Execution Copy
AGREEMENT AND PLAN OF MERGER
Dated as of March 10, 1999
Among
INTERNATIONAL GAME TECHNOLOGY,
SAC, INC.
And
SODAK GAMING, INC.
TABLE OF CONTENTS
Page
ARTICLE I
THE MERGER
SECTION 1.1 The Merger 1
SECTION 1.2 Closing 2
SECTION 1.3 Effective Time 2
SECTION 1.4 Effects of the Merger 2
SECTION 1.5 Articles of Incorporation and By-laws 2
SECTION 1.6 Directors 2
SECTION 1.7 Officers 2
SECTION 1.8 Additional Actions 2
ARTICLE II
EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE CONSTITUENT
CORPORATIONS; EXCHANGE OF CERTIFICATES
SECTION 2.1 Effect on Capital Stock 3
SECTION 2.2 Exchange of Certificates 4
SECTION 2.3 No Liability 5
SECTION 2.4 Dissenters' Rights 5
ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION 3.1 Representations and Warranties of the Company 6
SECTION 3.2 Representations and Warranties of Parent
and Sub 18
ARTICLE IV
COVENANTS RELATING TO CONDUCT OF BUSINESS
SECTION 4.1 Conduct of Business 21
SECTION 4.2 No Inconsistent Activities 24
ARTICLE V
ADDITIONAL AGREEMENTS
SECTION 5.1 Preparation of the Proxy Statement;
Stockholders' Meeting 25
SECTION 5.2 Access to Information; Confidentiality 25
SECTION 5.3 Reasonable Efforts; Notification 26
SECTION 5.4 Gaming Approvals 27
SECTION 5.5 Stock Options; Employee Benefits 30
SECTION 5.6 Takeover Statutes; Inconsistent Actions 32
SECTION 5.7 Indemnification, Exculpation and Insurance 32
SECTION 5.8 Letters of Accountants 34
SECTION 5.9 Fees and Expenses 34
SECTION 5.10 Public Announcements 34
ARTICLE VI
CONDITIONS PRECEDENT
SECTION 6.1 Conditions to Each Party's Obligations to Effect
the Merger 34
SECTION 6.2 Additional Conditions to Obligations of Parent and
Sub 35
SECTION 6.3 Additional Conditions to Obligations of the
Company 36
ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER
SECTION 7.1 Termination 37
SECTION 7.2 Effect of Termination 38
SECTION 7.3 Amendment 38
SECTION 7.4 Extension; Waiver 39
SECTION 7.5 Termination Fee 39
SECTION 7.6 Procedure for Termination, Amendment, Extension
or Waiver 40
ARTICLE VIII
GENERAL PROVISIONS
SECTION 8.1 Nonsurvival of Representations and Warranties 40
SECTION 8.2 Notices 40
SECTION 8.3 Definitions 41
SECTION 8.4 Interpretation 42
SECTION 8.5 Counterparts 42
SECTION 8.6 Entire Agreement; No Third-Party Beneficiaries 42
SECTION 8.7 Governing Law 42
SECTION 8.8 Assignment 42
SECTION 8.9 Enforcement 42
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of March 10, 1999,
among International Game Technology, a Nevada corporation
("Parent"), SAC, Inc., a South Dakota corporation and a direct
wholly owned subsidiary of Parent ("Sub"), and Sodak Gaming,
Inc., a South Dakota corporation (the "Company").
BACKGROUND
A. The respective Boards of Directors of Parent, Sub and
the Company have determined that it is advisable and in the best
interest of their respective stockholders for Sub to merge with
and into the Company (the "Merger") and have approved the Merger,
upon the terms and subject to the conditions set forth in this
Agreement and in accordance with the South Dakota Business
Corporation Act (the "SDBCA"), whereby each issued and
outstanding share of common stock of the Company, $.001 par value
per share (the "Company Common Stock"), other than shares to be
cancelled in accordance with Section 2.1(b), will be converted
into the right to receive $10.00 in cash (the "Merger
Consideration").
B. The Merger requires the approval of the holders of a
majority of the outstanding shares of the Company Common Stock
(the "Stockholder Approval").
C. Parent, Sub and the Company desire to make certain
representations, warranties, covenants and agreements in
connection with the Merger and also to prescribe various
conditions to the Merger.
D. Concurrently with the execution and delivery of this
Agreement and as a condition and inducement to each of Parent's
and Sub's willingness to enter into this Agreement, Xxxxxx'x
Operating Company, Inc., Xxxxxxx X. Xxxxxxxx, Xxxxxx Xxxxxx and
Xxxxxx X. Xxxxxxx, the significant stockholders of the Company
(the "Significant Stockholders"), have each entered into an
Irrevocable Proxy and Voting Agreement (collectively, the "Voting
Agreement") with Parent dated as of the date of this Agreement
substantially in the form of Exhibit A attached hereto, pursuant
to which each Significant Stockholder has agreed, among other
things, to vote all voting securities of the Company beneficially
owned by such Significant Stockholder or for which such
Significant Stockholder exercises voting power pursuant to an
irrevocable proxy in favor of approval and adoption of this
Agreement and the Merger.
AGREEMENT
In consideration of the representations, warranties,
covenants and agreements contained in this Agreement, the parties
agree as follows:
ARTICLE I
THE MERGER
SECTION 1.1 The Merger. Upon the terms and subject to the
conditions set forth in this Agreement, and in accordance with
the SDBCA, Sub shall be merged with and into the Company at the
Effective Time (as defined in Section 1.3). Following the
Merger, the separate corporate existence of Sub shall cease and
the Company shall continue as the surviving corporation (the
"Surviving Corporation") and shall succeed to and assume all the
rights and obligations of the Company and of Sub in accordance
with the SDBCA.
SECTION 1.2 Closing. The closing of the Merger will take
place at 2:00 p.m. on a date to be specified by the parties,
which shall be no later than the second business day after
satisfaction or waiver of the conditions set forth in Article VI
(the "Closing Date"), at the offices of O'Melveny & Xxxxx LLP,
Embarcadero Center West, 000 Xxxxxxx Xxxxxx, Xxx Xxxxxxxxx,
Xxxxxxxxxx, unless another time, date or place is agreed to by
the parties hereto; provided that in no event shall the Closing
Date occur on or before May 24, 1999, unless agreed to by Parent.
SECTION 1.3 Effective Time. Subject to the provisions of this
Agreement, as soon as practicable on or after the Closing Date,
the parties shall prepare, execute, acknowledge and file with the
Secretary of State of South Dakota articles of merger in such
form as is required by the relevant provisions of the SDBCA and
shall make all other filings or recordings required under the
SDBCA. The Merger shall become effective at such time as such
filing or filings are made with the Secretary of State of the
State of South Dakota, or at such other time as Sub and the
Company shall agree should be specified in such filings (the date
and time of such effectiveness, being the "Effective Time").
SECTION 1.4 Effects of the Merger. The Merger shall have the
effects set forth in 47-6-9 of the SDBCA and all other effects
specified in the applicable provisions of the SDBCA.
SECTION 1.5 Articles of Incorporation and By-laws. At the
Effective Time, the articles of incorporation and by-laws of
Surviving Corporation shall be amended to be identical to the
articles of incorporation and by-laws, respectively, of Sub as in
effect immediately prior to the Effective Time (except that the
name of the Surviving Corporation shall be changed to a name
designated by Parent).
SECTION 1.6 Directors. The directors of Sub at the Effective
Time shall continue as the directors of the Surviving
Corporation, until the earlier of their resignation or removal or
until their respective successors are duly elected and qualified,
as the case may be.
SECTION 1.7 Officers. The officers of the Company immediately
prior to the Effective Time shall be the initial officers of the
Surviving Corporation and shall hold office until the earlier of
their death, resignation or removal.
SECTION 1.8 Additional Actions. If, at any time after the
Effective Time, the Surviving Corporation shall consider or be
advised that any deeds, bills of sale, assignments, assurances or
any other actions or things are necessary or desirable to vest,
perfect or confirm of record or otherwise in the Surviving
Corporation its right, title or interest in, to or under any of
the rights, properties or assets of Sub or the Company or
otherwise to carry out this Agreement, the officers and directors
of the Surviving Corporation shall be authorized to execute and
deliver, in the name and on behalf of Sub or the Company, all
such deeds, bills of sale, assignments and assurances and to take
and do, in the name and on behalf of Sub or the Company, all such
other actions and things as may be necessary or desirable to
vest, perfect or confirm any and all right, title and interest
in, to and under such rights, properties or assets in the
Surviving Corporation or otherwise to carry out this Agreement.
ARTICLE II
EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE
CONSTITUENT CORPORATIONS; EXCHANGE OF CERTIFICATES
SECTION 2.1 Effect on Capital Stock. At the Effective Time,
by virtue of the Merger and without any action on the part of
Parent, Sub, the Company or the holders of any shares of Company
Common Stock or any shares of capital stock of Sub:
(a) Capital Stock of Sub. Each share of the capital stock of
Sub issued and outstanding immediately prior to the Effective
Time shall be converted into one (or such other number as may be
specified by Parent at any time prior to the Closing) fully paid
and nonassessable share of common stock of the Surviving
Corporation, which shall be owned by Parent.
(b) Cancellation of Treasury Stock and Parent Owned Stock. Each
share of Company Common Stock that is owned by the Company or by
any subsidiary of the Company and each share of Company Common
Stock that is owned by Parent, Sub or any other subsidiary of
Parent immediately prior to the Effective Time shall
automatically be cancelled and retired without any conversion
thereof and no consideration shall be delivered with respect
thereto.
(c) Conversion of Common Stock.
(i) At the Effective Time, each share of Company Common Stock
issued and outstanding immediately prior to the Effective Time
(other than shares of Company Common Stock (A) owned by the
Company or any subsidiary of the Company, or Parent, Sub or any
other subsidiary of Parent or (B) held by stockholders
("Dissenting Stockholders") duly exercising appraisal rights
pursuant to Sections 47-6-23 and 47-6-48 of the SDBCA
("Dissenting Shares" and, collectively with the shares of Company
Common Stock owned by the Company or any subsidiary of the
Company or Parent, Sub or any other subsidiary of Parent, the
"Excluded Shares")) shall, by virtue of the Merger and without
any action on the part of the holder thereof, be converted into
the right to receive, without interest, the Merger Consideration.
(ii) As of the Effective Time, all shares of Company Common Stock
shall no longer be outstanding and shall automatically be
cancelled and retired and shall cease to exist, and each
certificate previously representing any such shares shall
thereafter represent the right to receive cash upon surrender of
such certificates in accordance with Section 2.2 or the right, if
any, to require the Surviving Corporation to purchase such shares
of Company Common Stock for their "fair value" as determined in
accordance with Section 47-6-46 of the SDBCA. The holders of
such certificates previously evidencing such shares of Company
Common Stock outstanding immediately prior to the Effective Time
shall cease to have any rights with respect to such shares of
Company Common Stock as of the Effective Time except as otherwise
provided herein or by law.
SECTION 2.2 Exchange of Certificates.
(a) Promptly after the Effective Time, the Exchange Agent (as
defined below) shall mail to each holder of record of Company
Common Stock immediately prior to the Effective Time (other than
Excluded Shares) (i) a letter of transmittal (the "Company Letter
of Transmittal") (which shall specify that delivery shall be
effected, and risk of loss and title to the Company certificates
representing shares of the Company Common Stock (the
"Certificates") shall pass, only upon delivery of such
Certificates to the Exchange Agent and shall be in such form and
have such other provisions as Parent and the Company shall
mutually agree) and (ii) instructions for use in effecting the
surrender of the Certificates in exchange for the Merger
Consideration with respect to the shares of Company Common Stock
formerly represented thereby.
(b) At the Effective Time, Parent shall make available, or cause
to be made available to the party specified by Parent and
reasonably acceptable to the Company as the exchange agent (the
"Exchange Agent"), amounts sufficient in the aggregate to provide
all funds necessary for the Exchange Agent to make payments
pursuant to Section 2.1(c)(i) hereof to holders of Company Common
Stock issued and outstanding immediately prior to the Effective
Time who are to receive the Merger Consideration. Any interest,
dividends, or other income earned on the investment of cash
deposited by Parent with the Exchange Agent in accordance with
this Section 2.2(b) shall be for the account of and payable to
Parent.
(c) Upon surrender to the Exchange Agent of Certificates,
together with the Company Letter of Transmittal, duly executed
and completed in accordance with the instructions thereto, and
only upon such surrender, the holder of such Certificate shall be
entitled to receive, in exchange therefor, and Parent shall
promptly cause to be delivered to such holder a check in the
amount to which such holder is entitled, after giving effect to
any required tax withholdings. The Certificates surrendered
pursuant to this Section 2.2(c) shall forthwith be cancelled. If
any Certificate shall have been lost, stolen, mislaid or
destroyed, then upon (1) receipt of an affidavit of that fact
from the holder claiming such Certificate to be lost, mislaid,
stolen or destroyed and an indemnity (each in form and substance
reasonably satisfactory to Parent), and (2) if required by
Parent, the posting by such person of a bond in such reasonable
amount as the Company may direct as indemnity against any claim
that may be made against it with respect to such Certificate, the
Exchange Agent shall issue to such holder the Merger
Consideration into which the shares represented by such lost,
stolen, mislaid or destroyed Certificate shall have been
converted.
(d) No interest will be paid or will accrue on the amount
payable upon the surrender of any Certificate. If payment is to
be made to a person other than the registered holder of the
Certificate surrendered, it shall be a condition of such payment
that the Certificate so surrendered shall be properly endorsed
and otherwise in proper form for transfer, as determined by the
Exchange Agent or Parent, and that the person requesting such
payment shall pay any transfer or other taxes required by reason
of the payment to a person other than the registered holder of
the Certificate surrendered or establish to the satisfaction of
the Parent or the Exchange Agent that such tax has been paid or
is not payable. One year following the Effective Time, Parent
shall be entitled to cause the Exchange Agent to deliver to it
any funds (including any interest received with respect thereto)
made available to the Exchange Agent which have not been
disbursed to holders of Certificates formerly representing shares
of Company Common Stock outstanding on the Effective Time, and
thereafter such holders shall be entitled to look to the Parent
only as general creditors thereof with respect to cash payable
upon due surrender of their Certificates.
(e) In the event of a transfer of ownership of Company Common
Stock which is not registered in the transfer records of the
Company, the Merger Consideration may be paid or issued to a
person other than the person in whose name the Certificate so
surrendered is registered, if such Certificate, accompanied by
all documents required to evidence and effect such transfer,
shall be properly endorsed with signature guarantee or otherwise
be in proper form for transfer, and the person requesting such
payment shall pay any transfer or other taxes required by reason
of the payment of the Merger Consideration to a person other than
the registered holder of such Certificate or establish to the
satisfaction of Parent that such tax has been paid or is not
applicable.
(f) The Merger Consideration paid upon the surrender for
exchange of Certificates in accordance with the terms of this
Article II shall be deemed to have been paid in full satisfaction
of all rights pertaining to the shares of Company Common Stock
theretofore represented by such Certificates, subject, however,
to the Surviving Corporation's obligation to pay any dividends or
make any other distributions with a record date prior to the
Effective Time which may have been declared or made by the
Company on such shares of Company Common Stock in accordance with
the terms of this Agreement or prior to the date of this
Agreement and which remain unpaid at the Effective Time and have
not been paid prior to surrender. At the Effective Time, the
stock transfer books of the Company shall be closed, and there
shall be no further registrations of transfers of shares of
Company Common Stock thereafter on the records of the Company.
SECTION 2.3 No Liability. None of Parent, Sub, the Company or
the Exchange Agent shall be liable to any holder of shares of
Company Common Stock for any cash otherwise payable to such
holder of shares of Company Common Stock delivered or paid to a
public official pursuant to any applicable abandoned property,
escheat or similar law.
