Execution Copy
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
STRATOSPHERE CORPORATION,
A DELAWARE CORPORATION,
AMERICAN REAL ESTATE HOLDINGS LIMITED PARTNERSHIP,
A DELAWARE LIMITED PARTNERSHIP,
NYBOR LIMITED PARTNERSHIP,
A DELAWARE LIMITED PARTNERSHIP
AND
STRAT MERGER CORP.,
A DELAWARE CORPORATION
DATED: FEBRUARY 1, 2002
Table of Contents
Page
ARTICLE I DEFINITIONS.....................................................................................4
Section 1.1 Defined Terms.......................................................................4
Section 1.2 Other Defined Terms.................................................................6
ARTICLE II THE MERGER.....................................................................................7
Section 2.1 The Merger..........................................................................7
Section 2.2 Effective Time......................................................................8
Section 2.3 Closing.............................................................................8
Section 2.4 Certificate of Incorporation and By-Laws............................................8
Section 2.5 Directors...........................................................................8
ARTICLE III EFFECT OF MERGER ON SECURITIES OF MERGERCO AND THE COMPANY....................................9
Section 3.1 Conversion of Mergerco Common Stock.................................................9
Section 3.2 Conversion of Certain Company Common Stock for Merger Consideration; Cancelled
Shares; Treasury Shares..........................................................9
Section 3.3 Exchange of Certificates............................................................9
Section 3.4 Dissenting Shares...................................................................11
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE COMPANY..................................................12
Section 4.1 Organization and Capitalization.....................................................12
Section 4.2 Authorization.......................................................................13
Section 4.3 Absence of Certain Changes or Events................................................13
Section 4.4 No Conflict or Violation............................................................14
Section 4.5 Consents and Approvals..............................................................14
Section 4.6 Corporate Proceedings...............................................................14
Section 4.7 Required Company Vote...............................................................15
Section 4.8 Proxy Statement; Schedule 13E-3.....................................................15
Section 4.9 Company SEC Documents and Financial Statements......................................16
Section 4.10 Litigation..........................................................................17
ARTICLE V REPRESENTATIONS AND WARRANTIES OF MERGERCO......................................................17
Section 5.1 Organization........................................................................17
Section 5.2 Authorization.......................................................................17
Section 5.3 Consents and Approvals..............................................................18
Section 5.4 No Conflict or Violation............................................................18
Section 5.5 Proxy Statement; Schedule 13E-3.....................................................18
Section 5.6 Mergerco's Operations...............................................................18
Section 5.7 No Brokerage........................................................................19
ARTICLE VI REPRESENTATIONS AND WARRANTIES OF AREH.........................................................19
Section 6.1 Organization........................................................................19
Section 6.2 No Conflict or Violation............................................................19
Section 6.3 Authorization.......................................................................19
Section 6.4 Consents and Approvals..............................................................20
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Section 6.5 Proxy Statement; Schedule 13E-3.....................................................20
Section 6.6 Absence of Certain Changes or Events................................................20
ARTICLE VII ....................................................................................20
REPRESENTATIONS, WARRANTIES AND ADDITIONAL AGREEMENTS OF NYBOR............................................20
Section 7.1 Organization........................................................................20
Section 7.2 No Conflict or Violation............................................................21
Section 7.3 Authorization.......................................................................21
Section 7.4 Consents and Approvals..............................................................21
Section 7.5 No Conflict or Violation............................................................21
Section 7.6 Company Common Stock................................................................21
Section 7.7 Proxy Statement; Schedule 13E-3.....................................................22
ARTICLE VIII COVENANTS OF THE COMPANY AND MERGERCO........................................................22
Section 8.1 Maintenance of Business Prior to Closing............................................22
Section 8.2 Consents and Efforts; Other Obligations.............................................23
Section 8.3 Other Offers........................................................................24
Section 8.4 Meeting of Stockholders.............................................................26
Section 8.5 Proxy Statement.....................................................................26
Section 8.6 Schedule 13E-3......................................................................28
Section 8.7 Director and Officer Liability......................................................28
Section 8.8 Notices of Certain Events...........................................................30
Section 8.9 Further Assurances..................................................................31
Section 8.10 Voting..............................................................................31
ARTICLE IX COVENANTS OF AREH..............................................................................31
Section 9.1 Compliance of Mergerco..............................................................31
Section 9.2 Schedule 13E-3......................................................................32
Section 9.3 Financing...........................................................................32
ARTICLE X COVENANTS OF NYBOR..............................................................................32
Section 10.1 Disposal of Nybor Shares............................................................32
Section 10.2 Voting..............................................................................32
ARTICLE XI CONDITIONS TO THE MERGER.......................................................................32
Section 11.1 Conditions to the Obligations of Each Party.........................................32
Section 11.2 Conditions to the Obligations of the Company........................................33
Section 11.3 Conditions to the Obligations of Mergerco...........................................34
ARTICLE XII MISCELLANEOUS.................................................................................35
Section 12.1 Termination.........................................................................35
Section 12.2 Assignment..........................................................................37
Section 12.3 Notices.............................................................................38
Section 12.4 Entire Agreement; Waivers...........................................................39
Section 12.5 Multiple Counterparts...............................................................40
Section 12.6 Invalidity..........................................................................40
Section 12.7 Titles..............................................................................40
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Section 12.8 Fees and Expenses...................................................................40
Section 12.9 Cumulative Remedies.................................................................40
Section 12.10 Governing Law.......................................................................40
Section 12.11 Amendment...........................................................................41
Section 12.12 Public Announcements................................................................41
Section 12.13 Enforcement of Agreement............................................................41
Section 12.14 Non-survival of Representations and Warranties......................................41
Section 12.15 Interpretive Provisions.............................................................42
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AGREEMENT AND PLAN OF MERGER
This Agreement and Plan of Merger (this "Agreement"), dated this 1st
day of February, 2002 , is by and among STRATOSPHERE CORP., a Delaware
corporation (the "Company"), American Real Estate Holdings LIMITED PARTNERSHIP,
a Delaware limited partnership ("AREH"), nybor limited partnership, a Delaware
limited Partnership ("Nybor") and STRAT MERGER CORP., a Delaware corporation
("Mergerco").
RECITALS
A. This Agreement provides for the merger (the "Merger") of Mergerco with
and into the Company, with the Company as the surviving corporation in such
merger, all in accordance with the provisions of this Agreement.
B. The respective Boards of Directors of Mergerco and the Company and the
stockholders of Mergerco have approved this Agreement and have determined the
Agreement and the Merger are advisable, fair to and in the best interests of the
respective stockholders. The Company intends promptly to submit to its
stockholders the approval and adoption of this Agreement.
C. Prior to the date of this Agreement, AREH formed Mergerco for the
purpose of effecting this Merger. AREH agrees to provide the funds to Mergerco
necessary to enable Mergerco to pay the Merger Consideration and any amounts due
to holders of Dissenting Shares under Section 262 of the DGCL as set forth
herein and the Board of Directors of the general partner of AREH has approved
this Agreement.
D. The parties desire to make certain representations, warranties,
covenants and agreements in connection with the Merger and also to prescribe
various conditions to the Merger.
NOW, THEREFORE, in consideration of the mutual covenants and promises
contained herein, and for other good and valuable consideration the receipt and
adequacy of which is hereby acknowledged, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1 Defined Terms. As used herein, the terms below shall have the
following meanings:
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"Affiliate" shall mean, with respect to any person or entity (the
"referent person"), any person or entity that controls the referent person, any
person or entity that the referent person controls, or any person or entity that
is under common control with the referent person. For purposes of the preceding
sentence, the term "control" shall mean the power, direct or indirect, to direct
or cause the direction of the management and policies of a person or entity
through voting securities, by contract or otherwise.
"Board" shall mean the Board of Directors of the Company.
"Company Common Stock" shall mean the common stock of the Company
having a par value of $0.01 per share.
"Cancelled Shares" shall mean the shares of Company Common Stock owned
of record by AREH immediately prior to the Effective Time.
"DGCL" shall mean the General Corporation Law of the State of Delaware.
"Dissenting Stockholders" shall mean those Stockholders who hold
Dissenting Shares.
"Dissenting Shares" shall mean any shares held by Stockholders who are
entitled to an appraisal of their shares under the DGCL, and who have properly
exercised, perfected and not subsequently withdrawn or lost their appraisal
rights with respect to their Company Common Stock in accordance with the DGCL.
"Equity Securities" shall mean (i) shares of capital stock or other
equity securities, (ii) subscriptions, calls, warrants, options or commitments
of any kind or character relating to, or entitling any person or entity to
purchase or otherwise acquire, any capital stock or other equity securities and
(iii) securities convertible into or exercisable or exchangeable for shares of
capital stock or other equity securities.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
"Financial Advisor" shall mean Raymond James & Associates, Inc.
"GAAP" shall mean, with respect to any financial statements, accounting
principles generally accepted in the United States of America, as in effect from
time to time, consistently applied.
"Independent Director" shall mean the independent member of the Board
delegated to consider the transactions contemplated by this Agreement on behalf
of the Stockholders.
