(c) Exhibits
The following exhibits are incorporated by reference into
this report:
<TABLE>
<CAPTION>
Exhibit
Number Description
- ------- -----------
<S> <C>
2.1 Agreement and Plan of Merger dated as of April 17, 2000 by and among PH
Casino Resorts, Inc., Harveys Casino Resorts, and Pinnacle Acquisition
Corporation
2.2 Agreement and Plan of Merger dated as of April 17, 2000 by and among PH
Casino Resorts, Inc., Harveys Casino Resorts and Harveys Acquisition
Corporation
99.1 Press release, dated April 17, 2000
</TABLE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.
HARVEYS CASINO RESORTS
Date: April 27, 2000 By: /s/ John J. McLaughlin
________________________
John J. McLaughlin
Senior Vice President,
Chief Financial Officer
EXHIBIT INDEX TO CURRENT REPORT ON FORM 8-K
<TABLE>
<CAPTION>
Exhibit
Number Description
- ------- -----------
<S> <C>
2.1 Agreement and Plan of Merger dated as of April 17, 2000 by and among PH
Casino Resorts, Inc., Harveys Casino Resorts, and Pinnacle Acquisition
Corporation
2.2 Agreement and Plan of Merger dated as of April 17, 2000 by and among PH
Casino Resorts, Inc., Harveys Casino Resorts and Harveys Acquisition
Corporation
99.1 Press release, dated April 17, 2000
</TABLE>
Exhibit 2.1
AGREEMENT AND PLAN OF MERGER
Dated as of April 17, 2000
among
PH CASINO RESORTS, INC.
PINNACLE ENTERTAINMENT, INC.
and
PINNACLE ACQUISITION CORPORATION
TABLE OF CONTENTS
Page
----
ARTICLE I
DEFINITIONS.........................................................2
ARTICLE II
THE PINNACLE MERGER................................................12
Section 2.1 The Pinnacle Merger.............................12
Section 2.2 Closing.........................................12
Section 2.3 Effective Time..................................12
Section 2.4 Effects of the Pinnacle Merger..................12
Section 2.5 Corporate Governance Documents..................12
Section 2.6 Directors.......................................13
Section 2.7 Officers........................................13
Section 2.8 Further Actions.................................13
ARTICLE III
CONVERSION OF SHARES...............................................13
Section 3.1 Effect on Capital Stock of Pinnacle and
Pinnacle Acq Corp...............................13
Section 3.2 Exchange of Certificates........................14
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PINNACLE.........................16
Section 4.1 Organization, Standing and Corporate Power......16
Section 4.2 Subsidiaries....................................17
Section 4.3 Capital Structure...............................17
Section 4.4 Authority; Noncontravention.....................18
Section 4.5 Opinion of Financial Advisor....................19
Section 4.6 SEC Documents; Financial Statements.............19
Section 4.7 Absence of Certain Changes or Events............20
Section 4.8 Litigation......................................20
Section 4.9 Absence of Changes in Benefit Plans.............21
Section 4.10 Employee Benefits; ERISA........................21
Section 4.11 Taxes...........................................24
Section 4.12 Environmental Matters...........................25
Section 4.13 Permits; Compliance with Laws...................26
Section 4.14 State Takeover Statutes.........................27
Section 4.15 Brokers.........................................28
Section 4.16 Trademarks, etc.................................28
Section 4.17 Title to Properties.............................28
Section 4.18 Insurance.......................................30
Section 4.19 Contracts; Debt Instruments.....................31
Section 4.20 Board Consent and Recommendation................32
Section 4.21 Accounting Controls.............................32
Section 4.22 Affiliate Transactions..........................32
Section 4.23 Vote Required...................................33
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF
HOLDING AND PINNACLE ACQ CORP......................................33
Section 5.1 Organization, Standing and Corporate Power......33
Section 5.2 Authority; Noncontravention.....................33
Section 5.3 Interim Operations of Pinnacle Acq Corp.........35
Section 5.4 Licensing Matters...............................35
Section 5.5 Litigation......................................35
Section 5.6 Financing.......................................35
Section 5.7 No Other Agreements.............................35
ARTICLE VI
COVENANTS RELATING TO CONDUCT OF BUSINESS..........................36
Section 6.1 Conduct of Business.............................36
Section 6.2 Advice of Changes...............................40
Section 6.3 No Solicitation.................................41
ARTICLE VII
ADDITIONAL AGREEMENTS..............................................43
Section 7.1 Stockholders Meeting............................43
Section 7.2 Proxy Statement and Other Filings;
Auditor's Letter................................43
Section 7.3 Access to Information; Confidentiality..........45
Section 7.4 Reasonable Efforts; Notification................46
Section 7.5 Stock Option Plans; Change of Control Plan......47
Section 7.6 Indemnification and Insurance...................48
Section 7.7 Fees............................................48
Section 7.8 Public Announcement.............................49
Section 7.9 Title Insurance, Surveys........................50
Section 7.10 Transfer Taxes..................................51
Section 7.11 Financing.......................................51
Section 7.12 Tax Treatment...................................52
Section 7.13 Tender Offer and Consent Solicitations..........52
Section 7.14 Termination of Voting Agreement.................52
Section 7.15 Compliance Committees...........................52
Section 7.16 Atlantic Land Warrant...........................52
ARTICLE VIII
CONDITIONS PRECEDENT...............................................53
Section 8.1 Conditions to Each Party's Obligation To Effect
the Pinnacle Merger.............................53
Section 8.2 Conditions to Obligations of Pinnacle Acq Corp..54
Section 8.3 Conditions to Obligations of Pinnacle...........55
ARTICLE IX
TERMINATION, AMENDMENT AND WAIVER .................................56
Section 9.1 Termination.....................................56
Section 9.2 Effect of Termination...........................58
Section 9.3 Amendment.......................................58
Section 9.4 Extension; Waiver...............................58
Section 9.5 Procedure for Termination, Amendment, Extension
or Waiver.......................................59
ARTICLE X
GENERAL PROVISIONS ................................................59
Section 10.1 Nonsurvival of Representations..................59
Section 10.2 Representations and Warranties..................59
Section 10.3 Notices.........................................59
Section 10.4 Interpretation..................................61
Section 10.5 Counterparts....................................61
Section 10.6 Entire Agreement; No Third-Party Beneficiaries..61
Section 10.7 Governing Law...................................61
Section 10.8 Gaming Laws.....................................61
Section 10.9 Assignment......................................61
Section 10.10 Enforcement.....................................62
Section 10.11 Inglewood Sale; CPRs............................62
SCHEDULES
EXHIBITS
Exhibit A Material Terms of the Financing
AGREEMENT AND PLAN OF MERGER dated as of 12:01 A.M. on April
17, 2000 (this "Agreement"), among PH CASINO RESORTS, INC., a Delaware
corporation ("PHCR"), PINNACLE ENTERTAINMENT, INC., a Delaware corporation
("Pinnacle"), and PINNACLE ACQUISITION CORPORATION, a Delaware corporation
("Pinnacle Acq Corp").
W I T N E S S E T H
WHEREAS, Pinnacle Acq Corp is a direct wholly owned
subsidiary of PHCR and an indirect wholly owned subsidiary of Harveys
Casino Resorts, a Nevada corporation ("Harveys"), and Harveys is majority
owned by Colony Investors III, L.P., a Delaware limited partnership
("Colony III");
WHEREAS, the respective Boards of Directors of Pinnacle and
Pinnacle Acq Corp have determined that the merger of Pinnacle Acq Corp with
and into Pinnacle (the "Pinnacle Merger"), upon the terms and subject to
the conditions set forth in this Agreement, is advisable and in the best
interests of their respective corporations and stockholders, and have
approved this Agreement;
WHEREAS, PHCR has formed a wholly owned subsidiary, Harveys
Acquisition Corporation, a Nevada corporation ("Harveys Acq Corp"), which
will, simultaneously with the Pinnacle Merger, merge with and into Harveys
(the "Harveys Merger") so that, following the Pinnacle Merger and the
Harveys Merger, the Pinnacle Surviving Corporation (as defined below) and
the Harveys Surviving Corporation (as defined below) will each be wholly
owned subsidiaries of PHCR;
WHEREAS, for Federal income tax purposes, the parties intend
that the Pinnacle Merger, the Harveys Merger and the contribution pursuant
to the Voting Agreement (as defined below) qualify as exchanges under
section 351 of the Internal Revenue Code of 1986, as amended (the "Code");
WHEREAS, as a condition for PHCR and Pinnacle Acq Corp to
enter into this Agreement, those stockholders of Pinnacle listed on the
signature pages to the Voting Agreement, as defined below (the "Group"),
have entered into the Voting and Contribution Agreement as of the date
hereof with Pinnacle, Pinnacle Acq Corp and PHCR, which provides, among
other things, that, subject to the terms and conditions thereof, (a) each
member of the Group will vote its shares of Pinnacle Common Stock (as
defined below) in favor of the Pinnacle Merger and the approval and
adoption of this Agreement and (b) each member of the Group will contribute
certain securities of Pinnacle to PHCR in exchange for securities of PHCR;
WHEREAS, the Board of Directors of Pinnacle has approved the
terms of this Agreement and the transactions contemplated hereby;
WHEREAS, the parties hereto desire to make certain
representations, warranties, covenants and agreements in connection with
the Pinnacle Merger and also to prescribe various conditions to the
Pinnacle Merger.
NOW, THEREFORE, in consideration of the mutual
representations, warranties, covenants and agreements contained in this
Agreement and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto, intending
to be legally bound, agree as follows:
ARTICLE I
DEFINITIONS
Capitalized and certain other terms used in this Agreement
and not otherwise defined have the meanings set forth below. Unless the
context otherwise requires, such terms shall include the singular and
plural and the conjunctive and disjunctive forms of the terms defined.
"Affiliate" of any Person means another Person that directly
or indirectly, through one or more intermediaries, controls, is controlled
by, or is under common control with, such first Person.
"Agreement" has the meaning set forth in the recitals
hereof.
"Asset Dispositions" has the meaning set forth in Section
6.1(c).
"Asset Disposition Agreements" has the meaning set forth in
Section 6.1(c).
"Atlantic Land Warrant" means that certain warrant to
purchase shares of Pinnacle Common Stock held by Atlantic Land Corporation
and originally issued by Casino Magic Corporation.
"Audit" means any audit, assessment of Taxes, other
examination by any Tax Authority, proceeding or appeal of such proceeding
relating to Taxes.
"Bank Credit Facility" means the Amended and Restated
Reducing Revolving Loan Agreement, dated as of October 14, 1998, and
amended as of June 2, 1999 and September 30, 1999, among Hollywood Park,
Inc. and the banks named therein, Societe Generale and Bank of Scotland (as
Managing Agents), First National Bank of Commerce (as Co-Agent), and Bank
of America National Trust and Savings Association (as Administrative
Agent).
"Base Balance Sheet" has the meaning set forth in Section
4.6.
"Budget" has the meaning set forth in Section 6.1(a)(v).
"Business Day" means any day excluding: Saturday, Sunday and
any day which is in the City of New York a legal holiday or a day upon
which banking institutions in the City of New York are required or
authorized by law or other governmental action to close.
"Certificate of Merger" has the meaning set forth in Section
2.1.
"Closing" has the meaning set forth in Section 2.2.
"Closing Date" has the meaning set forth in Section 2.2.
"Code" has the meaning set forth in the recitals hereto.
"Colony" has the meaning set forth in Section 5.4.
"Colony LP" has the meaning set forth in Section 5.4.
"Colony III" has the meaning set forth in the recitals
hereof.
"Commitments" has the meaning set forth in Section 7.9(a).
"Competitive Proposal" means, other than the transactions
contemplated by this Agreement, (a) any proposal or offer from any Person
relating to any direct or indirect acquisition or purchase of assets of
Pinnacle or any of its Material Subsidiaries comprising 50% or more of
Pinnacle's consolidated assets or over 50% of any class of equity
securities of Pinnacle or any of its Material Subsidiaries or (b) any
tender offer or exchange offer that, if consummated, would result in any
Person beneficially owning 50% or more of any class of equity securities of
Pinnacle or any of its Material Subsidiaries or (c) any merger,
consolidation, business combination, liquidation, dissolution or similar
transaction involving Pinnacle with a third party; provided, that the Board
of Directors of Pinnacle determines in its good faith judgment that (i) the
value of the consideration (based on the opinion, with only customary
qualifications, of an independent financial advisor of good national
reputation in such matters) of such proposal exceeds the value of each of
the Pinnacle Merger Consideration and any alternative proposal presented by
Pinnacle Acq Corp or any of its Affiliates and (ii) such proposal is more
favorable to Pinnacle's stockholders than the Pinnacle Merger and any
alternative proposal presented by Pinnacle Acq Corp or any of its
Affiliates. Notwithstanding the foregoing, the consummation of (i) the
Principal Asset Dispositions (other than the sale of the Inglewood
Property), substantially on the terms and subject to the conditions
contained in the applicable Asset Disposition Agreement in effect as of the
date hereof (or as amended or modified in accordance with this Agreement),
and (ii) the sale of the Inglewood Property and the Other Asset
Dispositions on terms approved by Pinnacle's Board of Directors, in good
faith, shall not be deemed to constitute a Competitive Proposal.
"Confidential Information" has the meaning set forth in
Section 7.3.
"Contract" means any mortgage, indenture, note, debenture,
agreement, lease, license, permit, franchise or other instrument or
obligation, whether written or oral.
"Covered Person" has the meaning set forth in Section
6.3(a).
"Current SEC Documents" has the meaning set forth in Section
4.6.
"DGCL" means the Delaware General Corporation Law, as
amended from time to time.
"Effective Time" has the meaning set forth in Section 2.3.
"Environmental Claim" has the meaning set forth in Section
4.12(c).
"Environmental Laws" has the meaning set forth in Section
4.12(a).
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
"ERISA Affiliate" has the meaning set forth in Section
4.10(a).
"ERISA Plans" has the meaning set forth in Section 4.10(a).
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder.
"Exchange Funds" has the meaning set forth in Section
3.2(a).
"Existing Leases" has the meaning set forth in Section
4.17(b).
"Fairness Opinion" has the meaning set forth in Section 4.5.
"Financing" means debt financing on terms not less favorable
to the borrower than those set forth in Exhibit A hereto which, together
with any indebtedness of Pinnacle assumed in the Merger, is in an amount
sufficient to enable the payment, in full of (i) the Pinnacle Merger
Consideration, (ii) all payments in connection with the cancellation of the
Pinnacle Stock Options, (iii) all other related payments in connection with
the Pinnacle Merger and the Harveys Merger (including any related consent
payments to holders of and any related repurchase of outstanding
indebtedness of Pinnacle and Harveys set forth on Exhibit A), and (iv) the
related fees and expenses, estimates of which are set forth on Exhibit A.
"Gaming Approvals" " has the meaning set forth in Section
8.2(d).
"Gaming Authority" means any governmental authority or
agency with regulatory control or jurisdiction over the conduct of lawful
gaming or gambling, including, without limitation, the Arizona Racing
Commission, the California Attorney General, the California Gambling
Control Commission, the Colorado Division of Gaming, the Colorado Limited
Gaming Control Commission, the Indiana Gaming Commission, the City of
Inglewood, the Iowa Racing and Gaming Commission, the Louisiana Gaming
Control Board, the Mississippi Gaming Commission, the Mississippi State Tax
Commission, the Provincial Government of Neuquen, the Nevada State Gaming
Control Board, the National Indian Gaming Commission, the Nevada Gaming
Commission, the Washington State Gaming Commission, the Washoe County Board
of Commissioners, Nevada Gaming Commission and the Yakima Tribal Gaming
Commission.
"Gaming Laws" means any Federal, state, local or foreign
statute, ordinance, rule, regulation, permit, consent, approval,
registration, finding of suitability, license, judgment, order, decree,
injunction or other authorization governing or relating to the current or,
in the case of Pinnacle and its Subsidiaries, contemplated manufacturing,
distribution, casino gambling and gaming activities and operations of
Pinnacle and Harveys, including, without limitation, the California
Gambling Control Act and the rules and regulations promulgated thereunder,
the Colorado Limited Gaming Act and the rules and regulations promulgated
thereunder, the Indian Gaming Regulatory Act and the rules and regulations
promulgated thereunder, the Indiana Riverboat Gambling Act (as set forth at
Indiana Code 4-33) and the rules and regulations promulgated thereunder,
chapters 99D and F of the Code of Iowa and the rules and regulations
promulgated thereunder, the Louisiana Riverboat Economic Development and
Gaming Control Act and the rules and regulations promulgated thereunder,
the Mississippi Gaming Control Act and the rules and regulations
promulgated thereunder, and the Nevada Gaming Control Act and the rules and
regulations promulgated thereunder and all applicable local rules and
ordinances.
"Governmental Entity" means any Federal, state or local
government or any court, administrative or regulatory agency or commission
or other governmental authority or agency, domestic or foreign, including
any Gaming Authority.
"Group" has the meaning set forth in the recitals hereof.
"Harveys" has the meaning set forth in the recitals hereof.
"Harveys Acq Corp" has the meaning set forth in the recitals
hereof.
"Harveys Merger" has the meaning set forth in the recitals
hereof.
"Harveys Surviving Corporation" means the surviving
corporation of the Harveys Merger.
"HSR Act" means the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended.
"indebtedness" means, with respect to any Person, without
duplication, (a) all obligations of such Person for borrowed money, or with
respect to deposits or advances of any kind, (b) all obligations of such
Person evidenced by bonds, debentures, notes or similar instruments, (c)
all obligations of such Person upon which interest charges are customarily
paid (other than trade payables incurred in the Ordinary Course of
Business), (d) all obligations of such Person under conditional sale or
other title retention agreements relating to property purchased by such
Person, (e) all obligations of such Person issued or assumed as the
deferred purchase price of property or services or for trade or barter
arrangements (excluding obligations of such Person to creditors for raw
materials, inventory, services and supplies incurred in the ordinary course
of such Person's business), (f) all lease obligations of such Person
capitalized on the books and records of such Person, (g) all obligations of
others secured by any Lien on property or assets owned or acquired by such
Person, whether or not the obligations secured thereby have been assumed,
(h) all obligations of such Person under interest rate, or currency or
commodity hedging, swap or similar derivative transactions (valued at the
termination value thereof), (i) all letters of credit issued for the
account of such Person (excluding letters of credit issued for the benefit
of suppliers or lessors to support accounts payable to suppliers incurred
in the Ordinary Course of Business) and (j) all guarantees and arrangements
having the economic effect of a guarantee by such Person of any other
Person.
"In the Money Option" has the meaning set forth in Section
10.11.
"Indemnified Parties" has the meaning set forth in Section
7.6(a).
"Indiana Project" has the meaning set forth in Section 4.6.
"Inglewood Property" means the 97 acres of vacant land in
Inglewood which was the subject of the agreement announced on November 4,
1999 (and subsequently terminated), with the Hovnanian Companies of
California, the legal description of which is contained in Schedule 1.0
hereto.
"Intellectual Property Rights" has the meaning set forth in
Section 4.16.
"knowledge" of any Person means the actual knowledge of the
executive officers of such Person after due inquiry.
"Law" means any law, statute, ordinance, regulation or rule
or any judgment, decree, order, regulation or rule of any court or
governmental authority or body.
"Leased Properties" has the meaning set forth in Section
4.17(a).
"Licensed Persons" has the meaning set forth in Section 5.4.
"Lien" means any mortgage, pledge, assessment, security
interest, lease, sublease, lien, adverse claim, levy, charge, option, right
of others or restriction (whether on voting, sale, transfer, disposition or
otherwise) or other encumbrance of any kind, whether imposed by agreement,
understanding, law or equity, or any conditional sale contract, title
retention contract or other contract to give or to refrain from giving any
of the foregoing; provided that other than with respect to Section 4.17
hereof, workers', mechanics', suppliers', carriers', materialmen's,
landlords' statutory, warehousemen's liens, liens for taxes, assessments or
government charges that are not yet delinquent or that are being contested
in good faith and for which adequate reserves have been provided in
accordance with generally accepted accounting principles (to the extent
required thereunder), or other similar liens arising in the Ordinary Course
of Business, shall not constitute a "Lien."
"material adverse change" or "material adverse effect" with
respect to any Person means any change or effect that is individually or in
the aggregate materially adverse to the business, prospects, properties,
assets or financial condition or results of operations of such Person and
its Subsidiaries, taken as a whole; provided, however, that in no event
shall the following, either individually or in the aggregate, in and of
itself be deemed to constitute a "material adverse change" or a "material
adverse effect" (i) the effects of changes that are applicable to the
national financial, banking, currency or capital markets in general,
individually or in the aggregate, solely in and of itself be deemed to
constitute a "material adverse change" or a "material adverse effect;" (ii)
the failure by Pinnacle to meet independent, third party analysts'
projections of earnings, revenue or other financial performance measures
solely in and of itself be deemed to constitute a "material adverse change"
or a "material adverse effect;" provided, however, that the underlying
facts, circumstances, operating results or prospects which cause Pinnacle
to fail to meet such projections may be considered in determining whether a
"material adverse change" or a "material adverse effect" has occurred or
(iii) the effects of any event or circumstances (including the actual
occurrence of any proposed action) listed on Schedule 1.1 hereto.
"Materials of Environmental Concern" has the meaning set
forth in Section 4.12(a).
"Material Subsidiary" shall mean each of: Boomtown Hotel &
Casino, Inc., a Nevada corporation; Louisiana - I Gaming, a Louisiana
Partnership in Commendam; Biloxi Casino Corp., a Mississippi corporation;
Casino Magic of Louisiana, Corp., a Louisiana corporation; and Belterra
Resort (Indiana), LLC, an Indiana limited liability company.
"Notice of Competitive Proposal" has the meaning set forth
in Section 6.3(b).
"NYSE" means the New York Stock Exchange, Inc., or any
successor entity.
"Ordinary Course of Business" means (unless otherwise
indicated) (i) with respect to representations and warranties contained in
Article IV or V hereof, transactions in the ordinary course of business,
and (ii) with respect to covenants and agreements contained in Article VI
or VII hereof, transactions in the ordinary course of business consistent
with past practice.
"Other Asset Dispositions" has the meaning set forth in
Section 6.1(c).
"Other Filings" has the meaning set forth in Section 7.2(b).
"Owned Properties" has the meaning set forth in Section
4.17(a).
"Paying Agent" has the meaning set forth in Section 3.2(a).
"PBGC" has the meaning set forth in Section 4.10(c).
"Permits" has the meaning set forth in Section 4.13(a).
"Permitted Liens" means (i) Liens described on Schedule
4.17(b), other than the Liens arising under the Bank Credit Facility, (ii)
Liens for current taxes not yet due and payable or being contested in good
faith by appropriate proceedings and for which adequate reserves have been
provided in accordance with generally accepted accounting principles (to
the extent required thereunder), or (iii) such Liens, encumbrances,
restrictions, leases, option to purchase, options to lease, conditions,
covenants, assessments, defects, claims or exceptions which could not
reasonably be expected to, either individually or in the aggregate,
materially impair the current use, occupancy, value, financeability, or
marketability of title to the parcels of Real Property on a
project-by-project basis or as would not reasonably be expected to have a
material adverse effect on Pinnacle or any of its Material Subsidiaries.
"Person" means any natural person, corporation, general
partnership, limited partnership, limited liability company, limited
liability partnership, proprietorship, trust, union, association, court,
tribunal, agency, government, department, commission, self-regulatory
organization, arbitrator, board, bureau, instrumentality or other entity,
enterprise, authority or business organization.
"Pinnacle" has the meaning set forth in the recitals hereof.
"Pinnacle Acq Corp" has the meaning set forth in the
recitals hereof.
"Pinnacle Certificates" has the meaning set forth in Section
3.2(b).
"Pinnacle Common Stock" means the Common Stock of Pinnacle,
par value $.10 per share.
"Pinnacle Dissenting Shares" has the meaning set forth in
Section 3.2(f).
"Pinnacle Merger" has the meaning set forth in the recitals
hereof.
"Pinnacle Merger Consideration" means $24.00 in cash,
subject to adjustment as described in Section 10.11.
"Pinnacle Preferred Stock" means the Preferred Stock of
Pinnacle, par value $1.00 per share.
"Pinnacle Stockholders Meeting" has the meaning set forth in
Section 7.1.
"Pinnacle Stock Option" has the meaning set forth in Section
7.5(a).
"Pinnacle Stock Option Plans" has the meaning set forth in
Section 7.5(a).
"Pinnacle Surviving Corporation" has the meaning set forth
in Section 2.1.
"Pinnacle Surviving Corporation Common Stock" means the
Common Stock of the Pinnacle Surviving Corporation, par value $.01.
"Plans" has the meaning set forth in Section 4.10(a).
"Principal Asset Dispositions" has the meaning set forth in
Section 6.1(c).
"Proxy Statement" has the meaning set forth in Section
7.2(a).
"Real Properties" has the meaning set forth in Section
4.17(a).
"Requisite Vote" has the meaning set forth in Section 4.24.
"Schedule 13E-3" has the meaning set forth in Section
7.2(a).
"SEC" means the Securities and Exchange Commission.
"SEC Documents" has the meaning set forth in Section 4.6.
"Securities Act" means the Securities Act of 1933, as
amended, and the rules and regulations promulgated thereunder.