SECTION 2.4 Dissenters' Rights. If any Dissenting Stockholder
shall be entitled to require the Company to purchase such
stockholder's shares for their "fair value", as provided in
Chapter 47-6-46 of the SDBCA, the Company shall give Parent
notice thereof and Parent shall have the right to participate in
all negotiations and proceedings with respect to any such
demands. Neither the Company nor the Surviving Corporation
shall, except with the prior written consent of Parent,
voluntarily make any payment with respect to, or settle or offer
to settle, any such demand for payment. If any Dissenting
Stockholder shall fail to perfect or shall have effectively
withdrawn or lost the right to dissent, the shares held by such
stockholder shall thereupon be entitled to be surrendered in
exchange for the Merger Consideration as provided by Sections 2.1
and 2.2 hereof.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION 3.1 Representations and Warranties of the Company.
The Company represents and warrants to Parent and Sub as follows:
(a) Organization, Standing and Corporate Power. The Company is
and each of its subsidiaries is a corporation duly organized,
validly existing and in good standing under the laws of the
jurisdiction in which it is organized and has the requisite
corporate power and authority to carry on its business as now
being conducted. The Company and each of its subsidiaries is
duly qualified or licensed to do business as a foreign
corporation and is in good standing in each jurisdiction in which
the nature of its business or the ownership or leasing of its
properties makes such qualification or licensing necessary, other
than in such jurisdictions where the failure to be so qualified
or licensed would not have a Material Adverse Effect (as defined
in Section 8.3) on the Company. The Company has made available
to Parent complete and correct copies of its articles of
incorporation and by-laws and the articles of incorporation and
by-laws or other organizational documents of its subsidiaries, in
each case as amended to the date of this Agreement.
(b) Subsidiaries and Other Equity Interests. Section 3.1(b) of
the disclosure schedule delivered by the Company to Parent prior
to execution of this Agreement (the "Company Disclosure
Schedule"), contains a list of each subsidiary of the Company and
its jurisdiction of incorporation or organization. Except as set
forth in Section 3.1(b) of the Company Disclosure Schedule, all
the outstanding shares of capital stock of each such subsidiary
have been validly issued and are fully paid and nonassessable and
are owned as set forth in Section 3.1(b) of the Company
Disclosure Schedule, free and clear of all pledges, claims,
liens, charges, encumbrances and security interests of any kind
or nature whatsoever (collectively, "Liens"). Except as set forth
in Section 3.1(b) of the Company Disclosure Schedule, the Company
does not own, directly or indirectly, any capital stock or other
ownership interest in any corporation, partnership, limited
partnership, limited liability company, joint venture or other
entity.
(c) Capital Structure. The authorized capital stock of the
Company consists of as of the date hereof, and will consist of as
of the Effective Time, 75,000,000 shares of Company Common Stock
and 25,000,000 shares of preferred stock, $.001 par value per
share (the "Company Preferred Stock"). The rights, privileges
and preferences of the Company Common Stock and Company Preferred
Stock are as stated in the Company's Amended and Restated
Articles of Incorporation. As of the close of business on
March 10, 1999, (i) 22,789,908 shares of the Company Common Stock
and no shares of the Company Preferred Stock were issued and
outstanding, (ii) no shares of Company Common Stock were held by
the Company in its treasury, and (iii) 894,378 shares of Company
Common Stock were reserved for issuance upon exercise of the
Stock Options (as hereinafter defined). All issued and
outstanding shares of Company Common Stock are, and all shares
which may be issued upon the exercise of Stock Options will be,
duly authorized, validly issued, fully paid and nonassessable,
and are not subject to and were not issued in violation of any
preemptive rights. To the Knowledge (as defined in Section 8.3)
of the Company, there are no voting trusts, voting agreements,
irrevocable proxies or other agreements with respect to any
voting shares of capital stock of the Company. There are no
bonds, debentures, notes or other indebtedness of the Company or
any of its subsidiaries having the right to vote (or convertible
into or exchangeable for other securities having the right to
vote) on any matters on which the stockholders of the Company may
vote. Except as set forth above and except as set forth in
Section 3.1(c) of the Company Disclosure Schedule, as of the date
of this Agreement, there are no outstanding securities, options,
warrants, calls, rights, commitments, agreements, arrangements or
undertakings of any kind to which the Company or any of its
subsidiaries is a party or by which any of them is bound
obligating the Company or any of its subsidiaries to issue,
deliver or sell, or cause to be issued, delivered or sold,
additional shares of capital stock or other voting securities of
the Company or of any of its subsidiaries or obligating the
Company or any of its subsidiaries to issue, grant, extend or
enter into any such security, option, warrant, call, right,
commitment, agreement, arrangement or undertaking. There are no
outstanding contractual obligations of the Company or any of its
subsidiaries to repurchase, redeem or otherwise acquire any
shares of capital stock (or options to acquire any such shares)
of the Company or any of its subsidiaries. There are no
agreements, arrangements or commitments of any character
(contingent or otherwise) pursuant to which any person is or may
be entitled to receive any payment based on the revenues,
earnings or financial performance of the Company or any of its
subsidiaries or assets or calculated in accordance therewith
(other than ordinary course payments or commissions to sales
representatives of the Company based upon revenues generated by
them without augmentation as a result of the transactions
contemplated hereby) or to cause the Company or any of its
subsidiaries to file a registration statement under the
Securities Act of 1933, as amended (the "Securities Act"), or
which otherwise relate to the registration of any securities of
the Company.
(d) Authority; Noncontravention. The Company has the requisite
corporate power and authority to enter into this Agreement and,
subject to the Stockholder Approval, to consummate the
transactions contemplated by this Agreement. The execution and
delivery of this Agreement by the Company and the consummation by
the Company of the transactions contemplated by this Agreement
have been duly authorized by all necessary corporate action on
the part of the Company, subject to the Stockholder Approval of
this Agreement. Assuming the due authorization, execution and
delivery of this Agreement by Parent and Sub, this Agreement has
been duly executed and delivered by the Company and constitutes a
valid and binding obligation of the Company, enforceable against
the Company in accordance with its terms.
Except as set forth in Section 3.1(d) of the Company
Disclosure Schedule, the execution and delivery of this Agreement
does not, and the consummation of the transactions contemplated
by this Agreement and compliance with the provisions of this
Agreement will not, conflict with, or result in any violation of
or default (with or without notice or lapse of time, or both)
under, or give rise to a right of termination, cancellation or
acceleration of any obligation or to loss of a material benefit
under, or result in the creation of any Lien upon any of the
properties or assets of the Company or any of its subsidiaries
under, (i) the articles of incorporation or by-laws of the
Company or the comparable charter or organizational documents of
any of its subsidiaries, (ii) any contract for the provision of
any form of gaming services or products between the Company or
any of its subsidiaries and any third party, any loan or credit
agreement, note, bond, mortgage, indenture, lease, joint venture
or other agreement, instrument, permit, concession, franchise or
license applicable to the Company or any of its subsidiaries or
their respective properties or assets or (iii) subject to the
governmental filings and other matters referred to in the
following sentence, any judgment, order, decree, statute, law,
ordinance, rule or regulation (including, without limitation,
those of the National Indian Gaming Commission, or any other
tribal or governmental authority regulating any form of gaming)
applicable to the Company or any of its subsidiaries or their
respective properties or assets, other than, in the case of
clauses (ii) or (iii), any such conflicts, violations, defaults
or rights that individually or in the aggregate would not (A)
have a Material Adverse Effect on the Company, (B) impair in any
material respect the ability of the Company to perform its
obligations under this Agreement or (C) prevent or materially
delay the consummation of any of the transactions contemplated by
this Agreement.
No consent, approval, order or authorization of, or
registration, declaration or filing with, any federal, state or
local government or any court, administrative or regulatory
agency or commission or other governmental authority or agency,
domestic or foreign, including, without limitation, the National
Indian Gaming Commission, or any other tribal or governmental
authority regulating any form of gaming (a "Governmental
Entity"), is required by the Company or any of its subsidiaries
in connection with the execution and delivery of this Agreement
by the Company or the consummation by the Company of the
transactions contemplated by this Agreement, except for (i) the
filing with the Federal Trade Commission and the Antitrust
Division of the Department of Justice (the "Specified Agencies")
of a premerger notification and report form by the Company under
the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 0000 (xxx
"XXX Xxx"), (xx) the filing with the Securities and Exchange
Commission (the "SEC") of (x) the Proxy Statement (as defined in
Section 5.1) and (y) such reports under the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), as may be required
in connection with this Agreement and the transactions
contemplated by this Agreement, (iii) the filing of the articles
of merger with the Secretary of State of the State of South
Dakota and appropriate documents with the relevant authorities of
other states in which the Company is qualified to do business,
(iv) the approval by (A) the South Dakota Commission on Gaming
and South Dakota Lottery Commission and (B) other gaming
regulatory bodies in jurisdictions where the Company or its
subsidiaries are engaged in business and (v) such other consents,
approvals, orders, authorizations, registrations, declarations
and filings the failure of which to be obtained or made would not
have a Material Adverse Effect on the Company, impair in any
material respect the ability of the Company to perform its
obligations under this Agreement or prevent or materially delay
the consummation of any of the transactions contemplated by this
Agreement. Neither the Company nor any subsidiary of the Company
nor, to the Knowledge of the Company, any director or officer of
the Company or of any subsidiary of the Company has received any
written claim, demand, notice, complaint, court order or
administrative order from any Governmental Entity in the past
three years, asserting that a license of it or them, as
applicable, under any Gaming Laws (as defined in Section 3.1(o))
is being or may be revoked or suspended other than such claims,
demands, notices, complaints, court orders or administrative
orders which would not have a Material Adverse Effect on the
Company.
(e) SEC Documents; Financial Statements. Since January 1, 1997,
the Company has timely filed with the SEC all required reports
and forms and other documents (the "Company SEC Documents"). As
of their respective dates, the Company SEC Documents complied in
all material respects with the requirements of the Securities Act
or the Exchange Act, as the case may be, and the rules and
regulations of the SEC promulgated thereunder applicable to such
Company SEC Documents and none of the Company SEC Documents
contained any untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary
in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. The
financial statements of the Company included in the Company SEC
Documents comply as to form in all material respects with
applicable accounting requirements and the published rules and
regulations of the SEC with respect thereto, have been prepared
in accordance with generally accepted accounting principles
(except, in the case of unaudited statements, as permitted by
Form 10-Q of the SEC) applied on a consistent basis during the
periods involved (except as may be indicated in the notes
thereto) and fairly present the financial position of the Company
as of the dates thereof and the results of its operations and
cash flows for the periods then ended. Except as set forth in the
Company SEC Documents filed prior to the date of this Agreement
and publicly available and as set forth in Section 3.1(e) of the
Company Disclosure Schedule and except for liabilities and
obligations incurred in the ordinary course of business
consistent with past practice since the date of the most recent
balance sheet included in the Company SEC Documents, neither the
Company nor any of its subsidiaries has any material liabilities
or obligations of any nature (whether accrued, absolute,
contingent or otherwise) required by generally accepted
accounting principles to be set forth on a balance sheet of the
Company and its consolidated subsidiaries or in the notes
thereto.
(f) Information Supplied. None of the information supplied or
to be supplied by the Company specifically for inclusion or
incorporation by reference in the Proxy Statement will, at the
date it is first mailed to the Company's stockholders or at the
time of the Company Stockholders' Meeting (as defined in Section
5.1(d)), contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of
the circumstances under which they are made, not misleading. The
Proxy Statement will comply as to form in all material respects
with the requirements of the Exchange Act and the rules and
regulations promulgated thereunder, except that no representation
or warranty is made by the Company with respect to statements
made or incorporated by reference therein based on information
supplied by Parent or Sub specifically for inclusion or
incorporation by reference therein.
(g) Absence of Certain Changes or Events. Except as disclosed
in the Company SEC Documents filed prior to the date of this
Agreement and publicly available, since December 31, 1997 and
except as set forth in Section 3.1(g) of the Company Disclosure
Schedule, the Company has conducted its business only in the
ordinary course consistent with prior practice, and there has not
been (i) any Material Adverse Change in the Company, (ii) any
declaration, setting aside or payment of any dividend or other
distribution (whether in cash, stock or property) with respect to
any of the Company's capital stock, (iii) any split, combination
or reclassification of any of its capital stock or any issuance
or the authorization of any issuance of any other securities in
respect of, in lieu of or in substitution for shares of its
capital stock, (iv) any granting by the Company or any of its
subsidiaries to any officer or employee of the Company or any of
its subsidiaries of (A) any increase in compensation or (B) any
right to participate in (by way of bonus or otherwise) the
profits of the Company or any of its subsidiaries, except, in
each case, in the ordinary course of business consistent with
prior practice or as was required under employment agreements or
salary or wage policies in effect as of the date of the most
recent audited financial statements included in the Company SEC
Documents filed prior to the date of this Agreement (a list of
all such employment agreements being set forth in Section 3.1(g)
of the Company Disclosure Schedule), (v) any granting by the
Company or any of its subsidiaries to any such officer or
employee of any increase in severance or termination pay, except
as was required under employment, severance or termination
agreements in effect as of the date of the most recent audited
financial statements included in the Company SEC Documents filed
prior to the date of this Agreement and publicly available,
(vi) any entry into, or renewal or modification, by the Company
or any of its subsidiaries, of any employment, consulting,
severance or termination agreement with any officer, director or
employee of the Company or any of its subsidiaries, (vii) any
damage, destruction or loss, whether or not covered by insurance,
that has or could have a Material Adverse Effect on the Company,
(viii) any change in accounting methods, principles or practices
by the Company materially affecting its assets, liabilities or
business, or (ix) any other action taken since September 30, 1998
by the Company or any of its subsidiaries which, if Section
4.1(a) had then been in effect, would have been prohibited by
such Section if taken without Parent's consent (and no agreement,
understanding, obligation or commitment to take any such action
exists).
(h) Litigation. Except as disclosed in the Company SEC
Documents filed prior to the date of this Agreement and publicly
available and except as set forth in Section 3.1(h) of the
Company Disclosure Schedule, there is no suit, action,
investigation, audit or proceeding pending or, to the Knowledge
of the Company, threatened against the Company or any of its
subsidiaries that would (i) have a Material Adverse Effect on the
Company, (ii) impair in any material respect the ability of the
Company to perform its obligations under this Agreement or
(iii) prevent or delay the consummation of any of the
transactions contemplated by this Agreement, nor is there any
judgment, decree, injunction, rule or order of any Governmental
Entity or arbitrator outstanding against the Company or any of
its subsidiaries having, or which is reasonably likely to have,
any effect referred to in the foregoing clauses (i), (ii) or
(iii).
(i) Brokers. Neither the Company nor any of its subsidiaries
nor any of their respective officers, directors or employees has
employed any broker or finder, other than Xxxxxxx Xxxxx Xxxxxx
Inc., or incurred any liability for any financial advisory fees,
brokerage fees, commissions or finder's fees (other than
financial advisory fees paid to Xxxxxxx Xxxxx Barney Inc.), and
no broker or finder has acted directly or indirectly for the
Company or any of its subsidiaries in connection with this
Agreement or the transactions contemplated hereby. A true,
correct and complete copy of the Company's definitive engagement
letter with Xxxxxxx Xxxxx Xxxxxx Inc. has been delivered to
Parent.
(j) Voting Requirements. The Board of Directors of the Company
at a meeting duly called and held: (i) determined that the Merger
is advisable and fair and in the best interests of the Company
and its stockholders; (ii) approved the Merger and this Agreement
and the transactions contemplated by this Agreement; and
(iii) recommended approval of this Agreement and the Merger by
the holders of Company Common Stock and directed that the Merger
be submitted for consideration by the Company's stockholders.
The affirmative vote of the holders of a majority of the
outstanding shares of Company Common Stock entitled to vote is
the only vote of the holders of any class or series of the
Company's capital stock necessary to approve the Merger, this
Agreement and the transactions contemplated by this Agreement.
(k) Title to Properties. The Company and its subsidiaries have
good and marketable title to, or valid leasehold interests in,
all their properties and assets except where such failure would
not have a Material Adverse Effect on the Company.
