EXHIBIT 2.1
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of March ___, 1999, among ANCHOR
GAMING, a Nevada corporation ("Parent"), OLIVE AP ACQUISITION CORPORATION, a
Delaware corporation and a direct wholly-owned subsidiary of Parent ("Merger
Sub"), and POWERHOUSE TECHNOLOGIES, INC., a Delaware corporation (the
"Company").
PRELIMINARY STATEMENTS
A. The respective Boards of Directors of Parent, Merger Sub and the
Company have approved the merger of Merger Sub with and into the Company (the
"Merger"), upon the terms and subject to the conditions set forth in this
Agreement and in accordance with the Delaware General Corporation Law (the
"DGCL"), whereby the issued and outstanding shares of common stock of the
Company, $.01 par value per share (the "Company Common Stock"), will be
converted into the right to receive cash consideration of $19.50 per share
(the "Per Share Amount").
B. The Merger requires the approval of the holders of a majority of
the outstanding shares of the Company Common Stock (the "Company Stockholder
Approval").
C. Concurrently with the execution and delivery of this Agreement and
as a condition and inducement to each of Parent's and Merger Sub's
willingness to enter into this Agreement, certain stockholders of the Company
named on EXHIBIT A-1 have entered into or agreed to enter into Voting
Agreements (the "Voting Agreements") with Parent, substantially in the form
of EXHIBIT A-2, pursuant to which such stockholders have agreed, among other
things, to vote all shares of Company Common Stock beneficially owned by such
stockholders, or for which such stockholders exercise voting power pursuant
to an irrevocable proxy, in favor of approval and adoption of this Agreement
and the Merger.
D. Parent, Merger Sub and the Company desire to make certain
representations, warranties, covenants and agreements in connection with the
Merger and also to prescribe various conditions to the Merger.
In consideration of the representations, warranties, covenants and
agreements contained in this Agreement, and other good and valuable
consideration, the receipt and sufficiency of which all parties hereby
acknowledge, the parties agree as follows:
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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 DGCL, Merger Sub will
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
Merger Sub will cease and the Company will continue as the surviving
corporation (the "Surviving Corporation") and will succeed to and assume all
the rights and obligations of the Company and of Merger Sub in accordance
with the DGCL. At the election of Parent or Merger Sub, any one or more
direct or indirect wholly-owned subsidiaries of Parent incorporated under the
laws of the State of Delaware may be substituted for Merger Sub as a
constituent corporation in the Merger. As used in this Agreement, the term
"Merger Sub" refers to any such substituted corporation.
SECTION 1.2 CLOSING. The closing of the Merger will take place at
10:00 a.m. on a date to be specified by the parties, which will 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 Parent,
unless another time, date or place is agreed to in writing by the parties to
this Agreement.
SECTION 1.3 EFFECTIVE TIME. Subject to the provisions of this
Agreement, as soon as practicable on or after the Closing Date, the parties
will prepare, execute and acknowledge and thereafter file a certificate of
merger in such form as is required by the DGCL and will make all other
filings or recordings required under the DGCL. The Merger will become
effective at such time as such filings are made with the Delaware Secretary
of State, or at such other time as Merger Sub and the Company agree should be
specified in such filings (the date and time of such filing, or such later
date or time as may be set forth therein, being the "Effective Time").
SECTION 1.4 EFFECTS OF THE MERGER. The Merger will have the effects
set forth in Section 259 of the DGCL and all other effects specified in the
applicable provisions of the DGCL. Without limiting the foregoing, at the
Effective Time, all properties, rights, privileges, powers, and franchises of
the Company and Merger Sub will vest in the Surviving Corporation and all
debts, liabilities, obligations, and duties of the Company and Merger Sub
will become the debts, liabilities, obligations, and duties of the Surviving
Corporation.
SECTION 1.5 CERTIFICATE OF INCORPORATION AND BYLAWS. At the Effective
Time, the certificate of incorporation and bylaws of the Surviving
Corporation will be amended to be in the form of EXHIBITS B and C,
respectively (except that the name of the Surviving Corporation will be
changed to Powerhouse Technologies, Inc.).
SECTION 1.6 DIRECTORS. The directors of Merger Sub at the Effective
Time will 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.
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SECTION 1.7 OFFICERS. The officers of the Company immediately prior to
the Effective Time will be the initial officers of the Surviving Corporation
and will 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 considers or is 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 Merger Sub or the Company or otherwise to
carry out this Agreement, the officers and directors of the Surviving
Corporation will be authorized to execute and deliver, in the name and on
behalf of Merger 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
Merger 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; MERGER CONSIDERATION
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, Merger Sub, the
Company or the holders of any shares of capital stock of the Company or any
shares of capital stock of Merger Sub:
(a) Each share of the capital stock of Merger Sub issued and
outstanding immediately prior to the Effective Time will be converted into
and exchanged for one fully paid and nonassessable share of common stock of
the Surviving Corporation.
(b) 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, Merger Sub or any other subsidiary of Parent immediately
prior to the Effective Time will automatically be canceled and retired
without any conversion thereof and no consideration will be delivered with
respect thereto.
(c) (i) Except for shares to be canceled in accordance with SECTION
2.1(b), each share of the Company Common Stock issued and outstanding as of
the Effective Time (the "Shares") will be automatically canceled and
extinguished and converted into the right to receive in cash the Per Share
Amount (the "Merger Consideration") without interest, less any required
withholding taxes, upon surrender of the certificate formerly representing
such Shares in accordance with SECTION 2.3.
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(ii) As of the Effective Time, all such Shares will no longer be
outstanding and will automatically be canceled and retired and will cease to
exist, and each certificate previously representing any such Shares will
thereafter represent the right to receive the Merger Consideration. The
holders of such certificates previously evidencing such Shares outstanding
immediately prior to the Effective Time will cease to have any rights with
respect to such Shares as of the Effective Time, except as otherwise provided
in this Agreement or by law. Such certificates previously representing
Shares will be exchanged for the Merger Consideration upon the surrender of
such certificates in accordance with the provisions of SECTION 2.3, without
interest.
SECTION 2.2. APPRAISAL RIGHTS.