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"Material Adverse Effect" or "Material Adverse Change" or a similar
phrase shall mean any material adverse effect on or change with respect to (i)
the business, operations, assets (taken as a whole), liabilities (taken as a
whole), condition (financial or otherwise) or results of operations of the
Company, or (ii) the relations with customers, suppliers, distributors or
employees of the Company, or (iii) the right or ability of the Company to
consummate any of the transactions contemplated hereby, in each case other than
(A) changes relating to (x) the securities markets in general or (y) general
business or economic conditions, or (B) changes resulting from the announcement
of the transactions contemplated by this Agreement.
"Mergerco Common Stock" shall mean the common stock of Mergerco having
a par value of $0.01 per share.
"Nybor Shares" shall mean the shares of Company Common Stock held by
Nybor immediately prior to the Effective Time.
"SEC" shall mean the Securities and Exchange Commission.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Securities Laws" shall mean, collectively, the Securities Act and the
Exchange Act and all state securities laws and the rules and regulations
thereunder.
"Special Meeting" shall mean the Special Meeting of Stockholders of the
Company.
"Stockholders" shall mean the record holders of Company Common Stock
other than Mergerco, AREH and Nybor.
"Treasury Shares" shall mean Company Common Stock held in treasury by
the Company.
Section 1.2 Other Defined Terms. In addition to the terms defined in
Section 1.1, the following terms shall have the meanings defined for such terms
in the Recitals or Sections set forth below:
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TERM SECTION
---- -------
"Acquisition Proposal" 8.3(a)
"Action" 4.10
"Claim" 8.7(a)
"Closing" 2.3
"Closing Date" 2.3
"Company Financial Statements" 4.9(b)
"Company SEC Documents" 4.9(a)
"Consideration" 3.2(a)
"Disclosure Schedule" Article IV Preamble
"Effective Time" 2.2
"Exchange Fund" 3.3(d)
"Fairness Opinion" 4.6(a)
"Indemnified Party" 8.7(a)
"Merger" Recitals
"Merger Consideration" 3.2(b)
"Nybor" Recitals
"Nybor Consideration" 3.2(b)
"Paying Agent" 3.3(a)
"Payment Event" 8.3(b)
"Preferred Stock" 4.1(b)
"Proxy Statement" 8.5(a)
"Regulatory Filings" 4.5
"Requisite Stockholder Vote" 4.7
"Schedule 13E-3" 8.6(a)
"State Filings" 4.5
"Surviving Corporation" 2.1
"Third Party" 8.3(a)
ARTICLE II
THE MERGER
Section 2.1 The Merger. Upon the terms and subject to the satisfaction or
waiver, if permissible, of the conditions hereof, and in accordance with the
DGCL, at the Effective Time, Mergerco shall be merged with and into the Company.
Upon the effectiveness of the Merger, the separate corporate existence of
Mergerco shall cease and the Company shall continue as the surviving
corporation. The Company as the surviving corporation after the Merger is
hereinafter sometimes referred to as the "Surviving Corporation". The Merger
shall have the effects specified in this Agreement and the applicable provisions
of the DGCL.
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Section 2.2 Effective Time. As soon as practicable on or after the Closing
Date, the parties shall cause the Merger to be consummated by causing a
certificate of merger with respect to the Merger to be executed and filed in
accordance with the relevant provisions of the DGCL and shall make all other
filings or recordings required under the DGCL. The Merger shall become effective
at the time of filing of the certificate of merger or at such later time as is
specified therein (the "Effective Time").
Section 2.3 Closing. Upon the terms and subject to the conditions of this
Agreement, the closing of the Merger (the "Closing") shall take place (a) at the
offices of AREH, located at 100 South Bedford Road, Mt. Kisco, NY at 10:00 a.m.,
local time, on the second business day immediately following the day on which
the last to be satisfied or waived of the conditions set forth in Article XI
(other than those conditions that by their nature are to be satisfied at the
Closing, but subject to the satisfaction or waiver of those conditions) shall be
satisfied or waived in accordance herewith or (b) at such other time, date or
place as Mergerco and the Company may agree. The date on which the Closing
occurs is herein referred to as the "Closing Date."
Section 2.4 Certificate of Incorporation and By-Laws.
(a) At the Effective Time, and without any further action on the
part of the Company or Mergerco, the certificate of incorporation of
Mergerco, as in effect immediately prior to the Effective Time, shall
be the certificate of incorporation of the Surviving Corporation
following the Merger, until thereafter further amended as provided
therein and under the DGCL.
(b) At the Effective Time, and without any further action on the
part of the Company or Mergerco, the by-laws of Mergerco as in effect
immediately prior to the Effective Time shall be the by-laws of the
Surviving Corporation following the Merger, until thereafter changed or
amended as provided therein and under the DGCL.
Section 2.5 Directors. At the Effective Time, Carl C. Icahn, Martin Hirsch,
John Saldarelli and Robert J. Mitchell shall be the directors of the Surviving
Corporation.
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ARTICLE III
EFFECT OF MERGER ON SECURITIES OF MERGERCO AND THE COMPANY
Section 3.1 Conversion of Mergerco Common Stock. At the Effective Time, by
virtue of the Merger, each share of Mergerco Common Stock issued and outstanding
immediately prior to the Effective Time shall be canceled and extinguished and
automatically converted (subject to the terms of Section 3.3) into the right to
receive one (1) share of common stock having a par value of $0.01 of the
Surviving Corporation.
Section 3.2 Conversion of Certain Company Common Stock for Merger
Consideration; Cancelled Shares; Treasury Shares.
(a) At the Effective Time, by virtue of the Merger and without any
action on the part of the holder thereof, each share of Company Common
Stock outstanding immediately prior to the Effective Time (other than
Treasury Shares, Cancelled Shares, Dissenting Shares and Nybor Shares,
if any) shall automatically be changed into the right to receive, and
each certificate which immediately prior to the Effective Time
represented a share of such Company Common Stock shall have solely the
right to receive, $45.32 in cash (the "Consideration") upon surrender
of the certificate formerly representing Company Common Stock as
provided in Section 3.3.
(b) At the Effective Time, by virtue of the Merger and without any
action on the part of Nybor, each Nybor Share shall automatically be
changed into the right to receive, and each certificate which
immediately prior to the Effective Time represented a share of such
Company Common Stock shall have solely the right to receive, $44.33 in
cash (the "Nybor Consideration"; together with the "Consideration", the
"Merger Consideration") upon surrender of the certificate formerly
representing Company Common Stock as provided in Section 3.3.
(c) All Treasury Shares and Cancelled Shares shall, by virtue of
the Merger and without any action on the part of the holder thereof,
automatically be cancelled and no consideration shall be paid with
respect thereto.
Section 3.3 Exchange of Certificates.
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(a) Substantially contemporaneously with the Effective Time, Mergerco shall
cause to be deposited with a paying agent (the "Paying Agent") to be
jointly selected by the Company (acting through the Independent
Director) and Mergerco, for the benefit of the holders of shares of
Company Common Stock (other than Treasury Shares, Cancelled Shares and
Dissenting Shares), for payment in accordance with this Article III,
the funds necessary to pay the Merger Consideration for each share as
to which the Merger Consideration shall be payable.
(b) As soon as practicable after the Effective Time, and using its
reasonable best efforts to do so within three business days thereafter,
the Paying Agent shall mail to each holder of an outstanding
certificate or certificates that immediately prior to the Effective
Time represented shares of Company Common Stock (other than Treasury
Shares and Cancelled Shares, if any), (i) a letter of transmittal
(which shall specify that delivery shall be effected, and risk of loss
and title to such certificates shall pass, only upon delivery of such
certificates to the Paying Agent and shall be in such form and have
such other provisions as Mergerco and the Company may reasonably
specify) and (ii) instructions for use in effecting the surrender of
each certificate in exchange for payment of the Merger Consideration.
As soon as practicable after the Effective Time, each holder of an
outstanding certificate or certificates that immediately prior to the
Effective Time represented such shares of Company Common Stock, upon
surrender to the Paying Agent of such certificate or certificates,
together with a properly completed letter of transmittal, and
acceptance thereof by the Paying Agent, shall be entitled to receive in
exchange therefor the Consideration or the Nybor Consideration (as
appropriate in accordance with Section 3.2) multiplied by the number of
shares of Company Common Stock formerly represented by such
certificate. No interest shall be paid or accrue on the Merger
Consideration. The Paying Agent shall accept such certificates upon
compliance with such reasonable terms and conditions as the Paying
Agent may impose to effect an orderly exchange thereof in accordance
with customary exchange practices. After the Effective Time, there
shall be no further transfer on the records of the Company or its
transfer agent of certificates formerly representing shares of Company
Common Stock that have been converted, in whole or in part, pursuant to
this Agreement, into the right to receive cash, and if such
certificates are presented to the Company for transfer, they shall be
canceled against delivery of such cash. Until surrendered as
contemplated by this Section 3.3(b), each certificate formerly
7
representing shares of such Company Common Stock shall be deemed at any
time after the Effective Time to represent only the right to receive
upon such surrender the Merger Consideration for each such share of
Company Common Stock.
(c) Subject to the provisions of the DGCL, all cash paid upon the
surrender for exchange of certificates formerly representing shares of
Company Common Stock 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 exchanged for cash theretofore represented by
such certificates.