"Significant Takeover Proposal" means (other than the
transactions contemplated by this Agreement) (a) any proposal or offer from
any Person relating to any direct or indirect acquisition or purchase of
assets (including capital stock of any Subsidiaries) of Pinnacle or any of
its Subsidiaries comprising 20% or more of Pinnacle's consolidated assets
or of over 20% of any class of equity securities of Pinnacle or any of its
Material Subsidiaries or (b) any tender offer or exchange offer that if
consummated would result in any Person beneficially owning 20% or more of
any class of equity securities of Pinnacle or any of its Material
Subsidiaries or which would require approval under any Gaming Law, or (c)
any merger, consolidation, business combination, recapitalization,
liquidation, dissolution or similar transaction involving Pinnacle (or any
of its Material Subsidiaries) and a third party. Notwithstanding the
foregoing, consummation of (i) the Principal Asset Dispositions
substantially on the terms and subject to the conditions contained in the
applicable Asset Disposition Agreement in effect as of the date hereof (or
as amended or modified in accordance with this Agreement) (ii) the sale of
the Inglewood Property and the Other Asset Dispositions on terms approved
by Pinnacle's Board of Directors, in good faith, shall not be deemed to
constitute a Significant Takeover Proposal and (iii) any transaction which
would otherwise constitute a Significant Takeover Proposal but which is
consented to by PHCR in writing prior to the initiation of any substantive
negotiations or discussions with respect thereto, shall not be deemed to
constitute a Significant Takeover Proposal.
"SPD" has the meaning set forth in Section 4.10(b)(iv).
"Special Committee" has the meaning set forth in Section
4.5.
"Subsidiary" means, with respect to any Person, (a) any
corporation with respect to which such Person, directly or indirectly
through one or more Subsidiaries, (i) owns more than 50% of the outstanding
shares of capital stock having generally the right to vote in the election
of directors or (ii) has the power, under ordinary circumstances, to elect,
or to direct the election of, a majority of the board of directors of such
corporation, (b) any partnership with respect to which (i) such Person or a
Subsidiary of such Person is a general partner, (ii) such Person and its
Subsidiaries together own more than 50% of the interests therein, or (iii)
such Person and its Subsidiaries have the right to appoint or elect or
direct the appointment or election of a majority of the directors or other
Person or body responsible for the governance or management thereof, (c)
any limited liability company with respect to which (i) such Person or a
Subsidiary of such Person is the manager or managing member, (ii) such
Person and its Subsidiaries together own more than 50% of the interests
therein, or (iii) such Person and its Subsidiaries have the right to
appoint or elect or direct the appointment or election of a majority of the
directors or other Person or body responsible for the governance or
management thereof, or (d) any other entity in which such Person has,
and/or one or more of its Subsidiaries have, directly or indirectly, (i) at
least a 50% ownership interest or (ii) the power to appoint or elect or
direct the appointment or election of a majority of the directors or other
Person or body responsible for the governance or management thereof. For
purposes of this Agreement, the term "Subsidiary" shall not include
Sunflower Racing, Inc.
"Surveys" has the meaning set forth in Section 7.9(b).
"Takeover Proposal" means (other than the transactions
contemplated by this Agreement) (a) any proposal or offer from any Person
relating to any direct or indirect acquisition or purchase of assets
(including capital stock of any Subsidiaries) of Pinnacle or any of its
Subsidiaries comprising 10% or more of Pinnacle's consolidated assets or of
over 10% of any class of equity securities of Pinnacle or any of its
Material Subsidiaries or (b) any tender offer or exchange offer that if
consummated would result in any Person beneficially owning 10% or more of
any class of equity securities of Pinnacle or any of its Material
Subsidiaries or which would require approval under any Gaming Law, or (c)
any merger, consolidation, business combination, recapitalization,
liquidation, dissolution or similar transaction involving Pinnacle (or any
of its Material Subsidiaries) and a third party. Notwithstanding the
foregoing, consummation of (i) the Principal Asset Dispositions
substantially on the terms and subject to the conditions contained in the
applicable Asset Disposition Agreement in effect as of the date hereof (or
as amended or modified in accordance with this Agreement) and (ii) the sale
of the Inglewood Property and the Other Asset Dispositions on terms
approved by Pinnacle's Board of Directors, in good faith, and (iii) any
transaction which would otherwise constitute a Takeover Proposal but which
is consented to by PHCR in writing prior to the initiation of any
substantive negotiations or discussions with respect thereto, shall not be
deemed to constitute a Takeover Proposal.
"Tax" or "Taxes" means all Federal, state, local and foreign
taxes and other assessments and governmental charges of a similar nature,
including any property Tax (whether imposed directly or through
withholdings), including any interest, penalties and additions to Tax
applicable thereto.
"Tax Authority" means the Internal Revenue Service and any
other domestic or foreign governmental authority responsible for the
administration or collection of any Taxes.
"Tax Returns" means all Federal, state, local and foreign
returns, declarations, statements, reports, schedules, forms and
information returns relating to Taxes, and all amendments thereto.
"Termination Fee" has the meaning set forth in Section
7.7(b).
"Title Insurer" has the meaning set forth in Section 7.9(a).
"Title Policies" has the meaning set forth in Section
7.9(a).
"Transaction Documents" shall mean the Voting Agreement and
the exhibits thereto.
"Voting Agreement" means that certain Voting and
Contribution Agreement, dated the date hereof, among PHCR and the
stockholders of Pinnacle listed on the signature pages thereto, together
with the exhibits thereto.
ARTICLE II
THE PINNACLE MERGER
Section 2.1 The Pinnacle Merger. Upon the terms and subject
to the conditions set forth in this Agreement and the certificate of merger
or other appropriate documents (in any such case, the "Certificate of
Merger"), and in accordance with the applicable provisions of the DGCL,
Pinnacle Acq Corp shall be merged with and into Pinnacle. Following the
Pinnacle Merger, Pinnacle shall continue as the surviving corporation (the
"Pinnacle Surviving Corporation") and the separate existence of Pinnacle
Acq Corp will cease.
Section 2.2 Closing. The closing (the "Closing") of the
Pinnacle Merger and the contribution pursuant to the Voting Agreement will
take place at 10:00 a.m., Los Angeles time, on a date (the "Closing Date")
to be specified by PHCR, which may be on, but shall be no later than the
third business day after, the day on which there shall have been
satisfaction or waiver of the conditions set forth in Article VIII, at the
offices of Skadden, Arps, Slate, Meagher & Flom LLP, 300 South Grand
Avenue, Los Angeles, California 90071, unless another time date or place is
agreed to in writing by the parties hereto.
Section 2.3 Effective Time. On or before the Closing Date
the parties shall file the Certificate of Merger with the Secretary of
State of the State of Delaware in accordance with the provisions of DGCL
Section 251 and make all other filings or recordings required by law in
connection with the Pinnacle Merger. The Pinnacle Merger shall become
effective at such time as the Certificate of Merger is duly filed with the
Secretary of State of the State of Delaware, or at such other later time as
the parties shall agree and specify in the Certificate of Merger (the time
the Pinnacle Merger becomes effective being the "Effective Time").
Section 2.4 Effects of the Pinnacle Merger. The Pinnacle
Merger shall have the effects set forth in the DGCL. Without limiting the
generality of the foregoing, and subject thereto, at the Effective Time,
all the properties, rights, privileges, powers and franchises of Pinnacle
and Pinnacle Acq Corp shall vest in the Pinnacle Surviving Corporation, and
all debts, liabilities and duties of Pinnacle and Pinnacle Acq Corp shall
become the debts, liabilities and duties of the Pinnacle Surviving
Corporation.
Section 2.5 Corporate Governance Documents. The Certificate
of Incorporation of Pinnacle Acq Corp, as in effect immediately prior to
the Effective Time of the Pinnacle Merger, shall become the Certificate of
Incorporation of the Pinnacle Surviving Corporation after the Effective
Time, except that such Certificate of Incorporation shall be amended to
provide that the name of the Pinnacle Surviving Corporation shall be a name
selected by Pinnacle Acq Corp prior to the Effective Date, and thereafter
may be amended in accordance with its terms and as provided by law. The
By-laws of Pinnacle Acq Corp as in effect on the Effective Time shall
become the By-laws of the Pinnacle Surviving Corporation and thereafter may
be amended in accordance with its terms and as provided by law.
Section 2.6 Directors. The directors of Pinnacle Acq Corp
immediately prior to the Effective Time shall become the directors of the
Pinnacle Surviving Corporation, and shall serve in such capacity until the
earlier of their resignation or removal or until their respective
successors are duly elected and qualified, as the case may be.
Section 2.7 Officers. The officers of Pinnacle Acq Corp
immediately prior to the Effective Time shall become the officers of the
Pinnacle Surviving Corporation, and shall serve in such capacity until the
earlier of their resignation or removal or until their respective
successors are duly elected and qualified, as the case may be.
Section 2.8 Further Actions. At and after the Effective
Time, the Pinnacle Surviving Corporation shall take all action as shall be
required in connection with the Pinnacle Merger, including, but not limited
to, the execution and delivery of any further deeds, assignments,
instruments or documentation as are necessary or desirable to carry out the
provisions of this Agreement.
ARTICLE III
CONVERSION OF SHARES
Section 3.1 Effect on Capital Stock of Pinnacle and Pinnacle
Acq Corp. As of the Effective Time, by virtue of the Pinnacle Merger and
without any action on the part of the holder of any shares of Pinnacle
Common Stock or any shares of capital stock of Pinnacle Acq Corp:
(a) Capital Stock of Pinnacle. Each issued and
outstanding share of Pinnacle Common Stock (other than (i) shares to be
canceled in accordance with Section 3.1(c) and Pinnacle Dissenting Shares,
(ii) shares to be redeemed in accordance with Section 6.1(d) of this
Agreement but only to the extent so redeemed immediately prior to the
Effective Time, and (iii) the Shares Contributed (as defined in the Voting
Agreement)) shall be converted into the right to receive from the Pinnacle
Surviving Corporation the Pinnacle Merger Consideration, without interest.
The Paying Agent shall withhold or deduct for Taxes as required under
applicable law. As of the Effective Time, all shares of Pinnacle Common
Stock upon which the Pinnacle Merger Consideration is payable pursuant to
this Section 3.1(a) 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 Pinnacle Common Stock shall
cease to have any rights with respect thereto, except the right to receive
the Pinnacle Merger Consideration.
(b) Capital Stock of Pinnacle Acq Corp. Each share of
the Pinnacle Acq Corp Common Stock issued and outstanding immediately prior
to the Effective Time shall be converted into and become one fully paid and
nonassessable share of Pinnacle Surviving Corporation Common Stock.
(c) Cancellation of Treasury Stock and Pinnacle Acq
Corp Owned Stock. Each share of Pinnacle Common Stock that is owned by
PHCR, Pinnacle or by any Subsidiary of Pinnacle and each share of Pinnacle
Common Stock that is owned by Pinnacle Acq Corp shall automatically be
canceled and retired and shall cease to exist.
Section 3.2 Exchange of Certificates.
(a) Paying Agent. Immediately prior to the Effective
Time, Pinnacle Acq Corp shall designate a bank or trust reasonably
satisfactory to Pinnacle to act as paying agent in the Pinnacle Merger (the
"Paying Agent"), and, on or prior to the Effective Time, Pinnacle Acq Corp
shall deposit with the Paying Agent immediately available funds (the
"Exchange Funds") in an amount necessary for the payment of the Pinnacle
Merger Consideration upon surrender of certificates representing Pinnacle
Common Stock as part of the Pinnacle Merger pursuant to Section 3.1, it
being understood that any and all interest earned on the Exchange Fund
shall be turned over to the Pinnacle Surviving Corporation.
(b) Exchange Procedure. As soon as reasonably
practicable after the Effective Time, the Pinnacle Surviving Corporation
shall cause the Paying Agent to mail to each holder of record of a
certificate or certificates which immediately prior to the Effective Time
represented outstanding shares of Pinnacle Common Stock (the "Pinnacle
Certificates") whose shares were converted into the right to receive the
Pinnacle Merger Consideration pursuant to Section 3.1, (i) a letter of
transmittal (which shall specify that delivery shall be effected, and risk
of loss and title to the Pinnacle Certificates shall pass, only upon
delivery of the Pinnacle Certificates to the Paying Agent and shall be in
such form and have such other customary provisions as the Pinnacle
Surviving Corporation may reasonably specify) and (ii) instructions for use
in effecting the surrender of the Pinnacle Certificates in exchange for the
Pinnacle Merger Consideration. Upon surrender of a Pinnacle Certificate for
cancellation to the Paying Agent or to such other agent or agents as may be
appointed by the Pinnacle Surviving Corporation, together with such letter
of transmittal, duly executed, and such other documents as may reasonably
be required by the Paying Agent, the holder of such Pinnacle Certificate
shall be entitled to receive in exchange therefor the Pinnacle Merger
Consideration into which the shares of capital stock theretofore
represented by such Pinnacle Certificate shall have been converted pursuant
to Section 3.1, and the Pinnacle Certificate so surrendered shall forthwith
be cancelled. The Exchange Agent shall accept such Pinnacle Certificates
upon compliance with such reasonable terms and conditions as the Exchange
Agent may impose to effect an orderly exchange thereof in accordance with
normal exchange practices. In the event of a transfer of ownership of such
capital stock which is not registered in the transfer records of Pinnacle,
payment may be made to a Person other than the Person in whose name the
Pinnacle Certificate so surrendered is registered, if such Pinnacle
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 Pinnacle Certificate or establish to the
satisfaction of the Pinnacle Surviving Corporation that such tax has been
paid or is not applicable. Until surrendered as contemplated by this
Section 3.2(b), each Pinnacle Certificate shall be deemed at any time after
the Effective Time to represent only the right to receive upon such
surrender the Pinnacle Merger Consideration, without interest, into which
the shares of capital stock theretofore represented by such Pinnacle
Certificate shall have been converted pursuant to Sections 3.1. No interest
will be paid or will accrue on the consideration payable upon the surrender
of any Pinnacle Certificate. The Paying Agent shall withhold or deduct for
Taxes as required under applicable law.
(c) No Further Ownership Rights in Capital Stock. All
consideration paid upon the surrender of Pinnacle Certificates in
accordance with the terms of this Article III shall be deemed to have been
paid in full satisfaction of all rights pertaining to the shares of capital
stock theretofore represented by such Pinnacle Certificates, and there
shall be no further registration of transfers on the stock transfer books
of the Pinnacle Surviving Corporation of the shares of capital stock which
were outstanding immediately prior to the Effective Time. If, after the
Effective Time, the Pinnacle Certificates are presented to the Pinnacle
Surviving Corporation or the Paying Agent for any reason, they shall be
cancelled and exchanged as provided in this Article III, except as
otherwise provided by law.
(d) Termination of Exchange Funds. Any portion of the
Exchange Funds which remains undistributed to the holders of the Pinnacle
Certificates for twelve months after the Effective Time shall be delivered
to an entity identified in writing to the Paying Agent by the Pinnacle
Surviving Corporation, upon demand, and any holders of the Pinnacle
Certificates who have not theretofore complied with this Article III shall
thereafter look only to the Pinnacle Surviving Corporation for payment of
their claim for the Pinnacle Merger Consideration, and any cash or
dividends or distributions payable to such holders pursuant to this Article
III.
(e) No Liability. None of PHCR, Pinnacle Acq Corp,
Pinnacle, the Pinnacle Surviving Corporation or the Paying Agent shall be
liable to any Person in respect of any cash delivered to a public official
pursuant to any applicable abandoned property, escheat or similar law.
(f) Pinnacle Dissenting Shares. Notwithstanding
Section 3.1, shares of Pinnacle Common Stock which are issued and
outstanding immediately prior to the Effective Time and which are held by a
holder who has not voted such shares in favor of the Pinnacle Merger and
who has delivered a written demand for relief as a dissenting stockholder
in the manner provided by the DGCL and who, as of the Effective Time, shall
not have effectively withdrawn or lost such right to relief as a dissenting
stockholder ("Pinnacle Dissenting Shares") shall not be converted into a
right to receive the Pinnacle Merger Consideration. The holders of such
Pinnacle Dissenting Shares shall be entitled only to such rights as are
granted by Section 262 of the DGCL. Each holder of Pinnacle Dissenting
Shares who becomes entitled to payment for such shares pursuant to Section
262 of the DGCL shall receive payment therefor from the Surviving
Corporation in accordance with the DGCL; provided, however, that if any
such holder of Pinnacle Dissenting Shares (i) shall have failed to
establish his entitlement to relief as a dissenting stockholder as provided
in Section 262 of the DGCL, (ii) shall have effectively withdrawn his
demand for relief as a dissenting stockholder with respect to such Pinnacle
Dissenting Shares or lost his right to relief as a dissenting stockholder
and payment for his Pinnacle Dissenting Shares under Section 262 of the
DGCL, or (iii) shall have failed to file a complaint with the appropriate
court seeking relief as to determination of the value of all Pinnacle
Dissenting Shares within the time provided in Section 262 of the DGCL, such
holder shall forfeit the right to relief as a dissenting stockholder with
respect to such shares of Pinnacle Common Stock and each such share shall
be converted into the right to receive the Pinnacle Merger Consideration
without interest thereon, from the Pinnacle Surviving Corporation as
provided in Section 3.1. Pinnacle shall give Pinnacle Acq Corp prompt
written notice of any demands received by Pinnacle for relief as a
dissenting stockholder and Pinnacle Acq Corp shall have the right to
participate in all negotiations and proceedings with respect to such
demands. Pinnacle shall not, except with the prior written consent of
Pinnacle Acq Corp, make any payment with respect to, or settle or offer to
settle, any such demands.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PINNACLE
Except as set forth in the corresponding numbered sections
of the disclosure schedules delivered by Pinnacle to Pinnacle Acq Corp
concurrently with the execution of this Agreement or referenced in the
particular section of this Article IV to which exception is being taken,
Pinnacle represents and warrants to Pinnacle Acq Corp as follows:
Section 4.1 Organization, Standing and Corporate Power. Each
of Pinnacle and its Subsidiaries is a corporation, partnership or limited
liability company duly formed or organized, validly existing and in good
standing under the laws of the jurisdiction in which it is
formed or organized and has the requisite corporate, partnership or limited
liability company power and authority to carry on its business as now being
conducted. Each of Pinnacle and its Subsidiaries is duly qualified or
licensed to do business and is in good standing in each jurisdiction in
which the nature of its business or the ownership or leasing of its
properties makes such qualification or licensing necessary, other than in
such jurisdictions where the failure to be so qualified or licensed
(individually or in the aggregate) would not have a material adverse effect
on Pinnacle or any Material Subsidiary of Pinnacle. Pinnacle has made
available to Pinnacle Acq Corp complete and correct copies of the
Certificate of Incorporation and By-laws of Pinnacle and the comparable
charter and organizational documents of each of its Subsidiaries, in each
case as amended to the date of this Agreement. The respective certificates
of incorporation and by-laws or other organizational documents of the
Subsidiaries of Pinnacle do not contain any provision limiting or otherwise
restricting the ability of Pinnacle to control such Subsidiaries.
Section 4.2 Subsidiaries. Pinnacle's Subsidiaries identified
on Schedule 4.2(a) own or lease all of the material assets, hold all
material Permits and conduct all of the material business and operations of
Pinnacle and its Subsidiaries, taken as a whole (including, without
limitation, all business and operations associated with Pinnacle's
Argentina; Bossier City and Harvey, Louisiana; Bay St. Louis and Biloxi,
Mississippi; and Verdi, Nevada casino resorts and related facilities, Los
Angeles card clubs (which Pinnacle owns or subleases but does not operate),
Phoenix, Arizona horse racing facility, the project in development in
Vevay, Indiana and the potential project based in Lake Charles, Louisiana
in which Pinnacle has an option to lease, and the lending of funds to the
Yakima Tribal Gaming Corporation. Each Subsidiary of Pinnacle is identified
on Schedule 4.2(a). All the outstanding equity interests of each Subsidiary
are owned by Pinnacle, by another wholly owned Subsidiary of Pinnacle or by
Pinnacle and another wholly owned Subsidiary of Pinnacle, free and clear of
all Liens, except as set forth on Schedule 4.2(b). There are no proxies
with respect to any shares of any such Subsidiary. There are no outstanding
obligations of Pinnacle or any of its Subsidiaries to repurchase, redeem or
otherwise acquire any outstanding securities of any of Pinnacle's
Subsidiaries or to provide funds to or make any investment (in the form of
a loan, capital contribution or otherwise) in Pinnacle or any of its
Subsidiaries or other Person.
Section 4.3 Capital Structure. The authorized capital stock
of Pinnacle consists of 40,000,000 shares of Pinnacle Common Stock and
250,000 shares of Pinnacle Preferred Stock. As of April 16, 2000, (a)
26,297,652 shares of Pinnacle Common Stock and no shares of Pinnacle
Preferred Stock were issued and outstanding, (b) no shares of Pinnacle
Common Stock were held by Pinnacle in its treasury, and (c) 2,556,667
shares of Pinnacle Common Stock were reserved for issuance upon exercise of
outstanding Pinnacle Stock Options. No other shares of capital stock or
other voting securities of Pinnacle are authorized, issued or outstanding.
There are no outstanding stock appreciation rights, restricted stock grants
or contingent stock grants and there are no other outstanding contractual
rights to which Pinnacle is a party, the value of which is derived from the
value of shares of Pinnacle Common Stock. All outstanding shares of capital
stock of Pinnacle are, and all shares which may be issued upon exercise or
conversion of any security issued by Pinnacle (or any entity in which
Pinnacle owns a direct or indirect interest) will be, when issued, duly
authorized, validly issued, fully paid and nonassessable and not subject to
preemptive rights. There are no bonds, debentures, notes or other
indebtedness of Pinnacle having the right to vote (or convertible into, or
exchangeable for, securities having the right to vote) on any matters on
which stockholders of Pinnacle may vote. Except as set forth above, as of
the date of this Agreement, there are no outstanding securities, options,
warrants, calls, rights, commitments, agreements, arrangements or
undertakings of any kind to which Pinnacle or any of its Subsidiaries is a
party, or by which any of them is bound, obligating Pinnacle or any of its
Subsidiaries to issue, deliver or sell, or cause to be issued, delivered or
sold, shares of capital stock or other voting securities of Pinnacle or of
any of its Subsidiaries or obligating Pinnacle or any of its Subsidiaries
to issue, grant, extend or enter into any such security, option, warrant,
call, right, commitment, agreement, arrangement or undertaking.
Section 4.4 Authority; Noncontravention. Pinnacle has the
requisite corporate power and authority to enter into this Agreement and,
subject to approval of this Agreement by the Requisite Vote of the
outstanding shares of Pinnacle Common Stock, to consummate the transactions
contemplated by this Agreement. The execution and delivery of this
Agreement by Pinnacle and the consummation by Pinnacle of the transactions
contemplated by this Agreement have been duly authorized by all necessary
corporate action on the part of Pinnacle, subject, in the case of this
Agreement, to approval of this Agreement by the Requisite Vote of the
outstanding shares of Pinnacle Common Stock and the Pinnacle Compliance
Committee. This Agreement has been duly executed and delivered by Pinnacle
and, assuming this Agreement constitutes the valid and binding obligation
of the other parties hereto, constitutes the valid and binding obligation
of Pinnacle, enforceable against Pinnacle in accordance with its terms. The
execution and delivery of this Agreement do not, and the consummation of
the transactions contemplated by this Agreement and compliance with the
provisions of this Agreement will not, require notice or consent under,
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
termination, cancellation or acceleration of any obligation or to loss of a
material benefit under, or result in the creation of any Lien upon any of
the properties or assets of Pinnacle or any of its Subsidiaries under, (a)
the Certificate of Incorporation or By-laws of Pinnacle or the comparable
charter or organizational documents of any of its Subsidiaries, (b) other
than subject to the governmental filings and other matters referred to in
the following sentence and except as set forth on Schedule 4.4(a), (i) any
loan or credit agreement, note, bond, mortgage, indenture, lease or other
agreement or instrument or (ii) any permit, concession, franchise or
license applicable to Pinnacle or any of its Subsidiaries or their
respective properties or assets or (c) subject to the governmental filings
and other matters referred to in the following sentence, any judgment,
order, decree, statute, law, ordinance, rule or regulation applicable to
Pinnacle or any of its Subsidiaries or their respective properties or
assets, other than, in the case of clauses (b) or (c), any such conflicts,
violations, defaults, rights or Liens that individually or in the aggregate
would not (i) have a material adverse effect on Pinnacle or any of its
Material Subsidiaries, (ii) impair in any material respect the ability of
Pinnacle to perform its obligations under this Agreement or (iii) prevent
or impede in any material respect the consummation of any of the
transactions contemplated by this Agreement.
No consent, approval, order or authorization of, or registration,
declaration or filing with, any Governmental Entity is required by Pinnacle
or any of its Subsidiaries in connection with the execution and delivery of
this Agreement by Pinnacle or the consummation by Pinnacle of the
transactions contemplated by this Agreement, except for (A) the filing of a
premerger notification and report form by Pinnacle under the HSR Act, (B)
the filing with the SEC of such reports under Section 14(a) and Rule 13e-3
of the Exchange Act as may be required in connection with this Agreement
and the transactions contemplated by this Agreement, (C) the filing of the
Certificate of Merger with the Delaware Secretary of State and appropriate
documents with the relevant authorities of other states in which Pinnacle
is qualified to do business, (D) the obtaining of all Gaming Approvals,
each of which is set forth in Schedule 4.4(b) hereto, (E) such filings as
may be required by any applicable state securities or "blue sky" laws, (F)
the consents described on Schedule 4.4(c) hereto and (G) such other
consents, approvals, orders, authorizations, registrations, declarations
and filings the failure of which to be obtained or made would not,
individually or in the aggregate, (1) have a material adverse effect on
Pinnacle, (2) impair, in any material respect, the ability of Pinnacle to
perform its obligations under this Agreement or (3) prevent or
significantly delay the consummation of the transactions contemplated by
this Agreement.
Section 4.5 Opinion of Financial Advisor. The Board of
Directors of Pinnacle and a special committee of the Board of Directors of
Pinnacle (the "Special Committee") have received the opinion of Jefferies &
Company, Inc., dated April 16, 2000 (the "Fairness Opinion"), to the effect
that, as of such date and subject to the assumptions and qualifications
contained therein, the Pinnacle Merger Consideration is fair to the
stockholders of Pinnacle, from a financial point of view. A copy of the
Fairness Opinion has been delivered to Pinnacle Acq Corp.