(a) Notwithstanding anything in this Agreement to the contrary, Shares
that are issued and outstanding immediately prior to the Effective Time and
that are held by stockholders that have complied in all respects with the
requirements of the DGCL concerning the right of a stockholder of the Company
to dissent from the Merger and to require an appraisal of such Shares in the
manner provided in the DGCL, if applicable, and that, as of the Effective
Time, have not effectively withdrawn or lost such right to appraisal (the
"Dissenting Shares") will not be converted into or represent a right to
receive the Merger Consideration, but the holders of such Dissenting Shares
will be entitled only to such rights as are granted under Section 262 of the
DGCL. Each holder of Dissenting Shares that becomes entitled to payment for
such Shares pursuant to such section of the DGCL will receive payment for
such Dissenting Shares from the Surviving Corporation in accordance with the
DGCL; PROVIDED, HOWEVER, that to the extent that any holder or holders of
Shares have failed to establish the entitlement to appraisal rights as
provided in Section 262 of the DGCL, such holder or holders (as the case may
be) will forfeit the right to appraisal of such Shares and each such Share
will thereupon be deemed to have been converted, as of the Effective Time,
into and represent the right to receive payment from the Surviving
Corporation of the Merger Consideration, without interest.
(b) The Company will give the Parent and the Purchaser (i) prompt
notice of any written demands for appraisal, withdrawals of demands for
appraisal, and any other instrument served pursuant to Section 262 of the
DGCL received by the Company and (ii) the opportunity to direct all
negotiations and proceedings with respect to demands for appraisal under
Section 262 of the DGCL. The Company will not, except with the express
written consent of the Parent, voluntarily make any payment with respect to
any demands for appraisal or settle or offer to settle any such demands.
SECTION 2.3. PAYMENT FOR SHARES.
(a) Prior to the Effective Time, Merger Sub will appoint a bank or
trust company reasonably acceptable to the Company as agent for the holders
of Shares (the "Paying Agent") to receive and disburse the Merger Consideration
to which holders of Shares become entitled pursuant to SECTION 2.1(c). At
the Effective Time, Merger Sub or Parent will provide the Paying
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Agent with sufficient cash to allow the Merger Consideration to be paid by
the Paying Agent for each Share then entitled to receive the Merger
Consideration (the "Payment Fund").
(b) Promptly after the Effective Time, Merger Sub or Parent will cause
the Paying Agent to mail to each record holder of an outstanding certificate
or certificates representing Shares that as of the Effective Time represent
the right to receive the Merger Consideration (the "Certificates"), a form of
letter of transmittal (which will specify that delivery will be effected, and
risk of loss and title to the Certificates will pass, only upon proper
delivery of the Certificates to the Paying Agent) and instructions for use in
effecting the surrender of the Certificates for payment. Upon surrender to
the Paying Agent of a Certificate, together with such letter of transmittal
duly executed and completed in accordance with its instructions and such
other documents as may be requested, the holder of such Certificate will be
entitled to receive in exchange for such Certificate, subject to any required
withholding of taxes, the Merger Consideration and such Certificate will
forthwith be canceled. No interest will be paid or accrued on the Merger
Consideration upon the surrender of the Certificates. If payment or delivery
is to be made to a person other than the person in whose name the Certificate
surrendered is registered, it will be a condition of payment or delivery that
the Certificate so surrendered be properly endorsed, with signature properly
guaranteed, or otherwise be in proper form for transfer and that the person
requesting such payment or delivery pay any transfer or other taxes required
by reason of the payment or delivery to a person other than the registered
holder of the Certificate surrendered or establish to the satisfaction of the
Surviving Corporation that such tax has been paid or is not applicable.
Until surrendered in accordance with the provisions of this SECTION 2.3(b),
each Certificate (other than Certificates held by persons referred to in
SECTION 2.1(b)) will represent for all purposes only the right to receive the
Merger Consideration, without interest and subject to any required
withholding of taxes. Notwithstanding the foregoing, neither the Paying
Agent nor any party to this Agreement will be liable to a holder of Shares
for any Merger Consideration delivered to a public official pursuant to
applicable abandoned property, escheat or similar laws.
(c) Promptly following the date that is six months after the Effective
Time, the Paying Agent will return to the Surviving Corporation all cash,
certificates and other property in its possession that constitute any portion
of the Payment Fund, and the duties of the Paying Agent will terminate.
Thereafter, each holder of a Certificate formerly representing a Share may
surrender such Certificate to the Surviving Corporation and (subject to
applicable abandoned property, escheat and similar laws) receive in exchange
therefor the Merger Consideration without any interest. Neither Parent,
Merger Sub, nor the Surviving Corporation will be liable to any holder of
Shares for any amount paid to a public official pursuant to applicable
abandoned property, escheat or similar laws. If Certificates are not
surrendered prior to midnight on the fourth anniversary of the Effective
Time, unclaimed amounts of the Payment Fund will, to the extent permitted
under applicable law, become the property of the Surviving Corporation.
Notwithstanding the foregoing, the Surviving Corporation will be entitled to
receive from time to time all interest or other amounts earned with respect
to the Payment Fund as such amounts accrue or become available.
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(d) After the Effective Time there will be no registration of transfers
on the stock transfer books of the Surviving Corporation of the Shares that
were outstanding immediately prior to the Effective Time.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent and Merger Sub as follows:
SECTION 3.1 ORGANIZATION AND QUALIFICATION. The Company is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware and has the requisite corporate power and
authority and any necessary governmental authority to own, operate, and lease
its properties and assets and to carry on its business as it is now being
conducted, except for failures to have such power and authority as could not
reasonably be expected to result in a Company Material Adverse Effect (as
defined below). The Company is duly qualified or licensed to do business and
is in good standing in each jurisdiction where the character of its
properties owned or leased or the nature of its activities makes such
qualification or licensing necessary, except for failures to be so qualified
or licensed and in good standing as could not, individually or in the
aggregate, reasonably be expected to result in a Company Material Adverse
Effect. Copies of the certificate of incorporation and bylaws of the
Company, including all amendments, have been delivered to Parent and Merger
Sub and such copies are accurate and complete. The certificate of
incorporation and bylaws of the Company are in full force and effect and the
Company is not in default of the performance, observation, or fulfillment of
any provision of its certificate of incorporation or bylaws. For the
purposes of this Agreement, "Company Material Adverse Effect" or "Company
Material Adverse Change" means any change or effect that, individually or
when taken together with all such other changes or effects, could reasonably
be expected to be materially adverse to the condition (financial or other),
business, properties, assets, liabilities, results of operations, or legal or
regulatory environment of the Company and its subsidiaries, taken as a whole.