(d) Any cash deposited with the Paying Agent pursuant to this
Section 3.3 (the "Exchange Fund") that remains undistributed to the
holders of the certificates formerly representing shares of Company
Common Stock one year after the Effective Time shall be delivered to
the Surviving Corporation at such time and any former holders of shares
of Company Common Stock prior to the Merger who have not theretofore
complied with this Article III shall thereafter look only to the
Surviving Corporation and only as general unsecured creditors thereof
for payment of their claim for cash, if any.
(e) None of Mergerco, the Company or the Paying Agent shall be
liable to any person in respect of any cash from the Exchange Fund
delivered to a public office pursuant to any applicable abandoned
property, escheat or similar law.
(f) In the event any certificate formerly representing Company
Common Stock shall have been lost, stolen or destroyed, upon the making
of an affidavit of that fact by the person claiming such certificate to
be lost, stolen or destroyed and, if required by Surviving Corporation,
the posting by such person of a bond in such reasonable amount as
Surviving Corporation may direct as indemnity against any claim that
may be made against it with respect to such certificate, the Paying
Agent will issue in exchange for such lost, stolen or destroyed
certificate the Merger Consideration.
Section 3.4 Dissenting Shares. Notwithstanding Section 3.2 hereof,
Dissenting Shares shall not be converted into the right to receive the Merger
Consideration. The holders thereof shall be entitled only to such rights as are
granted by Section 262 of the DGCL. Each holder of Dissenting Shares
8
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 (i) if any such holder of Dissenting
Shares shall have failed to establish his entitlement to appraisal rights as
provided in Section 262 of the DGCL, (ii) if any such holder of Dissenting
Shares shall have effectively withdrawn his demand for appraisal of such shares
or lost his right to appraisal and payment for his shares under Section 262 of
the DGCL, or (iii) if neither any holder of Dissenting Shares nor the Surviving
Corporation shall have filed a petition demanding a determination of the value
of all Dissenting Shares within the time provided in Section 262 of the DGCL,
such holder shall forfeit the right to appraisal of such shares and each such
share shall be treated as if it had been converted as of the Effective Time,
into the right to receive the Merger Consideration, without interest thereon,
from the Surviving Corporation as provided in Section 3.2 hereof. The Company
shall give Mergerco prompt notice of any demands received by the Company for
appraisal of shares, and Mergerco shall have the right to participate in all
negotiations and proceedings with respect to such demands. The Company shall
not, except with the prior written consent of Mergerco, make any payment with
respect to, or settle or offer to settle, any such demands.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
As an inducement to Mergerco to enter into this Agreement, the Company
hereby makes, as of the date hereof, the following representations and
warranties to Mergerco, except as otherwise set forth in a written disclosure
schedule (the "Disclosure Schedule") delivered by the Company to Mergerco prior
to the date hereof, a copy of which is attached hereto.
Section 4.1 Organization and Capitalization.
(a) Organization. The Company is duly organized, validly existing and
in good standing under the laws of the State of Delaware and has the
corporate power and authority to own, lease and operate its assets and
property and to carry on its business as presently being conducted and
as proposed to be conducted. The Company is duly qualified to do
business as a foreign corporation and is in good standing in each
jurisdiction in which such qualification is necessary under applicable
law, except where the failure to be so qualified and in good standing
would not have a Material Adverse Effect. The Company has delivered to
Mergerco true, correct and complete copies of its certificate of
incorporation and by-laws (in each case, as amended to date). The
Company is not in violation of any provision of its certificate of
incorporation or by-laws.
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(b) Capitalization. The authorized capital stock of the Company
consists of: (i) 10,000,000 shares of Company Common Stock, and (ii)
3,000,000 shares of preferred stock having a par value of $0.01 per
share (the "Preferred Stock"). As of September 30, 2001, there were
2,030,000 shares of Company Common Stock and no shares of Preferred
Stock issued and outstanding. Since such date, no additional shares of
capital stock of the Company have been issued and no shares of
Preferred Stock have been issued. All issued and outstanding shares of
Company Common Stock are duly authorized, validly issued, fully paid,
nonassessable and free of preemptive rights. Except as set forth in
this Section 4.1(b), (i) there are no outstanding Equity Securities of
the Company and (ii) the Company is not a party to any commitments,
agreements or obligations of any kind or character for (A) the issuance
or sale of Equity Securities of the Company or (B) the repurchase,
redemption or other acquisition of any Equity Securities of the
Company.
(c) Voting Trusts, Proxies, Etc. The Company is not a party to any
stockholder agreements, voting trusts, proxies or other agreements or
understandings with respect to or concerning the purchase, sale or
voting of the Equity Securities of the Company.
Section 4.2 Authorization. The Company has all necessary corporate power
and authority to execute and deliver this Agreement and all agreements and
documents contemplated hereby. Subject only to (i) the approval of this
Agreement and the transactions contemplated hereby by the Requisite Stockholder
Vote, and (ii) the execution, filing and recordation of appropriate merger
documents as required by, and in accordance with, the DGCL, the consummation by
the Company of the transactions contemplated hereby has been duly authorized by
all requisite corporate action. This Agreement has been duly authorized,
executed and delivered by the Company and is a legal, valid and binding
obligation of the Company, enforceable against the Company in accordance with
its terms, except as the enforceability thereof may be limited by (a) applicable
bankruptcy, insolvency, moratorium, reorganization, fraudulent conveyance or
similar laws in effect that affect the enforcement of creditors' rights
generally or (b) general principles of equity, whether considered in a
proceeding at law or in equity.
Section 4.3 Absence of Certain Changes or Events. Since December 31,
2000, other than as stated in the Form 10-K filed by the Company for the period
ending December 31, 2000 and the Form10-Qs filed by the Company for the periods
ending March 31, 2001, June 30, 2001 and September 30, 2001, (i) the
10
Company has been operated in the ordinary course of business, consistent with
past practice, and (ii) there has been no Material Adverse Change.
Section 4.4 No Conflict or Violation. Except as set forth in Section 4.4
of the Disclosure Schedule, neither the execution, delivery and performance of
this Agreement, nor the consummation of the transactions contemplated hereby, by
the Company will result in (i) a violation of or a conflict with any provision
of the certificate of incorporation or by-laws of the Company, or (ii) a breach
of, or a default under, or the creation of any right of any party to accelerate,
terminate or cancel pursuant to (including, without limitation, by reason of the
failure to obtain a consent or approval under any such contract), any term or
provision of any contract, indenture, lease, encumbrance, permit, or
authorization or concession to which the Company is a party or by which any of
its assets are bound, which breach, default or creation of any such right would
reasonably be expected to have a Material Adverse Effect on the Company.
Section 4.5 Consents and Approvals. Except as set forth in Section 4.5
of the Disclosure Schedule, no consent, waiver, agreement, approval, permit or
authorization of, or declaration, filing, notice or registration to or with, any
federal, state, local or foreign governmental or regulatory authority or body is
required to be made or obtained by the Company in connection with the execution,
delivery and performance of this Agreement and the consummation of the
transactions contemplated hereby other than (i) filings required in connection
with or in compliance with the provisions of the Exchange Act, the Securities
Act or applicable state securities and "Blue Sky" laws (collectively, the
"Regulatory Filings"), (ii) the filing of the Merger Certificate under the DGCL,
(iii) filings, if any, required to be made with, or approvals, if any, required
to be obtained from the State of Nevada and Clark County (collectively, "State
Filings") and (iv) those consents, waivers, agreements, approvals,
authorizations, declarations, filings, notices or registrations, that have been,
or will be prior to the Closing Date, obtained or made, except those consents,
waivers, agreements, approvals, authorizations, declarations, filings, notices
or registrations, the failure of which to obtain would not have a Material
Adverse Effect or prevent or materially delay the Merger.
Section 4.6 Corporate Proceedings.
(a) The Independent Director has received the opinion (the
"Fairness Opinion") of the Financial Advisor dated the date hereof,
substantially to the effect that the Merger Consideration to be
received by the holders of the Company Common Stock in the Merger is
fair, from a financial point of view, to the Stockholders.
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(b) The Independent Director (at a meeting duly called and held at
which a quorum was present) has determined that this Agreement and the
Merger are advisable, fair to and in the best interests of the Company
and the Stockholders, and has recommended the adoption of this
Agreement to the Board.
(c) The Board, based on the recommendation of the Independent
Director (at a meeting duly called and held at which a quorum was
present), has (i) determined that this Agreement and the Merger are
advisable, fair to and in the best interests of the Company and its
stockholders, including the Stockholders, (ii) approved this Agreement
and the Merger, and (iii) resolved to recommend the adoption of this
Agreement by the stockholders of the Company.
Section 4.7 Required Company Vote. The affirmative vote of the holders of
in excess of 50% of all of the issued and outstanding shares of Company Common
Stock as provided by Section 251 of the DGCL are the only votes of the holders
of any class or series of the Company's equity securities necessary to approve
this Agreement, the Merger and the other transactions contemplated hereby (such
votes being collectively referred to as the "Requisite Stockholder Vote").