The Company or Gamblers Supply Management Company
("GSMC") has good and marketable title to the Xxxx Xxxxxxxxx
riverboat casino, together with all related shore-based
facilities, including, without limitation, the barge, the motel,
the enclosed walkway, the parking lot, the restaurant, the
administrative offices and other entertainment facilities
(collectively, the "Riverboat Complex") free and clear of any
Liens other than those set forth in Section 3.1(k) of the Company
Disclosure Schedule. The Company or GSMC has all licenses,
approvals, rights of way, easements, privileges, permits and
certificates from all governmental or quasi-governmental
authorities (including without limitation from the United States
Coast Guard) necessary to own and operate the Riverboat Complex
as it is currently being operated. The Riverboat Complex is not
in violation in any material respect of any applicable zoning
ordinance, building code, use or occupancy restrictions, or
health and safety codes. The Riverboat Complex is in good
operating condition subject to ordinary wear and tear, and the
plumbing, electrical, heating, ventilation, air conditioning, and
other mechanical systems on the Riverboat Complex are in good
working order and have been maintained in accordance with good
commercial maintenance practice. Except as set forth in
Section 3.1(k) of the Company Disclosure Schedule, to the
Knowledge of the Company, there are no material physical,
mechanical or structural defects in the Riverboat Complex, and
there are no material repairs which need to be made to the
Riverboat Complex which have not been made. The financial
information delivered by the Company to Parent with respect to
the operation of the Riverboat Complex (including without
limitation the EBITDA (earnings before interest, taxes,
depreciation and amortization)) from the Riverboat Complex for
the last two fiscal years, is true and correct in all material
respects.
(l) ERISA Compliance. Except as set forth in Section 3.1(l) of
the Company Disclosure Schedule,
(i) The Company has delivered to, or made available for review
by, Parent true, complete and correct copies of all "employee
pension benefit plans" (as defined in Section 3(2) of the
Employee Retirement Income Security Act of 1974, as amended
("ERISA")) (sometimes referred to herein as "Pension Plans"),
"employee welfare benefit plans" (as defined in Section 3(1) of
ERISA) and all other collective bargaining agreements or bonus,
pension, profit sharing, deferred compensation, incentive
compensation, stock ownership, stock purchase, stock option,
phantom stock, retirement, vacation, severance, disability, death
benefit, hospitalization, medical or other plans, arrangements or
understandings (whether or not legally binding) (collectively,
"Benefit Plans") currently maintained, or contributed to, or
required to be maintained or contributed to, by the Company or
any other person or entity that, together with the Company, is
treated as a single employer under Section 414(b), (c), (m) or
(o) of the Code (each a "Commonly Controlled Entity"), including
all employment, termination, severance or other contracts for the
benefit of any current or former employees, officers or directors
of the Company or any of its subsidiaries. The Company has
delivered to, or made available for review by, Parent true,
complete and correct copies of (A) the most recent annual report
on Form 5500 filed with the Internal Revenue Service ("IRS") with
respect to each of its Benefit Plans (if any such report was
required), (B) the most recently prepared actuarial report for
each such Benefit Plan, (C) the most recent summary plan
description for each such Benefit Plan for which such summary
plan description is required, (D) the most recently received IRS
determination letter for each such Benefit Plan and (E) each
trust agreement and group annuity contract relating to any such
Benefit Plan.
(ii) Each of the Company's and its subsidiaries' Benefit Plans
has been administered in all material respects in accordance with
its terms. The Company, each of its subsidiaries and all such
Benefit Plans are in compliance in all material respects with
applicable provisions of ERISA and the Code.
(iii) All of the Company's and its subsidiaries' Pension
Plans intended to be qualified under Section 401(a) of the Code
have been the subject of determination letters from the IRS to
the effect that such Pension Plans are qualified under Section
401(a) of the Code and no such determination letter has been
revoked nor, to the best knowledge of the Company, has revocation
been threatened, nor has any such Pension Plan been amended since
the date of its most recent determination letter or application
therefor in any respect that would adversely affect its
qualification or materially increase its costs.
(iv) No Pension Plan that the Company or any of its subsidiaries
maintains is subject to Title IV of ERISA. No Pension Plan to
which the Company or any of its subsidiaries contributes or is
required to contribute is a multiemployer plan (within the
meaning of Section 3(37) of ERISA).
(v) None of the Company, any of its subsidiaries, any officer of
the Company or any of its subsidiaries or any of the Company's or
its subsidiaries' Benefit Plans which are subject to ERISA,
including, without limitation, its Pension Plans, any trusts
created thereunder or any trustee or administrator thereof, has
engaged in a non-exempt "prohibited transaction" (as such term is
defined in Section 406 of ERISA or Section 4975 of the Code) or
any other breach of fiduciary responsibility that will subject
the Company, or any of its subsidiaries or any officer of the
Company or any of its subsidiaries, to tax or penalty under
ERISA, the Code or other applicable law that is material to the
business of the Company and that has not been corrected. Neither
any of such Benefit Plans nor any of such trusts has been
terminated, nor has there been any "reportable event" (as that
term is defined in Section 4043 of ERISA) with respect thereto,
during the last five years.
(vi) Except as expressly set forth in this Agreement, the
consummation of the transactions contemplated by this Agreement
will not result in an increase in the amount of compensation or
benefits or accelerate the vesting or timing of payment of any
benefits payable to or in respect of any employee or former
employee of the Company or any subsidiary of the Company or the
beneficiary or dependent of any such employee or former employee.
(vii) With respect to any of the Company's or any of its
subsidiaries' Benefit Plans that is an employee welfare benefit
plan, (A) no such Benefit Plan is funded through a "welfare
benefit fund," as such term is defined in Section 419(e) of the
Code, (B) each such Benefit Plan that is a "group health plan,"
as such term is defined in Section 5000(b)(1) of the Code,
complies in all material respects with the applicable
requirements of Section 4980B(f) of the Code and (C) each such
Benefit Plan (including any such Benefit Plan covering retirees
or other former employees) may be amended or terminated without
material liability to the Company or any of its subsidiaries on
or at any time after the Effective Time.
(viii) No Commonly Controlled Entity has incurred any material
liability to a Pension Plan of the Company or any of its
subsidiaries (other than for contributions not yet due).
(m) Taxes.
(i) Each of the Company and its subsidiaries has timely filed
all federal, state, local and foreign tax returns, declarations,
estimates, information returns, statements and reports
(collectively, "Returns") required to be filed by it through the
date hereof and shall timely file all such Returns required to be
filed on or before the Effective Time. All such Returns are and
will be true, complete and correct in all material respects. The
Company and each of its subsidiaries has paid and discharged (or
the Company has paid and discharged on such subsidiary's behalf)
all material taxes due from them, other than such taxes as are
being contested in good faith by appropriate proceedings and are
adequately reserved for on the most recent financial statements
contained in the SEC Documents filed prior to the date of this
Agreement and publicly available. There are no material liens
for taxes upon the assets of the Company or any subsidiary except
liens for taxes not yet due.
(ii) No claim or deficiency for any taxes has been proposed,
threatened, asserted or assessed by the IRS or any other taxing
authority or agency against the Company, or any of its
subsidiaries which, if resolved against the Company or any of its
subsidiaries, would have a Material Adverse Effect upon the
Company. No requests for waivers of the time to assess any taxes
are pending. No power of attorney has been granted by the
Company or any of its subsidiaries with respect to taxes which is
currently in force. None of the Company and its Subsidiaries has
waived any statute of limitations in respect of federal or state
income taxes or agreed to any extension of time with respect to a
tax assessment or deficiency, except as set forth in Section
3.1(m) of the Company Disclosure Schedule, no Returns in respect
of federal or state income taxes for any taxable years are being
examined by the Internal Revenue Service or by any applicable
state tax authority; no material deficiency for any taxes has
been proposed, asserted or assessed by any taxing authority
against the Company or its subsidiaries, which has not been
resolved or paid in full, other than such deficiency which is
being contested in good faith or is set forth in Section 3.1(m)
of the Company Disclosure Schedule. Except as set forth in
Section 3.1(m) of the Company Disclosure Schedule, neither the
Company nor any of its subsidiaries has made any election under
Section 341(f) of the Code.
(iii) As used in this Agreement, "taxes" shall include all
federal, state, local and foreign income, property, sales, excise
and other taxes, of any nature whatsoever (whether payable
directly or by withholding), together with any interest and
penalties, additions to tax or additional amounts imposed with
respect thereto. As used in this Section 3.1(m) only and without
impact on the term "material" as used elsewhere in the Agreement,
"material" means amounts in excess of $75,000. Notwithstanding
the definition of "subsidiary" set forth in Section 8.3 of this
Agreement, for the purposes of this Section 3.1(m), references to
the Company and each of its subsidiaries shall include former
subsidiaries of the Company for the periods during which any such
corporations were included in the consolidated federal income tax
return of the Company.
(iv) The Company and each subsidiary has established (and until
the Effective Time will establish) on its respective books and
records reserves (to be specifically designated as an increase to
current liabilities) that are adequate for the payment of all
taxes not yet due and payable, except where failure to establish
reserves would not reasonably be expected to be material.
(v) Except as set forth in Section 3.1(m) of the Company
Disclosure Schedule, the Company is not a party to any tax-
sharing or allocation agreement, nor does the Company owe any
amount under any tax-sharing or allocation agreement, and any
entity that is disposed of in connection with the disposition of
the Riverboat Complex shall not have any binding contractual
rights or obligations pursuant to any tax-sharing or similar
arrangement.
(vi) The Company and its subsidiaries has complied (and until the
Effective Time will comply) in all material respects with all
applicable laws, rules and regulations relating to the payment
and withholding of taxes (including, without limitation,
withholding of taxes pursuant to Sections 1441 or 1442 of the
Code or similar provisions under any foreign laws) and have,
within the time and in the manner prescribed by law, withheld
from employee wages and paid over to the proper governmental
authorities all amounts required to be so withheld and paid over
under all applicable laws.
(vii) The Company and its subsidiaries has never been (or has
any liability for unpaid taxes because it once was) a member of
an "affiliated group" (within the meaning of Section 1502 of the
Code) during any part of any consolidated return year within any
part of which year any corporation other than the Company or its
current subsidiaries was also a member of such affiliated group.
(n) No Excess Parachute Payments. Except as set forth in
Section 3.1(n) of the Company Disclosure Schedule, no amount
required to be paid (whether in cash or property or the vesting
of property) in connection with any of the transactions
contemplated by this Agreement to any employee, officer or
director of the Company or any of its affiliates who is a
"disqualified individual" (as such term is defined in proposed
Treasury Regulation Section 1.280G-1) under any employment,
severance or termination agreement or other compensation
arrangement of the Company or Benefit Plan currently in effect or
in effect as of the Closing Date is reasonably expected to be
characterized as an "excess parachute payment" (as such term is
defined in Section 280G(b)(1) of the Code).
(o) Compliance with Applicable Laws.
(i) Each of the Company and its subsidiaries has in effect all
federal, state, local and foreign governmental approvals,
authorizations, certificates, filings, franchises, licenses,
notices, permits and rights ("Permits") necessary for it to own,
lease or operate its properties and assets and to carry on its
business as now conducted, and there has occurred no default
under any such Permit, except for the lack of Permits and for
defaults under Permits, which lack or default would not have a
Material Adverse Effect on the Company. The Company does not
have any reason to believe any Governmental Entity is considering
limiting, suspending or revoking any of the Company's or its
subsidiaries' Permits. Except as disclosed in the Company SEC
Documents filed prior to the date of this Agreement and publicly
available, the Company and its subsidiaries are in compliance
with all applicable statutes, laws, ordinances, rules, orders and
regulations of any Governmental Entity, except for noncompliance
which would not have a Material Adverse Effect on the Company.
(ii) The Company and each of its subsidiaries are, and each of
their respective directors, officers, and persons performing
management functions similar to officers are, in compliance with
all applicable Gaming Laws, except for any immaterial events of
non-compliance, which have been corrected prior to the Closing
Date to the satisfaction of the applicable Governmental Entity.
The term "Gaming Laws" means any Federal, state, local, tribal or
foreign statute, ordinance, rule, regulation, permit, consent,
registration, qualification, finding of suitability, approval,
license, judgment, order, decree, injunction or other
authorization, including any condition of limitation placed
thereon, governing or relating to the current or contemplated
casino and gaming activities and operations of the Company or the
Parent, as the case may be, or any of their respective
subsidiaries.
(p) Environmental.
(i) The Company and each of its subsidiaries is, and has been,
and each of the Company's former subsidiaries, while subsidiaries
of the Company, was, in compliance with all applicable
Environmental Laws, except for noncompliance which would not have
a Material Adverse Effect on the Company. The term
"Environmental Laws" means any federal, state, local or foreign
statute, code, ordinance, rule, regulation, policy, guideline,
permit, consent, approval, license, judgment, order, writ,
decree, injunction or other authorization, including the
requirement to register underground storage tanks, relating to:
(A) emissions, discharges, releases or threatened releases of
Hazardous Material (as defined below) into the environment,
including, without limitation, into ambient air, soil, sediments,
land surface or subsurface, buildings or facilities, surface
water, groundwater, publicly owned treatment works, septic
systems or land; (B) the generation, treatment, storage,
disposal, use, handling, manufacturing, transportation or
shipment of Hazardous Material; (C) protection of the
environment; or (D) employee health and safety.
(ii) During the period of ownership or operation by the Company
and its subsidiaries of any of their respective current or
previously owned or leased properties, there have been no
releases of Hazardous Material in, on, under or affecting such
properties or, to the best Knowledge of the Company, any
surrounding site, except in each case for those which would not
have a Material Adverse Effect on the Company. The Company has
not shipped any Hazardous Material to any disposal site for which
it is or will be subject to any liability, except for such
liabilities which would not have a Material Adverse Effect on the
Company. To the Knowledge of the Company, prior to the period of
ownership or operation by the Company and its subsidiaries of any
of their respective current or previously owned or leased
properties, no Hazardous Material was generated, treated, stored,
disposed of, used, handled, released or manufactured at, or
transported, shipped or disposed of from, such current or
previously owned or leased properties, and there were no releases
of Hazardous Material in, on, under or affecting any such
property or any surrounding site, except in each case for those
which would not have a Material Adverse Effect on the Company.
The term "Hazardous Material" means (A) hazardous materials,
contaminants, constituents, medical wastes, hazardous or
infectious wastes and hazardous substances as those terms are
defined in the following statutes and their implementing
regulations: the Hazardous Materials Transportation Act, 49
U.S.C. 1801 et seq., the Resource Conservation and Recovery
Act, 42 U.S.C. 6901 et seq., the Comprehensive Environmental
Response, Compensation and Liability Act, as amended by the
Superfund Amendments and Reauthorization Act, 42 U.S.C. 9601 et
seq., the Clean Water Act, 33 U.S.C. 1251 et seq. and the Clean
Air Act, 42 U.S.C. 7401 et seq., (B) petroleum, including crude
oil and any fractions thereof, (C) natural gas, synthetic gas and
any mixtures thereof, (D) asbestos and/or asbestos-containing
material and (E) polychlorinated biphenyls ("PCBs") or materials
or fluids containing PCBs in excess of 50 ppm.
(q) Contracts; Debt Instruments. Except as disclosed in the
Company SEC Documents filed prior to the date of this Agreement
or set forth in Section 3.1(q) of the Company Disclosure
Schedule, there is no contract or agreement that is material to
the business, financial condition or results of operations of the
Company and its subsidiaries taken as a whole. Except as set
forth in Section 3.1(q) of the Company Disclosure Schedule,
neither the Company nor any of its subsidiaries is in violation
of or in default under (nor does there exist any condition which
upon the passage of time or the giving of notice, or both, would
cause such a violation or default under) any loan or credit
agreement, note, bond, mortgage, indenture, lease or any other
contract, agreement, arrangement or understanding to which it is
a party or by which it or any of its properties or assets is
bound, except for violations or defaults that would not have a
Material Adverse Effect on the Company.