Section 4.6 SEC Documents; Financial Statements. Pinnacle
files and has filed all required reports, proxy statements, forms, and
other documents with the SEC since January 1, 1996 (the "SEC Documents").
Schedule 4.6(a) hereto sets forth a complete list of all the required
reports, proxy statements, registration statements, forms, and other
documents filed with the SEC since January 1, 1996 through the date hereof
(the "Current SEC Documents"). True and complete copies of all such SEC
Documents have been delivered or made available to Pinnacle Acq Corp. As of
their respective dates, (a) the SEC Documents complied in all material
respects with the requirements of the Securities Act or the Exchange Act,
as the case may be, and the rules and regulations of the SEC promulgated
thereunder applicable to such SEC Documents, and (b) except to the extent
that information contained in any SEC Document has been revised or
superseded by a later filed SEC Document filed and publicly available prior
to the date of this Agreement, none of the SEC Documents contained any
untrue statement of a material fact or omitted 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. The financial statements of Pinnacle included in the 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 applied on a consistent basis during the
periods involved and fairly present the consolidated financial position of
Pinnacle and its consolidated Subsidiaries as of the dates thereof and the
consolidated results of their operations and cash flows for the periods
then ended (subject, in the case of unaudited statements, to normal
year-end audit adjustments). Except as set forth in the Current SEC
Documents and in Schedule 4.6(b), and except for liabilities and
obligations incurred in the Ordinary Course of Business, and except for the
Asset Dispositions and the transactions occurring in connection with the
construction of the Belterra Resort and Casino and the riverboat at the
site of the Belterra Resort and Casino (the "Indiana Project") and except
for transaction expenses incurred in connection with the transactions
contemplated by this Agreement, since the consolidated balance sheet as of
December 31, 1999 included in the Current SEC Documents (the "Base Balance
Sheet"), neither Pinnacle nor any of its Subsidiaries has incurred any
material liabilities or obligations of any nature (whether accrued,
absolute, contingent or otherwise) required by generally accepted
accounting principles to be set forth on a consolidated balance sheet of
Pinnacle and its consolidated Subsidiaries or in the notes thereto.
Section 4.7 Absence of Certain Changes or Events. Except as
disclosed in the Current SEC Documents, filed and publicly available
between January 1, 1999 and April 16, 2000, since the date of the Base
Balance Sheet, Pinnacle and its Subsidiaries have conducted their
respective businesses only in the Ordinary Course of Business consistent
with past practice, and, except as set forth in Schedule 4.7, there has not
been (a) any material adverse change in Pinnacle, (b) any declaration,
setting aside or payment of any dividend or other distribution with respect
to its capital stock, (c) any split, combination or reclassification of any
of its capital stock or any issuance or the authorization of any issuance
of any other securities in respect of, in lieu of or in substitution for
shares of its capital stock, (d)(i) any granting by Pinnacle or any of its
Subsidiaries to any employee or consultant of Pinnacle or any of its
Subsidiaries of any increase in compensation, except in the Ordinary Course
of Business consistent with past practice (including in connection with
promotions) or as was required under employment agreements in effect as of
the date of the Base Balance Sheet, (ii) any granting by Pinnacle or any of
its Subsidiaries to any of their respective employees or consultant of any
increase in severance or termination pay, except as part of a standard
employment package to any Person promoted or hired, or as was required
under employment, severance or termination agreements in effect as of the
date of the Base Balance Sheet or (iii) any entry by Pinnacle or any of its
Subsidiaries into any employment, severance or termination agreement with
any executive officer of Pinnacle or any of its Subsidiaries, (e) any
damage, destruction or loss affecting the businesses or assets of Pinnacle
or any of its Subsidiaries, whether or not covered by insurance, that has
or reasonably could be expected to have a material adverse effect on
Pinnacle or any Subsidiary, (f) any change in accounting methods,
principles or practices by Pinnacle affecting its assets, liabilities or
business (g) entry into any commitment or transaction material to Pinnacle
and its Subsidiaries taken as a whole (including, without limitation, any
borrowing or sale of assets) except in the Ordinary Course of Business, (h)
any incurrence, assumption or guarantee by Pinnacle or any of its
Subsidiaries of any indebtedness in excess of $1,000,000, other than in the
Ordinary Course of Business and in amounts and on terms consistent with
past practices, (i) any creation or assumption by Pinnacle or any of its
Subsidiaries of any material Lien on any material asset other than in the
Ordinary Course of Business or (j) any making of any loan, advance or
capital contributions to or investment in excess of $500,000 in any Person,
other than loans, advances or capital contributions to or investments in
wholly owned Subsidiaries of Pinnacle (and Belterra Resorts Indiana, LLC)
made in the Ordinary Course of Business consistent with past practice.
Section 4.8 Litigation. Other than the suits, actions and
proceedings set forth on Schedule 4.8(b), Schedule 4.8(a) (Section 1) sets
forth all material suits, actions and proceedings pending or, to the
knowledge of Pinnacle, threatened against Pinnacle or any of its Material
Subsidiaries, none of which, individually or in the aggregate other than as
set forth on Schedule 4.8(a) (Section 2), would reasonably be expected to
have a material adverse effect on Pinnacle or any of its Material
Subsidiaries, including with respect to its licenses, permits, registration
or other gaming approvals under the Gaming Laws. Schedule 4.8(b) sets forth
all suits, actions and proceedings pending or, to the knowledge of
Pinnacle, threatened against Pinnacle or any of its Subsidiaries in
connection with the transactions contemplated by this Agreement on the date
hereof. Schedule 4.8(c) (Section 1) sets forth all material judgments,
decrees, injunctions, rules or orders (other than rules and orders issued
in the Ordinary Course of Business of Pinnacle or its Material Subsidiaries
which do not result from a violation of law) of any Governmental Entity or
arbitrator outstanding against Pinnacle or any of its Subsidiaries, other
than as set forth on Schedule 4.8(c) (Section 2), none of which,
individually or in the aggregate, would reasonably be expected to have a
material adverse effect on Pinnacle or any of its Subsidiaries, including
with respect to its licenses, permits, registration or other gaming
approvals under the Gaming Laws.
Section 4.9 Absence of Changes in Benefit Plans. Except as
set forth in Schedule 4.9 or as otherwise expressly permitted hereunder,
there has not been any adoption or amendment by Pinnacle or any of its
Subsidiaries of any Plan since the date of the Base Balance Sheet. All
employment, consulting, severance, termination or indemnification
agreements, arrangements or understandings between Pinnacle or any of its
Subsidiaries which are required to be disclosed in the Current SEC
Documents have been fully and properly disclosed therein.
Section 4.10 Employee Benefits; ERISA.
(a) Schedule 4.10(a) contains a true and complete
list of each employment, consulting, bonus, deferred compensation,
incentive compensation, stock purchase, stock option, stock appreciation
right or other stock-based incentive, severance, change-in-control or
termination pay, hospitalization or other medical, disability, life or
other insurance, supplemental unemployment benefits, profit-sharing,
pension, or retirement plan, program, agreement or arrangement, and each
other employee benefit plan, program, agreement or arrangement, sponsored,
maintained or contributed to or required to be contributed to by Pinnacle
or any of its Subsidiaries, or by any trade or business, whether or not
incorporated, that together with Pinnacle or any of its Subsidiaries would
be deemed to comprise a controlled group or affiliated service group or be
deemed to be under common control or otherwise aggregated for purposes of
Sections 414(b), (c), (m) or (o) of the Code (an "ERISA Affiliate"), for
the benefit of any current or former employee or director of Pinnacle, or
any of its Subsidiaries or any ERISA Affiliate (the "Plans"). Schedule
4.10(a) identifies each of the Plans that is an "employee welfare benefit
plan," or "employee pension benefit plan" as such terms are defined in
Sections 3(1) and 3(2) of ERISA (such plans being hereinafter referred to
collectively as the "ERISA Plans"). None of the Plans is subject to Title
IV of ERISA. None of Pinnacle, any of its Subsidiaries nor any ERISA
Affiliate has any formal plan or commitment, whether legally binding or
not, to create any additional Plan or modify or change any existing Plan
that would affect any current or former employee or director of Pinnacle,
any of its Subsidiaries or any ERISA Affiliate.
(b) With respect to each of the Plans, Pinnacle has
heretofore delivered or as promptly as practicable after the date hereof
shall deliver to Pinnacle Acq Corp true and complete copies of each of the
following documents, as applicable:
(i) a copy of the Plan documents
(including all amendments thereto) for each written Plan or a
written description of any Plan that is not otherwise in writing;
(ii) a copy of the annual report or
Internal Revenue Service Form 5500 Series, if required under ERISA,
with respect to each ERISA Plan for the last three Plan years
ending prior to the date of this Agreement for which such a report
was filed;
(iii) a copy of the actuarial report,
if required under ERISA, with respect to each ERISA Plan for the
last three Plan years ending prior to the date of this Agreement;
(iv) a copy of the most recent Summary
Plan Description ("SPD"), together with all Summaries of Material
Modification issued with respect to such SPD, if required under
ERISA, with respect to each ERISA Plan, and all other material
employee communications relating to each ERISA Plan;
(v) if the Plan is funded through a
trust or any other funding vehicle, a copy of the trust or other
funding agreement (including all amendments thereto) and the latest
financial statements thereof, if any;
(vi) all contracts relating to the
Plans with respect to which Pinnacle, any of its Subsidiaries or
any ERISA Affiliate may have any liability, including insurance
contracts, investment management agreements, subscription and
participation agreements and record keeping agreements; and
(vii) the most recent determination
letter received from the IRS with respect to each Plan that is
intended to be qualified under Section 401(a) of the Code.
(c) No liability under Title IV of ERISA has been
incurred by Pinnacle, any of its Subsidiaries or any ERISA Affiliate since
the effective date of ERISA that has not been satisfied in full, and no
condition exists that presents a material risk to Pinnacle, or any of its
Subsidiaries or any ERISA Affiliate of incurring any liability under such
Title. To the extent this representation applies to Sections 4064, 4069 or
4204 of Title IV of ERISA, it is made not only with respect to the ERISA
Plans but also with respect to any employee benefit plan, program,
agreement or arrangement subject to Title IV of ERISA to which Pinnacle,
any of its Subsidiaries or any ERISA Affiliate made, or was required to
make, contributions during the past six years. All such plans, programs,
agreements or arrangements are listed on Schedule 4.10(c).
(d) None of Pinnacle, any of its Subsidiaries, any
ERISA Affiliate, any of the ERISA Plans, any trust created thereunder, nor
to Pinnacle's knowledge, any trustee or administrator thereof has engaged
in a transaction or has taken or failed to take any action in connection
with which Pinnacle, any of its Subsidiaries, any ERISA Affiliate, any
ERISA Plan or any such trust could be subject to any material liability for
either a civil penalty assessed pursuant to Section 409 or 502(i) of ERISA
or a tax imposed pursuant to Section 4975(a) or (b), 4976 or 4980B of the
Code.
(e) All contributions which Pinnacle, any of its
Subsidiaries or any ERISA Affiliate is required to pay under the terms of
each of the ERISA Plans have been timely paid in full or properly recorded
on the financial statements or records of Pinnacle or its Subsidiaries.
(f) Each of the Plans has been operated and
administered in all material respects in accordance with applicable Laws,
including but not limited to ERISA and the Code.
(g) There has been no material failure by any of the
ERISA Plans that is intended to be "qualified" within the meaning of
Section 401(a) of the Code to meet the requirements of such qualification.
Except as disclosed on Schedule 4.10(g) hereto, Pinnacle has applied for
and received a currently effective determination letter from the IRS
stating that it is so qualified, and no event has occurred which would
affect such qualified status.
(h) Except as disclosed on Schedule 4.10(h), no Plan
provides benefits, including without limitation death or medical benefits
(whether or not insured), with respect to current or former employees of
Pinnacle, its Subsidiaries or any ERISA Affiliate after retirement or other
termination of service (other than (i) coverage mandated by applicable
Laws, (ii) death benefits or retirement benefits under any "employee
pension plan," as that term is defined in Section 3(2) of ERISA, or (iii)
benefits, the full direct cost of which is borne by the current or former
employee (or beneficiary thereof)).
(i) Except as disclosed on Schedule 4.10(i), the
consummation of the transactions contemplated by this Agreement will not
(i) entitle any current or former employee, officer or director of
Pinnacle, any of its Subsidiaries or any ERISA Affiliate to severance pay,
unemployment compensation or any other similar termination payment, or (ii)
accelerate the time of payment or vesting, or increase the amount of or
otherwise enhance any benefit due, or any option or other equity security
held by, any such employee, officer or director.
(j) There are no pending or, to Pinnacle's knowledge,
threatened or anticipated claims by or on behalf of any Plan, by any
employee or beneficiary under any such Plan or otherwise involving any such
Plan (other than routine claims for benefits).
Section 4.11 Taxes.
(a) Each of Pinnacle and its Subsidiaries has timely
filed (or has had timely filed on its behalf) or will file or cause to be
timely filed, all material Tax Returns required by applicable law to be
filed by it prior to or as of the Closing Date. All such Tax Returns and
amendments thereto are, or will be before the Closing Date, true, complete
and correct in all material respects, except to the extent reserved as set
forth in Section 4.11(b).
(b) Each of Pinnacle and its Subsidiaries has paid
(or has had paid on its behalf), or has established (or has had established
on its behalf and for its sole benefit and recourse), or will establish or
cause to be established on or before the Closing Date, adequate reserves in
accordance with generally accepted accounting principles on the balance
sheets that are included in the Current SEC Documents for the payment of,
all material Taxes due with respect to any period ending prior to or as of
the Closing Date.
(c) Except as set forth in Schedule 4.11(c), (i) no
Audit by a Tax Authority is pending or threatened with respect to any
material Taxes due from Pinnacle or any of its Subsidiaries, (ii) there are
no outstanding waivers extending the statutory period of limitation
relating to the payment of material Taxes due from Pinnacle or any of its
Subsidiaries for any taxable period ending prior to the Closing Date which
are expected to be outstanding as of the Closing Date, and (iii) no issue
has been raised by any Tax Authority in any Audit of Pinnacle or any of its
Subsidiaries that if raised with respect to any other period not so audited
could be expected to result in a material proposed deficiency for any
period not so audited.
(d) Except as set forth on Schedule 4.11(d), no
deficiency or adjustment for any Taxes has been proposed, asserted or
assessed against Pinnacle or any of its Subsidiaries that has not been
resolved or paid or for which an adequate accrual has not been established
in accordance with generally accepted accounting principles which would
reasonably be expected to have a material adverse effect on Pinnacle. There
are no Liens for Taxes upon the assets of Pinnacle or any of its
Subsidiaries, except Liens for current Taxes not yet due and payable and
for which adequate accruals have been established in accordance with
generally accepted accounting principles.
(e) Except as set forth on Schedule 4.11(e), all Tax
sharing agreements, Tax indemnity agreements and similar agreements to
which Pinnacle or any of its Subsidiaries is a party are disclosed in the
Current SEC Documents.
Section 4.12 Environmental Matters.
(a) Each of Pinnacle and the Material Subsidiaries is
in substantial compliance with all applicable Federal, state, local and
foreign laws and regulations relating to pollution or protection of human
health or the environment, including, without limitation, ambient air,
surface water, ground water, land surface or subsurface strata, and natural
resources (together "Environmental Laws" and including, without limitation,
laws and regulations relating to emissions, discharges, releases or
threatened releases of chemicals, pollutants, contaminants, wastes, toxic
or hazardous substances or wastes, petroleum and petroleum products,
polychlorinated biphenyls ("PCBs"), or asbestos or asbestos-containing
materials ("Materials of Environmental Concern")), or otherwise relating to
the manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling of Materials of Environmental Concern,
except for such non-compliance as would not be reasonably likely to result
in liability to Pinnacle or any Material Subsidiary of more than $100,000
on an individual basis or more than $250,000 in the aggregate. Such
compliance includes, but is not limited to, the possession by Pinnacle and
the Material Subsidiaries of all permits and other governmental
authorizations required under all applicable Environmental Laws, and
substantial compliance with the terms and conditions thereof, except for
such non-compliance as would not be reasonably likely to result in
liability to Pinnacle or any Material Subsidiary of more than $100,000 on
an individual basis or more than $250,000 in the aggregate.
(b) Neither Pinnacle nor any of its Material
Subsidiaries has received any communication (written or oral, in the case
of oral, only such as would reasonably be likely to result in a cause of
action or written claim or violation), whether from a governmental
authority, citizens group, employee or otherwise, that alleges that
Pinnacle or any such Material Subsidiary is not in substantial compliance
with any Environmental Laws, and, to the knowledge of Pinnacle, there are
no circumstances that may prevent or interfere with such compliance in the
future, except for such non-compliance as would not be reasonably likely to
result in liability to Pinnacle or any Material Subsidiary of more than
$100,000 on an individual basis or more than $250,000 in the aggregate. To
Pinnacle's knowledge after reasonable efforts, Pinnacle has provided to
Pinnacle Acq Corp all environmental site assessment reports (such as "Phase
I" or "Phase II" reports) and all reports regarding the investigation or
remediation of Materials of Environmental Concern in soil or ground water,
including documentation of soil or ground water sampling and analysis (or
portions of all of the foregoing as may exist in Pinnacle's files), in
Pinnacle's possession, except for such reports that do not reveal any
conditions not generally disclosed in reports previously provided to
Pinnacle Acq Corp or on Schedule 4.12 with respect to the Cypress
Fee/Inglewood Gas Plant Area and Boomtown, Verdi properties only, and
except for such reports that do not reveal new conditions that,
individually or in the aggregate, would be reasonably expected to result in
liability to Pinnacle or any Material Subsidiary of more than $25,000.
Notwithstanding the foregoing, Pinnacle will use its best efforts to timely
provide all such reports to Pinnacle Acq Corp.
(c) There is no claim, action, cause of action,
notice of investigation or other notice (written or oral, in the case of
oral, only such as would reasonably be likely to result in a cause of
action or written claim or violation) (together "Environmental Claim") that
has been received by Pinnacle or any Material Subsidiary by any Person or
entity alleging potential liability (including, without limitation,
potential liability for investigatory costs, cleanup costs, governmental
response costs, natural resources damages, property damages, personal
injuries, or penalties) arising out of, based on or resulting from (i) the
presence, or release into the environment, of any Material of Environmental
Concern at any location, whether or not owned or operated by Pinnacle or
(ii) circumstances forming the basis of any violation, or alleged
violation, of any Environmental Law, that in either case is pending or to
Pinnacle's knowledge, threatened against Pinnacle or any of its Material
Subsidiaries or against any Person or entity whose liability for any
Environmental Claim Pinnacle or any of its Material Subsidiaries has
retained or assumed either contractually or by operation of law, which
matters referred to in clauses (i) and (ii) would be reasonably likely to
result in liability to Pinnacle or any Material Subsidiary of more than
$50,000 on an individual basis or more than $100,000 in the aggregate.
(d) To Pinnacle's knowledge, there are no past or
present actions, activities, circumstances, conditions, events or
incidents, including, without limitation, the release, emission, discharge,
presence or disposal of any Material of Environmental Concern, that would
reasonably be expected to result in liability to Pinnacle or any Material
Subsidiary of more than $250,000 on an individual basis or more than
$500,000 in the aggregate.
(e) To Pinnacle's knowledge after reasonable efforts,
all underground storage tanks located on any property owned, leased,
operated or controlled by Pinnacle or any of its Subsidiaries are
identified in Paragraph 7 of Schedule 4.12.
Section 4.13 Permits; Compliance with Laws.
(a) Since January 1, 1997, each of Pinnacle, its
Subsidiaries and their respective officers, directors and other personnel
has in effect all Federal, state, local and foreign governmental approvals,
authorizations, certificates, filings, franchises, orders, registrations,
findings of suitability, licenses, notices, permits, applications and
rights, including all authorizations under any applicable Law, including,
without limitation, any applicable Gaming Laws ("Permits"), necessary for
Pinnacle and its Subsidiaries to own, lease or operate their properties and
assets and to carry on their business as now conducted, other than such
Permits the absence of which would not, individually or in the aggregate,
have a material adverse effect on Pinnacle or any of its Material
Subsidiaries, and there has occurred no default under any such Permit other
than such defaults which, individually or in the aggregate, would not have
a material adverse effect on Pinnacle or any of its Material Subsidiaries,
result in a limitation or condition on any Permit or result in the
imposition of a fine or penalty in excess of $50,000 against Pinnacle or
any of its Material Subsidiaries. To the knowledge of Pinnacle, no event
has occurred, and no facts or circumstances exist, which would adversely
affect the ability of Pinnacle to obtain all necessary Permits to allow
Pinnacle to conduct its business with respect to the Indiana Project, in
the manner Pinnacle proposes to conduct such business. To the knowledge of
Pinnacle, no event has occurred which permits, or upon the giving of notice
or passage of time or both would permit, revocation, non-renewal,
modification, suspension or termination of any Permit that currently is in
effect the loss of which either individually or in the aggregate would
reasonably be expected to have a material adverse effect on Pinnacle or any
of its Material Subsidiaries. Neither Pinnacle nor any of its Material
Subsidiaries knows of any facts, which, if known to any Gaming Authority,
would reasonably be expected to result in the revocation or suspension of a
Permit under any Gaming Laws or would reasonably be expected to disqualify
it or them from licensing under any Gaming Laws, except such revocations,
suspensions or disqualifications as could not be reasonably expected to
have a material adverse effect on Pinnacle or any of its Material
Subsidiaries. All such Permits are held only by Pinnacle or a Subsidiary of
Pinnacle. Pinnacle, its Subsidiaries and their respective officers,
directors and other key personnel are in compliance with all applicable
statutes, laws, ordinances, rules, orders and regulations of any
Governmental Entity, except for possible noncompliance which individually
or in the aggregate would not have a material adverse effect on Pinnacle or
any of its Material Subsidiaries.
(b) Except as set forth on Schedule 4.13, each of
Pinnacle, its Subsidiaries and their respective officers, directors and
other key personnel is in compliance with all applicable Law, including any
applicable Gaming Laws, except for possible noncompliance which,
individually or in the aggregate, would not have a material adverse effect
on Pinnacle or any of its Material Subsidiaries, result in a limitation or
condition on any Permit or result in the imposition of a fine or penalty in
excess of $50,000 against Pinnacle or any of its Subsidiaries for which an
accrual has not been established under generally accepted accounting
principles.
(c) Neither Pinnacle, any Subsidiary of Pinnacle nor
any officer or director of Pinnacle or any Subsidiary of Pinnacle has
received any written claim, demand, notice, complaint, court order or
administrative order from any Governmental Entity in the past three years,
which remains unresolved on the date hereof or which was not favorably
disposed of, asserting that a material Permit of it or them, as applicable,
under any Laws, including any Gaming Laws should be limited, revoked or
suspended. No investigation or review by any Governmental Entity with
respect to Pinnacle or any of its Subsidiaries is pending, or, to the best
knowledge of Pinnacle, threatened, nor has any Governmental Entity
indicated to Pinnacle an intention to conduct the same, other than those
the outcome of which would not, individually or in the aggregate,
reasonably be expected to have a material adverse effect on Pinnacle or any
of its Material Subsidiaries.
Section 4.14 State Takeover Statutes. Assuming none of
Pinnacle Acq Corp, PHCR or Colony III has owned 15% or more of Pinnacle's
capital stock at any point during the last three years, Pinnacle and the
Board of Directors of Pinnacle, including the Special Committee, have each
taken all action required to be taken in order to exempt this Agreement (as
it may be amended from time to time), and the transactions contemplated
hereby (excluding the Harveys Merger) from, and this Agreement and the
transactions contemplated hereby (excluding the Harveys Merger) are exempt
from, the requirements of the provisions of Section 203 of the DGCL and
other antitakeover laws and regulations of any U.S. state, including
without limitation the State of Delaware. Pinnacle has heretofore delivered
to Pinnacle Acq Corp complete and correct copies of a resolution of the
Board of Directors of Pinnacle, and of the Special Committee that Section
203 of the DGCL and all other antitakeover laws and regulations of any U.S.
state, including without limitation the State of Delaware, are and shall be
inapplicable to the Pinnacle Merger and the transactions contemplated by
this Agreement (excluding the Harveys Merger), as this Agreement may be
amended from time to time.
Section 4.15 Brokers. Schedule 4.15 sets forth any broker's,
finder's, financial advisor's or other similar fee or commission payable in
connection with the transactions contemplated by this Agreement based upon
arrangements made by or on behalf of Pinnacle or any of its Subsidiaries.
Pinnacle has provided Pinnacle Acq Corp true and correct copies of all
agreements between Pinnacle and any Person listed on Schedule 4.15 hereto.
Section 4.16 Trademarks, etc. Except as disclosed on
Schedule 4.16, the material patents, trademarks (registered or
unregistered), trade names, service marks and copyrights and applications
therefor owned, used or filed by or licensed to Pinnacle and its Material
Subsidiaries (collectively, "Intellectual Property Rights") are sufficient
to allow each of Pinnacle and its Material Subsidiaries exclusive use
thereof and to conduct, and continue to conduct, its business as currently
conducted or as Pinnacle proposes to conduct such business. Each of
Pinnacle and its Material Subsidiaries owns or has unrestricted right to
use the Intellectual Property Rights in order to allow it to conduct, and
continue to conduct, its business as currently conducted or as Pinnacle
proposes to conduct such business, and the consummation of the transactions
contemplated hereby will not alter or impair such ability in any respect
which individually or in the aggregate would be reasonably likely to have a
material adverse effect on Pinnacle. Neither Pinnacle nor any of its
Subsidiaries has received any written notice from any other Person
pertaining to or challenging the right of Pinnacle or any of its
Subsidiaries to use any of the Intellectual Property Rights, which
challenge or other assertion, if upheld or successful, individually or in
the aggregate would be reasonably likely to have a material adverse effect
on Pinnacle. Except as disclosed on Schedule 4.16, no claims are pending by
any Person with respect to the ownership, validity, enforceability or use
of any such Intellectual Property Rights challenging or questioning the
validity or effectiveness of any of the foregoing which claims would
reasonably be expected to have a material adverse effect on Pinnacle.