Section 4.8 Proxy Statement; Schedule 13E-3. The information concerning
the Company and its officers, directors, employees and stockholders supplied by
and relating to the Company for inclusion in the Proxy Statement or the Schedule
13E-3 will not contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary in order to make
the statements therein, in light of the circumstances under which they were
made, not misleading. The Company makes no representation or warranty with
respect to any information supplied by Mergerco or any of its stockholders,
directors, officers and/or representatives that is contained in the Proxy
Statement or in the Schedule 13E-3.
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Section 4.9 Company SEC Documents and Financial Statements.
(a) Since December 28, 1998, the Company has timely filed all
required reports, schedules, forms, statements and other documents
(including exhibits and all other information incorporated therein)
with the SEC ("Company SEC Documents"). As of their respective dates
(and without giving effect to any amendments or modifications filed
after the date of this Agreement), each of the Company SEC Documents,
including the financial statements, exhibits and schedules thereto,
filed and publicly available with the SEC prior to the date hereof
complied (and each of the Company SEC Documents filed after the date of
this Agreement, will comply) as to form with applicable Securities Laws
and did not (or in the case of statements, circulars or reports filed
after the date of this Agreement, will not) contain any untrue
statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements made therein,
in the light of the circumstances under which they were made, not
misleading.
(b) Each of the Company's consolidated statements of financial
condition or balance sheets included in or incorporated by reference
into the Company SEC Documents, including the related notes and
schedules, fairly presented in all material respects (or, in the case
of Company SEC Documents filed after the date of this Agreement, will
fairly present in all material respects) the financial position of the
Company as of the date of such balance sheet and each of the Company's
statements of income, cash flows and changes in stockholders' equity
included in or incorporated by reference into the Company SEC
Documents, including any related notes and schedules (collectively, the
foregoing financial statements and related notes and schedules are
referred to as the "Company Financial Statements"), fairly presented in
all material respects (or, in the case of Company SEC Documents filed
after the date of this Agreement, will fairly present in all material
respects) the results of operations, cash flows and changes in
stockholders' equity of the Company for the periods set forth therein
(subject, in the case of unaudited statements, to normal year-end audit
adjustments), in each case in accordance with GAAP consistently applied
during the periods involved (except as may be noted therein and except,
in the case of unaudited statements, for the absence of notes).
13
Section 4.10 Litigation. Except as set forth in Section 4.10 of the
Disclosure Schedule, there is no private or government action, suit, proceeding
(administrative or otherwise), claim, arbitration, mediation or investigation
pending before any agency, court or tribunal, foreign or domestic ("Action"),
or, to the knowledge of the Company, threatened against the Company or any of
its assets or properties or any of its officers or directors (in their
capacities as such) that, individually or in the aggregate, would have a
Material Adverse Effect on the Company. There is no judgment, decree or order
against the Company or, to the best knowledge of the Company, any of its
directors or officers (in their capacities as such) that could prevent, enjoin
or materially alter or delay any of the transactions contemplated by this
Agreement or that would have a Material Adverse Effect on the Company.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF MERGERCO
As an inducement to the Company to enter into this Agreement, Mergerco
hereby makes the following representations and warranties as of the date hereof
to the Company:
Section 5.1 Organization. Mergerco is duly organized, validly existing
and in good standing under the laws of the State of Delaware and has the
corporate power and authority to conduct its business as it is presently being
conducted and to own, lease and operate its properties. Mergerco is duly
qualified to do business as a foreign corporation and is in good standing in
each jurisdiction in which such qualification is necessary under applicable law
except where the failure to be so qualified and in good standing would not
reasonably be expected to have a material adverse effect on Mergerco. Mergerco
has delivered to the Company true, correct and complete copies of its
certificate of incorporation and by-laws (in each case, as amended to date).
Mergerco is not in violation of any provision of its certificate of
incorporation or by-laws.
Section 5.2 Authorization. Mergerco has all necessary corporate power
and authority to, and has taken all corporate action necessary on its part to,
execute and deliver this Agreement and all agreements and documents contemplated
hereby and to consummate the transactions contemplated hereby. This Agreement
has been duly authorized, executed and delivered by Mergerco and is a legal,
valid and binding obligation of Mergerco, enforceable against it in
14
accordance with its terms, except as the enforceability thereof may be limited
by (i) applicable bankruptcy, insolvency, moratorium, reorganization, fraudulent
conveyance or similar laws in effect that affect the enforcement of creditors'
rights generally or (ii) general principles of equity, whether considered in a
proceeding at law or in equity.
Section 5.3 Consents and Approvals. No consent, waiver, agreement,
approval, permit or authorization of, or declaration, filing, notice or
registration to or with, any federal, state, local or foreign governmental or
regulatory authority or body or other person or entity is required to be made or
obtained by Mergerco in connection with the execution, delivery and performance
of this Agreement and the consummation of the transactions contemplated hereby
other than any Regulatory Filings, State Filings and the filing of the Merger
Certificate under the DGCL.
Section 5.4 No Conflict or Violation. Neither the execution, delivery
and performance of this Agreement, nor the consummation of the transactions
contemplated hereby, by Mergerco will result in (i) a violation of or a conflict
with any provision of the certificate of incorporation or by-laws of Mergerco,
(ii) a breach of, or a default under, or the creation of any right of any party
to accelerate, terminate or cancel pursuant to (including, without limitation,
by reason of the failure to obtain a consent or approval under any such
contract), any term or provision of any contract, indenture, lease, encumbrance,
permit, or authorization or concession to which Mergerco is a party or by which
any of its assets are bound, which breach, default or creation of any such right
would reasonably be expected to have a material adverse effect on Mergerco.
Section 5.5 Proxy Statement; Schedule 13E-3. The information concerning
Mergerco and its officers, directors, employees and shareholders supplied by and
relating to Mergerco for inclusion in the Proxy Statement and the Schedule 13E-3
will not contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading. Mergerco makes no representation or warranty with respect to any
information supplied by the Company or any of its representatives that is
contained in the Proxy Statement or in the Schedule 13E-3.
Section 5.6 Mergerco's Operations. Mergerco has not engaged in any
business activities or conducted any operations other than in connection with
the transactions contemplated hereby.
15
Section 5.7 No Brokerage. None of Mergerco or any of its officers,
directors, employees, stockholders or Affiliates has employed or made any
agreement with any broker, finder or similar agent or any person or entity to
pay any finder's fee, brokerage commission or similar payment in connection with
the transaction contemplated by this Agreement.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF AREH
As an inducement to the Company to enter into this Agreement, AREH
hereby makes the following representations and warranties as of the date hereof
to the Company:
Section 6.1 Organization. AREH is duly formed, validly existing and in
good standing under the laws of the State of Delaware and has the partnership
power and authority to conduct its business as it is presently being conducted
and to own, lease and operate its properties. AREH has delivered to the Company
true, correct and complete copies of its limited partnership agreement (as
amended to date). AREH is not in violation of any provision of its limited
partnership agreement.
Section 6.2 No Conflict or Violation. Neither the execution, delivery and
performance of this Agreement, nor the consummation contemplated hereby, by AREH
will result in a violation of or a conflict with any provision of its limited
partnership agreement.
Section 6.3 Authorization. AREH has all necessary partnership power and
authority to, and has taken all partnership action necessary on its part to,
execute and deliver this Agreement and all agreements and documents contemplated
hereby and to consummate the transactions contemplated hereby. This Agreement
has been duly authorized, executed and delivered by AREH and is a legal, valid
and binding obligation of AREH, enforceable against it in accordance with its
terms, except as the enforceability thereof may be limited by (i) applicable
bankruptcy, insolvency, moratorium, reorganization, fraudulent conveyance or
similar laws in effect that affect the enforcement of creditors' rights
generally or (ii) general principles of equity, whether considered in a
proceeding at law or in equity.
16
Section 6.4 Consents and Approvals. No consent, waiver, agreement,
approval, permit or authorization of, or declaration, filing, notice or
registration to or with, any federal, state, local or foreign governmental or
regulatory authority or body or other person or entity is required to be made or
obtained by AREH in connection with the execution, delivery and performance of
this Agreement and the consummation of the transactions contemplated hereby
other than any Regulatory Filings, State Filings and the filing of the Merger
Certificate under the DGCL.
Section 6.5. Proxy Statement; Schedule 13E-3. The information concerning
AREH and its general partner and its respective officers, directors, employees
and shareholders supplied by and relating to AREH for inclusion in the Proxy
Statement and the Schedule 13E-3 will not contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. AREH makes no
representation or warranty with respect to any information supplied by the
Company or any of its representatives that is contained in the Proxy Statement
or in the Schedule 13E-3.
Section 6.6 Absence of Certain Changes or Events. Since December 31,
2000, other than as stated in the Form10-Qs filed by American Real Estate
Partners, L.P. for the periods ending March 31, 2001, June 30, 2001 and
September 30, 2001, and the Form 8-K filed by American Real Estate Partners,
L.P. on December 27, 2001, (i) AREH has been operated in the ordinary course of
business, consistent with past practice, and (ii) there has been no Material
Adverse Change.