SECTION 3.2 SUBSIDIARIES. SCHEDULE 3.2 contains a list of each
subsidiary of the Company and its jurisdiction of incorporation or
organization. The Company is, directly or indirectly, the record and
beneficial owner of all the outstanding shares of capital stock of each of
its subsidiaries, there are no proxies or voting agreements with respect to
any such shares, and no equity security of any of its subsidiaries is or may
become required to be issued by reason of any options, warrants, scrip,
rights to subscribe to, calls or commitments of any character whatsoever
relating to, or securities or rights convertible into or exchangeable for,
shares of any capital stock of any such subsidiary, and there are no
contracts, commitments, understandings or arrangements by which any
subsidiary is bound to issue additional shares of its capital stock or
securities convertible into or exchangeable for such shares. All such shares
directly or indirectly owned by the Company are owned by the Company or a
wholly-owned subsidiary of the Company, free and clear of any claim, lien,
encumbrance or agreement, except for liens listed on SCHEDULE 3.2. Each
subsidiary of the Company is a corporation duly organized, validly existing,
and in good
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standing under the laws of its jurisdiction of incorporation and has the
requisite corporate power and authority and any necessary governmental
authority to own, operate, or lease its properties and assets and to carry on
its business as it is now being conducted, except for failures as could not,
individually or in the aggregate, reasonably be expected to result in a
Company Material Adverse Effect. Each subsidiary of the Company is duly
qualified or licensed to do business and is in good standing in each
jurisdiction where the character of its properties owned or leased or the
nature of its activities makes such qualification or licensing necessary,
except for failures to be so qualified, licensed or in good standing as could
not, individually or in the aggregate, reasonably be expected to result in a
Company Material Adverse Effect. Copies of the charter documents, bylaws or
equivalent organizational documents of each subsidiary of the Company have
been delivered to Parent and are accurate and complete. Neither the Company
nor any subsidiary of the Company (a) beneficially owns any equity interests
in any entities that are not subsidiaries of the Company or (b) is party to
any joint venture, partnership or similar arrangement.
SECTION 3.3 AUTHORIZED CAPITAL. As of March 4, 1999, the authorized
capital stock of the Company consists solely of (a) 25,000,000 shares of
common stock, $.01 par value per share, of which 10,622,957 shares are
outstanding and (b) 10,000,000 shares of preferred stock, $.01 par value per
share, of which no shares are outstanding. All of the outstanding shares of
capital stock of the Company have been duly authorized and are validly
issued, fully paid, nonassessable, and free of preemptive rights. SCHEDULE
3.3 lists each outstanding stock option of the Company (the "Employee
Options"), the number of shares covered by such Employee Options, the
exercise prices, and the plan or agreement pursuant to which such Employee
Options were issued. Except as set forth above or on SCHEDULE 3.3, there are
no preemptive rights nor any outstanding subscriptions, options, warrants,
rights, convertible securities or other agreements or commitments of any
character relating to the issued or unissued capital stock or other
securities of the Company or any of its subsidiaries. There are no voting
trusts or other understandings to which the Company or any of its
subsidiaries is a party with respect to the voting capital stock of the
Company or any of its subsidiaries.
SECTION 3.4 CORPORATE AUTHORIZATION. The Company has the full
corporate power and authority to execute and deliver this Agreement and,
subject to any necessary stockholder approval of the Merger, to consummate
the transactions contemplated by this Agreement. The execution, delivery and
performance by the Company of this Agreement and the consummation by the
Company of the Merger and of the other transactions contemplated by this
Agreement have been duly and validly authorized by all necessary corporate
action and, except for any required approval of the Merger and any adoption
of this Agreement by the stockholders of the Company in connection with the
consummation of the Merger, no other corporate proceedings on the part of the
Company are necessary to authorize this Agreement or to consummate the
transactions contemplated by this Agreement. This Agreement has been duly
and validly 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.
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SECTION 3.5 APPROVALS; NO VIOLATIONS. No filing with, and no permit,
authorization, consent or approval of, any foreign or domestic public body or
authority is necessary for the consummation by the Company of the
transactions contemplated by this Agreement, except (i) the filing of a
premerger notification and report form 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 5.2) 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 certificate of merger with the Delaware Secretary of State and
appropriate documents with the relevant authorities of other states in which
the Company is qualified to do business, and (iv) as set forth on SCHEDULE
3.5. Except as set forth on SCHEDULE 3.5, the execution and delivery of this
Agreement by the Company, the consummation by the Company of the transactions
contemplated by this Agreement and the compliance by the Company with any of
the provisions of this Agreement will not (a) conflict with or result in any
breach of any provision of the charters, bylaws or equivalent organizational
documents of the Company or any of its subsidiaries; (b) result in a
violation or breach of, or constitute (with or without notice or lapse of
time or both) a default (or give rise to any right of termination,
cancellation or acceleration) under, any of the terms, conditions or
provisions of any note, bond, mortgage, indenture, license, lease, contract,
agreement or other instrument or obligation to which the Company or any of
its subsidiaries is a party or by which any of them or any of their
properties or assets may be bound; or (c) violate any order, writ,
injunction, decree, statute, rule or regulation applicable to the Company,
any of its subsidiaries or any of their properties or assets, except such
violations, conflicts, breaches, defaults, terminations or accelerations
referred to in this SECTION 3.5 as could not, individually or in the
aggregate, reasonably be expected to result in a Company Material Adverse
Effect or adversely affect the ability of any party to perform its
obligations under this Agreement.