Neither Pinnacle nor any of its Subsidiaries has made any claim of a
violation or infringement by others of its rights to or in connection with
the Intellectual Property Rights in any such case where such claims
(individually or in the aggregate) would reasonably be expected to have a
material adverse effect on Pinnacle.
Section 4.17 Title to Properties.
(a) Schedule 4.17(a) sets forth a complete list of
all real property and interests in real property owned in fee by Pinnacle
or one of its Subsidiaries (collectively, the "Owned Properties") and sets
forth all real property and interests in real property leases, licenses or
similar interests held by Pinnacle or any of its Subsidiaries
(collectively, the "Leased Properties" and together with the Owned
Properties, the "Real Properties") as of the date hereof.
(b) Except as disclosed in Schedule 4.17(b), each of
Pinnacle and each of its Subsidiaries has sufficiently good and valid title
to the Owned Properties, an adequate leasehold, license or similar interest
in each of the Leased Properties, and such Real Properties allow Pinnacle
and each of its Subsidiaries to conduct, and continue to conduct, its
business as currently conducted or, with respect to the Indiana Project, as
Pinnacle proposes to conduct such business. Each Real Property is
sufficiently free of Liens to allow each of Pinnacle and each of its
Subsidiaries to conduct, and continue to conduct, its business as currently
conducted, or, with respect to the Indiana Project, as Pinnacle proposes to
conduct such business, and, subject to obtaining the required consents, the
consummation of the transactions contemplated by this Agreement will not
alter or impair such ability in any respect which individually or in the
aggregate would be reasonably likely to have a material adverse effect on
Pinnacle or any of its Material Subsidiaries. Pinnacle and its Subsidiaries
hold their respective interests in each of the Real Properties subject only
to the Permitted Liens and the Bank Credit Facility. Each of Pinnacle and
its Subsidiaries enjoys peaceful and undisturbed possession of each of the
Real Properties, except for such breaches of the right to peaceful and
undisturbed possession that do not materially interfere with the ability of
Pinnacle and its Subsidiaries to conduct its business as currently
conducted on such Real Property or, with respect to the Indiana Project, as
Pinnacle proposes to conduct such business. Except as disclosed on Schedule
4.17(b), there is no pending or, to Pinnacle's knowledge, contemplated
condemnation, eminent domain or similar proceeding or special assessment
which would have a material adverse effect on any of the Real Properties
owned by Pinnacle or its Subsidiaries on a project-by-project basis. Except
as disclosed in Schedule 4.17(b), each Leased Property is subject to a
lease, license or other agreement (collectively, the "Existing Leases")
which is in full force and effect and has not been amended except as
disclosed in Schedule 4.17(a), and, to Pinnacle's knowledge, no party
thereto is in default or breach under any such Existing Lease. To
Pinnacle's knowledge, no event has occurred which, with the passage of time
or the giving of notice or both, would cause a breach of or default under
any of such Existing Leases. With respect to each parcel of Real Property,
(i) except as set forth on Schedule 4.17(b), neither Pinnacle nor any of
its Subsidiaries has entered into any material outstanding contract for
construction on any such parcel other than the Indiana Project; (ii) all
improvements, buildings and systems (including, without limitation,
heating, air conditioning, electrical and plumbing) on any such parcel are
in operating condition, normal wear and tear excepted, except where such
non-operational condition would not have a material adverse effect on any
of the Real Properties owned by Pinnacle or its Subsidiaries (on a project-
by-project basis), and to Pinnacle's knowledge are safe for their current
occupancy and use; (iii) except as disclosed on the surveys previously
delivered by Pinnacle to Pinnacle Acq Corp and for minor encroachments, the
buildings and improvements located on each such parcel (A) are located
within the boundary lines of such parcel and, to Pinnacle's knowledge, are
not in violation of applicable setback requirements, local comprehensive
plan provisions, zoning laws and ordinances, building code requirements,
permits, licenses or other forms of approval, regulation or restrictions by
any Governmental Entity, and (B) do not encroach on any easement which may
burden the land, except in each of (A) and (B), where such violations or
encroachments would not have a material adverse effect on any of the Real
Properties owned by Pinnacle or its Subsidiaries(on a project-by-project
basis); and (iv) neither Pinnacle nor its Subsidiaries has received from
any party or Governmental Entity any written notice of any material
violation of applicable setback requirements, local comprehensive plan
provisions, zoning laws and ordinances, or building code requirements,
which has not been remedied; (v) all facilities located on each parcel of
the Real Properties have received all material approvals of Governmental
Entities (including, without limitation, certificates of occupancy,
licenses and permits) required in connection with the ownership, operation
or use thereof and have been operated and maintained in accordance with
applicable laws, ordinances, rules and regulations or any violations
thereof have been cured except where non-compliance would not have a
material adverse effect on any of the Real Property (on a
project-by-project basis); (vi) except as set forth on Schedule 4.17(c),
there are no leases, license or other agreements (other than concession
agreements and contracts with parties providing entertainment to the
patrons of the Real Properties) granting to any party or parties the right
of use or occupancy of any portion exceeding five percent (5%) of the gross
revenues of such Real Property on a project-by-project basis; (vii) except
as set forth on Schedule 4.17(d), there are no outstanding options or
rights of first refusal or similar rights to purchase any such parcel or
any portion thereof or interest therein; (viii) all facilities located on
each parcel of Real Property are connected to and supplied with utilities
and other services necessary for their ownership, operation or use, all of
which services are adequate to conduct business at each of the Real
Properties as currently conducted in accordance with all applicable laws,
ordinances, rules and regulations, except where non- compliance would not
have a material adverse effect on such Real Property; and (x) to Pinnacle's
knowledge, no Real Property has any physical defect or condition which
would materially impair the current use of such Real Property.
(c) The parcels constituting the Owned Properties are
assessed separately from all other adjacent property for purposes of real
property taxes.
(d) There are no material commitments to or
agreements between Pinnacle or any of its Subsidiaries and any Governmental
Entity affecting the Real Property which are not listed in any schedule to
this Agreement or described in the SEC Documents.
(e) Except as disclosed in Schedule 4.17(e) or as
shown in the policies of title insurance, surveys or preliminary title
reports (if more recent) delivered previously to Pinnacle Acq Corp, there
are no commitments, agreements, understandings or other restrictions
materially adversely affecting the ability of Pinnacle or any of its
Subsidiaries, as applicable, to continue to utilize the Real Property as it
is currently being utilized or, with respect to the Indiana Project, to
improve or develop such Real Property in the manner currently contemplated.
Section 4.18 Insurance. To the knowledge of Pinnacle,
Pinnacle and its Subsidiaries have obtained and maintained in full force
and effect insurance with responsible and reputable insurance companies or
associations in such amounts, on such terms and covering such risks,
including fire and other risks insured against by extended coverage, as is
customarily carried by Persons conducting businesses similar to those of
Pinnacle in the locations in which Pinnacle conducts its businesses and
each has maintained in full force and effect public liability insurance,
insurance against claims for personal injury or death or property damage
occurring in connection with any of the activities of Pinnacle or its
Subsidiaries or any of any properties owned, occupied or controlled by
Pinnacle or its Subsidiaries, in such amount as reasonably deemed necessary
by Pinnacle or its Subsidiaries or as may be required by a lender under any
and all documents evidencing any loan or credit facility to which Pinnacle
or its Subsidiaries is a party or by a landlord under any lease or similar
arrangement to which Pinnacle or its Subsidiaries is a party. Except as set
forth on Schedule 4.18(a), there is no claim by Pinnacle or any of its
Subsidiaries pending under any of such policies or bonds as to which
coverage has been questioned, denied or disputed by the underwriters of
such policies or bonds, except such claims that, individually and in the
aggregate, are not having and could not reasonably be expected to have a
material adverse effect on Pinnacle. All premiums payable under all such
policies and bonds have been paid or financed by Pinnacle or one of
Pinnacle's Subsidiaries. Pinnacle does not know of any threatened
termination of, or premium increase with respect to, any of such policies
or bonds, except such terminations or premium increases that, individually
and in the aggregate could not reasonably be expected to have a material
adverse effect on Pinnacle. Except as set forth on Schedule 4.18(b),
Pinnacle does not know of any pending or threatened uninsured claims which
individually or in the aggregate could be reasonably excepted to have a
material adverse effect on Pinnacle.
Section 4.19 Contracts; Debt Instruments. Except as
disclosed in the Current SEC Documents or set forth in Schedule 4.19(a),
there are no (a) agreements of Pinnacle or any of its Subsidiaries
containing an unexpired covenant not to compete or similar restriction
applying to Pinnacle or any of its Subsidiaries, (b) interest rate,
currency or commodity hedging, swap or similar derivative transactions to
which Pinnacle is a party, (c) other material contracts or amendments
thereto that would be required to be filed as an exhibit to a Form 10-K
filed by Pinnacle with the SEC on or prior to the date of this Agreement
and which have not been so filed, (d) written agreements to which Pinnacle
or any of its Material Subsidiaries is a party which, by its terms,
directly obligates any stockholder of Pinnacle with respect to any of the
obligations of Pinnacle or any of its Material Subsidiaries under such
agreement or (e) agreements, contracts, indentures or other instruments (i)
relating to any liabilities or obligations, contingent or otherwise, of
Pinnacle or any of its Material Subsidiaries, including those (A) evidenced
by bankers' acceptances or similar instruments issued or accepted by banks,
(B) relating to any capitalized lease obligations or (C) evidenced by a
letter of credit or a reimbursement obligation of such Person with respect
to any letter of credit, (ii) in respect of borrowed money, (iii) evidenced
by bonds, notes, debentures or similar instruments, (iv) representing the
balance deferred and unpaid of the purchase price of any property or
services, except (other than accounts payable or other obligations to trade
creditors which have remained unpaid for greater than 60 days past their
original due date) those incurred in the Ordinary Course of Business that
would constitute ordinarily a trade payable to trade creditors; (v) all
liabilities and obligations of others of the kind described in the
preceding clause (i), (ii), (iii) or (iv) that Pinnacle or any of its
Material Subsidiaries has guaranteed or that is otherwise their respective
legal liability or which are secured by any assets or property of Pinnacle
or any of its Material Subsidiaries. Each of the material agreements to
which Pinnacle or any of its Material Subsidiaries is a party is a valid
and binding obligation of Pinnacle or its Material Subsidiary, as the case
may be, and, to Pinnacle's knowledge, of each other party thereto, and each
such agreement is in full force and effect and is enforceable by Pinnacle
or its Material Subsidiary in accordance with its terms, except that (i)
such enforcement may be subject to bankruptcy, insolvency, reorganization,
moratorium or other similar laws now or hereafter in effect relating to
creditors' rights generally and (ii) the remedy of specific performance and
injunctive relief may be subject to equitable defenses and to the
discretion of the court before which any proceeding therefor may be
brought. Except as set forth on Schedule 4.19(b), there are no existing
defaults (or circumstances or events that, with the giving of notice or
lapse of time or both would become defaults) of Pinnacle or any of its
Material Subsidiaries (or, to the knowledge of Pinnacle, any other party
thereto) under any such agreements except for defaults that have not and
would not, individually or in the aggregate, have a material adverse effect
on Pinnacle or any Material Subsidiary.
Section 4.20 Board Consent and Recommendation. The Board of
Directors of Pinnacle has determined that the Pinnacle Merger, this
Agreement and the transactions contemplated by this Agreement are advisable
and fair to and in the best interests of the stockholders of Pinnacle and
resolved to recommend that the stockholders of Pinnacle approve the
Pinnacle Merger, this Agreement and the transactions contemplated by this
Agreement. The Special Committee has, by unanimous vote, recommended that
the Board of Directors and the stockholders of Pinnacle approve the
Pinnacle Merger, this Agreement and the transactions contemplated by this
Agreement.
Section 4.21 Accounting Controls. Since January 1, 1997,
Pinnacle and its Subsidiaries have maintained a system of internal
accounting controls sufficient to provide reasonable assurance that (a)
transactions are executed in accordance with management's general or
specific authorizations, (b) transactions are recorded as necessary to
permit preparation of financial statements in conformity with generally
accepted accounting principles and to maintain asset accountability, (c)
access to assets is permitted only in accordance with management's general
or specific authorization, and (d) the recorded accountability for assets
is compared with the existing assets at reasonable intervals and
appropriate action is taken with respect to any differences.
Section 4.22 Affiliate Transactions. Except as disclosed in
the Current SEC Documents or as disclosed in Schedule 4.22, there are no
contracts, liabilities, transactions or relationships that would be
required to be disclosed by Pinnacle by Item 404 of Regulation S-K of the
Securities Act and Exchange Act.
Section 4.23 Vote Required. The affirmative vote of the
holders of a majority of the outstanding shares of Pinnacle Common Stock
entitled to vote thereon (the "Requisite Vote") is the only vote of the
holders of any class or series of Pinnacle's capital stock necessary to
approve this Agreement and the transactions contemplated hereby.
Section 4.24 Material Subsidiaries. Other than with respect
to the operations of the properties that are subject to the Principal Asset
Dispositions, the Material Subsidiaries conduct all of the material
operations relating to Pinnacle's gaming facilities in Nevada, Louisiana,
Mississippi and Indiana, and, other than with respect to the properties
that are subject to the Principal Asset Dispositions, no other entity in
which Pinnacle owns a direct or indirect interest owns any material assets,
licenses, permits or personnel, or performs any material services with
respect to, such operations.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF
HOLDING AND PINNACLE ACQ CORP
Except as set forth in the corresponding numbered sections
of the disclosure schedules delivered by Pinnacle Acq Corp to Pinnacle
concurrently with the execution of this Agreement or referenced in the
particular section of this Article V to which exception is being taken,
PHCR and Pinnacle Acq Corp each represents and warrants to Pinnacle as
follows:
Section 5.1 Organization, Standing and Corporate Power. Each
of PHCR and Pinnacle Acq Corp is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction in which
it is organized and has the requisite corporate power and authority to
carry on its business as now being conducted. Each of PHCR and Pinnacle Acq
Corp is duly qualified or licensed to do business and is in good standing
in each jurisdiction in which the nature of its business or the ownership
or leasing of its properties makes such qualification or licensing
necessary, other than in such jurisdictions where the failure to be so
qualified or licensed (individually or in the aggregate) would not have a
material adverse effect on PHCR or Pinnacle Acq Corp. Each of PHCR and
Pinnacle Acq Corp has made available to Pinnacle complete and correct
copies of its certificate of incorporation and by-laws in effect on the
date of this Agreement.
Section 5.2 Authority; Noncontravention. Each of PHCR and
Pinnacle Acq Corp has the requisite corporate power and authority to enter
into this Agreement and to consummate the transactions contemplated by this
Agreement. The execution and delivery of this Agreement by each of PHCR and
Pinnacle Acq Corp and the consummation by each of PHCR and Pinnacle Acq
Corp of the transactions contemplated by this Agreement have been duly
authorized by all necessary corporate action on the part of each of PHCR
and Pinnacle Acq Corp, respectively, subject to approval of this Agreement
and the transactions contemplated hereby by the Harveys Casino Resorts
Compliance Committee. This Agreement has been duly executed and delivered
by each of PHCR and Pinnacle Acq Corp and, assuming this Agreement
constitutes the valid and binding obligation of Pinnacle, constitutes a
valid and binding obligation of each of PHCR and Pinnacle Acq Corp,
enforceable against each of PHCR and Pinnacle Acq Corp in accordance with
its terms. Except as set forth on Schedule 5.2(a), the execution and
delivery of this Agreement do not, and the consummation of the transactions
contemplated by this Agreement and compliance with the provisions of this
Agreement will not, require notice or consent under, 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 termination, cancellation
or acceleration of any obligation or to loss of a material benefit under,
or result in the creation of any Lien upon any of the properties or assets
of PHCR or Pinnacle Acq Corp under, (a) the respective certificates of
incorporation or by-laws of PHCR or Pinnacle Acq Corp, (b) other than
subject to the governmental filings and other matters referred to in the
following sentence, (i) any loan or credit agreement, note, bond, mortgage,
indenture, lease or other agreement, instrument or (ii) any permit,
concession, franchise or license applicable to PHCR or Pinnacle Acq Corp or
their respective properties or assets or (c) subject to the governmental
filings and other matters referred to in the following sentence, any
judgment, order, decree, statute, law, ordinance, rule or regulation
applicable to PHCR or Pinnacle Acq Corp or their respective properties or
assets, other than, in the case of clauses (b) or (c), any such conflicts,
violations, defaults, rights or Liens that individually or in the aggregate
would not (i) have a material adverse effect on PHCR or Pinnacle Acq Corp,
(ii) impair in any material respect the ability of PHCR or Pinnacle Acq
Corp to perform their respective obligations under this Agreement or (iii)
prevent or impede in any material respect the consummation of any of the
transactions contemplated by this Agreement.
No consent, approval, order or authorization of, or registration,
declaration or filing with, any Governmental Entity is required by PHCR or
Pinnacle Acq Corp in connection with the execution and delivery of this
Agreement by PHCR and Pinnacle Acq Corp or the consummation by PHCR and
Pinnacle Acq Corp of any of the transactions contemplated by this
Agreement, except for (A) the filing of a premerger notification and report
form by PHCR and Pinnacle Acq Corp under the HSR Act, (B) the filing with
the SEC of such reports under Section 14(a) and Rule 13e-3 of the Exchange
Act as may be required in connection with this Agreement and the
transactions contemplated by this Agreement, (C) the filing of the
Certificate of Merger with the Delaware Secretary of State and appropriate
documents with the relevant authorities of other states in which PHCR or
Pinnacle Acq Corp is qualified to do business, (D) the obtaining of all
Gaming Approvals, each of which are set forth in Schedule 5.2(b), (E) such
filings as may be required by an applicable state securities or "blue sky"
laws, and (F) such other consents, approvals, orders, authorizations,
registrations, declarations and filings the failure of which to be obtained
or made would not, individually or in the aggregate, (1) have a material
adverse effect on PHCR or Pinnacle Acq Corp, (2) impair, in any material
respect, the ability of PHCR or Pinnacle Acq Corp to perform their
respective obligations under this Agreement or (3) prevent or significantly
delay the consummation of the transactions contemplated by this Agreement.
Section 5.3 Interim Operations of Pinnacle Acq Corp. Each of
PHCR and Pinnacle Acq Corp was formed solely for the purpose of engaging in
the transactions contemplated hereby and has not engaged in any business
activities or conducted any operations other than in connection with the
transactions contemplated hereby.
Section 5.4 Licensing Matters. Subject to the last sentence
of this Section 5.4, none of PHCR, Pinnacle Acq Corp or any of their
respective Affiliates knows of any facts, which, if known to the Gaming
Authorities, would reasonably be expected to disqualify any of them, any of
their Subsidiaries or any of their respective officers, directors and any
other person required to make any filings or required to be found suitable
(the "Licensed Persons") from being licensed under the Gaming Laws or which
would prevent or materially delay the grant of licenses or approvals
necessary under the Gaming Laws necessary for PHCR and Pinnacle Acq Corp to
consummate the transactions contemplated hereby. Notwithstanding the
foregoing, (a) the term "Licensed Persons" as used herein shall exclude any
limited partner of any investment vehicle used by Colony Capital, Inc.
("Colony") or Colony III in connection with the transactions contemplated
hereby (each a "Colony LP"); (b) none of PHCR, Pinnacle Acq Corp or any of
their respective Affiliates makes any representation or warranty herein
regarding the likelihood of any determination by a Gaming Authority or
otherwise, that any Colony LP be required to make any filings or be found
suitable under the Gaming Laws in connection with the transactions
contemplated hereby, or the impact of any such determination on the
granting of the licenses or approvals necessary under the Gaming Laws for
PHCR and Pinnacle Acq Corp to consummate the transactions contemplated
hereby.
Section 5.5 Litigation. Except as described on Schedule 5.5,
as of the date of this Agreement, there is no action, suit or proceeding
pending or, to the knowledge of Pinnacle Acq Corp and PHCR, threatened
against PHCR or any of its Subsidiaries or affecting any of their
respective properties or assets nor are any Governmental Entity
investigations or audits pending before any court or governmental agency or
body against PHCR or any of its Subsidiaries or affecting any of their
respective assets or properties which, individually or in the aggregate
would reasonably be expected to affect adversely the ability of PHCR or
Pinnacle Acq Corp to consummate the transactions contemplated by this
Agreement.
Section 5.6 Financing. Pinnacle Acq Corp has delivered to
Pinnacle copies of a written commitment letter with respect to $900 million
aggregate principal amount of senior debt facilities and one or more
"highly confident" letters with respect to $550 million aggregate principal
amount of senior subordinated debt (the commitment letter and the highly
confident letters being referred to herein as, the "Financing Letters"). As
of the date hereof, such letters are in full force and effect and have not
been terminated.
Section 5.7 No Other Agreements. As of the date hereof,
except for this Agreement, the Voting Agreement and the transactions
contemplated hereby and thereby, none of Pinnacle Acq Corp, PHCR or any of
their Affiliates has made any other agreements or arrangements concerning
the Pinnacle Merger or Pinnacle or any of its Subsidiaries with (a) any
director, officer, employee or consultant of Pinnacle, or (b) any
stockholder beneficially owning 5% or more of the outstanding shares of
Pinnacle Common Stock.
Section 5.8 Harveys Merger. Harveys shall be the surviving
entity of the Harveys Merger.
ARTICLE VI
COVENANTS RELATING TO CONDUCT OF BUSINESS
Section 6.1 Conduct of Business.