The Louisiana Joint Venture Agreements (as defined in
5.4(a)(iii) hereof) constitute all of the agreements pertaining
to the joint venture described therein (the "Joint Venture") to
which the Company or any of its subsidiaries is a party, and true
and complete copies of the Louisiana Joint Venture Agreements,
and all amendments thereto, have been delivered to Parent.
Except for the performance of its express duties, undertakings
and obligations under the Louisiana Joint Venture Agreements and
any duties implied under Louisiana law, neither the Company nor
any subsidiary has any obligations, contingent or otherwise, with
respect to the Joint Venture. Neither the Company nor any
subsidiary has any obligation to make any loans or capital
contributions to the Joint Venture.
Section 3.1(g) of the Company Disclosure Schedule sets
forth all of the employment, consulting, severance or termination
agreements of the Company with any officer, director or employee
of the Company or any of its subsidiaries.
(r) Intellectual Property.
(i) Except as would not have a Material Adverse Effect on the
Company, (A) the Company and each of its subsidiaries owns, has
the right to acquire or is licensed or otherwise has the right to
use (in each case, free and clear of any Liens), all Intellectual
Property (as defined below) used in or necessary for the conduct
of its business as currently conducted, (B) no claims are pending
or, to the Knowledge of the Company, threatened, that the Company
or any of its subsidiaries is infringing on or otherwise
violating the rights of any person with regard to any
Intellectual Property, and (C) to the Knowledge of the Company,
no person is infringing on or otherwise violating any right of
the Company or any of its subsidiaries with respect to any
Intellectual Property owned by and/or licensed to the Company or
its subsidiaries.
(ii) For purposes of this Agreement, "Intellectual Property"
shall mean patents, copyrights, trademarks (registered or
unregistered), service marks, brand names, trade dress, trade
names, the goodwill associated with the foregoing and
registrations in any jurisdiction of, and applications in any
jurisdiction to register, the foregoing; and trade secrets and
rights in any jurisdiction to limit the use or disclosure thereof
by any person.
(s) Insider Interests. Except as set forth in Section 3.1(s) of
the Company Disclosure Schedule, to the Knowledge of the Company,
no stockholder, officer, director, employee or agent of the
Company or any of its subsidiaries or any affiliate of any
officer or director of the Company or any of its subsidiaries (as
the term "affiliate" is defined in Rule 12b-2 under the Exchange
Act), (i) has any interest in any assets or property (whether
real or personal, tangible or intangible) of or used in the
business of the Company or any subsidiary of the Company (other
than as an owner of outstanding securities of the Company), or
(ii) is indebted or otherwise obligated to the Company in an
amount in excess of $50,000, individually, or, for all such
persons, $250,000 in the aggregate. The Company is not indebted
or otherwise obligated to any such person, except for amounts not
in excess of $50,000 or amounts due under normal arrangements
applicable to directors, officers or employees generally as to
salary or fees or reimbursement of ordinary business expenses not
unusual in amount or significance. As of the date hereof, to the
Knowledge of the Company there are no material losses, claims,
damages, costs, expenses, liabilities or judgments which would
entitle any director, officer or employee of the Company or any
of its subsidiaries to indemnification by the Company or its
subsidiaries under applicable law, the articles of incorporation
or bylaws of the Company or any of its subsidiaries or any
insurance policy maintained by the Company or any of its
subsidiaries. Section 3.1(s) of the Company Disclosure Schedule
sets forth all outstanding loans to stockholders, officers,
directors, employees or agents of the Company or any of its
subsidiaries or any affiliate of any officer or director of the
Company or any of its subsidiaries, and all such loans are
payable on demand.
(t) Noncompetition. Except as set forth in Section 3.1(t) of
the Company Disclosure Schedule, the Company and its subsidiaries
are not, and after the Effective Time neither the Surviving
Corporation nor Parent will be (by reason of any agreement to
which the Company is a party), subject to any non-competition or
similar restriction on their respective businesses.
(u) Fairness Opinion. The Company has received an opinion from
Xxxxxxx Xxxxx Xxxxxx Inc. to the effect that the Merger
Consideration is, as of the date of this Agreement, fair from a
financial point of view to the stockholders of the Company, and
copies of such opinion shall be delivered to Parent when
available.
(v) Non-competition Agreements. Each of Xxxxxxx X. Xxxxxxxx and
Xxxxxx X. Xxxxxxx has entered into a non-competition agreement
dated the date hereof with the Company and Parent (together, the
"Non-Competition Agreements"), and copies of such executed
agreements have been delivered to Parent.
(w) Employment Agreements. Each of Xxxxxx X. Xxxxxxx and those
employees of the Company identified in a letter provided by
Parent to the Company on the date hereof has entered into an
employment agreement dated the date hereof with the Company
(collectively, the "Employment Agreements"), and copies of such
executed agreements have been delivered to Parent.
SECTION 3.2 Representations and Warranties of Parent and Sub.
Parent and Sub represent and warrant to the Company as follows:
(a) Organization, Standing and Corporate Power. Parent is and
each of its subsidiaries is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction
in which it is organized and has the requisite corporate power
and authority to carry on its business as now being conducted.
Parent is and each of its subsidiaries is duly qualified or
licensed to do business as a foreign corporation and is in good
standing in each jurisdiction in which the nature of its business
or the ownership or leasing of its properties makes such
qualification or licensing necessary, other than in such
jurisdictions where the failure to be so qualified or licensed
would not have a Material Adverse Effect on Parent. Parent has
delivered to the Company complete and correct copies of its
articles of incorporation and by-laws and the articles of
incorporation and by-laws or other organizational documents of
its subsidiaries of Sub, in each case as amended to the date of
this Agreement.
(b) Authority; Noncontravention. Parent and Sub have the
requisite corporate power and authority to enter into this
Agreement and to consummate the transactions contemplated by this
Agreement. The execution and delivery of this Agreement and the
consummation of the transactions contemplated by this Agreement
have been duly authorized by all necessary corporate action on
the part of Parent and Sub. Assuming the due authorization,
execution and delivery of this Agreement by the Company, this
Agreement has been duly executed and delivered by Parent and Sub
and constitutes a valid and binding obligation of each such
party, enforceable against each such party in accordance with its
terms.
Except as set forth in Section 3.2(b) of the disclosure
schedule delivered by Parent and Sub to the Company (the "Parent
Disclosure Schedule"), the execution and delivery of this
Agreement does not, and the consummation of the transactions
contemplated by this Agreement and compliance with the provisions
of this Agreement will not, conflict with, or result in any
violation of, or default (with or without notice or lapse of
time, or both) under, or give rise to a right of termination,
cancellation or acceleration of any obligation or to loss of a
material benefit under, or result in the creation of any Lien
upon any of the properties or assets of Parent or any of its
subsidiaries under, (i) the articles of incorporation or by-laws
of Parent or Sub or the comparable charter or organizational
documents of any other subsidiary of Parent, (ii) any loan or
credit agreement, note, bond, mortgage, indenture, or material
lease or other agreement, instrument, permit, concession,
franchise or license applicable to Parent or any of its
subsidiaries or their respective properties or assets or
(iii) subject to the governmental filings and other matters
referred to in the following sentence, any judgment, order,
decree, statute, law, ordinance, rule or regulation (including,
without limitation, those of the National Indian Gaming
Commission, or any other tribal or governmental authority
regulating any form of gaming) applicable to Parent or any of its
subsidiaries or their respective properties or assets, other
than, in the case of clauses (ii) or (iii), any such conflicts
violations, defaults or rights that individually or in the
aggregate would not (x) have a Material Adverse Effect on Parent,
(y) impair in any material respect the ability of Parent and Sub
to perform their respective obligations under this Agreement or
(z) prevent or materially delay the consummation of any of the
transactions contemplated by this Agreement.
No consent, approval, order or authorization of, or
registration, declaration or filing with any Governmental Entity
is required by Parent or any of its subsidiaries in connection
with the execution and delivery of this Agreement or the
consummation by Parent or Sub, as the case may be, of any of the
transactions contemplated by this Agreement, except for (i) the
filing with the Specified Agencies of a premerger notification
and report form under the HSR Act, (ii) the filing with the SEC
of such reports under Sections 13(a), 13(d) and 16(a) of the
Exchange Act as may be required in connection with this Agreement
and the transactions contemplated by this Agreement, (iii) the
filing of the articles of merger with the Secretary of State of
the State of South Dakota and appropriate documents with the
relevant authorities of other states in which Parent is qualified
to do business, (iv) the approval by (A) the Nevada State Gaming
Control Board and the Nevada Gaming Commission under the Nevada
Gaming Control Act and the rules and regulations promulgated
thereunder, (B) South Dakota Commission on Gaming and South
Dakota Lottery Commission, (C) the National Indian Gaming
Commission under the Indian Gaming Regulatory Act of 1988 and the
rules and regulations promulgated thereunder, and (D) other
gaming regulatory bodies in jurisdiction where Parent or its
subsidiaries are engaged in business (including, without
limitation, the State of Mississippi) and (v) such other
consents, approvals, orders, authorizations, registrations,
declarations and filings, the failure of which to be obtained or
made would not have a Material Adverse Effect on Parent, impair
in any respect the ability of Parent to perform its obligations
under this Agreement, or prevent or materially delay the
consummation of any of the transactions contemplated by this
Agreement. Neither Parent nor any subsidiary of Parent nor, to
the Knowledge of Parent, any director or officer of Parent or of
any subsidiary of Parent has received any written claim, demand,
notice, complaint, court order or administrative order from any
Governmental Entity in the past three years, asserting that a
license of it or them, as applicable, under any Gaming Laws (as
defined in Section 3.1(o)) is being or may be revoked or
suspended other than such claims, demands, notices, complaints,
court orders or administrative orders which would not have a
Material Adverse Effect on Parent.
(c) Information Supplied. None of the information supplied or
to be supplied by Parent or Sub for inclusion or incorporation by
reference in the Proxy Statement will, at the date the Proxy
Statement is first mailed to the Company's stockholders or at the
time of the Company Stockholders' Meeting, contain any untrue
statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which
they are made, not misleading.
(d) Brokers. Neither Parent nor any of its subsidiaries nor any
of their respective officers, directors or employees has employed
any broker or finder or incurred any liability for any financial
advisory fees, brokerage fees, commissions or finder's fees, and
no broker or finder has acted directly or indirectly for Parent
or any of its subsidiaries in connection with this Agreement or
the transactions contemplated hereby.
(e) Voting Requirements. The Board of Directors of Parent at a
meeting duly called and held: (i) determined that the Merger is
advisable and fair and in the best interests of Parent and its
stockholders; and (ii) approved the Merger and this Agreement and
the transactions contemplated by this Agreement. No vote of the
holders of any class or series of the Parent's capital stock is
necessary to approve the Merger, this Agreement or the
transactions contemplated by this Agreement.
(f) Compliance with Gaming Laws. Parent and each of its
subsidiaries, and each of their respective directors, officers,
and persons performing management functions similar to officers,
are in compliance with all applicable Gaming Laws, except for any
immaterial events of non-compliance, which have been corrected
prior to the Closing Date to the satisfaction of the applicable
Governmental Entity.
(g) Interim Operations of Sub.
(i) Sub was formed solely for the purpose of engaging in the
transactions contemplated hereby, has engaged in no other
business activities and has conducted its operations only as
contemplated hereby.
(ii) As of the date hereof and the Effective Time, except for
obligations or liabilities incurred in connection with its
incorporation or organization and the transactions contemplated
by this Agreement, Sub has not and will not have incurred,
directly or indirectly, through any subsidiary, any obligations
or liabilities or engaged in any business activities of any type
or kind whatsoever or entered into any agreements or arrangements
with any person.
ARTICLE IV
COVENANTS RELATING TO CONDUCT OF BUSINESS
SECTION 4.1 Conduct of Business.
(a) Conduct of Business by the Company. Except as expressly set
forth in this Agreement, as set forth in Section 4.1 of the
Company Disclosure Schedule or as consented to in writing by
Parent during the period from the date of this Agreement to the
Effective Time, the Company shall, and shall cause its
subsidiaries to, carry on their respective businesses in the
usual, regular and ordinary course in substantially the same
manner as heretofore conducted and in compliance in all material
respects with all applicable laws and regulations and, to the
extent consistent therewith, use all commercially reasonable
efforts to preserve intact their current business organizations,
keep available the services of their current officers and
employees and preserve their relationships with customers,
suppliers and others having business dealings with them. Without
limiting the generality of the foregoing, and except as expressly
set forth in this Agreement, as set forth in Section 4.1 of the
Company Disclosure Schedule or as consented to in writing by
Parent between the date of this Agreement and the Effective Time
or until the earlier termination of this Agreement pursuant to
its terms, the Company shall not, and shall not permit any of its
subsidiaries to:
(i) (A) declare, set aside or pay (whether in cash, stock,
property or otherwise) any dividends on, or make any other
distributions in respect of, any of its capital stock, other than
dividends and distributions by any direct or indirect wholly
owned subsidiary of the Company to its parent, (B) split, combine
or reclassify any of its capital stock or issue or authorize the
issuance of any other securities in respect of, in lieu of or in
substitution for shares of its capital stock or (C) purchase,
redeem or otherwise acquire any shares of capital stock of the
Company or any of its subsidiaries or any other securities
thereof or any rights, warrants or options to acquire any such
shares or other securities (other than pursuant to the Stock
Purchase Plan (as defined in Section 5.5);
(ii) other than the issuance of Company Common Stock upon the
exercise of the stock options to purchase shares of Company
Common Stock outstanding on the date of this Agreement (each a
"Stock Option" and collectively the "Stock Options") in
accordance with their present terms or in accordance with the
present terms of any employment agreements existing on the date
of this Agreement, (A) issue, deliver, sell, award, pledge,
dispose of or otherwise encumber or authorize or propose the
issuance, delivery, grant, sale, award, pledge or other
encumbrance (including limitations in voting rights) or
authorization of, any shares of its capital stock, any other
voting securities or any securities convertible into, or any
rights, warrants or options to acquire, any such shares, voting
securities or convertible securities, (B) amend, waive or
otherwise modify the terms of any such rights, warrants or
options or (C) accelerate the vesting of any of the Stock
Options, except pursuant to the terms thereof as in effect on the
date hereof;
(iii) amend its articles of incorporation, by-laws or other
comparable charter or organizational documents, or alter through
merger, liquidation, reorganization, restructuring or in any
other fashion the corporate structure or ownership of any
material subsidiary of the Company;
(iv) acquire or agree to acquire (for cash or shares of stock or
otherwise) (A) by merging or consolidating with, or by purchasing
a substantial portion of the assets of, or by any other manner,
any business or any corporation, partnership, limited liability
company, joint venture, association or other business
organization or division thereof or (B) any assets with a fair
market value in excess of $75,000 in the aggregate, except
purchases of inventory, fixtures, furniture, supplies, vehicles
and equipment in the ordinary course of business consistent with
past practice;
(v) commence or undertake or agree to commence the operation or
development of a casino or other gaming operations of any nature
(other than (A) the existing gaming operations of the Company,
which includes obligations under the Louisiana Joint Venture
Agreements (as hereinafter defined), provided that the Company
shall not make or commit to make any loans, advances or capital
contributions to, or investments in, the Joint Venture or Sodak
Louisiana L.L.C. ("Sodak LA") without the written consent of
Parent, and (B) additional wide area progressive systems);
(vi) mortgage or otherwise encumber or subject to any Lien, or
sell, lease, exchange or otherwise dispose of any of, its
properties or assets, except for sales of its properties or
assets in the ordinary course of business consistent with past
practice;
(vii) (A) incur any indebtedness for borrowed money except in
the ordinary course of business consistent with past practices or
guarantee any such indebtedness of another person, issue or sell
any debt securities or warrants or other rights to acquire any
debt securities of the Company or any of its subsidiaries,
guarantee any debt securities of another person, enter into any
"keep well" or other agreement to maintain any financial
statement condition of another person or enter into any
arrangement having the economic effect of any of the foregoing,
or (B) make any loans, advances or capital contributions to, or
investments in, any other person, other than (1) to the Company
or any direct or indirect wholly owned subsidiary of the Company,
(2) loans or advances to employees of the Company or any of its
subsidiaries for travel or business expenses in the ordinary
course of business or (3) loans or advances to operators of
casinos or gaming operations to finance the purchase of
furniture, fixtures and equipment in the ordinary course of
business consistent with past practice, provided such loans or
advances do not exceed the fair market value of such furniture,
fixtures and equipment;
(viii) make or agree to make any new capital expenditures
other than those consistent with the budget set forth in Section
4.1(a) of the Company Disclosure Schedule;
(ix) make or rescind any express or deemed election relating to
material taxes, settle or compromise any claim, action, suit,
litigation, proceeding, arbitration, investigation, audit or
controversy relating to material taxes, or change any of its
methods of reporting income or deductions for federal income tax
purposes from those employed in the preparation of its federal
income tax return for the taxable year ending December 31, 1998,
except as may be required by applicable law;
(x) pay, discharge or satisfy any claims, liabilities or
obligations (absolute, accrued, asserted or unasserted,
contingent or otherwise), other than the payment, discharge,
settlement or satisfaction, in the ordinary course of business
consistent with past practice or in accordance with their terms,
of liabilities reflected or reserved against in, or contemplated
by, the most recent consolidated financial statements (or the
notes thereto) of the Company included in the Company SEC
Documents or incurred in the ordinary course of business
consistent with past practice;
(xi) (A) increase the rate of compensation payable or to become
payable generally to any of the Company's or any of its
subsidiaries' directors, officers or employees other than usual
and customary increases to employees who are not officers, (B)
pay or agree to pay any pension, retirement allowance, severance,
continuation or termination benefit or other material employee
benefit not provided for by any existing Pension Plan, Benefit
Plan or employment agreement described in the Company SEC
Documents filed prior to the date of this Agreement and publicly
available, (C) establish, adopt or commit itself to any
additional pension, profit sharing, bonus, incentive, deferred
compensation, stock purchase, stock option, stock appreciation
right, group insurance, severance pay, continuation pay,
termination pay, retirement or other material employee benefit
plan, agreement or arrangement, or amend or modify or increase
the benefits under or take any action to accelerate the rights or
benefits under any collective bargaining agreement or any
employee benefit plan, agreement or arrangement, including the
Stock Option Plans or other Benefit Plan, (D) enter into any
severance or employment agreement with or for the benefit of any
person, or (E) increase the rate of compensation under or
otherwise change the terms of any existing employment agreement;
(xii) except in the ordinary course of business consistent
with past practice, modify, or amend in any material respect, or
renew, fail to renew or terminate, any material contract or
agreement to which the Company or any subsidiary is a party or
waive, release or assign any material rights or claims;
(xiii) change fiscal years;
(xiv) authorize, recommend, propose or announce an intention
to adopt a plan of complete or partial liquidation or dissolution
of the Company;
(xv) enter into any collective bargaining agreement;
(xvi) engage in any transaction with, or enter into any
agreement, arrangement or understanding with, directly or
indirectly, any of the Company's affiliates other than pursuant
to such agreements existing on the date hereof and disclosed on
the Company Disclosure Schedule;
(xvii) amend, modify or waive in any manner any of the
provisions of any of the Non-Competition Agreements or Employment
Agreements; or
(xviii) authorize any of, or commit or agree to take any of,
the foregoing actions.