SECTION 3.6 SEC FILINGS; FINANCIAL STATEMENTS. At least since December
31, 1995, the Company has timely filed with the SEC all forms, reports,
statements, and documents required to be filed by it pursuant to the
Securities Act of 1933 and the rules and regulations promulgated thereunder
(the "Securities Act"), and the Exchange Act, and the rules and regulations
promulgated thereunder, together with all amendments thereto and will file
all such forms, reports, statements and documents required to be filed by it
prior to the Effective Time (collectively, the "Company Reports"), and has
otherwise complied in all material respects with the requirements of the
Securities Act and the Exchange Act. The Company has made available to
Merger Sub accurate and complete copies of all Company Reports and will
promptly deliver to Merger Sub any Company Report filed by the Company after
the date of this Agreement. As of their respective dates, the Company
Reports did not and (in the case of Company Reports filed after the date of
this Agreement) will not contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to
make the statements made therein, in light of the circumstances under which
they were or (in the case of Company Reports filed after the date of this
Agreement) will be made, not misleading. Each of the historical consolidated
balance sheets included in or incorporated by reference into the Company
Reports as of its date and each of the historical consolidated statements of
income and earnings,
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stockholders' equity and cash flows included in or incorporated by reference
into the Company Reports (including any related notes and schedules) fairly
presents or will (in the case of Company Reports filed after the date of this
Agreement) fairly present the consolidated financial condition, results of
operations, stockholders' equity and cash flows, as the case may be, of the
Company and its subsidiaries for the periods set forth (subject, in the case
of unaudited statements, to normal year-end audit adjustments), in each case
in accordance with generally accepted accounting principles consistently
applied during the periods involved. The Company maintains a system of
internal accounting controls sufficient to provide that transactions are
executed in accordance with management's general or specific authorization,
transactions are recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting principles and to
maintain accountability for assets, access to assets is permitted only in
accordance with management's general or specific authorization and the
recorded accountability for assets is compared with existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.
SECTION 3.7 ABSENCE OF CERTAIN LIABILITIES AND CHANGES. Except as set
forth on SCHEDULE 3.7, in the audited financial statements of the Company for
the period ended and as of December 31, 1998 (a copy of which has been
delivered to Parent), or in the Company Reports, neither the Company nor any
of its subsidiaries has any liabilities or obligations of any nature, whether
or not accrued, contingent, or otherwise that could, individually or in the
aggregate, reasonably be expected to result in a Company Material Adverse
Effect. Since December 31, 1998, the Company and its subsidiaries have
conducted their respective businesses in a manner consistent with past
practices, and neither the Company nor any of its subsidiaries has become
subject to any liabilities or obligations other than liabilities or
obligations incurred in the ordinary course of business consistent with past
practices or incurred in connection with this Agreement, or the Merger and
disclosed in the Company Reports or consisting of legal, printing, accounting
and other customary fees (but not including those of Xxxxxx Brothers, Inc.,
or in the audited financial statements of the Company as of and for the
period ended December 31, 1998 (a copy of which has been delivered to Parent)
the Company's financial advisor (the "Advisor")) not exceeding $800,000 in
the aggregate and incurred in connection with this Agreement or the Merger.
Except as disclosed on SCHEDULE 3.7, in the Company Reports filed prior to
the date of this Agreement and publicly available, since September 30, 1998,
the Company has conducted its business only in the ordinary course consistent
with prior practice, and there has not been (i) any Company Material Adverse
Change, (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 (x) any increase in compensation,
except in the ordinary course of business consistent with prior practice or
as was required under employment agreements in effect as of the date of the
most recent audited financial statements included in the Company Reports
filed prior to the date of this Agreement or (y) any right to participate in
(by way of bonus or otherwise) the profits of the Company or any of its
subsidiaries except in the ordinary course of business consistent with past
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practice, (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 Reports 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 reasonably be expected
to have a Company Material Adverse Effect, (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 by the
Company or any of its subsidiaries which, if SECTION 5.1 had then been in
effect, would have been prohibited by such Article if taken without Parent's
consent (and no agreement, understanding, obligation or commitment to take
any such action exists).
SECTION 3.8 COMPLIANCE WITH APPLICABLE LAW.
(a) The Company and each of its subsidiaries currently hold and are in
compliance with the terms of all licenses, permits and authorizations
necessary for the lawful conduct of their respective businesses, and have
complied with, and neither the Company nor any of its subsidiaries is in
violation of, or in default under, the applicable statutes, ordinances,
rules, regulations, orders or decrees of any federal, state, local or foreign
governmental bodies, agencies or authorities having, asserting or claiming
jurisdiction over it or over any part of its operations or assets, except for
violations that could not, individually or in the aggregate reasonably be
expected to, result in a Company Material Adverse Effect. The businesses of
the Company and its subsidiaries are not being and have not been conducted in
violation of any law, ordinance or regulation of any governmental authorities
and regulatory agencies except for violations as could not, individually or
in the aggregate, reasonably be expected to result in a Company Material
Adverse Effect. No investigation or review by any governmental bodies or
authorities or regulatory agencies with respect to the Company or any of its
subsidiaries is pending or, to the knowledge of the Company, threatened, nor,
to the knowledge of the Company, have any governmental bodies or authorities
or regulatory agencies indicated in intention to conduct such an
investigation or review (other than routine investigations and reviews by
gaming regulatory authorities to which the Company is subject in the ordinary
course of its business), and no fine has been levied against, or order
entered with respect to, the Company or any subsidiary by any governmental
body or authority or regulatory agency.
(b) 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 (as
defined below), except for noncompliance which could not reasonably be
expected to have a Company Material Adverse Effect. None of the Company, any
subsidiary of the Company or any director or officer of the Company or 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
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a license of it or them, as applicable, under any Gaming Laws is being or may
be revoked or suspended other than such claims, demands, notices, complaints,
court orders or administrative orders which could not reasonably be expected
to have a Company Material Adverse Effect. The term "Gaming Laws" means any
federal, state, local or foreign statute, ordinance, rule, regulation,
permit, consent, registration, 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
any of its subsidiaries.
SECTION 3.9 TERMINATION, SEVERANCE, AND EMPLOYMENT AGREEMENTS. Set
forth on SCHEDULE 3.9 is a complete and accurate list of each (a) employment,
severance or collective bargaining agreement not terminable without liability
or obligation on 60 days' or less notice; (b) agreement with any director,
executive officer or other key employee, agent or contractor of the Company
or any subsidiary of the Company (i) the benefits of which are contingent, or
the terms of which are materially altered, on the occurrence of a transaction
involving the Company or any subsidiary of the Company of the nature of any
of the transactions contemplated by this Agreement or relating to an actual
or potential change in control of the Company or any of its subsidiaries or
(ii) providing any term of employment or other compensation guarantee or
extending severance benefits or other benefits after termination not
comparable to benefits available to employees, agents, or contractors
generally; (c) agreement, plan or arrangement under which any person may
receive payments that may be subject to the tax imposed by Section 4999 of
the Internal Revenue Code of 1986 (the "Code") or included in the
determination of such person's "parachute payment" under Section 280G of the
Code; and (d) agreement or plan, including any stock option plan, stock
appreciation right plan, restricted stock plan or stock purchase plan, any of
the benefits of which will be increased, or the vesting of the benefits of
which will be accelerated, by the occurrence of any of the transactions
contemplated by this Agreement or the value of any of the benefits of which
will be calculated on the basis of any of the transactions contemplated by
this Agreement. Except as disclosed on SCHEDULE 3.9, since September 30,
1998, neither the Company nor any of its subsidiaries has entered into or
amended any employment or severance agreement with any director, officer or
key employee or, granted any severance or termination pay to any officer,
director or key employee of the Company or any of its subsidiaries.