(a) During the term of this Agreement, except with
the prior written consent of Pinnacle Acq Corp (requests for which shall be
considered in good faith on a timely basis under the circumstances by
Pinnacle Acq Corp) and except as specifically required by this Agreement or
permitted under subsection (b) or (c) of this Section 6.1, Pinnacle shall
and shall cause its Subsidiaries to carry on their respective businesses in
the Ordinary Course of Business and use all reasonable efforts to preserve
intact their current business organizations, keep available the services of
their current officers and key employees and preserve their relationships
consistent with past practice with gaming customers, suppliers, licensors,
licensees, distributors and others having business dealings with them to
the end that their goodwill and ongoing businesses shall be unimpaired in
all material respects at the Effective Time. Except as expressly permitted
or contemplated by the terms of this Agreement, without limiting the
generality of the foregoing, Pinnacle shall not, and shall not permit any
of its Subsidiaries to:
(i) (A) declare, set aside or pay any
dividends on, or make any other distributions in respect of, any of
its capital stock, other than dividends and distributions by any
direct or indirect wholly owned Subsidiary of Pinnacle to its
Parent, (B) split, combine or reclassify any of its capital stock
or issue or authorize the issuance of any other securities in
respect of, in lieu of or in substitution for shares of its capital
stock or (C) except as shall be required under currently existing
terms of any stock-based benefit plan appearing on Schedule
4.10(a), purchase, redeem or otherwise acquire or amend the terms
of any shares of capital stock of Pinnacle or any of its
Subsidiaries or any other securities thereof or any rights,
warrants, options to acquire or any securities convertible into or
exchangeable for any such shares or other securities (other than,
after notice to Pinnacle Acq Corp, (1) redemptions, purchases or
other acquisitions required by applicable provisions under Gaming
Laws and (2) issuances or redemptions of capital stock of wholly
owned Subsidiaries occurring between Pinnacle and any of its wholly
owned Subsidiaries or occurring between wholly owned Subsidiaries
of Pinnacle);
(ii) issue, deliver, sell, grant,
pledge or otherwise encumber or amend any shares of its capital
stock, any other voting securities or any securities convertible or
exchangeable into, or any rights, warrants or options to acquire,
any such shares, voting securities or convertible or exchangeable
securities (other than the issuance of Pinnacle Common Stock upon
the exercise of employee stock options and contingent incentive
plans appearing on Schedule 4.10(a) (including with respect to
contingent shares of Pinnacle Common Stock) outstanding on the date
of this Agreement in accordance with their present terms);
(iii) amend its Certificate of
Incorporation, By-laws or other comparable charter or
organizational documents;
(iv) except in connection with the
transactions contemplated by this Agreement, voluntarily take any
action that would result in the failure to maintain the listing of
Pinnacle Common Stock on the NYSE;
(v) develop, acquire or agree to
develop or acquire any projects, assets or lines of business,
including without limitation by merging or consolidating with, or
by purchasing all or a substantial portion of the assets of, or by
any other manner, any business or any corporation, partnership,
joint venture, association or other business organization or
division thereof, or any assets that are material, individually or
in the aggregate, to Pinnacle or any of its Material Subsidiaries,
except (A) purchases of inventory, furnishings and equipment in the
Ordinary Course of Business or (B) expenditures consistent with
Pinnacle's current capital budget, as set forth in Schedule
6.1(a)(v)(B) (the "Budget") or (C) acquisitions or projects
identified on Schedule 6.1(a)(v)(C);
(vi) except as set forth on Schedule
6.1(a)(vi), sell, lease, license, swap, barter, transfer or
otherwise convey, mortgage or otherwise encumber or subject to any
Lien or prevent from becoming subject to a Lien any of its
properties or assets that are material, individually or in the
aggregate, to Pinnacle or any of its Material Subsidiaries, except
transactions in the Ordinary Course of Business;
(vii) (A) other than (1) working
capital borrowings in the Ordinary Course of Business, (2) projects
set forth in Schedule 6.1(a)(vii), (3) specific projects at
existing, operational facilities referred to and consistent with
that specified in the Budget and (4) other incurrences of
indebtedness which, in the aggregate, do not exceed $20.0 million,
incur any indebtedness, forgive any debt obligations of any Person
to Pinnacle or its Subsidiaries, issue or sell any debt securities
or warrants or other rights to acquire any debt securities of
Pinnacle or any of its Subsidiaries, guarantee any debt securities
of another Person, enter into any "keep well" or other agreement to
maintain any financial statement condition of another Person or
enter into any arrangement having the economic effect of any of the
foregoing or (B) other than (1) to Pinnacle or any direct or
indirect Subsidiary of Pinnacle, (2) advances to employees,
suppliers or customers in the Ordinary Course of Business, (3)
projects set forth in Schedule 6.1(a)(vii), and (4) specific
projects referred to and consistent with that specified in the
Budget, make any loans, advances or capital contributions to, or
investments in, any other Person;
(viii) settle any Audit relating to
material Taxes pending as of the date hereof or arising on or after
the date hereof, make any material Tax election, or amend any
material Tax Return in any respect;
(ix) pay, discharge, settle or satisfy
any material claims, liabilities or obligations (absolute, accrued,
asserted or unasserted, contingent or otherwise), other than the
payment, discharge, settlement or satisfaction in the Ordinary
Course of Business or in accordance with their terms of liabilities
reflected or reserved against in the Base Balance Sheet or incurred
in the Ordinary Course of Business or the optional redemption of
the 13% First Mortgage Notes due 2003 issued by Casino Magic of
Louisiana, Corp. at prices, and on terms consistent with the
Indenture governing such debt, as in effect on the date hereof, or,
except in the Ordinary Course of Business, waive the benefits of,
or agree to modify in any manner, any confidentiality, standstill
or similar agreement to which Pinnacle or any of its Subsidiaries
is a party;
(x) make any change in the compensation
payable or to become payable to any of its officers, directors,
employees, agents or consultants (other than (i) general increases
in wages to employees who are not officers, directors or Affiliates
in the Ordinary Course of Business and (ii) salary increases and
bonuses payable to Pinnacle officers pursuant to the terms of any
agreement existing as of the date hereof or disclosed on Schedule
6.1(a)(x)) or pursuant to regular annual reviews in the Ordinary
Course of Business or pursuant to or to Persons providing
management services, enter into or amend any Plan or make any loans
to any of its officers, directors, employees, Affiliates, agents or
consultants or make any change in its existing borrowing or lending
arrangements for or on behalf of any of such Persons pursuant to a
Plan or otherwise;
(xi) pay or make any accrual or
arrangement for payment of any pension, retirement allowance or
other employee benefit pursuant to any Plan, to any officer,
director, employee, consultant or Affiliate or pay or agree to pay
or make any accrual or arrangement for payment to any officers,
directors, employees, consultants or Affiliates of Pinnacle of any
amount relating to unused vacation days, except payments and
accruals made in the Ordinary Course of Business; adopt or pay,
grant, issue, accelerate or accrue salary or other payments or
benefits pursuant to any Plan with or for the benefit of any
director, officer, employee, agent or consultant, whether past or
present, other than as required under applicable law or the current
terms of any Plan; or amend in any material respect any Plan in a
manner inconsistent with the foregoing;
(xii) except as required by Law, enter
into any collective bargaining agreement;
(xiii) except pursuant to agreements
existing on the date hereof and except as otherwise disclosed on
Schedule 6.1(a)(xiii), make any payments (other than regular
compensation payable to officers and employees of Pinnacle in the
Ordinary Course of Business) or other distributions to, or enter
into any transaction, agreement or arrangement with, any of
Pinnacle's or any of its Subsidiaries' Affiliates, officers,
directors, stockholders or their Affiliates, associates or family
members or do or enter into any of the foregoing with respect to
employees, agents or consultants other than in the Ordinary Course
of Business;
(xiv) except in the Ordinary Course of
Business and except as otherwise permitted by this Agreement modify
or amend in a manner adverse to Pinnacle or it Subsidiaries the
material economic terms of any material contract or agreement or
terminate any material contract or agreement to which Pinnacle or
any Subsidiary is a party or waive, release or assign any material
rights or claims;
(xv) fail to make any scheduled
principal or interest payment on indebtedness evidenced by debt
instruments to which Pinnacle or any of its Subsidiaries is a
party; or
(xvi) authorize any of, or commit or
agree to take any of, the foregoing actions except as otherwise
permitted by this Agreement.
(b) Development Projects. Pinnacle, Pinnacle Acq Corp
and PHCR agree that Pinnacle, without the prior written consent of Pinnacle
Acq Corp otherwise required under Section 6.1(a), may expend amounts
consistent with and in the manner prescribed by the written budget, plans
and policies previously provided to Pinnacle Acq Corp related to the
development opportunities and activities for the Indiana Project,
including, without limitation, the hiring of employees and the entering
into of employment agreements with senior management personnel (to the
extent contained therein).
(c) Asset Dispositions. Schedule 6.1(c) sets forth
(i) certain asset sales that are presently being undertaken by Pinnacle or
its Subsidiaries (the "Principal Asset Dispositions") and (ii) the estimate
of Pinnacle's management of the net (after tax and transaction expenses and
determined substantially in accordance with the methodology used in the
financial model delivered to Pinnacle on the date hereof) proceeds to be
received by Pinnacle in connection with each such sale. Schedule 6.1(c)
also sets forth certain additional asset sales which are presently being
undertaken by Pinnacle or its Subsidiaries (the "Other Asset Dispositions"
and, together with the Principal Asset Dispositions, the "Asset
Dispositions"). Notwithstanding the foregoing clauses (a) and (b), Pinnacle
shall be permitted to consummate (i) the Principal Asset Dispositions
(other than the sale of the Inglewood Property), substantially on the terms
and subject to the conditions contained in the applicable Asset Disposition
Agreement in effect as of the date hereof (or as amended in accordance with
this Agreement), (ii) the sale of the Inglewood Property substantially in
accordance with the terms of the draft purchase agreement provided to
Pinnacle Acq Corp on April 14, 2000 (except with respect to price, which in
no event shall generate Net Proceeds of less than $13,054,000), and (iii)
the Other Asset Dispositions on terms approved by Pinnacle's Board of
Directors, in good faith. Except for amendments, waivers or modifications
which would not reasonably be expected to significantly delay the
consummation of the transactions contemplated by this Agreement, impair in
any material respect the ability of Pinnacle to perform its obligations
under this Agreement and which are not materially adverse to the original
terms of such Principal Asset Disposition, Pinnacle shall not amend, waive,
or modify any of the terms or conditions contained in the agreements (or in
the case of the Inglewood Property, the draft purchase agreement delivered
to Pinnacle Acq Corp on April 14, 2000) relating to the Principal Asset
Disposition (the "Asset Disposition Agreements") without the prior written
consent of Pinnacle Acq Corp.
(d) Redemption. Notwithstanding the foregoing
provisions of this Section 6.1, immediately prior to the Effective Time,
Pinnacle shall redeem the shares of Pinnacle Common Stock owned by R.D.
Hubbard on the date hereof that are not being contributed to PHCR under the
Voting Agreement for a price equal to the Pinnacle Merger Consideration
(including any Class A CPR that would be payable at the Effective Time).
(e) Other Actions. Pinnacle shall not, and shall not
permit any of its Subsidiaries to, take any action that would result in any
of its representations and warranties set forth in this Agreement that are
qualified as to materiality becoming untrue and those not so qualified
becoming untrue in any material respect.
Section 6.2 Advice of Changes. PHCR, Pinnacle Acq Corp and
Pinnacle shall promptly advise the other party orally and in writing of:
(a) Any representation or warranty made by it
contained in this Agreement becoming untrue or inaccurate in any material
respect;
(b) The failure by it to comply with or satisfy in
any material respect any covenant, condition or agreement to be complied
with or satisfied by it under this Agreement; or
(c) Any change or event having, or which, insofar as
can reasonably be foreseen, would have, a material adverse effect on such
party and its Subsidiaries taken as a whole or on the truth of their
respective representations and warranties or the ability of the conditions
set forth in Article VIII to be satisfied;
provided, however, that no such notification shall affect the
representations, warranties, covenants or agreements of the parties or the
conditions to the obligations of the parties under this Agreement.
Additionally, Pinnacle shall furnish to Pinnacle Acq Corp, as promptly as
practicable following Pinnacle Acq Corp's request therefor, all information
reasonably necessary for Pinnacle Acq Corp accurately to determine (i) what
amounts, if any, payable under any of the Plans or any other contract,
agreement, or arrangement with respect to which Pinnacle or any of its
Subsidiaries may have any liability could fail to be deductible for Federal
income tax purposes by virtue of section 162(a)(1), section 162(m) or
section 280G of the Code, or (ii) whether Pinnacle or any of its
Subsidiaries has entered into any contract, agreement or arrangement that
would result in the disallowance of any tax deductions pursuant to section
280G of the Code.
Section 6.3 No Solicitation.
(a) Pinnacle shall not, nor shall it permit any of
its Subsidiaries to, nor shall it authorize or permit any agent, officer,
director or employee of, or any investment banker, attorney or other
advisor or representative of, Pinnacle or any of its Subsidiaries to,
directly or indirectly, (i) solicit or initiate, or encourage any inquiries
regarding or the submission of, any Takeover Proposal (including, without
limitation, any proposal or offer to Pinnacle's stockholders) or (ii)
participate in any discussions or negotiations regarding, or furnish to any
Person any non-public information with respect to, or take any other action
to facilitate the making of any proposal that would constitute a Takeover
Proposal; provided, if in the opinion of the Board of Directors of
Pinnacle, after consultation with outside legal counsel, such failure to
act would be inconsistent with its fiduciary duties to Pinnacle's
stockholders under applicable law, Pinnacle may, in response to an
unsolicited, written Competitive Proposal (or Takeover Proposal which,
based on the advice of its financial advisors, the Board of Directors of
Pinnacle determines in good faith is reasonably likely to result in a
Competitive Proposal), and subject to compliance with Section 6.3(c) and
pursuant to an executed confidentiality agreement with customary terms and
conditions and, in any case, which includes customary standstill provisions
which prohibit such party from seeking to directly or indirectly accomplish
a Takeover Proposal except with the consent of the Board of Directors of
Pinnacle, and which expressly permits Pinnacle to fulfill its obligations
under Section 6.3(c), (A) furnish information with respect to Pinnacle to
the Person who made such unsolicited proposal and (B) participate in
negotiations with such Person regarding such Competitive Proposal (or
Takeover Proposal which, based on the advice of its financial advisors, the
Board of Directors of Pinnacle determines in good faith is reasonably
likely to result in a Competitive Proposal). Without limiting the
foregoing, it is understood that any violation of the restrictions set
forth in the preceding sentence by any director, officer, employee,
Affiliate or agent, of Pinnacle or any of its Subsidiaries (each a "Covered
Person"), whether or not such Person is purporting to act on behalf of
Pinnacle or any of its Subsidiaries or otherwise, shall be deemed to be a
breach of this Section 6.3(a) by Pinnacle; provided that it is understood
that this Section 6.3(a) shall not be deemed to have violated if in
response to an unsolicited inquiry, a Covered Person states solely that he
or she is subject to the terms of this Agreement and provides only public
information in response to the inquiry. All Covered Persons shall
immediately cease and cause to be terminated any existing activities,
discussions and negotiations with any parties conducted heretofore with
respect to, or that could reasonably be expected to lead to, any of the
foregoing.
(b) Neither the Board of Directors of Pinnacle nor
any committee thereof shall (i) withdraw or modify, or publicly propose to
withdraw or modify in a manner adverse to Pinnacle Acq Corp the approval or
recommendation by such Board of Directors or any such committee of this
Agreement or the Pinnacle Merger, (ii) approve or recommend, or publicly
propose to approve or recommend, any Takeover Proposal or (iii) cause
Pinnacle to enter into any agreement with respect to any Takeover Proposal.
Notwithstanding the foregoing, the Board of Directors of Pinnacle or the
Special Committee, prior to the approval of this Agreement or the Pinnacle
Merger (including as the same may be modified hereafter) by the Requisite
Vote, to the extent required by the fiduciary duties to Pinnacle's
stockholders under applicable Law, after consultation with outside legal
counsel, may, subject to the terms of this and the following sentences of
this Section 6.3(b), withdraw or modify its approval or recommendation of
this Agreement or the Pinnacle Merger, or approve or recommend a
Competitive Proposal, in each case at any time after 12:00 noon, Los
Angeles time, on the fifth day following Pinnacle Acq Corp's receipt of
written notice (a "Notice of Competitive Proposal") advising Pinnacle Acq
Corp that the Board of Directors of Pinnacle has received a Competitive
Proposal, specifying the material terms and conditions of such Competitive
Proposal and identifying the Person making such Competitive Proposal.
Pinnacle Acq Corp shall have the opportunity, until the end of the fifth
day after it receives a Notice of Competitive Proposal, to make an offer to
the Board of Directors of Pinnacle. Neither the Board of Directors of
Pinnacle nor any committee of the Board of Directors may withdraw, or
modify or publicly propose to withdraw, or modify in a manner adverse to
Pinnacle Acq Corp, its approval or recommendation of this Agreement or the
Pinnacle Merger or approve or recommend a Competitive Proposal
unless and until it shall have determined, in its good faith judgment (i)
the value of the consideration (based on the opinion, with only customary
qualifications, of an independent financial advisor of good national
reputation in such matters) of such proposal exceeds the value of each of
the Pinnacle Merger Consideration and any alternative proposal presented by
Pinnacle Acq Corp or any of its Affiliates and (ii) such proposal is more
favorable to Pinnacle's stockholders than the Pinnacle Merger and any
alternative proposal presented by Pinnacle Acq Corp or any of its
Affiliates. In addition, if Pinnacle enters into an agreement with respect
to any Competitive Proposal, it shall, concurrently with entering into such
agreement, pay, or cause to be paid, to Pinnacle Acq Corp the Termination
Fee.
(c) In addition to the obligations of Pinnacle set
forth in paragraph (b), Pinnacle shall advise Pinnacle Acq Corp promptly of
any request for non-public information or of any Takeover Proposal, or any
proposal with respect to any Takeover Proposal, the material terms and
conditions of such request or Takeover Proposal, and the identity of the
Person making any such Takeover Proposal or inquiry. Pinnacle will use
reasonable efforts to keep Pinnacle Acq Corp informed of the status and
details (including amendments or proposed amendments) of any such request,
Takeover Proposal or inquiry.
(d) Rule 14e-2 Disclosure. Nothing contained in this
Section 6.3 shall prohibit Pinnacle from taking and disclosing to its
stockholders a position contemplated by and in accordance with Rule 14e-2
promulgated under the Exchange Act if, in the good faith judgment of the
Board of Directors of Pinnacle or the Special Committee, following
consultation with outside counsel, failure so to disclose would be a
violation of its obligations under applicable law; provided, however, that,
neither Pinnacle nor its Board of Directors, the Special Committee, nor any
other committee thereof shall withdraw or modify, or propose publicly to
withdraw or modify, its position with respect to the Pinnacle Merger or
this Agreement, except in accordance with the provisions of Section 6.3(b).
ARTICLE VII
ADDITIONAL AGREEMENTS
Section 7.1 Stockholders Meeting. Pinnacle will, as soon as
practicable, and in no event later than 120 days after the date hereof,
duly call, give notice of, convene and hold a meeting of the holders of
Pinnacle Common Stock (the "Pinnacle Stockholders Meeting"); provided
however, the time period set forth in this Section 7.1 shall toll from the
51st day to the 80th day that the Proxy Statement (as defined below) and
the Schedule 13E-3 (as defined below) are filed with the SEC and remain
under review by the SEC (but in no event shall such period toll for more
than 30 days in total or the Pinnacle Stockholders Meeting occur later than
the 150th day after the date hereof); provided further that such tolling
period shall only be available if the Proxy Statement and the Schedule
13E-3 are filed in accordance with the provisions of Section 7.2 hereof and
Pinnacle has used its reasonable best efforts to respond to SEC comments to
such disclosure documentation promptly and completely. Subject to the
provisions of Section 6.3(b), Pinnacle will, through its Board of
Directors, recommend to its stockholders approval of this Agreement, the
Pinnacle Merger and the other transactions contemplated by this Agreement.
Section 7.2 Proxy Statement and Other Filings; Auditor's
Letter.
(a) Pinnacle shall, as promptly as practicable after
the execution of this Agreement, and in no event later than 45 days after
the date hereof, prepare and file with the SEC a proxy statement (together
with any amendments or supplements thereto, the "Proxy Statement") and a
Rule 13E-3 Transaction Statement on Schedule 13E-3 (together with any
amendments or supplements thereto, the "Schedule 13E-3") in connection with
the Pinnacle Merger. Pinnacle Acq Corp shall, upon request of Pinnacle,
furnish Pinnacle with such information concerning itself, PHCR and Colony
as may be required by law or any Governmental Entity in connection with the
Proxy Statement and Schedule 13E-3. Pinnacle shall cause the Proxy
Statement and the Schedule 13E-3 to comply as to form in all material
respects with the applicable provisions of the Exchange Act. Pinnacle
agrees that the Proxy Statement, the Schedule 13E-3 and each amendment or
supplement thereto at the time it is filed shall not include an untrue
statement of material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances in which they were made, not misleading; provided, however,
that the foregoing shall not apply to the extent that any untrue statement
of a material fact or omission to state material fact was made by Pinnacle
in reliance upon and in conformity with information concerning Pinnacle Acq
Corp, PHCR, Colony III or their Affiliates furnished to Pinnacle by
Pinnacle Acq Corp or its attorneys or advisors specifically for use in the
Proxy Statement or Schedule 13E-3. As promptly as possible after clearance
by the SEC of the Proxy Statement, Pinnacle shall mail the Proxy Statement
to its stockholders. Pinnacle Acq Corp and the Pinnacle Surviving Corp
shall indemnify and hold harmless Pinnacle, its Subsidiaries and their
respective officers, directors, employees and agents from and against any
and all losses, liabilities, costs, and expenses (including reasonable
attorneys' fees) directly arising out of any untrue statement of material
fact (or omission of a statement of material fact necessary in order to
make the statements therein not materially misleading) made in the Proxy
Statement, Schedule 13E-3 or any amendment or supplement thereto in
reliance upon and in conformity with information concerning Pinnacle Acq
Corp, PHCR, Colony III or their Affiliates furnished to Pinnacle in writing
by Pinnacle Acq Corp specifically for use in the Proxy Statement or
Schedule 13E-3. Pinnacle shall indemnify and hold harmless Pinnacle Acq
Corp, the Pinnacle Surviving Corp, PHCR, Colony, their respective
Subsidiaries and Affiliates and their respective officers, directors,
stockholders, partners, members, equityholders, employees and agents from
and against any and all losses, liabilities, costs, and expenses (including
reasonable attorneys' fees) directly arising out of any untrue statement of
material fact (or omission of a statement of material fact necessary in
order to make the statements therein not materially misleading) made in the
Proxy Statement, Schedule 13E-3 or any amendment or supplement thereto and
directly attributable to information provided by Pinnacle.
(b) As promptly as practicable, each party hereto
shall properly prepare and file any other filings required under the
Exchange Act, the Securities Act or any other Laws relating to the Pinnacle
Merger (collectively, "Other Filings").
(c) PHCR and Pinnacle Acq Corp shall furnish Pinnacle
with all information concerning them as Pinnacle may reasonably request in
connection with the preparation of the Proxy Statement, the Schedule 13E-3
and the Other Filings.
(d) Pinnacle shall provide copies of drafts of the
Proxy Statement and the Schedule 13E-3 to Pinnacle Acq Corp and its counsel
at least 5 Business Days prior to the date of any filing of such document
with the SEC (including with respect to each amendment or supplement
thereto) so as to allow Pinnacle Acq Corp to comment on such documents.
Prior to filing any Proxy Statement or Schedule 13E-3 with the SEC,
Pinnacle shall consider in good faith any comments on such Proxy Statement
or Schedule 13E-3, as the case may be, made by, or changes requested by,
Pinnacle Acq Corp or its attorneys or advisors. Pinnacle shall also
promptly provide Pinnacle Acq Corp with copies of any correspondence
received from the SEC, and shall permit representatives of Pinnacle Acq
Corp to attend any telephone call with the SEC which discusses comments
made by the staff.
Section 7.3 Access to Information; Confidentiality.
(a) Pinnacle shall afford to Pinnacle Acq Corp, and
to its officers, employees, accountants, counsel, financial advisers and
other representatives, reasonable access during normal business hours
during the period prior to the Effective Time to all the properties, books,
contracts, commitments and records of Pinnacle and its Subsidiaries and,
during such period, Pinnacle shall furnish promptly to Pinnacle Acq Corp
(a) a copy of each report, schedule, registration statement and other
document filed by it or its Subsidiaries during such period pursuant to the
requirements of Federal or state securities laws and (b) all other
information concerning its or its Subsidiaries' business, properties and
personnel as Pinnacle Acq Corp may reasonably request. Except as otherwise
agreed to by Pinnacle, notwithstanding termination of this Agreement,
Pinnacle Acq Corp will keep, and will cause its officers, employees,
accountants, counsel, financial advisers and other representatives and
affiliates to keep, all Confidential Information (as defined below)
confidential and not to disclose any Confidential Information to any Person
other than Pinnacle Acq Corp or Pinnacle Acq Corp's directors, officers,
employees, affiliates or agents, and then only on a confidential basis;
provided, however, that Pinnacle Acq Corp may disclose Confidential
Information (i) as required by law, rule, regulation or judicial process,
(ii) to its attorneys, accountants, financial advisors, lenders, placement
agents and underwriters on a confidential basis or (iii) as required by any
Governmental Entity. For purposes of this Agreement, "Confidential
Information" shall include all information about Pinnacle which has been
furnished by Pinnacle to Pinnacle Acq Corp; provided, however, that
Confidential Information does not include information which (A) is or
becomes generally available to the public other than as a result of a
disclosure by Pinnacle Acq Corp, its attorneys, accountants or financial
advisors not permitted by this Agreement, (B) was available to Pinnacle Acq
Corp on a non-confidential basis prior to its disclosure to Pinnacle Acq
Corp by Pinnacle or (C) becomes available to Pinnacle Acq Corp on a
non-confidential basis from a Person other than Pinnacle who, to the
knowledge of Pinnacle Acq Corp, is not otherwise bound by a confidentiality
agreement with Pinnacle or is not otherwise prohibited from transmitting
the relevant information to Pinnacle Acq Corp. In the event of termination
of this Agreement for any reason, Pinnacle Acq Corp shall promptly return
all Confidential Information to Pinnacle.
(b) Pinnacle Acq Corp shall use reasonable efforts to
keep Pinnacle informed of the status of its application for Gaming
Approvals and its activities related to obtaining the Financing.
(c) All permits and other governmental authorizations
currently held by Pinnacle and its Material Subsidiaries pursuant to the
Environmental Laws will be identified in writing to Pinnacle Acq Corp prior
to Closing.
Section 7.4 Reasonable Efforts; Notification. Upon the terms
and subject to the conditions set forth in this Agreement, each of the
parties agrees to use all reasonable efforts to take, or cause to be taken
(including through its officers and directors and other appropriate
personnel), all actions, and to do, or cause to be done, and to assist and
cooperate with the other parties in doing, all things necessary, proper or
advisable to consummate and make effective, in the most expeditious manner
practicable, the Pinnacle Merger, the Financing and the other transactions
contemplated by this Agreement, including (a) the obtaining of all
necessary actions or nonactions, waivers, consents and approvals from
Governmental Entities and the making of all necessary registrations and
filings (including filings with Governmental Entities, if any) and the
taking of all reasonable steps as may be necessary to obtain Permits or
waivers from, or to avoid an action or proceeding by, any Governmental
Entity (including in respect of any Gaming Law), (b) the seeking of all
necessary consents, approvals or waivers from third parties, (c) the
defending of any lawsuits or other legal proceedings, whether judicial or
administrative, challenging this Agreement or the consummation of any of
the transactions contemplated by this Agreement, including seeking to have
any stay or temporary restraining order entered by any court or other
Governmental Entity vacated or reversed and (d) the execution and delivery
of any additional instruments necessary to consummate the transactions
contemplated by, and to fully carry out the purposes of, this Agreement. In
connection with and without limiting the foregoing, Pinnacle and its Board
of Directors shall (including through its officers and directors and other
appropriate personnel) (i) take all reasonable action necessary to ensure
that no U.S. state takeover, business combination, control share, fair
price or fair value statute or similar statute or regulation is or becomes
applicable to the Pinnacle Merger, this Agreement or any of the other
transactions contemplated by this Agreement, (ii) if any U.S. state
takeover, business combination, control share, fair price or fair value
statute or similar statute or regulation becomes applicable to the Pinnacle
Merger, this Agreement or any other transaction contemplated by this
Agreement, take all reasonable action to ensure that the Pinnacle Merger
and the other transactions contemplated by this Agreement may be
consummated as promptly as practicable on the terms contemplated by this
Agreement and otherwise to minimize the effect of such statute or
regulation on the Pinnacle Merger, this Agreement and the other
transactions contemplated by this Agreement, and (iii) take all reasonable
action to assist PHCR and Pinnacle Acq Corp in connection with efforts
reasonably related to obtaining and effectuating the Financing for the
Pinnacle Merger and related transactions including, but not limited to,
successful syndication of the credit facility and sale of subordinated
notes, participation in road shows, preparation of offering circulars and
information memoranda (including providing all financial and other
information necessary therefor), delivery of officers' certificates and
opinions as are customary in financings of this type, delivery of
guarantees by Pinnacle and its Subsidiaries and granting of pledges and
security interests in and liens on assets of Pinnacle and its Subsidiaries;
provided that no obligation of Pinnacle and its Subsidiaries under any
guarantee or security document shall be effective until the Effective Time.