ARTICLE VII
REPRESENTATIONS, WARRANTIES AND
ADDITIONAL AGREEMENTS OF NYBOR
As an inducement to the Company to enter into this Agreement, Nybor
hereby makes the following representations and warranties as of the date hereof
to the Company:
Section 7.1 Organization. Nybor is duly formed, validly existing and in
good standing under the laws of the State of Delaware and has the partnership
power and authority to conduct its business as it is
17
presently being conducted. Nybor has delivered to the Company true, correct and
complete copies of its limited partnership agreement (as amended to date). Nybor
is not in violation of any provision of its limited partnership agreement.
Section 7.2 No Conflict or Violation. Neither the execution, delivery
and performance of this Agreement, nor the consummation contemplated hereby, by
Nybor will result in a violation of or a conflict with any provision of its
limited partnership agreement.
Section 7.3 Authorization. Nybor has all necessary partnership power
and authority to, and has taken all partnership action necessary on its part to,
execute and deliver this Agreement and all agreements and documents contemplated
hereby and to consummate the transactions contemplated hereby. This Agreement
has been duly authorized, executed and delivered by Nybor and is a legal, valid
and binding obligation of Nybor, enforceable against it in accordance with its
terms, except as the enforceability thereof may be limited by (i) applicable
bankruptcy, insolvency, moratorium, reorganization, fraudulent conveyance or
similar laws in effect that affect the enforcement of creditors' rights
generally or (ii) general principles of equity, whether considered in a
proceeding at law or in equity.
Section 7.4 Consents and Approvals. No consent, waiver, agreement,
approval, permit or authorization of, or declaration, filing, notice or
registration to or with, any federal, state, local or foreign governmental or
regulatory authority or body or other person or entity is required to be made or
obtained by Nybor in connection with the execution, delivery and performance of
this Agreement and the consummation of the transactions contemplated hereby
other than any Regulatory Filings, State Filings and the filing of the Merger
Certificate under the DGCL.
Section 7.5 No Conflict or Violation. Neither the execution, delivery
and performance of this Agreement, nor the consummation contemplated hereby, by
Nybor will result in a violation of or a conflict with any provision of its
limited partnership agreement.
Section 7.6 Company Common Stock. As of the date of this Agreement,
Nybor holds 783,320 shares of Company Common Stock. Nybor agrees to accept
payment of the Nybor Consideration notwithstanding the fact that it is an amount
less than the Consideration.
18
Section 7.7 Proxy Statement; Schedule 13E-3. The information concerning
Nybor and its general partner and its respective officers, directors, employees
and shareholders supplied by and relating to Nybor for inclusion in the Proxy
Statement and the Schedule 13E-3 will not contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. Nybor makes no
representation or warranty with respect to any information supplied by the
Company or any of its representatives that is contained in the Proxy Statement
or in the Schedule 13E-3 except that it has no actual knowledge (without
investigation) of a material misstatement or omission in the representations of
the Company as set forth in Article IV.
ARTICLE VIII
COVENANTS OF THE COMPANY AND MERGERCO
The Company and Mergerco covenant and agree with each other that from
the date hereof through the Closing:
Section 8.1 Maintenance of Business Prior to Closing. Prior to the
Effective Time, except as set forth in the Disclosure Schedule or as
contemplated by any other provision of this Agreement, unless Mergerco has
consented in writing thereto, such consent not to be unreasonably withheld or
delayed, the Company:
(a) except as contemplated by Section 8.3 hereof, shall conduct
its operations and business according to their usual, regular and
ordinary course consistent with past practice;
(b) shall use its reasonable efforts to preserve intact its
business organizations and goodwill, keep available the services of its
officers and key employees and maintain satisfactory relationships with
those persons having business relationships with it;
19
(c) shall promptly notify Mergerco of any Material Adverse Change;
and
(d) shall promptly deliver to Mergerco correct and complete copies
of any report, statement or schedule filed with the SEC subsequent to
the date of this Agreement.
Section 8.2 Consents and Efforts; Other Obligations.
(a) Upon the terms and subject to the conditions set forth in this
Agreement, each of the parties shall use its reasonable best efforts to
take, or cause to be taken, all actions, and to do, or cause to be
done, and to assist and cooperate with the other parties in doing, all
things necessary, proper or advisable under applicable laws and
regulations to consummate and make effective, in the most expeditious
manner practicable, the Merger and the other transactions contemplated
by this Agreement. Mergerco and the Company will use their reasonable
best efforts and cooperate with one another (i) in promptly determining
whether any filings are required to be made or consents, approvals,
waivers, licenses, permits or authorizations are required to be
obtained (or, which if not obtained, would result in a Material Adverse
Effect or an event of default, termination or acceleration of any
agreement or any put right under any agreement) under any applicable
law or regulation or from any governmental authorities or third
parties, including parties to loan agreements or other debt
instruments, in connection with the transactions contemplated by this
Agreement, including the Merger, and (ii) in promptly making any such
filings, in furnishing information required in connection therewith and
in timely seeking to obtain any such consents, approvals, permits or
authorizations. For purposes of this Section 8.2, best efforts shall
not include the obligation to make any payment to any third party as a
condition to obtaining such party's consent or approval.
(b) The Company shall give prompt written notice to Mergerco if
the Company obtains actual knowledge of: (i) the occurrence, or failure
to occur, of any event which occurrence or failure would reasonably be
expected to cause any
20
representation or warranty of the Company contained in this Agreement,
if made on or as of the date of such event or as of the Effective Time,
to be untrue or inaccurate, except for changes permitted by this
Agreement and except to the extent that any representation and warranty
is made as of a specified date, in which case, such representation and
warranty shall be true, complete and accurate as of such date; or (ii)
any failure of the Company or any officer, director, employee,
consultant or agent of the Company, to comply with or satisfy any
covenant, condition or agreement to be complied with or satisfied by it
or them under this Agreement; provided, however, that no such
notification shall affect the representations or warranties of the
Company or the conditions to the obligations of Mergerco hereunder.
(c) Mergerco shall give prompt written notice to the Company if
Mergerco obtains actual knowledge of (i) the occurrence, or failure to
occur, of any event which occurrence or failure would reasonably be
expected to cause any representation or warranty of the Company
contained in this Agreement, if made on or as of the date of such event
or as of the Effective Time, to be untrue or inaccurate, except for
changes permitted by this Agreement and except to the extent that any
representation and warranty is made as of a specified date, in which
case, such representation and warranty shall be true, complete and
accurate as of such date; or (ii) any failure of the Company or any
officer, director, employee, consultant or agent of the Company, to
comply with or satisfy any covenant, condition or agreement to be
complied with or satisfied by it or them under this Agreement provided,
however, that no such notification shall affect the representations and
warranties of the Company or the conditions to the obligations of
Mergerco hereunder.
Section 8.3 Other Offers.
(a) The Company shall not (whether directly or indirectly through
advisors, agents or other intermediaries), nor shall the Company
authorize or permit any of its or its officers, directors, agents,
representatives or advisors to (i) solicit, initiate or take any action
knowingly to facilitate the submission of inquiries, proposals or
offers from any corporation, partnership, person or other entity or
group, other than Mergerco and its representatives and Affiliates,
relating to (A) any acquisition or purchase of 25% or more of the
assets, or of over 25% of any class of Equity Securities of, the
Company, (B) any tender offer (including a self tender offer) or
exchange offer that if consummated would result in any person
beneficially owning 25% or more of any class of Equity Securities of
the Company, or (C) any merger, consolidation, recapitalization, sale
of all or
21
substantially all of the assets, liquidation, dissolution or similar
transaction involving the Company (each such transaction being referred
to herein as an "Acquisition Proposal"), or agree to or endorse any
Acquisition Proposal, (ii) enter into or participate in any discussions
or negotiations regarding any of the foregoing, or otherwise cooperate
in any way with, or knowingly assist or participate in, facilitate or
encourage, any effort or attempt by any other person (other than
Mergerco and its representatives and Affiliates) to do or seek any of
the foregoing, or (iii) grant any waiver or release under any
standstill or similar agreement with respect to any Equity Securities
of the Company; provided, however, that the foregoing shall not
prohibit the Independent Director or the Board (acting through the
Independent Director) (either directly or indirectly through advisors,
agents or other intermediaries) from (u) issuing one more press
releases regarding the Merger in compliance with Section 12.12 (v)
furnishing information in writing or orally (through the Company's
employees and advisors) pursuant to a customary confidentiality letter
(a copy of which shall be provided for informational purposes only to
Mergerco) concerning the Company and its businesses, properties or
Assets to any person, corporation, entity or "group," as defined in
Section 13(d) of the Exchange Act, other than Mergerco (a "Third
Party") in response to any unsolicited inquiry, proposal or offer, (w)
engaging in discussions or negotiations with such a Third Party that
has made such inquiry, proposal or offer, following receipt of a bona
fide Acquisition Proposal (excluding Acquisition Proposals (1) where
financing is required to consummate the transaction and the financing
is not committed or not likely in the judgment of the Independent
Director to be obtained by such Third Party on a timely basis or (2)
that are not on terms the Independent Director or the Board, in its
reasonable judgment (after consultation with its financial advisor and
after taking into account all aspects of the proposal and the Third
Party making the proposal and any proposed changes to this Agreement
that may be proposed by Mergerco in response to such Acquisition
Proposal) determines to be more favorable to stockholders of the
Company from a financial point of view), (x) taking and disclosing to
its stockholders a position contemplated by Rules 14d-9 and 14e-2(a)
under the Exchange Act or otherwise making disclosure to its
stockholders, (y) following receipt of a bona fide Acquisition
Proposal, failing to make or withdrawing or modifying its
recommendation referred to in Section 4.6 hereof, and/or (z)
terminating this Agreement but in each case referred to in the
foregoing clauses (u) through (z), only to the extent that the
Independent Director shall have concluded in good faith upon the advice
of legal counsel that such action is consistent with the Independent
Director's (and the Board's) fiduciary duties to the stockholders of
the Company under applicable law. The Company shall immediately cease
and cause its advisors, agents and other intermediaries to cease any
and all existing activities, discussions or negotiations with any
parties conducted prior to the date hereof with respect to any of the
foregoing.