SECTION 3.10 EMPLOYEE BENEFITS.
(a) Set forth in Schedule 3.10 is a complete and correct list of all
"Employee Benefit Plans" (as defined in Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA")), all plans or
policies providing for "fringe benefits" (including but not limited to
vacation, paid holidays, personal leave, employee discounts, educational
benefits or similar programs), and each other bonus, incentive compensation,
deferred compensation, profit sharing, stock, severance, retirement, health,
life, disability, group insurance, employment, stock option, stock purchase,
stock appreciation right, supplemental unemployment, layoff or any other
similar plan, agreement, policy or understanding (whether written or oral,
qualified or nonqualified, currently effective or terminated), and any trust,
escrow or other agreement related
11
thereto, which (i) is or has been established, maintained or contributed to
by the Company or any ERISA Affiliate or with respect to which the Company or
any ERISA Affiliate has any liability, or (ii) provides benefits, or
describes compensation or benefit policies or procedures applicable, to any
officer, employee, director, former officer, former employee or former
director of the Company or any ERISA Affiliate, or any dependent thereof,
regardless of whether funded (each, an "Employee Plan," and collectively, the
"Employee Plans"). The term "ERISA Affiliate" shall mean any corporation,
trade or business the employees of which, together with the employees of the
Company, are required to be treated as employed by a single employer under
the provisions of ERISA or Code Section 414.
(b) Neither the Company nor any ERISA Affiliate has at any time
maintained any plan subject to the provisions of Title IV of ERISA or
contributed, or been obligated to contribute, to any "multiemployer plan"
within the meaning of ERISA Section 4001(a)(3).
(c) With respect to each Employee Benefit Plan that is a "pension plan"
within the meaning of ERISA Section 3(2), no "accumulated funding deficiency"
within the meaning of ERISA Section 302 or Code Section 412 has occurred and
all contributions required under any such plan have been timely made. With
respect to each such plan which is intended to constitute a qualified plan
under Code Section 401(a):
(i) such plan has satisfied in form the requirements of such
exception except to the extent amendments are not required by law to be made
until after the Closing Date;
(ii) the Internal Revenue Service has issued a favorable
determination letter as to the qualified status of the plan;
(iii) there has been no termination or partial termination of
the plan; and
(iv) the plan has been operated and administered in material
compliance with its terms and applicable laws.
(d) Each Employee Benefit Plan has been operated in material compliance
with ERISA, the Code, and other applicable law.
(e) With respect to each Employee Benefit Plan, the Company has
furnished to Merger Sub true, correct and complete copies of (i) the plan
documents (including amendments and summary plan descriptions); (ii) the most
recent determination letter received from the Internal Revenue Service; (iii)
the annual reports (Form 5500) required to be filed for the three most recent
plan years of each such Employee Benefit Plan; and (iv) all related trust
agreements, insurance contracts or other funding agreements which implement
such Employee Benefit Plan;
(f) Except as set forth on SCHEDULE 3.10 and to the extent of coverage
required under Code Section 4980B, no written or oral representations have
been made to any employee or officer or former employee or officer of the
Company promising or guaranteeing any coverage
12
under any employee welfare benefit plan (as defined in ERISA Section 3(1))
for an period of time beyond the end of the current plan year.
(g) Except as set forth on SCHEDULE 3.10, the consummation of the
transactions contemplated by this Agreement will not (i) accelerate the time
of payment or vesting, or increase the amount of compensation (including
amounts due under an Employee Benefit Plan) due to any employee, officer,
former employee or former officer of Merger Sub; or (ii) require the Company
to make a larger contribution to, or pay greater benefits or provide owner
rights under, any Employee Benefit Plan than it otherwise would.
(h) No condition exists that would subject Merger Sub, any ERISA
Affiliate or the Company to any excise tax, penalty tax or fine related to
any Employee Benefit Plan, including, but not limited to a violation of
Section 406(a) or (b) of ERISA or any "prohibited transaction" (as defined in
Code Section 4975(c)(1)).
(i) Other than routine claims for benefits, there are no actions,
suits, claims, audits or investigations pending or, to the Company's
Knowledge, threatened against, or with respect to, any of the Employee
Benefit Plans or their assets; and all contributions required to be made to
the Employee Benefit Plans have been made timely.
SECTION 3.11 TAXES. The Company and its subsidiaries have timely filed
all federal income tax returns and reports and other material returns and
reports relating to federal, state, local and foreign taxes required to be
filed. Such reports and returns are true, correct and complete, except for
such failures to be true, correct and complete as could not, individually or
in the aggregate, reasonably be expected to result in a Company Material
Adverse Effect. The Company and its subsidiaries have paid or made adequate
provision for all taxes owed except taxes that if not so paid or provided for
could not reasonably be expected to result in a Company Material Adverse
Effect, and, except as disclosed in SCHEDULE 3.11, no unpaid deficiencies in
taxes or other governmental charges for any period have been proposed or
assessed by any government taxing authority and, to the knowledge of the
Company, no government tax authority is threatening to propose or assess
against the Company or any of its subsidiaries any such deficiency or charge
that could, individually or in the aggregate, reasonably be expected to
result in a Company Material Adverse Effect. The Company and its
subsidiaries have withheld or collected and paid over to the appropriate
governmental authorities or are properly holding for such payment all taxes
required by law to be withheld or collected, except for such failures to have
so withheld or collected and paid over, or to be so holding for payment as
could not, individually or in the aggregate, reasonably be expected to result
in a Company Material Adverse Effect. There are no material liens for taxes
upon the assets of the Company or its subsidiaries, other than liens for
current taxes not yet due and payable and liens for taxes that are being
contested in good faith by appropriate proceedings diligently prosecuted and
listed on SCHEDULE 3.11. Neither the Company nor any of its subsidiaries has
agreed to or is required to make any adjustment under Section 481(a) of the
Code. Neither the Company nor any of its subsidiaries has made any election
under Section 341(f) of the Code. There are no outstanding agreements,
waivers or arrangements extending the statutory period of limitation
applicable to any claim for,
13
or the period for the collection or assessment of, taxes due from or with
respect to the Company or any of its subsidiaries for any taxable period. No
claim has been made by a taxing authority in a jurisdiction in which the
Company does not file tax returns that the Company is required to file tax
returns in such jurisdiction, and, to the Company's knowledge, no taxing
authority could reasonably make such a claim. The Company has not been a
member of an affiliated group as defined in Section 1504 of the Code (or any
analogous combined, consolidated or unitary group as defined under state,
local or foreign income tax law) other than one of which the Company was the
common parent. The Company has no obligation or liability for the payment of
taxes of any other person arising as a result of any obligation to indemnify
another person or as a result of the Company assuming or succeeding to the
tax liability of any other person as a successor, transferee or otherwise.