Notwithstanding the foregoing, the parties acknowledge that none of
Pinnacle Acq Corp or its Affiliates are obligated by this Section 7.4(a) or
any other provision of this Agreement to obtain any consent, approval,
license, waiver, order, decree, determination of suitability or other
authorization or to make any filing with respect to any limited partner of
Colony III or any of its Affiliates. Nothing herein shall be deemed to
require Pinnacle Acq Corp or its Affiliates to take any steps (including
without limitation the expenditure of funds) or provide any information to
obtain any consent, approval, license, waiver, order, decree, determination
of suitability or other authorization, other than is customary in Argentina
and the States of Arizona, California, Colorado, Indiana, Iowa, Louisiana,
Mississippi and Nevada for such matters.
Section 7.5 Stock Option Plans; Change of Control Plan.
(a) As soon as practicable following the date of this
Agreement, but in any event no later than 30 days before the Closing Date,
the Board of Directors of Pinnacle (or, if appropriate, any committee
administering the Pinnacle Stock Option Plans) shall adopt such resolutions
or use all reasonable efforts to take such other actions as are required to
provide that except as set forth in the Voting Agreement each then
outstanding stock option (whether or not vested) to purchase shares of
Pinnacle Common Stock (a "Pinnacle Stock Option") heretofore granted under
any stock option or other stock-based incentive plan, program or
arrangement of Pinnacle (collectively, the "Pinnacle Stock Option Plans")
shall be canceled immediately prior to the Effective Time in exchange for
payment of an amount in cash equal to the product of (i) the number of
shares of Pinnacle Common Stock subject to such Pinnacle Stock Option
immediately prior to the fifth Business Day prior to the Closing Date and
(ii) the excess, if any, of the cash amount of the Pinnacle Merger
Consideration over the per share exercise price of such Pinnacle Stock
Option. In addition, in the event that the Inglewood Sale shall not have
closed on or prior to the fifth Business Day prior to the Closing Date,
holders of In the Money Pinnacle Stock Options (as defined in Section
10.11) also shall receive one Class A CPR for each share issuable upon
exercise. A listing of all outstanding Pinnacle Stock Options as of the
date hereof, showing what portions of such Pinnacle Stock Options are
exercisable as of such date, the dates upon which such Pinnacle Stock
Options were granted, and the exercise price of such Pinnacle Stock
Options, is set forth in Schedule 7.5.
(b) All Pinnacle Stock Option Plans shall terminate
as of the Effective Time, and the provisions in any other Plan providing
for the issuance, transfer or grant of any capital stock of Pinnacle or any
interest in respect of any capital stock of Pinnacle shall be deleted as of
the Effective Time. Immediately following the Effective Time, no holder of
a Pinnacle Stock Option or any participant in any Pinnacle Stock Option
Plan shall have any right thereunder to acquire any capital stock of
Pinnacle, Pinnacle Acq Corp, PHCR or the Pinnacle Surviving Corporation.
Section 7.6 Indemnification and Insurance.
(a) The indemnification obligations set forth in
Pinnacle's Certificate of Incorporation and By-laws on the date of this
Agreement shall be duplicated, to the extent permissible under the DGCL, in
the Pinnacle Surviving Corporation's Certificate of Incorporation and
By-laws and shall not be amended, repealed or otherwise modified for a
period of six years after the Effective Time in any manner that would
adversely affect the rights thereunder of individuals who on or prior to
the Effective Time were directors, officers, employees or agents of
Pinnacle. The indemnification obligations set forth in Pinnacle's
Certificate of Incorporation and By-laws on the date of this Agreement and
in the respective organizational documents of Pinnacle's Subsidiaries shall
not be amended, repealed or otherwise modified for a period of six years
after the Effective Time in any manner that would adversely affect the
rights thereunder of individuals who on or prior to the Effective Time were
directors, officers, employees or agents of Pinnacle or any of its
Subsidiaries (together with the persons listed in the previous sentence,
the "Indemnified Parties").
(b) Prior to the Effective Time, Pinnacle shall have
procured directors' and officers' liability insurance for a period of six
years from the Effective Time, (which policy shall be of at least the same
coverage, with carriers comparable to Pinnacle's and its Subsidiaries'
existing carriers, containing terms and conditions which are no less
favorable to those covered in Pinnacle's and its Subsidiaries' existing
directors' and officers' liability policy) to cover those Persons who are
covered on the date of this Agreement by Pinnacle's and its Subsidiaries'
directors' and officers' liability insurance policy with respect to those
matters covered by Pinnacle's and its Subsidiaries' directors' and
officers' liability policy.
(c) Section 7.6 shall survive the consummation of the
Pinnacle Merger at the Effective Time, is intended to benefit Pinnacle, the
Pinnacle Surviving Corporation and the Indemnified Parties (and the heirs
and representatives of the Indemnified Parties), and shall be binding on
all successors and assigns of Pinnacle Acq Corp and the Pinnacle Surviving
Corporation and shall be enforceable by each Indemnified Party and his or
her heirs and representatives.
Section 7.7 Fees.
(a) Except as provided below, all fees and expenses
incurred in connection with the Pinnacle Merger, this Agreement and the
transactions contemplated hereby shall be paid by the party incurring such
fees or expenses, whether or not the Pinnacle Merger is consummated.
(b) Pinnacle shall pay, or cause to be paid, in same
day funds to Pinnacle Acq Corp $25 million (the "Termination Fee") upon
demand if (A) Pinnacle Acq Corp or Pinnacle, as applicable, terminates this
Agreement pursuant to Section 9.1 (f) and prior to such termination a
Significant Takeover Proposal shall have been made; (B) Pinnacle Acq Corp
terminates this Agreement pursuant to Section 9.1(e); (C) Pinnacle
terminates this Agreement pursuant to Section 9.1(g); or (D) prior to any
other termination of this Agreement pursuant to Section 9.1(d) or Section
9.1(c)(A) (which termination does not follow from the failure of Pinnacle
Acq Corp to cause any condition specified in Section 8.3 to be satisfied),
(x) a Competitive Proposal (disregarding for this purpose the proviso in
the definition thereof) or (y) a Significant Takeover Proposal ("Triggering
Proposal"), shall have been made on or after March 2, 2000 and within 12
months of such termination, a transaction constituting a Significant
Takeover Proposal is consummated or Pinnacle enters into an agreement
(which is thereafter consummated) with respect to, or the Board of
Directors of Pinnacle or a committee thereof approves or recommends, or
publicly proposes to approve or recommend, a Significant Takeover Proposal
(which is thereafter consummated).
(c) Notwithstanding Section 7.7(b)(D)(y) above, the
Termination Fee in such event shall not be payable by Pinnacle in the event
that Pinnacle makes a good faith demonstration, reasonably satisfactory to
Pinnacle Acq Corp, that (A) such Significant Takeover Proposal is made by a
Person (i) who is unaffiliated with the Person that made the Triggering
Proposal, and (ii) who did not solicit, have significant discussions or
engage in any negotiations with, or receive any non-public information from
Pinnacle, its Subsidiaries or any of Pinnacle's Covered Persons during the
period in which this Agreement was in effect, (B) such Significant Takeover
Proposal is not related to, contemplated by, or otherwise connected,
directly or indirectly, with the Triggering Proposal and (C) there is no
direct or indirect nexus or causal effect between the Triggering Proposal
and the Significant Takeover Proposal (which Pinnacle may demonstrate
(X)(1) by establishing the Triggering Proposal has been terminated or
withdrawn, (2) the initial contact relating to such Significant Takeover
Proposal is made to or by Pinnacle, any of its Subsidiaries or any of
Pinnacle's Covered Persons a significant time after such termination or
withdrawal, and (3) during the period beginning on the date the Triggering
Proposal is terminated or withdrawn and ending on the date of the initial
contact regarding the Significant Takeover Proposal, neither Pinnacle, its
Subsidiaries nor its Covered Persons shall have solicited, initiated,
encouraged or entertained any inquiries regarding or the submission of, or
participated in any discussions or negotiations regarding, or furnished any
information with respect to, any Significant Takeover Proposal or (Y)
otherwise.
(d) Only one Termination Fee shall be payable to
Pinnacle Acq Corp pursuant to the terms hereof.
Section 7.8 Public Announcement. PHCR and Pinnacle Acq Corp
and their respective Affiliates, on the one hand, and Pinnacle, on the
other hand, will consult with each other before issuing, and provide each
other the opportunity to review and comment upon, any press release or
other public statements with respect to the transactions contemplated by
this Agreement, including the Pinnacle Merger, and shall not issue any such
press release or make any such public statement prior to such consultation,
except as may be required by applicable law, court process or by
obligations pursuant to any listing agreement with any national securities
exchange or national securities quotation system (in which case the parties
will use reasonable efforts to cooperate in good faith with respect to such
press release or other public statement). The parties agree that the
initial press release to be issued with respect to the transactions
contemplated by this Agreement shall be in the form heretofore agreed to by
the parties.
Section 7.9 Title Insurance, Surveys, and Flood Insurance.
(a) As promptly as practicable after the date hereof but in
no event later than ninety (90) days prior to the Effective Time, Pinnacle
shall deliver copies of previous owner policies or other title evidence
sufficient to obtain commitments (the "Commitments") to be issued by a
title company acceptable to Pinnacle Acq Corp (the "Title Insurer") for the
issuance of an ALTA Leasehold Policy of Title Insurance, an ALTA Owner's or
Lender's Policy of Title Insurance or a "date-down" of such policies, as
applicable, for such of the Real Properties as Pinnacle Acq Corp shall
designate (collectively, the "Title Policies"). Each of the Title Policies
shall name an entity designated by Pinnacle Acq Corp as insured and shall
show leasehold title or fee simple title to each of the Real Properties
vested at the Effective Time in Pinnacle or its Subsidiaries, subject only
to the Permitted Liens, provided, however, no monetary liens (other than
those being contested by Pinnacle or its Subsidiaries in good faith) shall
encumber the title to any Real Property, including, without limitation, the
Bank Credit Facility. The Commitments and the Title Policies to be issued
by the Title Insurer shall have all standard and general exceptions deleted
so as to afford full "extended form coverage" and shall contain contiguity
(where appropriate), survey, and such other endorsements as may be
reasonably requested by Pinnacle Acq Corp or its lender. At the Closing,
Pinnacle and its Subsidiaries shall deliver such affidavits or other
instruments as the Title Insurer may reasonably require to delete standard
and general exceptions and to provide the endorsements reasonably required
hereunder. Pinnacle and its Subsidiaries shall cause the Commitments to be
later-dated to cover the Closing and to cause the Title Insurer to delete
all Schedule B-1 requirements and all standard and general exceptions in
the Commitment at the Closing as directed by Pinnacle Acq Corp.
(b) As promptly as practicable after the date hereof but in
no event later than ninety (90) days prior to the Effective Time, Pinnacle
and its Subsidiaries shall deliver to Pinnacle Acq Corp and Title Insurer
an as-built survey of each of the Owned Properties and the Leased
Properties which constitute ground leases, except the Asset Dispositions
other than the property located in Compton, California (collectively, the
"Surveys"), prepared by a registered land surveyor or engineer, licensed in
the state where such Owned Property or Leased Property is located, dated on
or after the date hereof, certified to Pinnacle Acq Corp, Title Insurer,
and such other entities as Pinnacle Acq Corp may designate in writing to
Pinnacle, and conforming to current ALTA/ACSM Minimum Detail Requirements
for Land Title Surveys, sufficient to cause Title Insurer to delete the
standard printed survey exception. The Surveys shall show only Permitted
Liens. Each Survey shall show access from the land to dedicated roads and
shall include a flood plain certification. Any survey may be a
recertification of a prior survey, provided that it meets the
above-described criteria.
(c) To the extent any Real Property is located within an
area designated as "flood prone" or a "special flood hazard area" (as
defined under the regulations adopted under the National Flood Insurance
Act of 1968 and the Flood Disaster Protection Act of 1973), at Pinnacle Acq
Corp's request, Pinnacle shall obtain and maintain flood insurance, if
available, in an amount specified by Pinnacle Acq Corp with respect to such
Real Property.
(d) Pinnacle and its Subsidiaries shall use reasonable
efforts to obtain prior to Closing estoppel certificates in form and
substance reasonably satisfactory to Pinnacle Acq Corp and its lenders from
each of the lessors under the leases described on Schedule 4.17(b).
(e) If the Commitments reveal any mortgages, deeds of trust,
ground leases or similar matters affecting the Leased Properties which will
remain of record after the Closing and are senior in priority to the
respective Lease and for which Pinnacle or its Subsidiary has not
previously obtained a nondisturbance and attornment agreement, then
Pinnacle and its Subsidiaries shall use their reasonable efforts to obtain
non-disturbance and attornment agreements in form and substance reasonably
acceptable to Pinnacle Acq Corp and its lenders, from the applicable
mortgagees, holders of beneficial interests under the deeds of trust,
ground lessors and similar parties.
(f) Pinnacle and its Subsidiaries shall use their reasonable
efforts and shall cooperate with Pinnacle Acq Corp to obtain, prior to
Closing, (i) any required consents to any assignments and/or financing of
any of the Leased Properties, and (ii) any modifications reasonably and
customarily required by Pinnacle Acq Corp's lender to the leases for the
Leased Properties.
Section 7.10 Transfer Taxes. All liability for any transfer
or other similar taxes in connection with the exchange of Pinnacle Common
Stock to the Pinnacle Acq Corp or the consummation of any other transaction
contemplated by this Agreement shall be borne by Pinnacle.
Section 7.11 Financing.
(a) Pinnacle Acq Corp shall use its commercially reasonable
efforts to obtain and effectuate the Financing. Pinnacle shall use its
commercially reasonable efforts to cooperate with and assist Pinnacle Acq
Corp in obtaining and effectuating the Financing; provided that
"commercially reasonable efforts" shall not require Pinnacle Acq Corp to
expend money in excess of the expenses set forth in Exhibit A hereto, seek
or provide any equity or supplemental investment in connection with the
transactions contemplated hereby, or amend in any manner adverse to
Pinnacle Acq Corp any of the terms set forth on Exhibit A hereto.
(b) Neither Pinnacle Acq Corp nor PHCR shall, and each shall
cause Harveys not to, voluntarily enter into any agreement, commitment or
understanding with respect to or concerning any financing, acquisition,
disposition or corporate transaction not contemplated hereby or by the
Voting Agreement which would, as of the date of such transaction,
reasonably be expected to materially impair the ability of PHCR to obtain
the Financing. Pinnacle shall have no remedy with respect to this Section
7.11, and Pinnacle shall not be permitted to claim a breach under this
Section 7.11 unless and until such time as this Agreement is terminated (i)
by Pinnacle Acq Corp solely because of the failure of the condition Section
8.2(f) hereof to be satisfied, or (ii) by Pinnacle or by Pinnacle Acq Corp
pursuant to Section 9.1(h) hereof.
Section 7.12 Tax Treatment. Each of PHCR and Pinnacle shall
use its reasonable best efforts to cause the Harveys Merger, the Pinnacle
Merger and the contributions described in the Voting Agreement to qualify
as an exchange governed by section 351 of the Code.
Section 7.13 Tender Offer and Consent Solicitations. To the
extent required in connection with the transactions contemplated hereby,
Pinnacle Acq Corp shall use its reasonable best efforts to obtain the
consent or valid tender, without subsequent withdrawal, of not less than
50% of each tranche of the outstanding principal amount of debt of Pinnacle
pursuant to a consent solicitation and/or tender offer for such debt;
provided that "reasonable best efforts" shall not require Pinnacle Acq Corp
to expend money in excess of the expenses set forth in Exhibit A hereto,
seek or provide any equity or supplemental investment in connection with
the transactions contemplated hereby, or amend in any manner adverse to
Pinnacle Acq Corp any of the terms set forth in Exhibit A hereto.
Section 7.14 Termination of Voting Agreement. Upon any
termination of this Agreement pursuant to the terms of Article IX hereof,
the Voting Agreement shall also terminate and become void and have no
effect, without any liability, or obligation on the part of the parties
thereto.
Section 7.15 Compliance Committees. Pinnacle shall, and
Pinnacle Acq Corp shall cause Harveys to, use their reasonable best efforts
to cause the compliance committees of the Boards of Directors of Pinnacle
and Harveys, respectively, to review and approve this Agreement and the
transactions contemplated hereby as promptly as practicable after the date
hereof.
Section 7.16 Atlantic Land Warrant. Pinnacle shall use its
commercially reasonable efforts to cause the warrant agreement governing
the Atlantic Land Warrant to be amended to provide for each of the
following: (i) in the event that the Inglewood Sale shall have closed on or
prior to the fifth Business Day prior to the Closing Date, then, as of the
Effective Time, the Atlantic Land Warrant shall be converted into the right
to receive from the Pinnacle Surviving Corporation an amount in cash equal
to the product of (x) the number of shares of Pinnacle Common Stock that
were subject to the Atlantic Land Warrant immediately prior to the
Effective Time and (y) the excess (if any) of the cash amount of the
Pinnacle Merger Consideration over the exercise price per share of the
Atlantic Land Warrant immediately prior to the Effective Time; (ii) in the
event that the Inglewood Sale shall not have closed on or prior to the
fifth Business Day prior to the Closing Date, the holder of the Atlantic
Land Warrant shall not receive the amount contemplated by clause (i) above
and shall instead be deemed to have received a number of Class B CPRs (as
defined in Section 10.11 hereof) equal to the number of shares of Pinnacle
Common Stock that were subject to the Atlantic Land Warrant immediately
prior to the Effective Time; and (iii) as of the Effective Time, the
Atlantic Land Warrant shall no longer be outstanding and shall
automatically be canceled and shall cease to exist, and the holder of the
Atlantic Land Warrant shall cease to have any rights with respect thereto,
except the right to receive the consideration (if any) described in clause
(i) above which such holder is entitled to receive.
Section 7.17 Filing of Corporate Gaming License
Applications. PHCR and Pinnacle Acq Corp shall, and PHCR shall cause
Harveys and Harveys Acq Corp to, file, within sixty days of the date of
this Agreement, corporate applications for gaming licenses in each
jurisdiction in which Gaming Approvals are required to permit such persons
to consummate the transactions contemplated by this Agreement and the
Harveys Merger Agreement; provided that if advised by any of their gaming
counsel that filing any such corporate application for gaming licenses in
such 60-day period is not conducive to the timely satisfaction of the
condition set forth in Section 8.3(d), then PHCR and Pinnacle Acq Corp
shall, and PHCR shall cause Harveys and Harveys Acq Corp to, file such
corporate applications for gaming licenses as soon after such 60-day period
as is appropriate; provided, further, that Pinnacle and each of its
Affiliates shall reasonably cooperate to the extent needed to facilitate
the approval of such application. Nothing in this Section 7.17 shall
require any of PHCR, Pinnacle Acq Corp, Harveys or Harveys Acq Corp to file
during such 60-day period any gaming license applications with respect to
any individual. In addition, nothing in this Section 7.17 shall obligate
any of PHCR, Pinnacle Acq Corp, Harveys, Harveys Acquisition Corporation,
or any of their respective Affiliates to obtain any consent, approval,
license, waiver, order, decree, determination of suitability or other
authorization or make any filing or application with respect to any limited
partner of Colony III or its Affiliates.
ARTICLE VIII
CONDITIONS PRECEDENT
Section 8.1 Conditions to Each Party's Obligation To Effect
the Pinnacle Merger. The respective obligations of each party to effect the
Pinnacle Merger is subject to the satisfaction or waiver on or prior to the
Closing Date of the following conditions:
(a) Stockholder Approval. This Agreement shall have
been approved and adopted by the Requisite Vote in accordance with
applicable Law and the Certificate of Incorporation of Pinnacle.
(b) No Injunctions or Restraints. No statute, rule,
regulation, executive order, decree, temporary restraining order,
preliminary or permanent injunction or other order enacted, entered,
promulgated, enforced or issued by any Governmental Entity or other legal
restraint or prohibition preventing the consummation of the Pinnacle Merger
or the transactions contemplated hereby shall be in effect; provided, in
the case of a decree, injunction or other order, each of the parties shall
have used their best efforts to prevent the entry of any such injunction or
other order and to appeal as promptly as possible any decree, injunction or
other order that may be entered.
(c) HSR Act. Any waiting period (and any extension
thereof) applicable to the transaction contemplated by this Agreement under
the HSR Act shall have expired or shall have been terminated.
Section 8.2 Conditions to Obligations of Pinnacle Acq Corp.
The obligations of Pinnacle Acq Corp to effect the Pinnacle Merger are
further subject to the satisfaction or waiver on or prior to the Closing
Date of the following conditions:
(a) Representations and Warranties. The
representations and warranties of Pinnacle contained herein that are
qualified as to materiality shall be true and accurate, and those not so
qualified shall be true and accurate in all material respects, in each case
on the date hereof and at and as of the Effective Time with the same force
and effect as though made at and as of the Effective Time (except to the
extent a representation or warranty speaks specifically as of an earlier
date or except as contemplated by this Agreement), and Pinnacle Acq Corp
shall have received a certificate signed on behalf of Pinnacle by its
President and its Chief Financial Officer to such effect.
(b) Covenants. Pinnacle shall have performed, in all
material respects, all obligations and complied, in all material respects,
with all covenants required by this Agreement to be performed or complied
with by it at or prior to the Effective Time, and Pinnacle Acq Corp shall
have received certificates signed on behalf of Pinnacle by its President
and its Chief Financial Officer to such effect.
(c) No Material Adverse Effect. From the date hereof
through and including the Effective Time, no event or events shall have
occurred which, individually or in the aggregate, would reasonably be
expected to have a material adverse effect on Pinnacle or the transactions
contemplated hereby.
(d) Gaming Authority Approval. All licenses, permits,
registrations, authorizations, consents, waivers, orders, findings of
suitability or other approvals required to be obtained from, and all
filings, notices or declarations required to be made with, any Gaming
Authority or Governmental Entity to permit Pinnacle Acq Corp and Pinnacle
to consummate the Pinnacle Merger, to permit Harveys Acq Corp and Harveys
to complete the Harveys Merger, and to permit the Pinnacle Surviving
Corporation and the Harveys Surviving Corporation and each of their
respective Subsidiaries to conduct their respective businesses in the
jurisdictions regulated by such Gaming Authorities after the Effective Time
in the same manner as conducted by Pinnacle and Harveys and their
respective Subsidiaries prior to the Effective Time (collectively, the
"Gaming Approvals") shall have been obtained or made, as applicable;
provided that this condition shall not be deemed satisfied if any Gaming
Approval obligates Pinnacle Acq Corp or Harveys Acq Corp, or any of their
respective Affiliates to obtain any consent, approval, license, waiver,
order, decree, determination of suitability or other authorization or make
any filing or application with respect to any limited partner of Colony III
or its Affiliates.
(e) Consents. All consents, waivers, orders,
approvals, authorizations, registrations, findings of suitability,
licensing and action of (i) any Governmental Entity other than a Gaming
Authority required to permit the consummation of the Pinnacle Merger, and
(ii) any third party listed on Schedule 4.4(a) or 4.4(b) hereof with
respect to which consent is indicated on such Schedule to be obtained,
shall have been obtained or made, free of any condition that would be
materially adverse to Pinnacle or the transactions contemplated hereby.
(f) Financing. Pinnacle Acq Corp and Harveys Acq Corp
shall have received the cash proceeds of the Financing.
(g) Tender Offers and Consent Solicitations. To the
extent required in connection with the transactions contemplated hereby,
Pinnacle Acq Corp shall have received valid consents and related tenders
under the outstanding principal amount of debt of Pinnacle and Harveys
pursuant to tender offers for such debt. Pinnacle Acq Corp shall have
received the requisite consents under the instruments under which such debt
was issued for any amendments of such instruments necessary in connection
with the transactions contemplated hereby and such amendments shall have
become effective in accordance with the terms of such instruments.
(h) Principal Asset Dispositions. The Principal Asset
Dispositions (other than the Inglewood Sale) shall have been consummated on
substantially the terms and subject to the conditions contained in the
applicable Asset Disposition Agreement, Pinnacle shall have received
therefrom not less than the net proceeds indicated on Schedule 6.1(c)
hereto, and the Chief Financial Officer of Pinnacle shall have delivered a
certificate to Pinnacle Acq Corp certifying that his good faith reasonable
estimate of net proceeds from such Principal Asset Dispositions are not
less than the amounts set forth on Schedule 6.1(c) hereto.
(i) Transaction Documents. The transactions
contemplated by the Transaction Documents shall have been consummated
immediately prior to the Effective Time.
(j) Dissenting Shares. The aggregate number of
Pinnacle Dissenting Shares shall not exceed 5% of the total number of
shares of Pinnacle Common Stock outstanding immediately prior to the
Pinnacle Stockholders Meeting.
(k) Indiana Project. (i) All material phases of the
Indiana Project (other than the golf course and performance theater) shall
have been substantially completed and opened to the public by not later
than September 15, 2000; and (ii) the costs associated with the Indiana
Project shall not be, in the aggregate, more than $207 million, and the
project (other than the golf course and performance theater) will have been
completed in substantial conformity with the written budgets, plans and
policies relating to the Indiana Project provided to Pinnacle Acq Corp
prior to the date hereof.
Section 8.3 Conditions to Obligations of Pinnacle. The
obligations of Pinnacle to effect the Pinnacle Merger are further subject
to the satisfaction or waiver on or prior to the Closing Date of the
following conditions:
(a) Representations and Warranties. The
representations and warranties of Pinnacle Acq Corp contained herein that
are qualified as to materiality shall be true and accurate, and those not
so qualified shall be true and accurate in all material respects, in each
case at and as of the Effective Time with the same force and effect as
though made at and as of the Effective Time (except to the extent a
representation or warranty speaks specifically as of an earlier date or
except as contemplated by this Agreement), and Pinnacle shall have received
certificates signed on behalf of Pinnacle Acq Corp by its President to such
effect.