(b) Other Actions. The Company and Parent shall not, and shall
not permit any of their respective subsidiaries to, take any
action that would result in (i) any of the representations and
warranties of such party set forth in this Agreement that are
qualified as to materiality becoming untrue or (ii) any of such
representations and warranties that are not so qualified becoming
untrue in any material respect.
SECTION 4.2 No Inconsistent Activities.
(a) In light of the consideration given by the Board of
Directors of the Company prior to the execution of this Agreement
to, among other things, the transactions contemplated hereby, and
in light of the Company's representations contained in Section
3.1(u), the Company agrees that it shall not, nor shall it permit
any of its subsidiaries to, nor shall it authorize or permit any
officer, director or employee of, or any investment banker,
attorney or other advisor or representative of, the Company or
any of its subsidiaries to, directly or indirectly, solicit or
initiate, or encourage the submission of, any Takeover Proposal
(as defined below), or participate in any discussions or
negotiations regarding, or furnish to any person any information
with respect to, or take any other action to facilitate any
inquiries or the making of any proposal that constitutes, or may
reasonably be expected to lead to, any Takeover Proposal;
provided, however, that nothing in this Section 4.2 shall prevent
the Company or its Board of Directors from furnishing non-public
information to, or entering into discussions or negotiations
with, another person in connection with an unsolicited bona fide
Takeover Proposal by such person, if and only to the extent that
(i) such person has made a proposal to the Board of Directors of
the Company to consummate a Takeover Proposal, which proposal
identifies a price or range of values to be paid for the
outstanding securities or all or substantially all of the assets
of the Company, (ii) the Board of Directors of the Company
determines in good faith, after consultation with a financial
advisor of nationally recognized reputation, that such proposal
would, if so completed, result in a transaction that would
provide greater value to the holders of Company Common Stock than
the Merger (a "Superior Proposal") and that the party making the
proposal has demonstrated that the funds necessary for its
proposal are reasonably likely to be available, (iii) the Board
of Directors of the Company determines in good faith, after
consultation with outside counsel, that such action is necessary
in order to comply with its fiduciary duties to the Company's
stockholders under applicable law, and (iv) prior to furnishing
such information to, or entering into discussions or negotiations
with, such person or entity, the Board of Directors receives from
such person an executed confidentiality agreement in form and
substance similar to the Confidentiality Agreement dated March
13, 1998 (the "Confidentiality Agreement") between the Company
and Parent.
(b) The Company shall notify Parent orally and in writing of any
inquiries, offers or proposals with respect to a Takeover
Proposal (including without limitation the terms and conditions
of such proposal, the identity of the person or entity making it
and all other information reasonably requested by Parent), within
24 hours of the receipt thereof by an officer or director of the
Company or any advisor to the Company, shall keep Parent informed
of the status and details of any such inquiry, offer or proposal
and answer Parent's questions with respect thereto. For purposes
of this Agreement, "Takeover Proposal" means any proposal
(whether or not in writing and whether or not delivered to the
Company's stockholders generally) for a merger, consolidation,
purchase of assets, tender offer or other business combination
involving the Company or any of its subsidiaries or any proposal
or offer to acquire in any manner, directly or indirectly, an
equity interest in, any voting securities of, or a substantial
portion of the assets of, the Company or any of its subsidiaries,
other than the transactions contemplated by this Agreement.
Neither the Company nor any of its subsidiaries shall directly or
indirectly, release any third party from any confidentiality
agreement, except in connection with a Superior Proposal if the
Company's Board of Directors shall have determined in good faith,
after consultation with outside counsel, that such release of any
third party is necessary in order to comply with its fiduciary
duties to the Company's stockholders under applicable law.
Nothing contained herein shall prohibit the Company from
disclosing to its stockholders the statement required by Rule 14e-
2(a) under the Exchange Act with respect to a Takeover Proposal
by means of a tender offer.
ARTICLE V
ADDITIONAL AGREEMENTS
SECTION 5.1 Preparation of the Proxy Statement; Stockholders'
Meeting.
(a) As soon as practicable following the date of this Agreement,
the Company shall call and hold a meeting of its stockholders
(the "Company Stockholders' Meeting"), for the purpose of
obtaining the Stockholder Approval. Subject to the fiduciary
duties of its Board of Directors, the Company shall use its best
efforts to solicit from its stockholders proxies, and shall take
all other action necessary or advisable to secure the vote or
consent of stockholders required by applicable law or otherwise
to obtain the Stockholder Approval, and through its Board of
Directors, shall recommend to its stockholders the obtaining of
the Stockholder Approval. As promptly as practicable after the
execution of this Agreement, the Company shall prepare and file
with the SEC a proxy statement relating to the Company's
Stockholders' Meeting (together with any amendments thereof or
supplements thereto, the "Proxy Statement"). Parent shall
furnish all information concerning itself to the Company as the
Company may reasonably request in connection with such actions
and the preparation of the Proxy Statement. As soon as
reasonably practicable after clearance from the SEC, the Company
shall mail the Proxy Statement to its stockholders. The Proxy
Statement shall not be filed, and no amendment or supplement to
the Proxy Statement will be made by the Company, without prior
consultation with Parent and its counsel.
(b) Parent agrees promptly to advise the Company if at any time
prior to the Company Stockholders' Meeting (as defined above) any
information provided by it in the Proxy Statement is or becomes
incorrect or incomplete in any material respect and to provide
the Company with the information needed to correct such
inaccuracy or omission.
SECTION 5.2 Access to Information; Confidentiality. The
Company shall, and shall cause its subsidiaries to, afford
Parent, and the officers, employees, accountants, counsel,
financial advisors and other representatives of Parent,
reasonable access during normal business hours during the period
prior to the Effective Time to all their respective properties,
books, contracts, commitments, personnel and records and, during
such period, the Company shall, and shall cause each of its
subsidiaries to, furnish promptly to Parent, (a) a copy of each
report, schedule, registration statement and other document filed
by it during such period pursuant to the requirements of federal
or state securities laws and (b) all other information concerning
its business, properties and personnel as Parent may reasonably
request. Except as required by law, each of the Company and
Parent will hold, and will cause its respective officers,
employees, accountants, counsel, financial advisers and other
representatives and affiliates to hold, any confidential
information in accordance with the Confidentiality Agreement.
SECTION 5.3 Reasonable Efforts; Notification.
(a) Upon the terms and subject to the conditions set forth in
this Agreement, each of the Company, Parent and Sub agrees to use
commercially reasonable 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 to consummate and make effective, in the most
expeditious manner practicable, the Merger and the other
transactions contemplated by this Agreement, including (i) the
making of all necessary applications, registrations and filings
(including filings with Governmental Entities, if any), (ii) the
obtaining of all necessary actions or nonactions, licenses,
consents, approvals or waivers from Governmental Entities and
other third parties and (iii) taking of all reasonable steps as
may be necessary to obtain an approval or waiver from, or to
avoid an action or proceeding by, any Governmental Entity,
(iv) the execution and delivery of any additional instruments
necessary to consummate the transactions contemplated by, and to
fully carry out the purposes of, this Agreement, (v) the
defending of any lawsuits or other legal proceedings, judicial or
administrative, challenging this Agreement or the consummation of
the transactions contemplated hereby or thereby, including the
using of all commercially reasonable efforts necessary to lift,
rescind or mitigate the effect of any injunction or restraining
order or other order adversely affecting the ability of any party
hereto to consummate the transactions contemplated hereby,
(vi) the using of all commercially reasonable efforts to fulfill
all conditions to the obligations of Parent (including obtaining
any financing necessary to consummate the Merger), Sub or the
Company pursuant to this Agreement, and (vii) the using of all
commercially reasonable efforts to prevent, with respect to a
threatened or pending temporary, preliminary or permanent
injunction or other order, decree or ruling or statute, rule,
regulation or executive order, the entry, enactment or
promulgation thereof, as the case may be; provided, however, that
Parent shall not be obligated to take any action pursuant to the
foregoing if the taking of such action or the obtaining of any
waiver, license, consent, approval or exemption is reasonably
likely to be materially burdensome to Parent and its subsidiaries
taken as a whole or to impact in a materially adverse manner the
economic or business benefits of the transactions contemplated by
this Agreement so as to render inadvisable the consummation of
the Merger.
(b) The Company shall give prompt written notice to Parent, and
Parent shall give prompt written notice to the Company, of
(i) any representation or warranty made by it contained in this
Agreement that is qualified as to materiality becoming untrue or
inaccurate in any respect or any such representation or warranty
that is not so qualified becoming untrue or inaccurate in any
material respect, (ii) the failure by it to comply with or
satisfy in any material respect any covenant, condition or
agreement to be complied with or satisfied by it under this
Agreement or (iii) the occurrence of any change or event having,
or which insofar as can reasonably be foreseen to have, a
Material Adverse Effect on the Company; provided, however, that
no such notification shall (A) affect the representations,
warranties, covenants or agreements of the parties or the
conditions to the obligations of the parties under this Agreement
or (B) limit or otherwise affect the remedies available hereunder
to the party receiving such notice.
SECTION 5.4 Gaming Approvals.
(a) Gaming Approvals.
(i) Upon the terms and subject to the conditions set forth in
this Agreement, each of the Company and Parent agrees to promptly
prepare and file all necessary documentation, to effect all
applications, notices, petitions and filings, to obtain as
promptly as practicable all permits, registrations, licenses,
findings of suitability, qualifications, consents, waivers,
variances, exemptions, orders, approvals and authorizations of
all Governmental Entities which are necessary in connection with
the consummation of the transactions contemplated by this
Agreement (whether required to be made or obtained prior to or
after the Effective Time) (all of the foregoing, collectively
"Gaming Approvals") and to comply with the terms and conditions
of all such Gaming Approvals. Each of the Company and Parent
shall use all commercially reasonable efforts to, and to cause
their respective officers, directors and affiliates to, file
within thirty days after the date hereof, and in all events shall
file within sixty days after the date hereof, all required
initial applications and documents in connection with obtaining
the Gaming Approvals and shall act reasonably and promptly
thereafter in responding to additional requests in connection
therewith. Parent and the Company shall have the right to review
in advance, and to the extent practicable, each will consult
with the other on, in each case subject to applicable laws
relating to the exchange of information, all the information
relating to the Company or Parent as the case may be, and any of
their respective subsidiaries, directors, officers and
stockholders, which appear in any filing made with, or written
materials submitted to, any Governmental Entity in connection
with the transactions contemplated by this Agreement. The
Company and Parent agree to promptly advise each other upon
receiving any communication from any Governmental Entity which
causes such party to believe that there is a reasonable
likelihood that any Gaming Approval required from such
Governmental Entity will not be obtained or that the receipt of
any such approval will be materially delayed.
(ii) Promptly following the execution of this Agreement, the
Company shall use its commercially reasonable efforts to cause
the sale of the Riverboat Complex for cash in a stock or asset
sale transaction (including a transaction where the riverboat is
first contributed to GSMC and the stock of GSMC is sold), such
disposition to (i) include the termination of, or the assignment
and assumption by the purchaser of the Riverboat Complex of, any
leases (including, without limitation, leases relating to
furniture, fixtures and equipment used thereon) or any guaranties
thereof or other agreements relating to the Riverboat Complex or
its operation, (ii) be effected for a price (including but not
limited to provisions relating to the allocation of the purchase
price among the assets sold) satisfactory to Parent and (iii) be
made in a manner, to the extent possible, that is, after
consultation with Parent, tax efficient. Notwithstanding the
foregoing, if the Company presents to Parent a proposed sale of
the Riverboat Complex, Parent shall, within five business days
thereof, either (i) subject to Parent having obtained, or
representing to the Company that it has been advised by the
applicable Governmental Entity that it is likely to receive
within thirty (30) days or less, all Gaming Approvals required to
acquire the Riverboat Complex, give notice to the Company that it
is withholding its approval of such sale and in such event the
condition specified in Section 6.2(f) hereof and Parent's right
to approve the price shall be deemed waived by Parent, or
(ii) give notice to the Company that it either approves of the
proposed sale or approves of the proposed sale subject to the
receipt of an opinion of an investment banking firm designated by
Parent and approved by the Company, such approval not to be
unreasonably withheld, that the consideration received for the
Riverboat Complex is fair to the Company from a financial point
of view, such opinion to be given without taking into
consideration the existence of this Agreement or the proposed
Merger (the "Fairness Opinion"). In the event that Parent
approves of the sale subject to the receipt of a Fairness Opinion
and such opinion cannot for any reason be obtained, then the
Company shall not proceed with the sale and the condition
specified in Section 6.2(f) hereof and Parent's right to approve
the price shall remain effective. In all events, Parent shall
have the right to review and approve the terms of the sale other
than the price received, such approval not to be unreasonably
withheld. The Company shall, as part of its efforts to sell the
Riverboat Complex, consult with Parent regarding its sales
efforts and shall use commercially reasonable efforts to obtain
the best terms for the sale of the Riverboat Complex . If
requested by Parent, the Company shall use its commercially
reasonable efforts to assist Parent in obtaining all Gaming
Approvals necessary to permit Parent to acquire the Riverboat
Complex as part of the Merger (it being understood that any
conditions that may be imposed by regulatory authorities must be
acceptable to Parent).