The Company will not be required to include any amount in taxable income for
any taxable period (or portion thereof) ending after the Effective Time as a
result of (A) a change in method of accounting for a taxable period ending
prior to the Effective Time, (B) any "closing agreement" as described in
Section 7121 of the Code (or corresponding provision of state, local or
foreign income tax laws) entered into prior to the Effective Time, (C) any
sale reported on the installment method that occurred prior to the Effective
Time or (D) any prepaid amount received prior to the Effective Time. All
taxes accrued but not yet due and all contingent liabilities for taxes are
adequately reflected in the reserves for taxes in the financial statements
contained in the Company Reports. Except as set forth on SCHEDULE 3.11,
there has been no "ownership change" as described in Section 382 of the Code
that has resulted in any limitation on the Company's ability to offset
pre-change losses against its taxable income.
SECTION 3.12 LITIGATION. Except as set forth on SCHEDULE 3.12, there
is no suit, claim, action, proceeding or investigation pending or, to the
knowledge of the Company, threatened against the Company or any of its
subsidiaries or any of their respective properties or assets before any
court, regulatory agency or tribunal that, individually or in the aggregate,
if adversely determined, could reasonably be expected to result in a Company
Material Adverse Effect. Neither the Company nor any of its subsidiaries is
subject to any outstanding order, writ, injunction or decree that,
individually or in the aggregate, could reasonably be expected to result in a
Company Material Adverse Effect or would prevent or delay the consummation of
the transactions contemplated by this Agreement.
SECTION 3.13 ENVIRONMENTAL MATTERS.
(a) Except for matters disclosed in SCHEDULE 3.13 and except for
matters that are not reasonably expected to result, individually or in the
aggregate with all other such matters, in liability to the Company or any of
its subsidiaries in excess of $1,000,000, (i) the properties, operations and
activities of the Company and its subsidiaries are in compliance with all
applicable Environmental Laws (as defined below); (ii) the Company and its
subsidiaries and the properties and operations of the Company and its
subsidiaries are not subject to any existing, pending or, to the knowledge of
the Company, threatened action, suit, claim, investigation, inquiry or
proceeding by or before any governmental authority under any Environmental
Laws; (iii) all notices, permits, licenses, or similar authorizations, if
any, required to be obtained or filed by the Company or any of its
subsidiaries under any Environmental Laws in connection with any
14
aspect of the business of the Company or its subsidiaries, including, without
limitation, those relating to the treatment, storage, disposal or release of
a hazardous or otherwise regulated substance, have been duly obtained or
filed and will remain valid and in effect after the Merger, and the Company
and its subsidiaries are in compliance with the terms and conditions of all
such notices, permits, licenses and similar authorizations; (iv) the Company
and its subsidiaries have satisfied and are currently in compliance with all
financial responsibility requirements applicable to their operations and
imposed by any governmental authority under any Environmental Laws, and the
Company and its subsidiaries have not received any notice of noncompliance
with any such financial responsibility requirements; (v) to the Company's
knowledge, there are no physical or environmental conditions existing on any
property of the Company or its subsidiaries or resulting from the Company's
or such subsidiaries' operations or activities, past or present, at any
location, that would give rise to any on-site or off-site remedial
obligations imposed on the Company or any of its subsidiaries under any
Environmental Laws or that would effect the soil, groundwater or surface
water or human health (to the extent of exposure to hazardous substances);
(vi) to the Company's knowledge, since the effective date of the relevant
requirements of applicable Environmental Laws and the extent required by such
applicable Environmental Laws, all hazardous or otherwise regulated
substances generated by the Company and its subsidiaries have been
transported only by carriers authorized under Environmental Laws to transport
such substances and wastes, and disposed of only treatment, storage, and
disposable facilities authorized under Environmental Laws to treat, store or
dispose of such substances and wastes; (vii) there has been no exposure of
any person or property to hazardous substances or any pollutant or
contaminant, nor has there by any release of hazardous substances, or any
pollutant or contaminant into the environment by the Company or its
subsidiaries or in connection with their properties or operations that could
reasonably be expected to give rise to any claim against the Company or any
of its subsidiaries for damages or compensation; and (viii) the Company and
its subsidiaries have made available to Parent all internal and external
environmental audits and studies and all correspondence on substantial
environmental matters in the possession of the Company or its subsidiaries
relating to any of the current or former properties or operations of the
Company and its subsidiaries.
(b) For purposes of this Agreement, the term "Environmental Laws" will
mean any and all laws, statutes, ordinances, rules, regulations or orders of
any Governmental Entity pertaining to health (to the extent of exposure to
hazardous substances) the environment currently in effect in any and all
jurisdictions in which the Company and its subsidiaries own property or
conduct business, including, without limitation, the Clean Air Act, as
amended, the Comprehensive Environmental, Response, Compensation, and
Liability Act of 1980 ("CERCLA"), as amended, the Federal Water Pollution
Control Act, as amended, the Occupational Safety and Health Act of 1970, as
amended, the Resource Conservation and Recovery Act of 1976 ("RCRA"), as
amended, the Safe Drinking Water Act, as amended, the Toxic Substances
Control Act, as amended, the Hazardous & Solid Waste Amendments Act of 1984,
as amended, the Superfund Amendments and Reauthorization Act of 1986, as
amended, the Hazardous Materials Transportation Act, as amended, the Oil
Pollution Act of 1990, any state laws implementing the foregoing federal laws
and all other environmental conservation or protection laws. For purposes of
this Agreement, the terms "hazardous substance" and "release"
15
have the meanings specified in CERCLA and RCRA and will include petroleum and
petroleum products, radon and PCB's and the term "disposal" has the meaning
specified in RCRA; PROVIDED, HOWEVER, that to the extent the laws of the
state in which the property is located establish a meaning for "hazardous
substance," "release" or "disposal" that is broader than that specified in
either CERCLA or RCRA, such broader meaning will apply.