(b) Agreements and Covenants. Pinnacle Acq Corp shall
have performed, in all material respects, all obligations and complied, in
all material respects, with all covenants required by this Agreement to be
performed or complied with by it at or prior to the Effective Time, and
Pinnacle shall have received a certificate signed on behalf of Pinnacle Acq
Corp by its President to such effect.
(c) Gaming Authority Approval. All licenses, permits,
registrations, authorizations, consents, waivers, orders, findings of
suitability or other approvals required to be obtained from, and all
filings, notices or declarations required to be made with, any Gaming
Authority to permit Pinnacle Acq Corp to consummate the Pinnacle Merger
shall have been obtained or made, as applicable.
ARTICLE IX
TERMINATION, AMENDMENT AND WAIVER
Section 9.1 Termination. This Agreement may be terminated at
any time prior to the Effective Time, whether before or after approval of
matters presented in connection with the Pinnacle Merger by the
stockholders of Pinnacle:
(a) by mutual written consent of each of the parties;
(b) by either Pinnacle Acq Corp or Pinnacle if any
Governmental Entity shall have issued an order, decree or ruling or taken
any other action permanently enjoining, restraining or otherwise
prohibiting the acceptance for payment of, or payment for, shares of
Pinnacle Common Stock pursuant to the Pinnacle Merger and such order,
decree or ruling or other action shall have become final and nonappealable;
provided, in the case of an order, decree, ruling or other order, each of
the parties shall have used their best efforts to prevent the entry of any
such order, decree, ruling or other order and to appeal as promptly as
possible any order, decree, ruling or other order that may be entered;
provided further, the right to terminate this Agreement pursuant to the
foregoing clause shall not be available to any party that fails to comply
with Section 7.4;
(c) (A) by either Pinnacle Acq Corp or Pinnacle, at
any time after January 15, 2001 if the Effective Time shall not have
occurred on or prior to such date other than due to the failure of the
party seeking to terminate this Agreement to perform its obligations under
this Agreement required to be performed at or before the Closing; provided,
however, that, Pinnacle Acq Corp may, at its option, (x) extend such date
for up to six months if (i) it can demonstrate to Pinnacle's reasonable
good faith satisfaction that there is a reasonable likelihood that it will
receive the Gaming Approvals by such date, and (ii) Pinnacle Acq Corp
delivers to Pinnacle commitment letter(s) and highly confident letter(s)
reflecting amounts that are at least sufficient to cover the Financing with
expiration dates that are at least coextensive with the date of such
extension (and "Extended Commitment"); or (y) extend the January 15,2001
date for up to two months if the parties shall have received from any
responsible individual of each Gaming Authority (i) the approval of which
is required to be obtained to permit Pinnacle Acq Corp and Harveys Acq Corp
to consummate the Pinnacle Merger and Harveys Merger, respectively and (ii)
which has not prior to January 15, 2001 finally determined whether such
approval shall be granted, reasonable assurance (written or oral) that a
hearing is scheduled or can reasonably be expected to be scheduled prior to
March 15, 2001;
(B) Notwithstanding the foregoing, in the event that
Pinnacle or Pinnacle Acq Corp receives a final and nonappealable written
statement from any of the Gaming Authorities that states that such Gaming
Authority has disapproved or will not give approval to this Agreement,
which disapproval would cause Pinnacle Acq Corp to be unable to consummate
the Pinnacle Merger, or if Pinnacle Acq Corp has finally withdrawn (with no
intent to resubmit) its gaming application with such Gaming Authority, such
party may terminate this Agreement with written notice of such termination
given to the other party hereto; provided that no party may terminate this
Agreement pursuant to the terms of this sentence if such party is in
material breach of this Agreement;
(d) by Pinnacle Acq Corp, if this Agreement has not
been approved by the Requisite Vote of the outstanding shares of Pinnacle
Common Stock within 120 days after the date hereof; provided however, the
time period set for in this Section shall toll from the 51st day to the
80th day that the Proxy Statement and the Schedule 13E-3 are filed with the
SEC and remain under review by the SEC (but in no event shall such period
toll for more than 30 days in total or the Pinnacle Stockholders Meeting
occur later than the 150th day after the date hereof); provided further
that such tolling period shall only be available if the Proxy Statement and
the Schedule 13E-3 are filed in accordance with the provisions of Section
7.2 hereof and Pinnacle has used its reasonable best efforts to respond to
SEC comments to such disclosure documentation promptly and completely;
(e) by Pinnacle Acq Corp if the Board of Directors of
Pinnacle amends, modifies or withdraws its recommendation or publicly
proposes to amend, modify in a manner adverse to Pinnacle Acq Corp, or
withdraw its recommendation of the Pinnacle Merger or this Agreement or if,
following a Takeover Proposal, Pinnacle fails to comply with its
obligations under Sections 6.3 and 7.4 hereof;
(f) by either Pinnacle or Pinnacle Acq Corp if, at a
duly held stockholders meeting of Pinnacle or any adjournment thereof at
which this Agreement is voted upon, the Requisite Vote in favor of the
adoption of this Agreement shall not have been obtained; or
(g) by Pinnacle in connection with simultaneously
entering into a definitive agreement in accordance with Section 6.3(b);
provided, it has complied with all provisions thereof, including the notice
provisions therein, and that it simultaneously makes payment of the
Termination Fee.
(h) by Pinnacle Acq Corp or Pinnacle in the event
that the Financing Letters shall have been withdrawn or terminated by the
issuing lenders, and Pinnacle Acq Corp is unable, despite the exercise of
its reasonable efforts, to obtain a replacement commitment letter(s) and/or
highly confident letter(s) reflecting amounts that are at least sufficient
to cover the Financing, within 20 Business Days following such withdrawal
or termination.
Section 9.2 Effect of Termination. In the event of
termination of this Agreement by either Pinnacle or Pinnacle Acq Corp as
provided in Section 9.1, this Agreement shall forthwith become void and
have no effect, without any liability or obligation on the part of Pinnacle
Acq Corp or Pinnacle, other than the provisions of Section 7.2, Section
7.3, Section 7.7, this Section 9.2 and Article X (other than Section 10.11)
and except to the extent that such termination results from the wilful and
material breach by a party of any of its representations, warranties,
covenants or agreements set forth in this Agreement, in which case each
other party shall be entitled to recover all damages allowable at law and
all relief available in equity; provided that, upon receipt by Pinnacle Acq
Corp of the Termination Fee in accordance with the provisions hereof,
Pinnacle Acq Corp shall have no further rights hereunder, at law or in
equity, to damages or other relief and shall release and forever discharge
Pinnacle, and each of its past, present and future representatives,
affiliates, stockholders, directors, officers, employees, subsidiaries,
successors and assigns from any and all claims, demands, proceedings or
other obligations, known or unknown, both at law and in equity, which
Pinnacle Acq Corp may ever have against such persons arising out of any
matter, cause or event occurring at or prior to the Effective Time;
provided further that the limitation set forth in the previous proviso is
not intended to act as a limitation of liability in the event that the
Termination Fee is not payable pursuant to the terms hereof.
Section 9.3 Amendment. This Agreement may be amended by the
mutual agreement of the parties at any time before or after any required
approval of matters presented in connection with the Pinnacle Merger by the
stockholders of Pinnacle; provided, that after any such approval, there
shall not be made any amendment that by law requires further approval by
such stockholders without the further approval of such stockholders. This
Agreement may not be amended except by an instrument in writing signed on
behalf of each of the parties.
Section 9.4 Extension; Waiver. At any time prior to the
Effective Time, the parties may (a) extend the time for the performance of
any of the obligations or other acts of the other parties, (b) waive any
inaccuracies in the representations and warranties of the other party
contained in this Agreement or in any document delivered pursuant to this
Agreement or (c) subject to the proviso of Section 9.3, waive compliance by
the other party with any of the agreements or conditions contained in this
Agreement. Any agreement on the part of a party to any such extension or
waiver shall be valid only if set forth in an instrument in writing signed
on behalf of such party. The failure of any party to this Agreement to
assert any of its rights under this Agreement or otherwise shall not
constitute a waiver of those rights.
Section 9.5 Procedure for Termination, Amendment, Extension
or Waiver. A termination of this Agreement pursuant to Section 9.1, an
amendment of this Agreement pursuant to Section 9.3 or an extension or
waiver pursuant to Section 9.4 shall, in order to be effective, require in
the case of Pinnacle Acq Corp or Pinnacle, action by its Board of Directors
or the duly authorized designee of its Board of Directors.
ARTICLE X
GENERAL PROVISIONS
Section 10.1 Nonsurvival of Representations. None of the
representations and warranties in this Agreement shall survive the
Effective Time. This Section 10.1 shall not limit any covenant or agreement
of the parties which by its terms contemplates performance after the
Effective Time of the Pinnacle Merger.
Section 10.2 Representations and Warranties. Notwithstanding
anything in this Agreement to the contrary, the disclosure of any
information on any schedule to this Agreement shall be deemed to constitute
the disclosure of such information for all other schedules to this
Agreement to the extent that it is clear from a reading of such information
that it is applicable to such other schedules.
Section 10.3 Notices. All notices, requests, claims, demands
and other communications under this Agreement shall be in writing and shall
be deemed given if delivered personally or sent by overnight courier
(providing proof of delivery) to the parties or sent by telecopy (providing
confirmation of transmission) at the following addresses or telecopy number
(or at such other address or telecopy number for a party as shall be
specified by like notice):
(a) if to Pinnacle Acq Corp or PHCR, to:
c/o Harveys Casino Resorts
Highway 50 & Stateline Avenue
Lake Tahoe, Nevada 89449
Attention: Charles W. Scharer
Telephone: 775-586-6756
Facsimile: 775-586-6852
and
c/o Colony Capital, Inc.
1999 Avenue of the Stars, Suite 1200
Los Angeles, California 90067
Telephone: 310-282-8820
Facsimile: 310-282-8813
Attention: Jonathan H. Grunzweig
with a copy to:
Skadden, Arps, Slate, Meagher & Flom LLP
300 South Grand Avenue, Suite 3400
Los Angeles, California 90071
Attention: Nick P. Saggese, Esq.
Telephone: 213-687-5550
Facsimile: 213-687-5600
(b) if to Pinnacle, to
Pinnacle Entertainment, Inc.
330 North Brand Boulevard, Suite 1100
Glendale, California 91203
Attention: Loren Ostrow, Esq.
Telephone: 818-662-5900
Facsimile: 818-662-5901
with a copy to:
Irell & Manella LLP
1800 Avenue of the Stars, Suite 900
Los Angeles, California 90067
Attention: Alvin Segel, Esq.
Telephone: 310-203-7069
Facsimile: 310-203-7199
and
Munger, Tolles & Olson LLP
355 South Grand Avenue, Suite 3500
Los Angeles, California 90071
Attention: Simon Lorne, Esq.
Telephone: 213-683-9100
Facsimile: 213-687-3702
Section 10.4 Interpretation. When a reference is made in
this Agreement to an Article, Section or Schedule, such reference shall be
to an Article or Section of or a Schedule to, this Agreement unless
otherwise indicated. The table of contents and headings contained in this
Agreement are for reference purposes only and shall not affect in any way
the meaning or interpretation of this Agreement. Whenever the words
"include," "includes" or "including" are used in this Agreement, they shall
be deemed to be followed by the words "without limitation." The Transaction
Documents and the consummation of the transactions contemplated by such
Transaction Documents are transactions contemplated by this Agreement. To
the extent any restriction on the activities of Pinnacle or its
Subsidiaries under the terms of this Agreement requires prior approval
under any Gaming Law, such restriction shall be of no force or effect
unless and until such approval is obtained. If any provision of this
Agreement is illegal or unenforceable under any Gaming Law, such provision
shall be void and of no force or effect.
Section 10.5 Counterparts. This Agreement may be executed in
one or more counterparts, all of which shall be considered one and the same
agreement and shall become effective when one or more counterparts have
been signed by each of the parties and delivered to the other parties.
Section 10.6 Entire Agreement; No Third-Party Beneficiaries.
This Agreement and the Voting Agreement constitute the entire agreements,
and supersede all prior agreements and understandings, both written and
oral, among the parties with respect to the subject matter of these
agreements and are not intended to confer upon any Person other than the
parties any rights or remedies hereunder, except that (i) officers,
directors, employees and agents of Pinnacle and its Subsidiaries are
intended beneficiaries of the covenants and agreements set forth in Section
7.6 and (ii) the holders of Pinnacle Stock Options are the intended
beneficiaries of the covenants and agreements set forth in Section 7.5.
Section 10.7 Governing Law. THIS AGREEMENT SHALL BE GOVERNED
BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF DELAWARE,
WITHOUT REGARD TO ANY APPLICABLE CONFLICTS OF LAW.
Section 10.8 Gaming Laws. Each of the provisions of this
Agreement is subject to and shall be enforced in compliance with the Gaming
Laws.
Section 10.9 Assignment. Neither this Agreement nor any of
the rights, interests or obligations under this Agreement shall be
assigned, in whole or in part, by operation of law or otherwise by any of
the parties without the prior written consent of the other parties, except
that Pinnacle Acq Corp may assign, in its sole discretion, any of or all
its rights, interests and obligations under this Agreement to any
controlled affiliate of Colony Capital, Inc., provided such party assumes
Pinnacle Acq Corp's obligations hereunder, and Pinnacle Acq Corp remains
liable hereunder. Subject to the preceding sentence, this Agreement will be
binding upon, inure to the benefit of, and be enforceable by, the parties
and their respective successors and assigns.
Section 10.10 Enforcement. The parties agree that
irreparable damage would occur in the event that any of the provisions of
this Agreement were not performed in accordance with their specific terms
or were otherwise breached. It is accordingly agreed that the parties shall
be entitled to an injunction or injunctions to prevent breaches of this
Agreement and to enforce specifically the terms and provisions of this
Agreement in any court of the United States located in the State of
Delaware or in Delaware state court, this being in addition to any other
remedy to which they are entitled at law or in equity. In addition, each of
the parties hereto (a) consents to commit itself to the personal
jurisdiction of any Federal court located in the State of Delaware or any
Delaware state court in the event any dispute arises out of this Agreement
or any of the transactions contemplated by this Agreement, (b) agrees that
it will not attempt to deny or defeat such personal jurisdiction by motion
or other request for leave from any such court and (c) agrees that it will
not bring any action relating to this Agreement or any of the
transactions contemplated by this Agreement in any court other than a
Federal or state court sitting in the State of Delaware.
Section 10.11 Inglewood Sale; CPRs.
(a) Upon the occurrence of an event set forth below, the
Pinnacle Merger Consideration shall be adjusted in the manner set forth
below with respect to such event:
(i) In the event that the Inglewood Sale shall have
closed on or prior to the fifth Business Day prior to the Closing
Date and the Net Proceeds to Pinnacle from the Inglewood Sale are
equal to or greater than $40,750,000, then the Pinnacle Merger
Consideration shall equal $25.00 in cash.
(ii) In the event that the Inglewood Sale shall have
closed on or prior to the fifth Business Day prior to the Closing
Date and the Net Proceeds to Pinnacle from the Inglewood Sale are
greater than $13,054,000 but less than $40,750,000, then the
Pinnacle Merger Consideration shall equal the sum of (x) $24.00 in
cash, and (y) the Proceeds Adjustment, in cash.
(iii) In the event that the Inglewood Sale shall have
closed on or prior to the fifth Business Day prior to the Closing
Date and the Net Proceeds to Pinnacle from the Inglewood Sale are
less than or equal to $13,054,000, then there shall be no
adjustment to the Pinnacle Merger Consideration.
(iv) In the event that the Inglewood Sale shall not
have closed on or prior to the fifth Business Day prior to the
Closing Date, then the Pinnacle Merger Consideration shall equal
(i) $24.00 in cash, and (ii) one Class A CPR; provided that, the
holder of the Atlantic Land Warrant shall not receive the Pinnacle
Merger Consideration and shall instead receive that number of Class
B CPRs equal to the number of shares issuable upon exercise of the
Atlantic Land Warrant immediately prior to the Effective Time and
no other consideration.
(b) As used in this Agreement, the following terms shall
have the following respective meanings:
"Class A CPR" means a contingent payment right
representing the right to receive from the Pinnacle Surviving
Corporation (or, at its option, PHCR), in cash, the Class A CPR
Amount, if any. The Paying Agent shall distribute to holders of
Class A CPRs the Class A CPR Amount, if any, as soon as practicable
following the closing of the Inglewood Sale. Payments in respect of
Class A CPRs shall be without interest and less any withholding or
deduction for Taxes required under applicable law. The CPRs shall
not represent an equity or other ownership interest in PHCR or the
Pinnacle Surviving Corporation, shall not be transferable by the
holders thereof, except by operation of law or will, shall not be
represented by any form of certificate or instrument, and shall not
bear interest. Holders of Class A CPRs shall have no voting or
other rights as stockholders of PHCR or the Pinnacle Surviving
Corporation. No amount shall be payable with respect to the Class A
CPRs if the Inglewood Sale shall not have closed prior to December
31, 2001 (the "Expiration Date"). If the Inglewood Sale shall not
have closed prior to the Expiration Date, no further obligations
shall be owing in respect of the Class A CPRs or the provisions of
this Section 10.11.
"Class B CPR" means a contingent payment right
representing the right to receive from the Pinnacle Surviving
Corporation (or, at its option, PHCR), in cash the Class B CPR
Amount, if any. The Paying Agent shall distribute to holders of
Class B CPRs the Class B CPR Amount, if any, as soon as practicable
following the closing of the Inglewood Sale. Payments in respect of
Class B CPRs shall be without interest and less any withholding or
deduction for Taxes required under applicable law. The Class B CPRs
shall not represent an equity or other ownership interest in PHCR
or the Pinnacle Surviving Corporation, shall not be transferable by
the holders thereof, except by operation of law or will, shall not
be represented by any form of certificate or instrument, and shall
not bear interest. Holders of Class B CPRs shall have no voting or
other rights as stockholders of PHCR or the Pinnacle Surviving
Corporation. No amount shall be payable with respect to the Class B
CPRs if the Inglewood Sale shall not have closed prior to the
Expiration Date. If the Inglewood Sale shall not have closed prior
to the Expiration Date, no further obligations shall be owing in
respect of the Class B CPRs or the provisions of this Section
10.11.
"Class A CPR Adjustment" means the quotient
determined by dividing (a) the difference of (1) the Net Proceeds
to the Pinnacle Surviving Corporation from the Inglewood Sale,
minus (2) $13,054,000, minus (3) the product of (x) the Class B CPR
Amount, and (y) the number of Class B CPRs outstanding, by (b) the
sum of (1) the total number of shares of Pinnacle Common Stock
outstanding immediately prior to the Effective Time, plus (2) the
Implied Option Shares Number plus (3) the number of shares redeemed
in accordance with Section 6.1(d) of this Agreement; provided that,
if such number is negative, it shall be deemed to be zero.
"Class A CPR Amount" means, with respect to an event
described below, the amount set forth below with respect to such
event:
(A) In the event that Net Proceeds to the
Pinnacle Surviving Corporation from the Inglewood Sale are
equal to or greater than $40,750,000, then the Class A CPR
Amount shall equal $1.00.
(B) In the event that the Net Proceeds to the
Pinnacle Surviving Corporation from the Inglewood Sale are
greater than $13,054,000 but less than $40,750,000, then the
Class A CPR Amount shall equal the Class A CPR Adjustment.
(C) In the event that the Net Proceeds to the
Pinnacle Surviving Corporation from the Inglewood Sale are
less than or equal to $13,054,000, then the Class A CPR
Amount shall equal zero dollars ($0).
"Class B CPR Adjustment" means the difference of (a)
the quotient determined by dividing (1) the difference of (x) Net
Proceeds to the Pinnacle Surviving Corporation from the Inglewood
Sale, minus (y) $13,054,000, by (2) the total number of Class A
CPRs and Class B CPRs outstanding, minus (b) $0.78; provided that,
if such number is negative, it shall be deemed to be zero.
"Class B CPR Amount" means, with respect to an event
described below, the amount set forth below with respect to such
event:
(A) In the event that Net Proceeds to the
Pinnacle Surviving Corporation from the Inglewood Sale are
equal to or greater than $40,750,000, then the Class B CPR
Amount shall equal $0.22.
(B) In the event that the Net Proceeds to the
Pinnacle Surviving Corporation from the Inglewood Sale are
greater than $13,054,000 but less than $40,750,000, then the
Class B CPR Amount shall equal the Class B CPR Adjustment.
(C) In the event that the Net Proceeds to the
Pinnacle Surviving Corporation from the Inglewood Sale are
less than or equal to $13,054,000, then the Class B CPR
Amount shall equal zero dollars ($0).
"Gross Proceeds" means the aggregate dollar amount of
any and all gross proceeds to Pinnacle or the Pinnacle Surviving
Corporation, as the case may be, from the Inglewood Sale.
"Implied Option Shares Number" means the number
obtained by multiplying (a) the quotient derived by dividing (1)
the difference of (x) the Maximum Option Consideration, minus (y)
the aggregate exercise price of all In the Money Pinnacle Options,
by (2) the Maximum Option Consideration, times (b) the total number
of shares of Pinnacle Common Stock issuable upon exercise of the In
the Money Pinnacle Options.
"In the Money Pinnacle Options" means Pinnacle
Options with an exercise price less than $24.00 per share.
"Inglewood Sale" means the sale or other disposition
for value of the entire Inglewood Property, whether accomplished in
a single transaction or in more than one transaction; provided,
however, that if the Inglewood Sale is accomplished in more than
one transaction, the Inglewood Sale shall not be deemed to have
been closed until such time as the transaction with respect to the
last remaining portion of the Inglewood Property shall have closed.
"Maximum Option Consideration" means the product
derived by multiplying (a) $24.00, times (b) the total number of
shares of Pinnacle Common Stock issuable upon exercise of the In
the Money Pinnacle Options.
"Net Proceeds" means the sum of (a) the product
determined by multiplying (i) 0.58 by (ii) the difference of (x)
the Gross Proceeds, minus (y) Pinnacle's inside tax basis in the
Inglewood Property, plus (b) Pinnacle's inside tax basis in the
Inglewood Property.
"Proceeds Adjustment" means an amount of cash equal
to the quotient determined by dividing (a) the difference of (1)
the Net Proceeds to Pinnacle from the Inglewood Sale, minus (2)
$13,054,000, minus (3) the Warrant Adjustment Amount, by (b) the
sum of (1) the total number of shares of Pinnacle Common Stock
outstanding immediately prior to the Effective Time, plus (2) the
Implied Option Shares Number, plus (3) the number of shares
redeemed in accordance with Section 6.1(d) of this Agreement;
provided that, if such number is negative, it shall be deemed to be
zero.
"Warrant Adjustment Amount" means the difference of
(a) the quotient determined by dividing (1) the difference of (x)
Net Proceeds to the Pinnacle Surviving Corporation from the
Inglewood Sale, minus (y) $13,054,000, by (2) the sum of (x) the
total number of shares of Pinnacle Common Stock outstanding, plus
(y) the total number of shares of Pinnacle Common Stock issuable
upon exercise of the In the Money Options plus (c) the total number
of shares of Pinnacle Common Stock issuable upon exercise of the
Atlantic Land Warrant, plus (d) the number of shares redeemed in
accordance with Section 6.1(d) of this Agreement minus (b) $0.78;
provided that, if such number is negative, it shall be deemed to be
zero.
(c) In the event that the Inglewood Sale shall not have
closed on or prior to the fifth Business Day prior to the Closing Date, the
Pinnacle Surviving Corporation shall use its commercially reasonable
efforts to consummate the Inglewood Sale during the period beginning on the
date following the Closing Date and continuing through to but not including
the Expiration Date; provided, however, that none of PHCR, Pinnacle Acq
Corp or the Pinnacle Surviving Corporation shall have any liability for
breach of this Section 10.11(c) except to the extent that any such breach
shall have resulted from a willful and material breach by such party.
(d) The obligation of the Pinnacle Surviving Corporation to
pay the Class A CPR Amount and the Class B CPR Amount shall be secured by a
letter of credit in an amount of $27,696,000 to be obtained at or prior to
the Effective Time issued in favor of the Paying Agent (or in the event
that the Paying Agent is unwilling to act in such capacity, a bank or title
company reasonably acceptable to Pinnacle and Pinnacle Acq Corp), which
shall expire on the Expiration Date.
(e) A committee comprised of member of the present Board of
Directors of Pinnacle or their designee(s) (the "Inglewood Sale Committee")
shall have approval rights over any proposed sale of the Inglewood Property
and such sales effort shall be managed by the present president of Realty
Investment Group, Inc., or such other person as may be mutually agreed to
by the Pinnacle Surviving Corporation and the Inglewood Sale Committee.
[signature pages follow]
IN WITNESS WHEREOF, PHCR, Pinnacle and Pinnacle Acq Corp
have caused this Agreement to be signed by their respective officers
thereunto duly authorized, all as of the date first written above.
PH CASINO RESORTS, INC.
By: /s/ Charles W. Scharer
----------------------------------
Name: Charles W. Scharer
Title: President
PINNACLE ENTERTAINMENT, INC.
By: /s/ Paul Alanis
----------------------------------
Name: Paul Alanis
Title: President
PINNACLE ACQUISITION CORPORATION
By: /s/ Charles W. Scharer
----------------------------------
Name: Charles W. Scharer
Title: President
Exhibit 2.2
AGREEMENT AND PLAN OF MERGER
Dated as of April 17, 2000
among
PH CASINO RESORTS, INC.
HARVEYS CASINO RESORTS
and
HARVEYS ACQUISITION CORPORATION
SCHEDULES
EXHIBITS
Exhibit A Voting and Contribution Agreement
Exhibit B Pinnacle Merger Agreement
AGREEMENT AND PLAN OF MERGER dated as of April 17, 2000
(this "Agreement"), among PH CASINO RESORTS, INC., a Delaware corporation
("PHCR"), HARVEYS CASINO RESORTS, a Nevada corporation ("Harveys"), and
HARVEYS ACQUISITION CORPORATION, a Nevada corporation ("Harveys Acq Corp").