(iii) The Company shall use its commercially reasonable
efforts to sell or terminate (by means of withdrawal or
otherwise) all of the Company's direct or indirect interests
under that certain Amended and Restated Joint Venture Agreement
of QNOV, dated July 31, 1998, by and among Shreveport
Paddlewheels, LLC ("SPL"), Sodak LA and HWCC-Louisiana, Inc.
("Hollywood"); that certain Amended and Restated Assignment of
Joint Venture Interest, dated September 22, 1998, by and among
Sodak LA and Hollywood, as Assignees and SPL and New Orleans
Paddlewheels Inc. ("NOP"), as assignors; that certain Amended and
Restated Master Agreement, dated July 31, 1998, by and among NOP,
SPL, Hollywood and Sodak LA; that certain Consulting Agreement,
dated July 31, 1998, by and between the Queen of New Orleans at
the Hilton Joint Venture ("QNOV") and the Company; that certain
Loan and Settlement Agreement, dated January 16, 1998, by and
among NOP, SPL, Hollywood, Sodak LA and Hilton New Orleans
Corporation ("HNOC"); that certain Indemnity Agreement, dated
January 16, 1998 by and among NOP, HNOC, Sodak LA, SPL and
Hollywood; that certain Loan and Settlement Agreement, dated
January 16, 1998, by and among NOP, Hollywood, Sodak LA, SPL and
HNOC; that certain Compromise Agreement, dated January 16, 1998,
by and among HNOC, NOP, QNOV and the City of New Orleans; that
certain Side Agreement, dated January 16, 1998, by and among
QNOV, Hollywood and Sodak LA; that certain Indemnity Agreement -
Physical Inspections, by and among NOP, SPL, Sodak LA, Hollywood
and Red River Entertainment of Shreveport Partnership in
Commendam; those certain Loan Agreement, Security Agreement,
Guaranty Agreement and Marine Services Agreement contemplated to
be entered into by and among SPL, Hollywood and Sodak LA
(collectively, the "Louisiana Joint Venture Agreements") (either
directly and/or through the sale of all of the Company's
interests in Sodak LA) pursuant to documentation in form and
substance (other than as to price) reasonably satisfactory to
Parent; provided that the minimum price shall be an amount equal
to all loans, advances and additional capital contributions to,
or investments in, Sodak LA, the Joint Venture or any Joint
Venture partner made with the consent of Parent after the date
hereof (it being understood that $2.5 million has been
contributed by the Company as of the date hereof). The Company
shall not provide any consideration in connection with such sale
or termination other than a forfeiture of the $2.5 million
capital contribution made by the Company as of the date hereof.
Upon the consummation of such sale, neither the Company nor any
of its subsidiaries shall have any further liabilities or
obligations of any nature whatsoever relating to the Louisiana
Joint Venture Agreements or the sale or termination thereof. The
Company shall, as part of its efforts to sell its interests in
the Louisiana Joint Venture Agreements, consult with the Parent
regarding its sales efforts and shall use commercially reasonable
efforts to obtain the best terms for the sale of its interests in
the Louisiana Joint Venture Agreements.
Parent shall have the right, at any time during the
period commencing on the date 90 days after the date of this
Agreement and ending on the date 180 days after the date of this
Agreement, if the Company has not prior thereto entered into a
definitive agreement with a third party purchaser to sell its
interests in the Louisiana Joint Venture Agreements in accordance
with the preceding paragraph, to require Xxxxxx Xxxxxx and Xxxxxx
X. Xxxxxxx, or an entity wholly owned by them, to purchase all of
the Company's interests under the Louisiana Joint Venture
Agreements (either directly and/or through the purchase of all
the Company's interests in Sodak LA) and as consideration
therefor Xxxxxx Xxxxxx and Xxxxxx X. Xxxxxxx shall assume all of
the Company's obligations under the Louisiana Joint Venture
Agreements and, in addition, pay to Parent the consideration
specified in that certain letter to Xxxxxx Xxxxxx and Xxxxxx X.
Xxxxxxx dated as of the date hereof; provided that such
consideration shall be increased by an amount equal to all loans,
advances and additional capital contributions to, or investments
in, Sodak LA, the Joint Venture or any Joint Venture partner made
with the consent of Parent after the date hereof (it being
understood that $2.5 million has been contributed by the Company
as of the date hereof). Xxxxxx Xxxxxx and Xxxxxx X. Xxxxxxx agree
to promptly prepare and file all necessary documentation, to
effect all applications, notices, petitions and filings, and to
use best efforts to obtain as promptly as practicable all Gaming
Approvals necessary for Xxxxxx Xxxxxx and Xxxxxx X. Xxxxxxx to
effect such transaction. The documentation to effect such
transaction shall be prepared by Parent, shall not contain any
representations or warranties by the Company other than with
respect to the Company's ownership of the interests being
purchased and shall not provide for any continuing obligations on
the part of the Company or any of its subsidiaries in connection
with such purchase or with respect to the Louisiana Joint Venture
Agreements. Upon the request of Parent, the Company shall
promptly undertake any actions required under the Louisiana Joint
Venture Agreements in connection with such sale.
(iv) Nothing in this Agreement, including but not limited to the
provisions of Section 5.4(a)(ii) hereof, shall obligate Parent to
take any action which may require or result in the voluntary
surrender, forfeiture or other termination by Parent of, or
otherwise have any material adverse impact on, any permits,
registrations, licenses, findings of suitability, qualifications,
consents, waivers, variances, exemptions, orders, approvals and
authorizations of all Governmental Entities which are then held
by Parent or any of its subsidiaries.
(b) Denial of License; Individuals. If any person shall become
an Ineligible Person prior to the Closing, then (i) each
Ineligible Person shall, and the Company shall cause each
Ineligible Person to, immediately and permanently, resign from
any position, including as director or officer, in the Company,
Parent or Sub and each Ineligible Person shall have no further
management role in Parent, Sub or the Company, (ii) if required
to do so by any Governmental Entity as a condition to receipt of
any Gaming Approval, each Ineligible Person shall, and the
Company shall cause each Ineligible Person to, dispose of all of
its securities or other ownership interests in the Company, and
(iii) each Ineligible Person shall, and the Company shall cause
each Ineligible Person to, cooperate with the Company, Parent and
Sub in their efforts to obtain and retain in full force and
effect the Gaming Approval. "Ineligible Person" shall mean any
person who owns any capital stock or other interest in the
Company (i) who is denied a Gaming Approval, disqualified from
eligibility for a Gaming Approval or found unsuitable by any
Governmental Entity before the Closing Date, (ii) whose continued
involvement in the business of the Company as an employee,
director, officer or otherwise, may, in Parent's reasonable
opinion after consultation with counsel, have a Material Adverse
Effect on the likelihood that any Governmental Entity will issue
a Gaming Approval to the Company, the Surviving Corporation, Sub
or Parent or (iii) is expressly precluded from having any
continuing interest in the Company, the Surviving Corporation,
Sub or Parent in any Gaming Approval granted by a Governmental
Entity as a condition to the issuance or continued validity of
any Gaming Approval by any Governmental Entity.
SECTION 5.5 Stock Options; Employee Benefits.
(a) Stock Option Plans.
(i) Any Stock Option outstanding immediately prior to the
Effective Time which is then exercisable or becomes exercisable
as a result of an acceleration triggered by the Merger pursuant
to any existing option agreements and all Stock Options
outstanding immediately prior to the Effective Time that were
granted to members of the Board of Directors of the Company
pursuant to the 1993 Directors' Stock Option Plan (all such Stock
Options being the "Vested Options"), shall be cancelled and,
subject to the Company's receipt of the acknowledgement described
in Section 6.2(i) from the holder of such Vested Options, shall
entitle the holder thereof, upon surrender thereof, to receive,
for each share of Company Common Stock subject to such Vested
Option, an amount (subject to any applicable withholding tax) in
cash equal to the Merger Consideration minus the per share
exercise or purchase price of such Vested Option as of the date
hereof.
(ii) Any restricted shares of Company Common Stock granted to any
employee of the Company outstanding immediately prior to the
Effective Time ("Restricted Shares"), whether or not then vested
and transferable by such employee, shall be converted, by virtue
of the Merger and without any action on the part of the holder
thereof, into the right to receive, without interest, the Merger
Consideration.
(iii) Amounts contributed to the Company's Employee Stock
Purchase Plan (the "Stock Purchase Plan") for the purchase of
Company Common Stock that, prior to the Effective Time, have not
yet been applied to the purchase of Company Common Stock shall be
applied to the purchase of Company Common Stock immediately prior
to the Effective Time at a purchase price per share equal to the
purchase price that would have been paid pursuant to the terms of
the Stock Purchase Plan had the date on which the Effective Time
occurs been the last day of an investment cycle under the Stock
Purchase Plan. Each share of Company Common Stock purchased
pursuant to this Section 5.5(a)(iii) shall be converted into the
Merger Consideration in accordance with Section 2.1(c)(i) of this
Agreement. The Company will amend the Stock Purchase Plan to
provide that no contributions can be made to the Stock Purchase
Plan after a date that is no later than the last day of the
Company's regular payroll period ending immediately prior to the
Effective Time, and no such contributions shall actually be made.
(b) Employee Benefits. From and after the Effective Time,
Parent shall, or cause the Surviving Corporation to, provide all
of the employees of the Surviving Corporation and its
subsidiaries with all employee benefit plans, programs, policies
or arrangements (the "Parent Benefit Plans") as are provided by
Parent and its subsidiaries to their own employees who are
similarly situated. From and after the Effective Time, if any
director, officer or other employee of the Company or its
subsidiaries becomes eligible to participate in any compensation
or benefit plan, agreement or arrangement maintained by Parent,
the Surviving Corporation or any of their respective
subsidiaries, Parent shall cause (i) all service of such
director, officer or employee completed prior to the Effective
Time with Company or any of its subsidiaries to be recognized
under such plan, agreement or arrangement for all purposes
except, in the case of a defined benefit retirement plan, for
benefit accrual purposes, (ii) to be waived any waiting or
eligibility periods or exclusions for pre-existing conditions
(except that the waiver of the exclusions for pre-existing
conditions shall not require coverage of any condition which
would not have been covered under Parent's medical benefit plans
had the condition not been pre-existing) of, any such director,
officer or employee and his or her dependents and (iii) to be
recognized all co-payments, deductibles or similar amounts or
costs incurred by any such director, officer or employee under a
comparable plan, agreement or arrangement of the Company or any
of its subsidiaries during the plan year in which such director,
officer or employee commences participation in an applicable
benefit plan, agreement or arrangement of Parent, the Surviving
Corporation or any of their respective subsidiaries. The
foregoing shall not constitute any commitment, contract,
understanding or undertaking, guarantee (express or implied) on
the part of the Surviving Corporation to continue the employment
of any employee of the Company for any term of duration or on any
terms other than those as the Surviving Corporation may
establish.
(c) Continuation of Agreements. The Surviving Corporation and
its subsidiaries shall honor, pay and perform all of their
respective covenants and obligations under, and in accordance
with the existing terms of, all employment, severance,
termination and similar agreements identified in Section 3.1(g)
of the Company Disclosure Schedule between the Company or any
such subsidiary and any officer, director or employee thereof,
from and after the Effective Time to and including the earlier of
(i) the termination of such agreement and (ii) one year after the
Effective Time.
SECTION 5.6 Takeover Statutes; Inconsistent Actions. If any
"fair price," "moratorium," "control share," "business
combination," "shareholder protection" or similar or other anti-
takeover statute or regulation enacted under any state or Federal
law shall become applicable to the Merger or any of the other
transactions contemplated hereby, the Company and the Board of
Directors of the Company shall grant such approvals and take all
such actions as are within its authority so that the Merger and
the other transactions contemplated hereby and thereby may be
consummated as promptly as practicable on the terms contemplated
hereby and thereby and otherwise use all commercially reasonable
efforts to eliminate the effects of such statute or regulation on
the Merger and the transactions contemplated hereby and thereby.
The Company has not and, during the term of this Agreement shall
not, adopt, effect or implement any "shareholders' rights plan,"
"poison pill" or similar arrangement.
SECTION 5.7 Indemnification, Exculpation and Insurance.
(a) The articles of incorporation and the by-laws of the
Surviving Corporation shall contain the provisions with respect
to indemnification and exculpation from liability set forth in
the Company's articles of incorporation and by-laws on the date
of this Agreement, which provisions shall not be amended,
repealed or otherwise modified for a period of six years from the
Effective Time in any manner that would adversely affect the
rights thereunder of individuals who on or prior to the Effective
Time were directors, officers, employees or agents of the
Company, unless such modification is required by law.
(b) For six years from the Effective Time, Parent shall maintain
in effect directors' and officers' liability insurance covering
those persons who are currently covered by the Company's
directors' and officers' liability insurance policy (a copy of
which has been heretofore made available to Parent) on terms no
less favorable to such indemnified parties than the terms of such
current insurance coverage; provided, however, that (i) in lieu
of the purchase of such insurance by the Surviving Corporation or
Parent, the Company, with Parent's written consent, may purchase
a five-year extended reporting period endorsement ("reporting
tail coverage") under its existing directors' and officers'
liability insurance coverage and (ii) if the cost of such
insurance in any year during such six-year period shall exceed
150% of the premium cost for such policy for the year ended June
30, 1999 (such premium being the "Current Premium"), then Parent
shall cause the Surviving Corporation to, and the Surviving
Corporation shall, provide coverage affording the same protection
as maintained by Parent as of such date for its officers and
directors. The Company represents to Parent that the Current
Premium is $270,500.
(c) In addition to the other rights provided for in this Section
5.7 and not in limitation thereof, for six years from and after
the Effective Time, Parent and the Surviving Corporation shall,
to the fullest extent permitted by applicable law, (i) indemnify
and hold harmless the individuals who on or prior to the
Effective Time were officers or directors of the Company
(collectively, the "Indemnitees") against all losses, Expenses
(as hereinafter defined), claims, damages, liabilities,
judgments, or amounts paid in settlement (collectively, "Costs")
in respect to any claim, action, suit or proceeding, whether
criminal, civil, administrative or investigative based on, or
arising out of or relating to the fact that such person is or was
a director or officer of the Company and arising out of acts or
omissions occurring on or after July 1, 1998 and on or prior to
the Effective Time (including, without limitation, in respect of
acts or omissions in connection with this Agreement and the
transactions contemplated hereby) to the fullest extent that the
Company would have been permitted under the SDBCA and its
articles of incorporation and by-laws in effect on the date
hereof to indemnify such person (an "Indemnifiable Claim") and
(ii) advance to such Indemnitees all Expenses incurred in
connection with any Indemnifiable Claim promptly after receipt of
reasonably detailed statements therefor; provided, that the
person to whom Expenses are to be advanced provides an
undertaking to repay such advances if it is ultimately determined
that such person is not entitled to indemnification from the
Surviving Corporation. In the event any Indemnifiable Claim is
asserted or made within such six year period, all rights to
indemnification and advancement of Expenses in respect of any
such Indemnifiable Claim shall continue until such Indemnifiable
Claim is disposed of or all judgments, orders, decrees or other
rulings in connection with such Indemnifiable Claim are fully
satisfied. For the purposes of this Section 5.7, "Expenses"
shall include reasonable attorneys' fees and all other costs,
charges and expenses paid or incurred in connection with
investigating, defending, being a witness in or participating in
(including on appeal), or preparing to defend, be a witness in or
participate in any Indemnifiable Claim.