22
(b) If a Payment Event (as hereinafter defined) occurs, the
Company shall pay to Mergerco, AREH and Nybor, within three business
days following such event, the reasonable out-of-pocket expenses
incurred by Mergerco, AREH and Nybor, in connection with or relating to
this Agreement and the Merger, which shall include reasonable fees and
expenses of legal counsel, accountants and a financial advisor to
Mergerco, AREH and Nybor, up to a maximum reimbursement amount of
$500,000. "Payment Event" means the termination of this Agreement
pursuant to Section 12.1(a)(iv) or (v).
(c) The Independent Director shall (i) promptly notify Mergerco
(in writing) if any offer is made, any discussions or negotiations are
sought to be initiated, any inquiry, proposal or contact is made or any
information is requested with respect to any Acquisition Proposal, (ii)
promptly notify Mergerco of the terms of any proposal that it may
receive in respect of any such Acquisition Proposal, including, without
limitation, the identity of the prospective purchaser or soliciting
party, (iii) promptly provide Mergerco with a copy of any such offer,
if written, or a written summary (in reasonable detail) of such offer,
if not in writing, and (iv) keep Mergerco reasonably informed of the
status of such offer and the offeror's efforts and activities with
respect thereto.
(d) This Section 8.3 shall survive any termination of this
Agreement, however caused other than termination due to material breach
by Mergerco or AREH.
Section 8.4 Meeting of Stockholders. Except as set forth in Section 8.3
hereof, (i) the Company acting through the Board shall take all action necessary
in accordance with applicable law and its certificate of incorporation and
by-laws, including the timely mailing of the Proxy Statement, to convene the
Special Meeting as promptly as practicable after SEC clearance of the Proxy
Statement to consider and vote upon the approval of this Agreement and the
transactions contemplated hereby, and (ii) the Board, based on the
recommendation of the Independent Director, shall recommend such approval and
shall take all lawful action to solicit such approval.
Section 8.5 Proxy Statement.
23
(a) Mergerco and the Company shall cooperate and prepare, and, as
soon as practicable after the date of this Agreement, the Company shall
file with the SEC, a proxy statement with respect to the Special
Meeting (the "Proxy Statement"), respond to comments of the staff of
the SEC, clear the Proxy Statement with the staff of the SEC and
promptly thereafter mail the Proxy Statement to all holders of record
of Company Common Stock. The Company shall comply in all respects with
the requirements of the Exchange Act and the rules and regulations of
the SEC thereunder applicable to the Proxy Statement and the
solicitation of proxies for the Special Meeting (including any
requirement to amend or supplement the Proxy Statement) and each party
shall furnish to the other such information relating to it and the
transactions contemplated by this Agreement and such further and
supplemental information as may be reasonably requested by the other
party. The Proxy Statement shall include the recommendation of the
Board in favor of the Merger, except as otherwise provided herein. The
Company shall use all reasonable efforts, and Mergerco will cooperate
with the Company, to have all necessary state securities law or "Blue
Sky" permits or approvals required to carry out the transactions
contemplated by this Agreement and will pay all expenses incident
thereto.
(b) The information provided by each of the Company and Mergerco
for use in the Proxy Statement shall not, as of (i) the time of the
Proxy Statement (or any amendment thereof or supplement thereto) is
first mailed to the Stockholders or (ii) the time of the Special
Meeting contemplated by such Proxy Statement, contain any untrue
statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the
statements therein not misleading. If at any time prior to the
Effective Time any event or circumstance relating to any party hereto,
or its respective officers or directors, should be discovered by such
party that should be set forth in an amendment or a supplement to the
Proxy Statement, such party shall promptly inform the Company and
Mergerco thereof and take appropriate action in respect thereof.
(c) No amendment or supplement to the Proxy Statement shall be
made by Mergerco or the Company without prior approval of the other
party. The Company shall promptly advise Mergerco of any request by the
SEC for amendment of the Proxy Statement or comments thereon and
responses thereto or requests by the SEC for additional information.
24
Section 8.6 Schedule 13E-3.
(a) As soon as practicable after the date of this Agreement,
Mergerco, AREH and their respective relevant Affiliates and the Company
shall file with the SEC a Rule 13E-3 Transaction Statement on Schedule
13E-3 ("Schedule 13E-3"), with respect to the Merger. Mergerco and the
Company shall cooperate and provide each other with such information as
any of such parties may reasonably request in connection with the
preparation of the Schedule 13E-3. The information provided by each of
the Company and Mergerco for use in the Schedule 13E-3 shall not, as of
time the Schedule 13E-3 is filed with the SEC, contain any untrue
statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the
statements therein not misleading. Each party hereto agrees promptly to
supplement, update and correct any information provided by it for use
in the Schedule 13E-3 if and to the extent that it is or shall have
become incomplete, false or misleading.
(b) No amendment or supplement to the Schedule 13E-3 shall be made
by Mergerco or the Company without notice to the other party. Mergerco
shall promptly advise the Company of any request by the SEC for
amendment of the Schedule 13E-3 or comments thereon and responses
thereto or requests by the SEC for additional information.
Section 8.7 Director and Officer Liability.
(a) From and after the consummation of the Merger, the parties
shall, and shall cause the Surviving Corporation to, indemnify, defend
and hold harmless any person who is now, or has been at any time prior
to the date hereof, or who becomes prior to the Effective Time, an
officer or director (the "Indemnified Party") of the Company against
all losses, claims, damages, liabilities, costs and expenses (including
attorney's fees and expenses), judgments, fines, losses, and amounts
paid in settlement, with the written approval of the Surviving
Corporation(which approval shall not be unreasonably withheld), in
connection with any actual or threatened action, suit, claim,
proceeding or investigation (each a "Claim") to the extent that any
such Claim is based on, or arises out of, (i) the fact that such person
is or was a director, officer, employee or agent of the Company or is
or was serving at the request of the Company as a director, officer,
25
employee or agent of another corporation, partnership, joint venture,
trust or other enterprise, or (ii) this Agreement, or any of the
transactions contemplated hereby, in each case to the extent that any
such Claim pertains to any matter or fact arising, existing, or
occurring prior to the Effective Time, regardless of whether such Claim
is asserted or claimed prior to, at or after the Effective Time, to the
full extent permitted under the DGCL or the Company's Certificate of
Incorporation, by-laws or indemnification agreements from time to time
in effect, including provisions relating to advancement of expenses
incurred in the defense of any action or suit. Without limiting the
foregoing, in the event any Indemnified Party becomes involved in any
capacity in any Claim, then from and after consummation of the Merger,
the parties shall cause the Surviving Corporation to periodically
advance to such Indemnified Party its legal and other expenses
(including the cost of any investigation and preparation incurred in
connection therewith), subject to the provision by such Indemnified
Party of an undertaking to reimburse the amounts so advanced in the
event of a final non-appealable determination by a court of competent
jurisdiction that such Indemnified Party is not entitled thereto.
(b) All rights to indemnification and all limitations on liability
existing in favor of the Indemnified Party as provided in the Company's
Certificate of Incorporation and by-laws as in effect as of the date
hereof shall survive the Merger and shall continue in full force and
effect, without any amendment thereto, for a period of six years from
the Effective Time to the extent such rights are consistent with the
DGCL; provided that in the event any claim or claims are asserted or
made within such six year period, all rights to indemnification in
respect of any such claim or claims shall continue until disposition of
any and all such claims; provided further, that any determination
required to be made with respect to whether an Indemnified Party's
conduct complies with the standards set forth under the DGCL, the
Company's Certificate of Incorporation or by-laws or such agreements,
as the case may be, shall be made by independent legal counsel selected
by the Surviving Corporation and reasonably acceptable to the
Indemnified Party; and provided further, that nothing in this Section
8.7 shall impair any rights or obligations of any present or former
directors or officers of the Company.
(c) In the event the Surviving Corporation or any of its
successors or assigns (i) consolidates with or merges into any other
person and shall not be the continuing or surviving corporation or
entity of such consolidation or merger, or (ii) transfers or conveys
all or substantially all of its properties and assets to any
26
person, then and in each case, to the extent necessary to effectuate
the purposes of this Section 8.7, proper provision shall be made so
that the successors and assigns of the Surviving Corporation assume the
obligations set forth in this Section 8.7.