SECTION 3.14 VOTING REQUIREMENTS. The Board of Directors of 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; (iii) recommended approval of this Agreement and the Merger
by the Company's stockholders and directed that the Merger be submitted for
consideration by the Company's stockholders; and (iv) adopted a resolution
having the effect of causing the Merger not to be subject to Sections 203 of
the DGCL. 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.
SECTION 3.15 FINDERS AND INVESTMENT BANKERS; TRANSACTION EXPENSES.
Neither the Company nor any of its officers or directors has employed any
investment banker, business consultant, financial advisor, broker or finder
in connection with the transactions contemplated by this Agreement, except
for the Advisor, or incurred any liability for any investment banking,
business consultancy, financial advisory, brokerage or finders' fees or
commissions in connection with the transactions contemplated hereby, except
for fees payable to the Advisor (as reflected in agreements between such firm
and the Company, copies of which have been delivered to Parent).
SECTION 3.16. INSURANCE. The Company and each of its subsidiaries are
currently insured, and during each of the past five calendar years have been
insured, for reasonable amounts against such risks as companies engaged in a
similar business and similarly situated would, in accordance with good
business practice, customarily be insured.
SECTION 3.17. TITLE TO PROPERTIES; ENTIRE BUSINESS. The Company and
its subsidiaries have good title or a valid and subsisting leasehold interest
in and to or a valid and enforceable license to use all material assets,
properties and rights owned, used or held for use by them in the conduct of
their respective businesses, in each case, free and clear of any liens,
claims or encumbrances other than (a) as set forth on SCHEDULE 3.12 or (b)
Permitted Liens (as defined below). The Company and its subsidiaries own or
have sufficient right to use all assets and properties necessary to conduct
their businesses in the manner in which they are currently conducted. As
used in this Agreement, a "Permitted Lien" means: (a) a lien of a landlord,
carrier, warehouseman, mechanic, materialman or any other statutory lien
arising in the ordinary course of business; (b) a lien for taxes not yet due
or being contested in good faith; (c) with respect to the right of the
Company or its subsidiaries to use any property leased to the Company or its
subsidiaries, a lien that arises by the terms of the applicable lease; (d) a
purchase money security interest arising in the ordinary course of business;
or (e) a lien that does not materially
16
detract from the value of the encumbered property or assets or does not
materially detract from or interfere with the use of the encumbered property
or assets in the ordinary course of business.
SECTION 3.18. INTELLECTUAL PROPERTY RIGHTS. There are no registered
patents, trademarks, service marks, trade names or copyrights, or
applications for or licenses (to or from the Company or any of its
subsidiaries) with respect to any of the foregoing that are material to the
Company and its subsidiaries taken as a whole, that (a) are owned by the
Company or any of its subsidiaries, or with respect to which the Company or
any of its subsidiaries has any rights, or (b) are used, whether directly or
indirectly, by the Company or any of its subsidiaries, other than as set
forth on SCHEDULE 3.18. Except as set forth in SCHEDULE 3.18, the Company
and its subsidiaries have the right to use the trademarks and trade names set
forth on such SCHEDULE 3.18 and any other computer software and software
licenses, intellectual property, proprietary information, trade secrets,
trademarks, trade names, copyrights, material and manufacturing
specifications, drawings and designs used by the Company or any of its
subsidiaries (collectively, "Intellectual Property"), without infringing on
or otherwise acting adversely to the rights or claimed rights or any person,
except to the extent such infringement or actions adverse to another's rights
or claimed rights could not reasonably be expected to have a Company Material
Adverse Effect. Except as set forth on such SCHEDULE 3.18, neither the
Company nor any of its subsidiaries is obligated to pay any royalty or other
consideration material to the Company and its subsidiaries taken as a whole
to any person in connection with the use of any Intellectual Property.
Except as set forth in such SCHEDULE 3.18 and as could not reasonably be
expected to have a Company Material Adverse Effect, to the Company's
knowledge, no other person is infringing on the rights of the Company and its
subsidiaries in any of their Intellectual Property.
SECTION 3.19 MAJOR CUSTOMERS. The Company has made available to Parent
a list of the ten largest customers by dollar volume of the Company and its
subsidiaries (the "Major Customers"), with the amount of revenues
attributable to each such customer, for each fiscal years ending December 31,
1997 and 1998. Except as set forth on SCHEDULE 3.19, none of the Major
Customers has terminated or materially altered its relationship with the
Company since January 1, 1997 or, to the Company's knowledge, threatened to
do so or otherwise notified the Company of its intention to do so, and there
has been no material dispute with any of the Major Customers since January 1,
1997.
SECTION 3.20. YEAR 2000 COMPLIANCE. The disclosures in the Company's
Quarterly Report on Form 10-Q for the period ending September 30, 1998
regarding the "status of Year 2000 Compliance" are true, complete and correct
in all material respects as if made on the date of this Agreement.
SECTION 3.21. CERTAIN MATERIAL CONTRACTS. Except as disclosed on
SCHEDULE 3.21, 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. Each material contract disclosed on SCHEDULE
3.21 is, to the extent it purports to be, a valid and legally binding
obligation of the Company or its subsidiaries, as applicable, and is in full
force and effect.
17
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 could not reasonably be expected to
have a Company Material Adverse Effect.