W I T N E S S E T H
WHEREAS, PHCR is a wholly-owned subsidiary of Harveys and
Harveys Acq Corp is a wholly-owned subsidiary of PHCR;
WHEREAS, the respective Boards of Directors of Harveys and
Harveys Acq Corp have determined that the merger of Harveys Acq Corp with
and into Harveys (the "Merger"), upon the terms and subject to the
conditions set forth in this Agreement, is advisable and in the best
interests of their respective corporations and stockholders, and have
approved this Agreement;
WHEREAS, the entry into this Agreement and the consummation
of the transactions herein described are expressly conditional on the
simultaneous entry into an agreement and plan of merger (the "Pinnacle
Merger Agreement") among Pinnacle Entertainment, Inc., a Delaware
corporation ("Pinnacle"), Pinnacle Acquisition Corporation, a Delaware
corporation ("Pinnacle Acq Corp") and PHCR;
WHEREAS, for Federal income tax purposes, the parties intend
that the Merger and the merger of Pinnacle Acq Corp with and into Pinnacle
(the "Pinnacle Merger") pursuant to the Pinnacle Merger Agreement, viewed
as a single transaction or as a series of transactions pursuant to a single
plan, qualifies as an exchange under section 351 of the Internal Revenue
Code of 1986 (the "Code");
NOW, THEREFORE, in consideration of the mutual
representations, warranties, covenants and agreements contained in this
Agreement and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto, intending
to be legally bound, agree as follows:
ARTICLE I
DEFINITIONS
Capitalized and certain other terms used in this Agreement
and not otherwise defined have the meanings set forth in the Pinnacle
Merger Agreement.
ARTICLE II
THE MERGER
SECTION 2.01. The Merger. Upon the terms and subject to the
conditions set forth in this Agreement and the articles of merger or other
appropriate documents (in any such case, the "Articles of Merger") required
by law in connection with the Merger, and in accordance with the applicable
provisions of the Nevada Revised Statute, as amended (the "NRS"), Harveys
Acq Corp shall be merged with and into Harveys. Following the Merger,
Harveys shall continue as the surviving corporation (the "Harveys Surviving
Corporation") and the separate existence of Harveys Acq Corp will cease.
SECTION 2.02. Closing. The closing (the "Closing") of the
Merger will take place at 10:00 a.m., Los Angeles time, on a date (the
"Closing Date") to be specified by PHCR, which may be on, but shall be no
later than the third business day after, the day on which there shall have
been satisfaction or waiver of the conditions set forth in Article VIII, at
the offices of Skadden, Arps, Slate, Meagher & Flom LLP, 300 South Grand
Avenue, Los Angeles, California 90071, unless another time date or place is
agreed to in writing by the parties hereto.
SECTION 2.03. Effective Time. On the Closing Date, or as
soon as practicable thereafter, the parties shall file the Articles of
Merger with the Secretary of State of the State of Nevada, in accordance
with the provisions of NRS section 92A.005 et seq. (the "Nevada Merger
Law"), and make all other filings or recordings required by law in
connection with the Merger. The Merger shall become effective at such time
as the Articles of Merger are duly filed with the Secretary of State of the
State of Nevada, or at such other later time as the parties shall agree and
specify in the Articles of Merger (the time the Merger becomes effective
being the "Effective Time").
SECTION 2.04. Effects of the Merger. The Merger shall have
the effects set forth in the Nevada Merger Law. Without limiting the
generality of the foregoing, and subject thereto, at the Effective Time,
all the properties, rights, privileges, powers and franchises of Harveys
and Harveys Acq Corp shall vest in the Harveys Surviving Corporation, and
all debts, liabilities and duties of Harveys and Harveys Acq Corp shall
become the debts, liabilities and duties of the Harveys Surviving
Corporation.
SECTION 2.05. Corporate Governance Documents. The Articles
of Incorporation of Harveys Acq Corp, as in effect immediately prior to the
Effective Time of the Merger, shall become the Articles of Incorporation of
the Harveys Surviving Corporation after the Effective Time, except that
such Articles of Incorporation shall be amended to provide that the name of
the Harveys Surviving Corporation shall be "Harveys Casino Resorts," and
thereafter may be amended in accordance with its terms and as provided by
law. The By-laws of Harveys Acq Corp as in effect immediately prior to the
Effective Time shall become the By-laws of the Harveys Surviving
Corporation and thereafter may be amended in accordance with their terms
and as provided by law.
SECTION 2.06. Directors. The directors of Harveys Acq Corp
immediately prior to the Effective Time shall become the directors of the
Harveys Surviving Corporation, and shall serve in such capacity until the
earlier of their resignation or removal or until their respective
successors are duly elected and qualified, as the case may be.
SECTION 2.07. Officers. The officers of Harveys immediately
prior to the Effective Time shall become the officers of the Harveys
Surviving Corporation, and shall serve in such capacity until the earlier
of their resignation or removal or until their respective successors are
duly elected and qualified, as the case may be.
SECTION 2.08. Further Actions. At and after the Effective
Time, Harveys Surviving Corporation shall take all action as shall be
required in connection with the Merger, including, but not limited to, the
execution and delivery of any further deeds, assignments, instruments or
documentation as are necessary or desirable to carry out the provisions of
this Agreement.
ARTICLE III
CONVERSION OF SHARES
SECTION 3.01. Effect on Capital Stock of Harveys and Harveys
Acq Corp. As of the Effective Time, by virtue of the Merger and without any
action on the part of the holder of any shares of capital stock of Harveys
or any shares of capital stock of Harveys Acq Corp:
(a) Capital Stock of Harveys
(i) Each share of Class A Common Stock,
par value $.01 per share, of Harveys (the "Harveys Class A Common
Stock") (other than shares canceled in accordance with Section
3.01(c)) issued and outstanding immediately prior to the Effective
Time shall be converted into and become 1.25379 fully paid and
nonassessable shares of Class A Common Stock, par value $.01 per
share, of PHCR (the "PHCR Class A Common Stock").
(ii) Each share of Class B Common
Stock, par value $.01, of Harveys (the "Harveys Class B Common
Stock") (other than shares canceled in accordance with Section
3.01(c)) issued and outstanding immediately prior to the Effective
Time shall be converted into and become 1.25379 fully paid and
nonassessable shares of Class B Common Stock, par value $.01 per
share, of PHCR (the "PHCR Class B Common Stock").
(b) Capital Stock of Harveys Acq Corp. Each share of
common stock, par value $.01 per share, of Harveys Acq Corp (the
"Harveys Acq Corp Common Stock") issued and outstanding immediately
prior to the Effective Time shall be converted into and become one
fully paid and nonassessable shares of common stock, par value $.01
per share, of Harveys Surviving Corporation (the "Harveys Surviving
Corporation Common Stock").
(c) Cancellation of Treasury Stock and Harveys Acq
Corp Owned Stock. Each share of Harveys Class A Common Stock and
Harveys Class B Common Stock that is owned by Harveys or by any
Subsidiary of Harveys and each share of Harveys Class A Common
Stock and Harveys Class B Common Stock that is owned by Harveys Acq
Corp shall automatically be canceled and retired and shall cease to
exist.
SECTION 3.02. Exchange of Certificates.
(a) Exchange Agent. Immediately prior to the
Effective Time, Harveys Acq Corp shall designate a bank or trust to
act as exchange agent in the Merger (the "Exchange Agent").
(b) Exchange Procedure. As soon as reasonably
practicable after the Effective Time, the Harveys Surviving
Corporation shall cause the Exchange Agent to mail to each holder
of record of a certificate or certificates representing which
immediately prior to the Effective Time represented outstanding
shares of Harveys Class A Common Stock or Harveys Class B Common
Stock (the "Certificates") whose shares were converted into the
right to receive PHCR Class A Common Stock or PHCR Class B Common
Stock, as applicable, pursuant to Section 3.01 (i) a letter of
transmittal (which shall specify that delivery shall be effected,
and risk of loss and title to the Certificates shall pass, only
upon delivery of the Certificates to the Exchange Agent and shall
be in such form and have such other provisions as the Harveys
Surviving Corporation may reasonably specify) and (ii) instructions
for use in effecting the surrender of the Certificates in exchange
for PHCR Class A Common Stock or PHCR Class B Common Stock, as
applicable. Upon surrender of a Certificate for cancellation to the
Exchange Agent together with such letter of transmittal, duly
executed, and such other documents as may reasonably be required by
the Exchange Agent, the holder of such Certificate shall be
entitled to receive in exchange therefor the number of shares into
which the shares of capital stock theretofore represented by such
Certificate shall have been converted pursuant to Sections 3.01 and
3.02, and the Certificate so surrendered shall forthwith be
cancelled.
(c) No Further Ownership Rights in Capital Stock. All
shares delivered upon the surrender of Certificates in accordance
with the terms of this Article III shall be deemed to have been
paid in full satisfaction of all rights pertaining to the shares of
capital stock theretofore represented by such Certificates, and
there shall be no further registration of transfers on the stock
transfer books of the Harveys Surviving Corporation of the shares
of capital stock which were outstanding immediately prior to the
Effective Time. If, after the Effective Time, Certificates are
presented to the Harveys Surviving Corporation or the Exchange
Agent for any reason, they shall be cancelled and exchanged as
provided in this Article III, except as otherwise provided by law.
ARTICLE IV
ADDITIONAL AGREEMENTS
SECTION 4.01. Registration Statement.
(a) PHCR shall as promptly as possible after the
Closing, and in no event later than 30 days after the date thereof,
prepare and file with the SEC an amendment (the "Amendment") to
Harveys' registration statement on Form 10. PHCR shall cause the
Amendment to comply as to form in all material respects with the
applicable provisions of the Securities and Exchange Act of 1934,
as amended (the "Exchange Act"). PHCR agrees that the Amendment at
the time it is filed shall not include an untrue statement of
material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in
light of the circumstances in which they were made, not misleading.
(b) As promptly as practicable, each party hereto
shall properly prepare and file any other filings required under
the Exchange Act, the Securities Act of 1933, as amended (the
"Securities Act") or any other Laws relating to the Merger or the
Amendment (collectively, "Other Filings").
SECTION 4.02. Reasonable Efforts. Upon the terms and subject
to the conditions set forth in this Agreement, each of the parties agrees
to use all reasonable efforts to take, or cause to be taken (including
through its officers and directors and other appropriate personnel), all
actions, and to do, or cause to be done, and to assist and cooperate with
the other parties in doing, all things necessary, proper or advisable to
consummate and make effective, in the most expeditious manner practicable,
the Merger, the Pinnacle Merger, the Voting and Contribution Agreement and
the other transactions contemplated by this Agreement, including (a) the
obtaining of all necessary actions or nonactions, waivers, consents and
approvals from Governmental Entities and the making of all necessary
registrations and filings (including filings with Governmental Entities, if
any) and the taking of all reasonable steps as may be necessary to obtain
Permits or waivers from, or to avoid an action or proceeding by, any
Governmental Entity (including in respect of any Gaming Law), (b) the
obtaining of all necessary consents, approvals or waivers from third
parties, (c) the defending of any lawsuits or other legal proceedings,
whether judicial or administrative, challenging this Agreement or the
consummation of any of the transactions contemplated by this Agreement,
including seeking to have any stay or temporary restraining order entered
by any court or other Governmental Entity vacated or reversed and (d) the
execution and delivery of any additional instruments necessary to
consummate the transactions contemplated by, and to fully carry out the
purposes of, this Agreement.
SECTION 4.03. At the Effective Time, all outstanding
employee stock options of Harveys (the "Harveys Options") shall be canceled
and shall be exchanged for options to purchase an number of shares of PHCR
Class A Common Stock or PHCR Class B Common Stock, as applicable (the
"Replacement Options"), equal to the product of (A) the number of Harveys
Options, multiplied by (B) 1.25379. Such Replacement Options shall have an
exercise price per share equal to (A) the exercise price of the Harveys
Options prior to the Merger, divided by (B) 1.25379. Such Replacement
Options shall otherwise have terms identical with those of the Harveys
Options.
SECTION 4.04. Tax Treatment. Each of Harveys, PHCR and
Harveys Acq Corp shall use its reasonable best efforts to cause the Merger
to qualify as an exchange governed by section 351 of the Code.
ARTICLE V
CONDITIONS PRECEDENT
SECTION 5.01. Conditions to Each Party's Obligation To
Effect the Merger. The respective obligations of each party to effect the
Merger is subject to the satisfaction or waiver on or prior to the Closing
Date of the following conditions:
(a) No Injunctions or Restraints. No statute, rule,
regulation, executive order, decree, temporary restraining order,
preliminary or permanent injunction or other order enacted,
entered, promulgated, enforced or issued by any Governmental Entity
or other legal restraint or prohibition preventing the consummation
of the Merger or the transactions contemplated thereby (including
the Pinnacle Merger) shall be in effect; provided, in the case of a
decree, injunction or other order, each of the parties shall have
used their best efforts to prevent the entry of any such injunction
or other order and to appeal as promptly as possible any decree,
injunction or other order that may be entered.
(b) Gaming Authority Approval. All licenses, permits,
registrations, authorizations, consents, waivers, orders, findings
of suitability or other approvals required to be obtained from, and
all filings, notices or declarations required to be made with, any
Gaming Authority to permit Harveys Acq Corp and Harveys to
consummate the Merger and to permit the Harveys Surviving
Corporation and each of its Subsidiaries to conduct their
businesses in the jurisdictions regulated by such Gaming
Authorities after the Effective Time in the same manner as
conducted by Harveys and its Subsidiaries prior to the Effective
Time (collectively, the "Gaming Approvals") shall have been
obtained or made, as applicable; provided that no such Gaming
Approval shall obligate Harveys Acq Corp, or any of its Affiliates
to obtain any consent, approval, license, waiver, order, decree,
determination of suitability or other authorization with respect to
any limited partner of any Affiliate of Harveys Acq Corp.
( c) Consents. All consents, waivers, orders,
approvals, authorizations, registrations, findings of suitability
and action of any Governmental Entity shall have been obtained or
made, free of any condition.
SECTION 5.02. Conditions to Obligations of Harveys Acq Corp.
The obligations of Harveys Acq Corp to effect the Merger are further
subject to the satisfaction or waiver on or prior to the Closing Date of
the following conditions:
(a) Contribution by Stockholders. The transactions
contemplated by the Voting and Contribution Agreement shall have
been consummated immediately prior to the Effective Time.
SECTION 5.03. Conditions to Obligations of Harveys. The
obligations of Harveys to effect the Merger are further subject to the
satisfaction or waiver on or prior to the Closing Date of the following
condition:
(a) Compliance Committee. Harveys shall have received
any and all consents necessary from the Harveys Casino Resorts
Compliance Committee.
(b) Pinnacle Merger Agreement. All conditions to
closing contained in the Pinnacle Merger Agreement shall have been
satisfied or waived by the appropriate party thereto.
ARTICLE VI
TERMINATION, AMENDMENT AND WAIVER
SECTION 6.01. Termination. This Agreement may be terminated
at any time prior to the Effective Time by written consent of each of the
parties.
SECTION 6.02. Amendment. This Agreement may be amended by
the mutual agreement of the parties at any time. This Agreement may not be
amended except by an instrument in writing signed on behalf of each of the
parties.
SECTION 6.03. Extension; Waiver. At any time prior to the
Effective Time, the parties may (a) extend the time for the performance of
any of the obligations or other acts of the other parties, (b) waive any
inaccuracies in the representations and warranties of the other party
contained in this Agreement or in any document delivered pursuant to this
Agreement or waive compliance by the other party with any of the agreements
or conditions contained in this Agreement. Any agreement on the part of a
party to any such extension or waiver shall be valid only if set forth in
an instrument in writing signed on behalf of such party. The failure of any
party to this Agreement to assert any of its rights under this Agreement or
otherwise shall not constitute a waiver of those rights.
ARTICLE VII
GENERAL PROVISIONS
SECTION 7.01. Notices. All notices, requests, claims,
demands and other communications under this Agreement shall be in writing
and shall be deemed given if delivered personally or sent by overnight
courier (providing proof of delivery) to the parties at the following
addresses (or at such other address for a party as shall be specified by
like notice):
(a) if to Harveys, Harveys Acq Corp or PHCR, to:
c/o Harveys Casino Resorts
Highway 50 & Stateline Avenue
Lake Tahoe, Nevada 89449
Attention: Charles W. Scharer
and
c/o Colony Capital, Inc.
1999 Avenue of the Stars, Suite 1200
Los Angeles, California 90067
Telephone: 310-282-8820
Facsimile: 310-282-8813
Attention: Jonathan H. Grunzweig
with a copy to:
Skadden, Arps, Slate, Meagher & Flom LLP
300 South Grand Avenue, Suite 3400
Los Angeles, California 90071
Attention: Nick P. Saggese, Esq.
Telephone: 213-687-5550
Facsimile: 213-687-5600
SECTION 7.02. Interpretation. When a reference is made in
this Agreement to an Article, Section or Schedule, such reference shall be
to an Article or Section of or a Schedule to, this Agreement unless
otherwise indicated. The table of contents and headings contained in this
Agreement are for reference purposes only and shall not affect in any way
the meaning or interpretation of this Agreement. Whenever the words
"include," "includes" or "including" are used in this Agreement, they shall
be deemed to be followed by the words "without limitation." The Pinnacle
Merger Agreement and the consummation of the transactions contemplated by
the Pinnacle Merger Agreement and the Voting and Contribution Agreement and
the consummation of the transactions contemplated by such Voting and
Contribution Agreement are transactions contemplated by this Agreement. To
the extent any restriction on the activities of Harveys or its Subsidiaries
under the terms of this Agreement requires prior approval under any Gaming
Law, such restriction shall be of no force or effect unless and until such
approval is obtained. If any provision of this Agreement is illegal or
unenforceable under any Gaming Law, such provision shall be void and of no
force or effect.
SECTION 7.03. Counterparts. This Agreement may be executed
in one or more counterparts, all of which shall be considered one and the
same agreement and shall become effective when one or more counterparts
have been signed by each of the parties and delivered to the other parties.
SECTION 7.04. Entire Agreement; No Third-Party
Beneficiaries. This Agreement and the Voting and Contribution Agreement
constitute the entire agreements, and supersede all prior agreements and
understandings, both written and oral, among the parties with respect to
the subject matter of these agreements and are not intended to confer upon
any Person other than the parties any rights or remedies hereunder.
SECTION 7.05. Governing Law. THIS AGREEMENT SHALL BE GOVERNED
BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEVADA,
WITHOUT REGARD TO ANY APPLICABLE CONFLICTS OF LAW.
SECTION 7.06. Gaming Laws. Each of the provisions of this
Agreement is subject to and shall be enforced in compliance with the Gaming
Laws.
SECTION 7.07. Assignment. Neither this Agreement nor any of
the rights, interests or obligations under this Agreement shall be
assigned, in whole or in part, by operation of law or otherwise by any of
the parties without the prior written consent of the other parties.
[signature pages follow]
IN WITNESS WHEREOF, PHCR, Harveys, and Harveys Acq Corp have
caused this Agreement to be signed by their respective officers thereunto
duly authorized, all as of the date first written above.
PH CASINO RESORTS, INC.
By: /s/ Charles W. Scharer
-----------------------------------
Name: Charles W. Scharer
Title: President
HARVEYS CASINO RESORTS
By: /s/ Charles W. Scharer
-----------------------------------
Name: Charles W. Scharer
Title: President
HARVEYS ACQUISITION CORPORATION
By: /s/ Charles W. Scharer
-----------------------------------
Name: Charles W. Scharer
Title: President
EXHIBIT 99.1 Press Release dated April 17, 2000
PINNACLE ENTERTAINMENT, INC. HARVEYS CASINO RESORTS
(formerly: Hollywood Park, Inc.) Highway 50 & Stateline Ave.
330 North Brand Avenue, Suite 1100 P.O. Box 128
Glendale, California 91203 Lake Tahoe, Nevada 89449
TRADED: NYSE: PNK
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FOR FURTHER INFORMATION:
AT PINNACLE: AT THE FINANCIAL RELATIONS BOARD:
<S> <C> <C> <C> <C>
R.D. HUBBARD MR. LYNN P. REITNOUER PAUL ALANIS PAUL GOODSON KATHY BRUNSON
CHAIRMAN AND SPECIAL COMMITTEE PRESIDENT & GENERAL INQUIRIES ANALYST INQUIRIES
CEO CHAIRMAN COO
(949) 752-4840 (818) 662-5900 (818) 662-5900 (310) 442-0599 (312) 266-7800
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
AT HARVEYS: AT COLONY:
JIM RAFFERTY OWEN BLICKSILVER
775-586-6753 212-419-4283
FOR IMMEDIATE RELEASE
APRIL 17, 2000
DEFINITIVE AGREEMENT REACHED FOR HARVEYS' ACQUISITION
OF PINNACLE ENTERTAINMENT
TRANSACTION EXPECTED TO CLOSE IN FOURTH QUARTER 2000
GLENDALE, CALIFORNIA - APRIL 17, 2000 - Pinnacle Entertainment, Inc.
(NYSE:PNK; formerly Hollywood Park, Inc.) announced today that it has
entered into a definitive agreement with PH Casino Resorts, a newly formed
subsidiary of Harveys Casino Resorts, pursuant to which PH Casino Resorts
would acquire by merger all of the outstanding capital stock of Pinnacle
Entertainment. (Harveys Casino Resorts is an affiliate of Colony Capital,
Inc.) As a condition to the transaction, senior management of Pinnacle will
contribute $50 million of Pinnacle Entertainment shares and share
equivalents to PH Casino Resorts and have agreed to an ongoing role with
PH.
Upon closing of the merger, PH Casino Resorts will acquire all of the then
outstanding stock of Pinnacle Entertainment for $24 per fully diluted share
in cash, plus up to an additional $1 per fully diluted share, which amount
is contingent upon the sale of Pinnacle Entertainment's 97 acres of surplus
land in Inglewood, California, for net after tax proceeds of at least
$40.75 million.
In the event the 97 acres are not sold prior to the closing of this
transaction, the merger agreement stipulates a price per share of $24 per
fully diluted share payable in cash upon closing, with an additional $1 per
fully diluted share to be payable in the future, contingent upon the sale
of the 97 acres prior to December 31, 2001 for net after tax proceeds of at
least $40.75 million. In the event the 97 acres are sold prior to December
31, 2001 for net after
tax proceeds of less than $40.75 million but more than $13.1 million, the
$1 per fully diluted share will be reduced proportionately. In the event
the 97 acres are not sold by December 31, 2001 or have been sold, but at a
price less than $13.1 million, then Pinnacle Entertainment stockholders
would not be entitled to any such additional payment. PH Casino Resorts'
obligation to pay the contingent amount will be secured by an irrevocable
letter of credit in the maximum amount of the obligation.
The merger has received the unanimous approval of the Boards of both
companies and of a special committee comprised exclusively of independent
directors of Pinnacle Entertainment. Consummation of the merger is subject
to, among other things, regulatory approvals in the various jurisdictions
in which Pinnacle Entertainment and Harveys Casino Resorts conduct gaming
operations, approval by a majority of Pinnacle Entertainment's
stockholders, completion of PH Casino Resorts' financing for the
transaction (with respect to which customary bank commitment and high yield
"highly confident" letters have been received) and satisfaction of other
conditions precedent, including certain dispositions and the opening of
Pinnacle Entertainment's Indiana casino resort (currently under
construction) substantially in accordance with its current budget not later
than September 15, 2000. The parties currently expect the transaction to be
consummated in the fourth quarter of 2000.
Pinnacle Entertainment is a diversified gaming company that owns and
operates eight casinos (four with hotels) in Nevada, Mississippi, Louisiana
and Argentina, two of which are the subject of a pending sales transaction.
Pinnacle Entertainment receives lease income from two card club casinos,
both in the Los Angeles metropolitan area; and owns and operates the Turf
Paradise horse racing facility in Arizona that is the subject of a pending
sale transaction. The Company is also constructing the Belterra Resort and
Casino, a major hotel/casino complex in Southern Indiana, approximately 35
miles southwest of Cincinnati.
Founded in 1944, Harveys Casino Resorts owns and operates Harveys Resort
and Casino, a AAA Four-Diamond full-service resort at Lake Tahoe, Nevada;
Harveys Casino Hotel in Council Bluffs, Iowa; and Harveys Wagon Wheel
Hotel/Casino in Central City, Colorado. Harveys Casino Resorts also manages
Bluffs Run Casino in Council Bluffs, Iowa.
(The Private Securities Litigation Reform Act of 1995 provides a "safe
harbor" for forward-looking statements. Forward-looking information
involves important risks and uncertainties that could significantly affect
future results and accordingly, such results may differ from those
expressed in forward-looking statements made by or on behalf of the
Company, including statements related to the completion of the sale of
Pinnacle Entertainment to PH Casino Resorts. Pinnacle Entertainment
cautions that these statements are qualified by important factors that
could cause actual results to differ materially from those reflected by the
forward-looking statements contained herein. Such factors include, but are
not limited to, the failure of either Pinnacle Entertainment or PH Casino
Resorts to fulfill the conditions necessary to complete the transaction, as
well as other risks as detailed from time to time in Pinnacle
Entertainment's filings with the Securities and Exchange Commission. For
more information on the potential factors that could affect the Company's
financial results, review the Company's filings with the Securities and
Exchange Commission, including the Company's Annual Report on Form 10-K and
the Company's other filings with the SEC.)
FOR MORE INFORMATION ON PINNACLE ENTERTAINMENT, INC. VIA FACSIMILE AT NO COST,
CALL 1-800-PRO-INFO AND DIAL COMPANY CODE PNK.
# # #
# # #1-800-PRO-INFO AND DIAL COMPANY CODE PNK.