(d) For a period of six years after the Effective Time, the
parties shall cause the Surviving Corporation to maintain in effect the
current policies of directors' and officers' liability insurance
maintained by the Company (or policies of at least the same coverage
and amounts containing terms and conditions which are no less
advantageous, which policies may include a "tail policy") with respect
to claims arising from facts or events which occurred before or at the
Effective Time; provided, however, that the Surviving Corporation shall
not be obligated to make annual premium payments for such insurance to
the extent that such premiums exceed an amount equal to 200% of the
annual premiums paid as of the date hereof by the Company for such
insurance and if such premiums exceed such amount the Surviving
Corporation shall purchase insurance policies in amounts and with
coverage as reasonably can be purchased for such amount.
(e) The provisions of this Section 8.7 are intended to be for the
benefit of, and shall be enforceable by, each Indemnified Party and his
or her heirs and representatives and shall be binding on the Surviving
Corporation and its respective successors and assigns.
Section 8.8 Notices of Certain Events. The Company shall promptly
notify Mergerco of:
(a) any notice or other communication from any person alleging
that the consent of such person is or may be required in connection with the
transactions contemplated by this Agreement;
(b) any notice or other communication from any governmental or
regulatory agency or authority in connection with the transactions contemplated
by this Agreement; and
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(c) any actions, suits or proceedings commenced or, to the best of
its knowledge threatened against, relating to or involving or otherwise
affecting the Company that would reasonably be anticipated to have a
Material Adverse Effect or that relate to the consummation of the
transactions contemplated by this Agreement.
Section 8.9 Further Assurances. At and after the Effective Time, the
officers and directors of the Surviving Corporation are authorized to execute
and deliver, in the name and on behalf of the Company, any deeds, bills of sale,
assignments or assurances and to take and do, in the name and on behalf of the
Company or Mergerco, any other actions and things to vest, perfect or confirm of
record or otherwise in the Surviving Corporation any and all right, title and
interest in, to and under any of the rights, properties or assets of the Company
acquired or to be acquired by the Surviving Corporation as a result of, or in
connection with, the Merger.
Section 8.10 Voting. Mergerco and its Affiliates, as applicable, will
vote any shares of Company Common Stock held by them, or that they have the
right to vote, in favor of approval of the Merger, in person, or by proxy;
provided, however, that in the event the Independent Director recommends to the
Board that the Board withdraw its recommendation of the Merger, the provisions
of this Section 8.10 shall thereafter be null and void.
ARTICLE IX
COVENANTS OF AREH
AREH covenants and agrees from the date hereof through the Closing:
Section 9.1 Compliance of Mergerco. AREH will take all action as may be
necessary to cause Mergerco to satisfy its covenants as set forth in Article
VIII.
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Section 9.2 Schedule 13E-3. AREH will satisfy its obligations as set
forth in Section 8.6.
Section 9.3 Financing. AREH will provide the funds to Mergerco
necessary to enable Mergerco and the Surviving Corporation to pay the Merger
Consideration and any amounts due to holders of Dissenting Shares under Section
262 of the DGCL set forth herein, and all of the fees and expenses related to
the Merger. AREH will maintain adequate capital to satisfy such obligation.
ARTICLE X
COVENANTS OF NYBOR
Nybor covenants and agrees from the date hereof through the Closing:
Section 10.1 Disposal of Nybor Shares. Nybor will not dispose of any
of the Nybor Shares prior to Closing.
Section 10.2 Voting. Nybor agrees to vote the Nybor Shares in favor of
the Merger.
ARTICLE XI CONDITIONS TO THE MERGER
Section 11.1 Conditions to the Obligations of Each Party. The
obligations of the Company and Mergerco to consummate the transactions
contemplated hereby on the Closing Date are subject to the satisfaction, on
or prior to the Closing Date, of each of the following conditions:
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(a) The Requisite Stockholder Vote shall have been obtained; and
(b) No provision of any applicable law or regulation and no
judgment, order, decree, temporary restraining order or preliminary or
permanent injunction prohibiting or restraining the consummation of the
Merger shall be in effect; provided, however, that the Company and
Mergerco shall each use reasonable efforts to have any such judgment,
order, decree or injunction vacated.
(c) The Company shall have received approvals from any State
Filings and any other government approvals or filings listed on Section
4.5 of the Disclosure Schedule to the extent required to be obtained
prior to Closing.
(d) The Company shall have received the consents from the parties
to the agreements listed in Section 4.4 of the Disclosure Schedule or
shall have otherwise satisfied the requirements of such agreements.
Section 11.2 Conditions to the Obligations of the Company. The
obligation of the Company to consummate the transactions contemplated hereby on
the Closing Date is subject, in the sole discretion of the Company, to the
satisfaction on or prior to the Closing Date of the following conditions, which
may be waived by the Company in accordance with Section 12.4;
(a) Representations, Warranties and Covenants.
(i) All representations and warranties of
Mergerco contained in this Agreement shall be true and correct
in all material respects at and as of the Closing Date, as if
such representations and warranties were made at and as of the
Closing Date, except (i) for any changes specifically
permitted by this Agreement and (ii) to the extent that any
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such representations and warranties were made as of a
specified date, which representations and warranties shall
continue on the Closing Date to be true in all material
respects as of such specified date.
(ii) Mergerco shall have performed in all material respects
all obligations arising under the agreements and covenants
required hereby to be performed by it prior to or on the
Closing Date, unless such failure to perform is due to any
material act by, or material omission of, the Company.
(iii) The Company shall have received on or prior to Closing,
(A) a certificate executed by the President of Mergerco
certifying that, as of the Closing Date, the conditions set
forth in Section 11.2(a)(i) and (ii) have been satisfied, and
(B) certified resolutions duly adopted by the Board of
Directors of Mergerco approving this Agreement, determining
the Agreement and the Merger are advisable, fair to and in the
best interest of Mergerco and its stockholders, and approving
all other necessary corporate action to enable Mergerco to
comply with the terms of this Agreement.
(b) Fairness Opinion. The Fairness Opinion shall not have been withdrawn,
revoked or annulled or adversely modified in any material respect.
Section 11.3......Conditions to the Obligations of Mergerco. The obligation of
Mergerco to consummate the transactions contemplated hereby on the Closing Date
is subject, in the sole discretion of Mergerco, to the satisfaction on or prior
to the Closing Date of each of the following conditions, any of which may be
waived by Mergerco in accordance with Section 12.4:
(a) Representations, Warranties and Covenants.
(i) All representations and warranties of the Company
contained in this Agreement shall be true and correct in all
material respects at and as of the Closing Date as if such
representations and warranties were made at and as of the
Closing Date, except (i) for any
31
changes specifically permitted by this Agreement and (ii) to
the extent that any such representations and warranties were
made as of a specified date, which representations and
warranties shall continue on the Closing Date to be true in
all material respects as of such specified date.
(ii) The Company shall have performed in all material
respects all obligations arising under the agreements and
covenants required hereby to be performed by it prior to or on
the Closing Date, unless such failure to perform is due to any
material act by, or material omission of, Mergerco.
(iii) Mergerco shall have received, at or prior to the
Closing, (A) a certificate executed by the Chief Financial
Officer of the Company certifying that, as of the Closing
Date, the conditions set forth in Sections 11.3(a)(i) and
(ii), and (d) have been satisfied; and (B) certified
resolutions duly adopted by the Board approving this
Agreement, determining the Agreement and the Merger are
advisable, fair to and in the best interest of the Company and
its stockholders, including the Stockholders, and approving
all other necessary corporate action to enable the Company to
comply with the terms of this Agreement.
(b) Dissenting Shares. The total number of Dissenting Shares shall not
exceed 5% of the outstanding shares of Company Common Stock at the
Effective Time.
(c) The Company shall have received on or prior to Closing a legal
opinion in a form and substance reasonably satisfactory to Mergerco
from Schreck Brignone Godfrey, gaming counsel to the Company, to the
effect set forth on Exhibit A attached hereto.
ARTICLE XII
MISCELLANEOUS
Section 12.1 Termination.
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(a) Termination. This Agreement may be terminated prior to the
Effective Time as follows (notwithstanding any approval of the Merger
by the stockholders of the Company):
(i) by mutual written consent of Mergerco and the Company
(acting through the Independent Director) at any time;
(ii) by Mergerco or the Company if the Closing shall not have
occurred on or before December 31, 2002, provided that the
party seeking to exercise such right is not then in breach of
any of its material obligations under this Agreement;
(iii) by either the Company or Mergerco if there shall be any
law or regulation that makes consummation of the Merger
illegal or otherwise prohibited or if any judgment,
injunction, order or decree enjoining Mergerco or the Company
from consummating the Merger is entered and such judgment,
injunction, order or decree shall become final and
non-appealable;
(iv) by Mergerco if the Board (acting through the
Independent Director) shall have (A) withdrawn or modified or
amended, in a manner adverse to Mergerco, its approval or
recommendation of this Agreement and the Merger or its
recommendation that Stockholders adopt and approve this
Agreement and the Merger, (B) approved, recommended or
endorsed an Acquisition Proposal (including a tender or
exchange offer for Company Common Stock), (C) failed to call
the Special Meeting or failed as promptly as practicable to
mail the Proxy Statement to the Stockholders or failed to
include in such statement the recommendation referred to
above, or (D) resolved to do any of the foregoing;
33
(v) by the Independent Director or the Board (acting through the
Independent Director) as provided in Section 8.3;
(vi) by either the Company or Mergerco if, at a duly held
stockholders meeting of the Company (including the Special
Meeting) or any adjournment thereof at which this Agreement
and the Merger is voted upon, the Requisite Stockholder Vote
shall not have been obtained; or
(vii) by Mergerco if the appraisal requests exceed the percentage
in Section 11.3(b).