(d) Any Indemnitee wishing to claim indemnification under
paragraph (c) of this Section 5.7, upon learning of any such
claim, action, suit, proceeding or investigation, shall promptly
notify the Surviving Corporation thereof, but the failure to so
notify shall not relieve the Surviving Corporation of any
liability it may have to such Indemnitee if such failure does not
materially prejudice the indemnifying party. In the event of any
such claim, action, suit, proceeding or investigation (whether
arising before or after the Effective Time), (i) the Surviving
Corporation shall have the right to assume the defense thereof
and the Surviving Corporation shall not be liable to such
Indemnitees for any legal expenses of other counsel or any other
expenses subsequently incurred by such Indemnitees in connection
with the defense thereof, except that if the Surviving
Corporation does not elect to assume such defense or counsel for
the Indemnitees advises that there are issues which raise
conflicts of interest between the Surviving Corporation and any
Indemnitees or between any two or more Indemnitees, such
Indemnitees may retain counsel satisfactory to them, and the
Surviving Corporation shall pay all reasonable fees and expenses
of such counsel for the Indemnitees promptly as statements
therefor are received; provided, however, that the Surviving
Corporation shall be obligated pursuant to this paragraph (d) to
pay for only one firm of counsel for all Indemnitees in any
jurisdiction (unless there is a conflict of interest as provided
above), (ii) the Indemnitees will cooperate in the defense of any
such matter and (iii) the Surviving Corporation shall not be
liable for any settlement effected without the prior written
consent of the Surviving Corporation, which consent shall not be
unreasonably withheld.
(e) The obligations of the Company, the Surviving Corporation
and Parent contained in this Section 5.7 shall be binding on the
successors and assigns of Parent and the Surviving Corporation.
If Parent, the Surviving Corporation or any of their 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 all or
substantially all of its properties and assets to any person,
then and in each such case, proper provisions shall be made so
that the successors and assigns of Parent or the Surviving
Corporation, as the case may be, shall assume the obligations set
forth in this Section 5.7.
SECTION 5.8 Letters of Accountants. The Company shall use its
commercially reasonable efforts to cause to be delivered to
Parent a "comfort" letter of KPMG Peat Marwick LLP , the
Company's independent public accountants, dated and delivered on
the date on which the Proxy Statement is mailed to stockholders
of the Company and dated the Closing Date, each addressed to
Parent, in form and substance reasonably satisfactory to Parent
and reasonably customary in scope and substance for letters
delivered by independent public accountants in connection with
transactions such as those contemplated by this Agreement.
SECTION 5.9 Fees and Expenses. Except as provided in Section
7.5, whether or not the Merger is consummated, 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, however, that those expenses
incurred in connection with printing and mailing the Proxy
Statement, including the filing fee paid to the SEC, and all
filing fees related to compliance with the HSR Act in connection
with the transactions contemplated hereby shall be shared equally
by Parent and the Company.
SECTION 5.10 Public Announcements. Parent and Sub, on the one
hand, and the Company, on the other hand, will consult with each
other before issuing, and provide each other the opportunity to
review and comment upon, any press release or other public
statements with respect to the transactions contemplated by this
Agreement, including the Merger, including without limitation
those press releases that may be required by applicable law,
court process or by obligations pursuant to any listing agreement
with any national securities exchange.
ARTICLE VI
CONDITIONS PRECEDENT
SECTION 6.1 Conditions to Each Party's Obligations to Effect
the Merger. The respective obligation of each party to effect
the Merger is subject to the satisfaction or waiver on or prior
to the Closing Date of the following conditions:
(a) Stockholder Approval. The Stockholder Approval shall have
been obtained.
(b) No Injunctions or Restraints. No litigation brought by a
Governmental Entity shall be pending, and no litigation shall be
threatened by any Governmental Entity, which seeks to enjoin or
prohibit the consummation of the Merger, and no temporary
restraining order, preliminary or permanent injunction or other
order issued by any court of competent jurisdiction or other
legal restraint or prohibition preventing the consummation of the
Merger shall be in effect.
(c) HSR Act. The applicable waiting period (and any extension
thereof) under the HSR Act shall have expired or been terminated.
SECTION 6.2 Additional Conditions to Obligations of Parent and
Sub. The obligations of Parent and Sub to effect the Merger are
also subject to the following conditions:
(a) Representations and Warranties. Each of the representations
and warranties of the Company contained in this Agreement that is
qualified by materiality shall be true and correct at and as of
the Closing Date as though made on and as of the Closing Date,
and each of such representations and warranties that is not so
qualified shall be true and correct in all material respects at
and as of the Closing Date as if made at and as of the Closing
Date, provided that those representations and warranties which
address matters only as of a particular date shall remain true
and correct at and as of such date. Parent shall have received a
certificate of the Chief Executive Officer and Chief Financial
Officer of the Company to such effect.
(b) Agreements and Covenants. The Company shall have performed
or complied in all material respects with all agreements and
covenants required by this Agreement to be performed or complied
with by it on or prior to the Closing Date. Parent shall have
received a certificate of the Chief Executive Officer and Chief
Financial Officer of the Company to that effect. The Significant
Stockholders shall have performed all of their obligations under
the Voting Agreements at or prior to the Closing Date.
(c) Certificates and Other Deliveries. The Company shall have
delivered, or caused to be delivered, to Parent (i) a certificate
of good standing from the Secretary of State of the State of
South Dakota and of comparable authority in other jurisdictions
in which the Company and its subsidiaries are incorporated or
qualified to do business stating that each is a validly existing
corporation in good standing; (ii) duly adopted resolutions of
the Board of Directors and stockholders of the Company approving
the execution, delivery and performance of this Agreement and the
instruments contemplated hereby, certified by the Secretary of
the Company; and (iii) a true and complete copy of the articles
of incorporation or comparable governing instruments, as amended,
of the Company and its subsidiaries certified by the Secretary of
State of the state of incorporation or comparable authority in
other jurisdictions, and a true and complete copy of the by-laws
or comparable governing instruments, as amended, of the Company
and its subsidiaries certified by the Secretary of the Company
and its subsidiaries, as applicable.
(d) No Material Adverse Change. From and including the date
hereof, there shall not have occurred a Material Adverse Change
with respect to the Company.
(e) Consents and Approvals. Parent shall have received
evidence, in form and substance reasonably satisfactory to it,
that such licenses, permits, consents, approvals, waivers,
findings of suitability, authorizations, qualifications and
orders of, and declarations, registrations and filings
(including, without limitation, all Gaming Approvals)
(collectively, "Consents and Filings") required to be made or
obtained by the Company or Parent from all Governmental Entities
and parties to loan or credit agreements, notes, mortgages,
indentures, leases or other contracts, agreements or instruments
to which the Company, Parent or any of their respective
subsidiaries is a party or by which the Company, Parent or any of
their respective subsidiaries or their respective assets are
bound or affected, as are required in connection with the Merger
and the consummation of the transactions contemplated hereby,
have been obtained or made, as applicable, by the Company or
Parent, as the case may be, without the imposition of any
limitations, prohibitions or requirements and are in full force
and effect, other than those Consents and Filings (excluding
Gaming Approvals) which, if not obtained or made, or those
limiting prohibitions or requirements which would not, either
have (i) a material adverse effect on the transactions
contemplated hereby, (ii) a Material Adverse Effect on the
Surviving Corporation or Parent after the Effective Time, or
(iii) a Material Adverse Effect on the continuation of the
operations and business of the Company and its subsidiaries by
the Surviving Corporation after the consummation of the
transactions contemplated hereby.
(f) Riverboat Operations. If so required by any Governmental
Entity as a condition to the receipt by the Company, Parent or
Sub of any of the Consents and Filings or in order for Parent to
comply with applicable Gaming Laws, the Company shall have
disposed of the Riverboat in accordance with Section 5.4(a)(ii).
(g) Louisiana Joint Venture Agreements. The Company shall have
sold or terminated (by withdrawal or otherwise) all of the
Company's direct or indirect interests in the Louisiana Joint
Venture Agreements in accordance with Section 5.4(a)(iii).
(h) Employment. Each of Xxxxxx Xxxxxxx and the minimum number
of persons specified in the letter (such number to include those
persons specifically designated as included in such minimum
number in such letter) delivered by Parent to the Company
pursuant to Section 3.1(w) shall have continued in the employment
of the Company through, and be employed by the Company on, the
Effective Time.
(i) Other Agreements. Parent shall have received
acknowledgements from the holders of all outstanding Stock
Options that such Stock Options shall be cancelled as of the
Effective Time and that such holder is only entitled to receive
the per share Merger Consideration minus the per share exercise
price of such Stock Options.
(j) Financing. The funds necessary to pay the aggregate Merger
Consideration shall have been obtained by Parent on terms
reasonably acceptable to Parent.
(k) Dissenting Shares. The Dissenting Shares shall comprise
less than 10% of the outstanding Company Common Stock.
SECTION 6.3 Additional Conditions to Obligations of the
Company. The obligations of the Company to effect the Merger are
also subject to the following conditions:
(a) Representations and Warranties. Each of the representations
of Parent and Sub contained in this Agreement that is qualified
by materiality shall be true and correct at and as of the Closing
Date as though made on and as of the Closing Date and each of
such representations and warranties that is not so qualified
shall be true and correct in all material respects at and as of
the Closing Date as if made at and as of the Closing Date,
provided that those representations and warranties which address
matters only as of a particular date shall remain true and
correct at and as of such date. The Company shall have received
a certificate of the Chief Executive Officer and Chief Financial
Officer of Parent to such effect.
(b) Agreements and Covenants. Parent shall have performed or
complied in all material respects with all agreements and
covenants required by this Agreement to be performed or complied
with by it on or prior to the Closing Date. The Company shall
have received a certificate of the Chief Executive Officer and
Chief Financial Officer of Parent to such effect.
(c) Certificates and Other Deliveries. Parent shall have
delivered to the Company (i) a certificate of existence from the
Secretary of State of the State of Nevada stating that Parent is
a validly existing corporation together with a certificate of
good standing from the Secretary of State of the State of South
Dakota stating that Sub is a validly existing corporation in good
standing; (ii) duly adopted resolutions of the Board of Directors
of each of Parent and Sub approving the execution, delivery and
performance of this Agreement and the instruments contemplated
hereby, and of the stockholders of Sub approving the Merger, each
certified by the Secretary or the Assistant Secretary of the
relevant party; and (iii) a true and complete copy of the
articles of incorporation, as amended, of Parent and Sub
certified by the Secretary of State of the state of each of their
incorporation, and a true and complete copy of the by-laws, as
amended, of Parent and Sub certified by the Secretary or
Assistant Secretary of Sub or Parent, as applicable.
ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER
SECTION 7.1 Termination. This Agreement may be terminated at
any time prior to the Effective Time, whether before or after
approval by the stockholders of the Company:
(a) by mutual written consent of Parent and the Company, if the
Board of Directors of each so determines by the affirmative vote
of a majority of the members of its entire Board of Directors;
(b) by Parent (provided that Parent is not then in material
breach of any representation, warranty, covenant or other
agreement contained herein), upon a material breach of any
representation, warranty, covenant or agreement on the part of
the Company set forth in this Agreement, or if any representation
or warranty of the Company shall have become untrue, in either
case such that the conditions set forth in Section 6.2(a) or
Section 6.2(b), as the case may be, would be incapable of being
satisfied by December 31, 1999;
(c) by the Company (provided that the Company is not then in
material breach of any representation, warranty, covenant or
other agreement contained herein), upon a material breach of any
representation, warranty, covenant or agreement on the part of
Parent or Sub set forth in this Agreement, or if any
representation or warranty of Parent or Sub shall have become
untrue, in either case such that the conditions set forth in
Section 6.3(a) or Section 6.3(b), as the case may be, would be
incapable of being satisfied by December 31, 1999;
(d) by either Parent or the Company if any Governmental Entity
shall have issued an order, decree or ruling or taken any other
action permanently enjoining, restraining or otherwise
prohibiting the consummation of the Merger and such order, decree
or ruling or other action shall have become final and
nonappealable;
(e) by either Parent or the Company, if the Merger shall not
have occurred by December 31, 1999, unless the failure to
consummate the Merger is the result of a breach of covenant set
forth in this Agreement or a material breach of any
representation or warranty set forth in this Agreement by the
party seeking to terminate this Agreement and provided that if
the Merger has not been consummated because of a failure to
obtain approval from a Governmental Entity and such approval is
still pending, then Parent or the Company may extend such date to
March 31, 2000 by providing written notice thereof to the other
party on or before December 31, 1999;
(f) by either Parent or the Company (provided that the
terminating party is not in material breach of any of its
obligations hereunder), if any approval of the stockholders of
the Company required for the consummation of the Merger shall not
have been obtained by reason of the failure to obtain the
required vote at a duly held meeting of the Company's
stockholders or at any adjournment or postponement thereof;
(g) by Parent, if the Board of Directors of the Company
(i) withdraws or modifies adversely its recommendation of the
Merger following the receipt by the Company of a Takeover
Proposal, (ii) recommends a Takeover Proposal to Company
stockholders or (iii) fails to call or hold the Company
Stockholders' Meeting by reason of the receipt by the Company of
a Takeover Proposal; or
(h) by the Company if, prior to approval of the Merger by its
stockholders and as a result of a Superior Proposal, the Board of
Directors of the Company determines in good faith after
consultation with outside counsel, that the termination of this
Agreement and acceptance of such Superior Proposal is necessary
in order to comply with its fiduciary duties; provided, however,
that before the Company may terminate this Agreement pursuant to
this subsection 7.1(h), the Company shall give notice to Parent
of the proposed termination under subsection 7.1(h) and Parent,
within five (5) business days of receipt of such notice, shall
have the right, in its sole discretion, to offer to amend this
Agreement to provide for terms substantially similar to those of
the Superior Proposal and the Company shall negotiate in good
faith with Parent with respect to such proposed amendment;
provided, further, that if Parent and the Company are unable to
reach an agreement with respect to the Parent's proposed
amendment within the five (5) business day period described
above, the Company may terminate this Agreement pursuant to this
subsection 7.1(h).
SECTION 7.2 Effect of Termination In the event of termination
of this Agreement by either the Company or Parent as provided in
Section 7.1, this Agreement shall forthwith become void and have
no effect, without any liability or obligation on the part of
Parent, Sub or the Company or their respective officers or
directors, except as set forth in the last sentence of Section
5.2, Section 5.9, Section 7.5 and Article VIII which shall
survive termination and except to the extent that such
termination results from the breach by a party of any of its
representations, warranties, covenants or agreements set forth in
this Agreement.
SECTION 7.3 Amendment. This Agreement may be amended by the
parties at any time before or after approval hereof by the
stockholders of the Company; provided, however, that after such
stockholder approval there shall not be made any amendment that
by law requires further approval by the stockholders of the
Company without the further approval of such stockholders. This
Agreement may not be amended except by an instrument in writing
signed on behalf of each of the parties.
SECTION 7.4 Extension; Waiver. At any time prior to the
Effective Time, the parties may (a) extend the time for the
performance of any of the obligations or other acts of the other
parties, (b) waive any inaccuracies in the representations and
warranties contained in this Agreement or in any document
delivered pursuant to this Agreement or (c) subject to the
proviso of Section 7.3, waive compliance with any of the
agreements or conditions contained in this Agreement. Any
agreement on the part of a party to any such extension or waiver
shall be valid only if set forth in an instrument in writing,
signed on behalf of such party. The failure of any party to this
Agreement to assert any of its rights under this Agreement or
otherwise shall not constitute a waiver of those rights.
SECTION 7.5 Termination Fee.
(a) In the event (i) Company terminates this Agreement pursuant
to Section 7.1(h), (ii) Parent terminates this Agreement pursuant
to Section 7.1(g) or Parent terminates this Agreement as a result
of the Company's willful and material breach of Section 4.2, or
(iii) any Significant Stockholder fails to vote in favor of the
Merger and Stockholder Approval is not received, then the Company
shall pay Parent an amount equal to Eight Million Dollars
($8,000,000) (the "Termination Fee") by wire transfer of
immediately available funds upon the occurrence of such event.