The party desiring to terminate this Agreement pursuant to Sections
12.1(a)(ii)-(vii) shall give written notice of such termination to the other
party in accordance with Section 12.3.
(b) Effect of Termination. If this Agreement is terminated pursuant
to Section 12.1, this Agreement shall become void and of no effect with
no liability on the part of an party hereto or such party's officers,
directors, employees or representatives, except (i) that the agreements
contained in Sections 8.3, 12.8 and 12.13 hereof shall survive the
termination hereof and (ii) nothing herein shall relieve any party from
liability for any breach of this Agreement.
(c) Procedure Upon Termination. In the event of termination of this
Agreement pursuant to Section 12.1, each party shall redeliver all
documents, work papers and other material of any other party and any
and all copies thereof relating to the transactions contemplated
hereby, whether obtained before or after the execution hereof, to the
party furnishing the same.
Section 12.2 Assignment. Neither this Agreement nor any of the rights
or obligations hereunder may be assigned, in whole or in part, by operation of
law or otherwise by any party without the prior written consent of the other
party to this Agreement. Subject to the foregoing, this Agreement shall be
binding upon and inure to the benefit of the parties hereto and their
34
respective successors and assigns, and, with respect to the provisions of
Section 8.7 hereof, shall inure to the benefit of the persons or entities
benefiting from the provisions thereof who are intended to be third- party
beneficiaries thereof, and no other person shall have any right, benefit or
obligation hereunder.
Section 12.3 Notices. All notices, requests, demands and other
communications that are required or may be given under this Agreement shall be
in writing and shall be deemed to have been duly given when received, if
personally delivered; the day after it is sent, if sent for next day delivery to
a domestic address by recognized overnight delivery service (e.g., Federal
Express); and upon receipt, if sent by certified or registered mail, return
receipt requested. In each case notice shall be sent to:
(a) If to the Company, addressed to:
Stratosphere Corporation
2000 Las Vegas Blvd. South
Las Vegas, Nevada 89104
Attn: William Bischoff
With copies to:
The Independent Director of the Board of Directors
of Stratosphere Corporation.
c/o Jerome Becker, Esq.
1675 York Avenue, #34K
New York, New York 10128
and
O'Melveny & Myers LLP
Citicorp Center
153 East 53rd Street
New York, New York 10022
Attention: Charles F. Niemeth, Esq.
(b) If to AREH, address to:
American Real Estate Holdings Limited Partnership
100 South Bedford Road
Mt. Kisco, New York 10549
Attn: John Saldarelli
35
With a copy to:
American Real Estate Holdings Limited Partnership
100 South Bedford Road
Mt. Kisco, New York 10549
Attn: Felecia Buebel Esq.
(c) If to Nybor, addressed to:
Nybor Limited Partnership
c/o Icahn & Co., Inc.
One Wall Street Court, Suite 980
New York, New York 10005
With a copy to:
Marc Weitzen, Esq.
General Counsel
Icahn Associates Corp.
767 Fifth Avenue, 47th floor
New York, New York 10153
(d) If to Mergerco, addressed to:
Strat Merger Corp.
c/o American Real Estate Holdings Limited Partnership
100 South Bedford Road
Mt. Kisco, New York 10549
Attn: John Saldarelli
Marc Weitzen, Esq.
General Counsel
Icahn Associates Corp.
767 Fifth Avenue, 47th floor
New York, New York 10153
or to such other place and with such other copies as either party may
designate as to itself by written notice to the others pursuant to this
Section 12.3.
Section 12.4 Entire Agreement; Waivers. This Agreement, together with
all exhibits and schedules hereto (including, without limitation, the Disclosure
Schedule), and the other agreements referred to herein, constitute the entire
agreement among the parties pertaining to the subject matter hereof
36
and supersedes all prior agreements, understandings, negotiations and
discussions, whether oral or written, of the parties. No waiver of any of the
provisions of this Agreement shall be deemed or shall constitute a waiver of any
other provision hereof (whether or not similar), nor shall such waiver
constitute a continuing waiver unless otherwise expressly provided.
Section 12.5 Multiple Counterparts. This Agreement may be executed in
one or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
Section 12.6 Invalidity. In the event that any one or more of the
provisions contained in this Agreement or in any other instrument referred to
herein, shall, for any reason, be held to be invalid, illegal or unenforceable
in any respect, then to the maximum extent permitted by law, such invalidity,
illegality or unenforceability shall not affect any other provision of this
Agreement or any other such instrument.
Section 12.7 Titles. The titles, captions or headings of the Articles
and Sections herein are inserted for convenience of reference only and are not
intended to be a part of or to affect the meaning or interpretation of this
Agreement.
Section 12.8 Fees and Expenses. Except as provided in Section 8.3
hereof, all costs and expenses incurred in connection with this Agreement and
the transactions contemplated hereby shall be paid by the party incurring such
expenses, provided that the Company shall pay all fees and expenses in
connection with the printing and mailing of the Proxy Statement, including the
disclosure statement required by Rule 13E-3 under the Exchange Act included
therein.
Section 12.9 Cumulative Remedies. All rights and remedies of either
party hereto are cumulative of each other and of every other right or remedy
such party may otherwise have at law or in equity, and the exercise of one or
more rights or remedies shall not prejudice or impair the concurrent or
subsequent exercise of other rights or remedies.
Section 12.10 Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY,
AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF DELAWARE,
37
REGARDLESS OF THE LAWS THAT MIGHT OTHERWISE GOVERN UNDER APPLICABLE PRINCIPLES
OF CONFLICTS OF LAWS.
Section 12.11 Amendment. This Agreement may be amended by the parties
hereto at any time before or after approval of matters presented in connection
with the Merger by the Stockholders, but after any such Stockholder approval, no
amendment shall be made that by law requires the further approval of
Stockholders without obtaining such further approval; provided that any
amendment of this Agreement shall have been approved by the Independent Director
on behalf of the Company. This Agreement may not be amended except by an
instrument in writing signed on behalf of each of the parties hereto.
Section 12.12 Public Announcements. None of Mergerco, AREH and the
Company (as shall be approved by the Independent Director acting for the
Company) will issue any press release or public statement with respect to the
transactions contemplated by this Agreement, including the Merger, without the
other parties' prior consent (such consent not to be unreasonably withheld),
except (i) as may be required by applicable law or court process and (ii) upon
the execution of this Agreement and notwithstanding Section 12.3 hereof, the
Company (as approved by the Independent Director on its behalf) may issue a
public announcement in substantially the form approved by Mergerco or its
counsel prior to such execution. In addition to the foregoing, Mergerco, AREH
and the Company will consult with each other before issuing, and provide each
other the opportunity to review and comment upon, any such press release or
other public statements with respect to such transactions. The initial press
release or releases to be issued with respect to the transactions contemplated
by this Agreement shall be mutually agreed upon prior to the issuance thereof.
Section 12.13 Enforcement of Agreement. The parties hereto agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with its 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 hereof, this being in addition to
any other remedy to which they are entitled at law or in equity.
Section 12.14 Non-survival of Representations and Warranties. The
representations and warranties in this Agreement or in any instrument delivered
pursuant to this Agreement shall terminate at the Effective Time.
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Section 12.15 Interpretive Provisions.
(a) The words "hereof," "herein," "hereby" and "hereunder" and
words of similar import refer to this Agreement as a whole and, unless
otherwise specified herein, not to any particular Article, Section or
other subdivision hereof.
Accounting terms used but not otherwise defined herein shall
have the meanings given to such terms under GAAP.
(Signature Page Follows)
39
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed on their respective behalf, by their respective representative or
officer thereunto duly authorized, all as of the day and year first above
written.
STRATOSPHERE CORPORATION
By: /s/ William F. Bischoff
Name: William F. Bischoff
Title: Chief Financial Officer
AMERICAN REAL ESTATE HOLDINGS LIMITED PARTNERSHIP
By: AMERICAN PROPERTY INVESTORS, INC., its general
partner
By: /s/ Martin Hirsch
Name: Martin Hirsch
Title: Executive Vice President
NYBOR LIMITED PARTNERSHIP
By: BARBERRY CORP.,
its general partner
By: /s/ Edward E. Mattner
Name: Edward E. Mattner
Title: Authorized Signatory
STRAT MERGER CORP.
By: /s/ John P. Saldarelli
Name: John P. Saldarelli
Title: President
[Signature Page to Agreement and Plan of Merger for Stratosphere Going Private]
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EXHIBIT A
FORM OF LEGAL OPINION OF GAMING COUNSEL TO COMPANY
41