(b) In the event (i) Stockholder Approval is not received,
(ii) prior to the Company Stockholders' Meeting there shall have
been a Takeover Proposal made (whether or not such Takeover
Proposal shall have been rejected or shall have been withdrawn
prior to the time of the Company Stockholders' Meeting) and
(iii) within twelve (12) months from the termination of this
Agreement, the Company shall have entered into an agreement for,
and within twenty-four (24) months from such termination shall
have consummated, a transaction substantially in the form
proposed in such Takeover Proposal then the Company shall pay
Parent an amount equal to the Termination Fee by wire transfer of
immediately available funds, payable upon consummation of such
transaction.
(c) Parent shall pay to the Company by wire transfer Two Million
Dollars ($2,000,000) (the "Parent Termination Fee") if this
Agreement is terminated by Parent or the Company pursuant to
Section 7.1(e) and at the time of such termination (i) the
conditions specified in Section 6.2(j) to the obligations of
Parent shall not have been satisfied or waived and (ii) each of
the other conditions set forth in Article VI to the obligations
of the Company, Parent and Sub shall have been satisfied or
waived; provided that the conditions set forth in Sections 6.2(a)
through 6.2(c) and 6.3(a) through 6.3(c) will be deemed to be
satisfied if the certificates or documents required to be
delivered pursuant to such sections are capable of being
delivered on the termination date.
(d) The parties agree that the agreements contained in Section
7.5 are an integral part of the transactions contemplated by this
Agreement. If the Company fails to promptly pay to Parent any
fee due under this Section 7.5, the Company shall pay the costs
and expenses (including legal fees and expenses) in connection
with any action, including the filing of any lawsuit or other
legal action, taken to collect payment, together with interest on
the amount of any unpaid fee at the publicly announced prime rate
of Bank of America from the date such fee was first due. If
Parent fails to promptly pay to the Company any fee due under
this Section 7.5, Parent shall pay the costs and expenses
(including legal fees and expenses) in connection with any
action, including the filing of any lawsuit or other legal
action, taken to collect payment, together with interest on the
amount of any unpaid fee at the publicly announced prime rate of
Bank of America from the date such fee was first due.
(e) The payment by the Company of the Termination Fee pursuant
to this Section 7.5 shall be Parent's and Sub's exclusive remedy
against the Company other than for a willful breach by the
Company of Section 4.2. The payment by the Parent of the Parent
Termination Fee pursuant to this Section 7.5 shall be the
Company's exclusive remedy against the Parent if this Agreement
is terminated by Parent or the Company pursuant to Section 7.1(e)
as a result of Parent's failure to satisfy the condition set
forth in Section 6.2(j).
SECTION 7.6 Procedure for Termination, Amendment, Extension or
Waiver. A termination of this Agreement pursuant to Section 7.1,
an amendment of this Agreement pursuant to Section 7.3 or an
extension or waiver of this Agreement pursuant to Section 7.4
shall, in order to be effective, require in the case of Parent,
Sub or the Company, action by its Board of Directors, acting by
the affirmative vote of a majority of the members of the entire
Board of Directors.
ARTICLE VIII
GENERAL PROVISIONS
SECTION 8.1 Nonsurvival of Representations and Warranties.
None of the representations and warranties in this Agreement or
in any instrument delivered pursuant to this Agreement shall
survive the Effective Time. This Section 8.1 shall not limit any
covenant or agreement of the parties which by its terms
contemplates performance after the Effective Time of the Merger
(including without limitation the provisions of Section 5.4
hereof).
SECTION 8.2 Notices. All notices, requests, claims, demands
and other communications under this Agreement shall be in writing
and shall be deemed given if delivered personally or sent by
overnight courier (providing proof of delivery) to the parties at
the following addresses (or at such other address for a party as
shall be specified by like notice):
(a) if to Parent or Sub, to
International Game Technology
0000 Xxxxxxxxx Xxxxx
Xxxx, Xxxxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxx XxXxx
with copies to:
O'Melveny & Xxxxx LLP
000 Xxxxxxx Xxxxxx Xxxxx, 00xx Xxxxx
Xxxxxxx Xxxxx, Xxxxxxxxxx 00000
Facsimile: (000) 000-0000
Attention: J. Xxx Xxxxxx
O'Melveny & Xxxxx LLP
000 Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxxxxxx X. Xxxxxx
(b) if to the Company, to:
Sodak Gaming, Inc.
0000 Xxxxx Xxxxxxx 00
Xxxxx Xxxx, Xxxxx Xxxxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxxxx Xxxxxxxx
with a copy to:
Cleary, Gottlieb, Xxxxx & Xxxxxxxx
Xxx Xxxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxxx
Facsimile: (000) 000-0000
SECTION 8.3 Definitions. For purposes of this Agreement:
(a) an "affiliate" of any person means another person that,
directly or indirectly, through one or more intermediaries,
controls, is controlled by, or is under common control with, such
first person;
(b) "Knowledge" means a fact, event, circumstance or occurrence
actually known by any of the officers or directors of the Company
or Parent, as the case may be.
(c) "Material Adverse Change" or "Material Adverse Effect"
means, when used in connection with the Company, the Surviving
Corporation or Parent, any change or effect (or any development
that insofar as can reasonably be foreseen, is likely to result
in any change or effect) that is or is likely to be, individually
or in the aggregate, materially adverse to the business, assets,
properties, financial condition or results of operations of such
party and its subsidiaries taken as a whole, excluding any such
adverse change that is due to events, occurrences, facts,
conditions, changes, developments or effects which affect the
economy generally.
(d) "person" means an individual, corporation, partnership,
joint venture, association, trust, unincorporated organization or
other entity; and
(e) a "subsidiary" with respect to any person means ownership
directly or indirectly of an amount of the voting securities,
other voting ownership or voting partnership interests of another
person which is sufficient to elect at least a majority of its
board of directors or other governing body or, if there are no
such voting interests, more than 50% of the equity interests.
SECTION 8.4 Interpretation. When a reference is made in this
Agreement to a Section, Exhibit or Schedule, such reference shall
be to a Section of, or an Exhibit or Schedule to, this Agreement
unless otherwise indicated. The table of contents and headings
contained in this Agreement are for reference purposes only and
shall not affect in any way the meaning or interpretation of this
Agreement. Whenever the words "include," "includes" and
"including" are used in this Agreement, they shall be deemed to
be followed by the words "without limitation."
SECTION 8.5 Counterparts. This Agreement may be executed in
one or more counterparts, all of which shall be considered one
and the same agreement and shall become effective when one or
more counterparts have been signed by each of the parties and
delivered to the other parties.
SECTION 8.6 Entire Agreement; No Third-Party Beneficiaries.
This Agreement and the Confidentiality Agreements constitute the
entire agreement, and supersede all prior agreements and
understandings, both written and oral, among the parties with
respect to the subject matter of this Agreement and except for
the provisions of Article II and Sections 5.5 and 15.7 are not
intended to confer upon any person other than the parties hereto
any rights or remedies hereunder.
SECTION 8.7 Governing Law. This Agreement shall be governed
by, and construed and enforced in accordance with, the laws of
the State of Nevada, regardless of the laws that might otherwise
govern under applicable principles of conflict of laws thereof.
SECTION 8.8 Assignment. Neither this Agreement nor any of the
rights, interests or obligations under this Agreement shall be
assigned, in whole or in part, by operation of law or otherwise
by any of the parties without the prior written consent of the
other parties. Subject to the preceding sentence, this Agreement
will be binding upon, inure to the benefit of, and be enforceable
by, the parties and their respective successors and assigns.
SECTION 8.9 Enforcement. The parties agree that irreparable
damage would occur in the event that any of the provisions of
this Agreement were not performed in accordance with their
specific terms or were otherwise breached. It is accordingly
agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce
specifically the terms and provisions of this Agreement in any
court of the United States located in the State of Nevada or in
Nevada state court, this being in addition to any other remedy to
which they are entitled at law or in equity. In addition, each
of the parties hereto (a) consents to submit itself to the
personal jurisdiction of any federal court located in the State
of Nevada or any Nevada state court in the event any dispute
arises out of this Agreement or any of the transactions
contemplated by this Agreement, (b) agrees that it will not
attempt to deny or defeat such personal jurisdiction by motion or
other request for leave from any such court and (c) agrees that
it will not bring any action relating to this Agreement or any of
the transactions contemplated by this Agreement in any court
other than a federal or state court sitting in the State of
Nevada.
[The remainder of this page intentionally left blank]
IN WITNESS WHEREOF, Parent, Sub and the Company have caused
this Agreement to be signed by their respective officers
thereunto duly authorized, all as of the date first written
above.
PARENT:
INTERNATIONAL GAME TECHNOLOGY,
a Nevada corporation
By: /s/ G. Xxxxxx Xxxxx
Name: G. Xxxxxx Xxxxx
Its: President and Chief Operating Officer
SUB:
SAC, INC., a South Dakota
corporation
By: /s/ Xxxxxxx X. Xxxx
Name: Xxxxxxx X. Xxxx
Its: Treasurer
THE COMPANY:
SODAK GAMING, INC., a South
Dakota corporation
By: /s/ Xxxxxx X. Xxxxxxx
Name: Xxxxxx X. Xxxxxxx
Its: President and Chief Executive Officer
EXHIBIT A
FORM OF IRREVOCABLE PROXY AND VOTING AGREEMENT
IRREVOCABLE PROXY AND VOTING AGREEMENT
March 10, 1999
International Game Technology
0000 Xxxxxxxxx Xxxxx
Xxxx, Xxxxxx 00000
Attn: Xxxxx XxXxx
Re: Agreement of Significant Stockholders Concerning
Transfer and Voting of Shares of Sodak Gaming, Inc.
I understand that you and Sodak Gaming, Inc. (the
"Company"), of which the undersigned is a significant
stockholder, are prepared to enter into an agreement for the
merger of the Company with and into a wholly-owned subsidiary
("Sub") of Parent, but that you have conditioned your willingness
to proceed with such agreement (the "Agreement") upon your
receipt from me of assurances satisfactory to you of my support
of and commitment to the Merger. I am familiar with the
Agreement and the terms and conditions of the Merger, as approved
by the board of directors of the Company. Terms used but not
otherwise defined herein shall have the same meanings as are
given them in the Agreement. In order to evidence such
commitment and to induce you to enter into the Agreement, I
hereby represent and warrant to you and agree with you as
follows:
1. Voting. I will vote or cause to be voted all shares of
capital stock of the Company owned of record or beneficially
owned or held in any capacity by me or under my control, by proxy
or otherwise, in favor of the Merger and other transactions
provided for in or contemplated by the Agreement and against any
inconsistent proposals or transactions. I hereby revoke any
other proxy granted by me and irrevocably appoint you, during the
term of this letter agreement, as proxy for and on behalf of me
to vote (including, without limitation, the taking of action by
written consent) such shares, for me and in my name, place and
xxxxx for the matters and in the manner contemplated by this
Section 1. This proxy is irrevocable.
2. Ownership. As of the date hereof, my only ownership
of, or interest in, equity securities of the Company, including
proxies granted to me, consists solely of the interests described
in Schedule 1 attached hereto (collectively, the "Shares").
3. Restriction on Transfer. I will not sell, transfer,
pledge or otherwise dispose of any of the Shares or any interest
therein (including the granting of a proxy to any person) or
agree to sell, transfer, pledge or otherwise dispose of any of
the Shares or any interest therein prior to the Merger, without
your express written consent. Any transferee of the Shares must,
as a condition to receipt of such Shares, agree to bound by the
terms hereof.
4. Share Legend. At your request, the following legend
shall be placed on the certificates for the Shares:
THE SHARES REPRESENTED BY THIS CERTIFICATE
ARE SUBJECT TO THE TERMS AND CONDITIONS OF A
VOTING AGREEMENT DATED MARCH 10, 1999 BETWEEN
THE REGISTERED HOLDER HEREOF AND
INTERNATIONAL GAME TECHNOLOGY, A COPY OF
WHICH AGREEMENT IS ON FILE AT THE PRINCIPAL
OFFICES OF INTERNATIONAL GAME TECHNOLOGY.
5. No Solicitation. From the date hereof until the
termination hereof, I will not, directly or indirectly, (i) take
any action to solicit, initiate or encourage any Takeover
Proposal or (ii) engage in negotiations or discussions with, or
disclose any nonpublic information relating to the Company or any
subsidiary of the Company to, or otherwise assist, facilitate or
encourage, any person (other than Parent and Sub) that may be
considering making, or has made, a Takeover Proposal. I will
notify Sub within 24 hours after receipt by me of any Takeover
Proposal or any indication that any such third party is
considering making a Takeover Proposal or any request for
nonpublic information relating to the Company or any subsidiary
of the Company or for access to the properties, books or records
of the Company or any such subsidiary by any such third party
that may be considering making, or has made, a Takeover Proposal.
The foregoing provisions of this Section 5 shall not be construed
to limit actions taken, or to require actions to be taken, by me
that are required or restricted by my fiduciary duties or my
employment duties, or permitted by the Agreement, and that, in
each case, are undertaken solely in my capacity as a director or
officer of the Company.
6. Acknowledgement; Waiver of Claims. The undersigned
acknowledges that you requested the undersigned and three other
stockholders of the Company to provide the agreements contained
in this letter agreement and to agree, if required by you, and
subject to the receipt of all necessary Gaming Approvals, to
purchase the Company's interest in, and to assume the Company's
obligations under, the Louisiana Joint Venture Agreements in
accordance with Section 5.4(a)(iii) of the Agreement. [The
undersigned hereby agrees, if required by you, to purchase the
Company's interest in, and to assume the Company's obligations
under, the Louisiana Joint Venture Agreements (either directly or
through the purchase of the Company's interests in Sodak
Louisiana, L.L.C.) in accordance with Section 5.4(a)(iii) of the
Agreement.] [The undersigned hereby declines to grant to you the
right to require the undersigned to purchase the Company's
interest in, and to assume the Company's obligations under, the
Louisiana Joint Venture Agreements in accordance with Section
5.4(a)(iii) of the Agreement.] The undersigned shall have no
claims, and expressly waives any claim, direct or indirect,
derivative or other, against you, the Company or any such other
stockholders arising out of, related to or based upon the request
for such assurances or agreement, the grant or declination by any
stockholder of such requests, any exercise of your rights under
such Section 5.4(a)(iii) and the transfer resulting therefrom or
the consummation of the transactions contemplated by the
Agreement.
7. Effective Date; Succession; Remedies; Termination.
Upon your acceptance and execution of the Agreement, this letter
agreement shall mutually bind and benefit you and me, any of our
heirs, successors and assigns and any of your successors. You
will not assign the benefit of this letter agreement other than
to a wholly owned subsidiary. I agree that in light of the
inadequacy of damages as a remedy, specific performance shall be
available to you, in addition to any other remedies you may have
for the violation of this letter agreement. This letter
agreement (including the proxy granted herein) shall terminate on
the earlier of (i) termination of the Agreement and
(ii) December 31, 1999, or such later date, if any, to which
Parent and the Company agree to extend the date specified in
Section 7.1(e) of the Agreement. The provisions of Section 6
shall survive any such termination and shall be for the benefit
of you, the Company and the other stockholders referred to in
Section 6.
8. Nature of Holdings; Shares. All references herein to
our holdings of the Shares shall be deemed to include Shares held
or controlled by the undersigned, individually, jointly, or in
any other capacity, and shall extend to any securities issued to
the undersigned in respect of the Shares.
[SIGNIFICANT STOCKHOLDER]:
Name:
______________________________
AGREED:
INTERNATIONAL GAME TECHNOLOGY,
a Nevada corporation
By:
_______________________________
Name:
_____________________________
Its:
_______________________________
SCHEDULE 1
Class Number of Record Owner Beneficial Proxy Holder
Shares Owner
SCHEDULES
Company Disclosure Schedule
Parent Disclosure Schedule
EXHIBITS
Exhibit A Irrevocable Proxy and Voting Agreement