SECTION 3.22. INSIDER INTERESTS. Except as set forth on SCHEDULE 3.22,
no person that beneficially owns in excess of 5% of the outstanding Company
Common Stock nor any executive officer or director 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) (a) 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); (b) (except for any person that
beneficially owns in excess of 5% of the outstanding Company Common Stock)
has any direct or indirect interest of any nature whatsoever in any person or
business which competes with, conducts any business similar to, has any
arrangement or agreement (including arrangements regarding the shared use of
personnel or facilities) with (whether as a customer or supplier or
otherwise), or is involved in any way with, the Company or any subsidiary of
the Company; or (c) is indebted or otherwise obligated to the Company. The
Company is not indebted or otherwise obligated to any such person, except for
amounts due under normal arrangements applicable to all employees generally
as to salary or reimbursement of ordinary business expenses not unusual in
amount or significance. As of the date of this Agreement, except for claims
and proceedings listed on SCHEDULE 3.22, there are no 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
certificate 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 3.23 NONCOMPETITION. 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 noncompetition or similar restriction on their respective businesses.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
Parent and Merger Sub represent and warrant to the Company as follows:
SECTION 4.1 ORGANIZATION AND QUALIFICATION. Each of Parent and Merger Sub
is a corporation duly organized, validly existing, and in good standing under
the laws of its jurisdiction of incorporation and has all requisite corporate
power and authority and any
18
necessary governmental authority to carry on its business as now conducted.
Each of Parent and Merger Sub is duly qualified or licensed to do business,
and is in good standing, in each jurisdiction where the character of its
properties owned or leased or the nature of its activities makes such
qualification or licensing necessary, except for failures to be so duly
qualified or licensed and in good standing as could not, individually or in
the aggregate, reasonably be expected to result in a Parent Material Adverse
Effect. For the purposes of this Agreement, "Parent Material Adverse Effect"
or "Parent Material Adverse Change" means any change or effect that,
individually or when taken together with all such other changes or effects,
could reasonably be expected to be materially adverse to the condition
(financial or other), business, properties, assets, liabilities, results of
operations or legal or regulatory environment of Parent and its subsidiaries,
taken as a whole.
SECTION 4.2 CORPORATE AUTHORIZATION. Each of Parent and Merger Sub has
the full corporate power and authority to execute and deliver this Agreement
and to consummate the transactions contemplated by this Agreement. The
execution, delivery and performance by each of Parent and Merger Sub of this
Agreement and the consummation by Parent and Merger Sub of the Merger and of
the other transactions necessary for such consummation have been duly and
validly authorized by Parent as sole stockholder of Merger Sub and by the
Board of Directors of each of Parent and Merger Sub and no other corporate
proceedings on the part of Parent or Merger Sub are necessary to authorize
this Agreement or to consummate the transactions contemplated by this
Agreement. This Agreement has been duly and validly executed and delivered
by each of Parent and Merger Sub and constitutes a valid and binding
obligation of each of Parent and Merger Sub, enforceable in accordance with
its terms.
SECTION 4.3 APPROVALS; NO VIOLATIONS. No filing with, and no permit,
authorization, consent or approval of any foreign or domestic public body or
authority is necessary for the consummation by Parent and Merger Sub of the
transactions contemplated by this Agreement, except (i) the filing of a
premerger notification and report form under the HSR Act, (ii) the filing
with the SEC of such reports under the Exchange Act as may be required in
connection with this Agreement and the transactions contemplated by this
Agreement, (iii) the filing of the certificate of merger with the Delaware
Secretary of State and appropriate documents with the relevant authorities of
other states in which the Company is qualified to do business, and (iv) as
set forth on SCHEDULE 4.3. Except as set forth on SCHEDULE 4.3, the execution
and delivery of this Agreement by Parent and Merger Sub, the consummation by
Parent and Merger Sub of the transactions contemplated by this Agreement and
the compliance by them with any of the provisions of this Agreement will not
(a) conflict with or result in any breach of any provision of the
organizational documents or bylaws of Parent or Merger Sub; (b) result in a
violation or breach of, or constitute (with or without due notice or lapse of
time or both) a default (or give rise to any right of termination,
cancellation, or acceleration under), any of the terms, conditions, or
provisions of any note, bond, mortgage, indenture, license, lease, contract,
agreement, or other instrument or obligation to which Parent or Merger Sub is
a party or by which either of them or any of their respective properties or
assets may be bound; or (c) violate any order, writ, injunction, decree,
statute, rule, or regulation applicable to Parent or Merger Sub or any of
their respective properties or assets, except such violations, conflicts,
breaches, defaults, terminations,
19
or accelerations referred to in this SECTION 4.3 as could not, individually
or in the aggregate, reasonably be expected to result in a Parent Material
Adverse Effect.
SECTION 4.4 NO PRIOR ACTIVITIES. Except for obligations or liabilities
incurred in connection with its incorporation or organization, or the
negotiation and consummation of this Agreement and the transactions
contemplated by this Agreement, Merger Sub has not incurred any obligations
or liabilities, nor has it engaged in any business or activities of any type
or kind whatsoever or entered into any agreements or arrangements with any
person.
SECTION 4.5 INFORMATION SUPPLIED. None of the information supplied or
to be supplied by Parent or Merger Sub for inclusion or incorporation by
reference in the Proxy Statement (as defined in SECTION 5.2) will, at the
date the Proxy Statement is first mailed to the stockholders of the Company
or at the time of the meeting of the stockholders of the Company held to vote
on approval and adoption of this Agreement and the Merger, 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.
SECTION 4.6 FINANCING. Purchaser will use its commercially reasonable
best efforts to secure sufficient funds on the Closing Date to satisfy its
obligations under this Agreement, including, without limitation, preserving
its right to borrow pursuant to the terms of a letter dated March 9, 1999
from Bank of America National Trust and Savings Association and NationsBanc
Xxxxxxxxxx Securities LLC by securing an extension of such commitment or by
executing definitive loan agreements as contemplated by such letter.
ARTICLE V
COVENANTS
SECTION 5.1 CONDUCT OF BUSINESS OF THE COMPANY.
(a) Except as expressly contemplated by this Agreement during the
period from the date of this Agreement to the Effective Time:
(i) Each of the Company and its subsidiaries will conduct its
business solely in the ordinary course consistent with past practices.
(ii) Neither the Company nor any of its subsidiaries will
intentionally take or willfully omit to take any actions that is intended to
or could reasonably be expected to result in, a Company Material Adverse
Effect.
(iii) The Company will use its reasonable best efforts to preserve
intact the business organization of the Company and each of its subsidiaries,
to keep available the services of its and their present officers and key
employees and consultants and to maintain satisfactory
20
relationships with customers, agents, reinsurers, suppliers and other persons
having business relationships with the Company or its subsidiaries.
(b) Without limiting the provisions of SECTION 5.1(a) or as otherwise
expressly provided in this Agreement, neither the Company nor any of its
subsidiaries will:
(i) issue, sell or dispose of additional shares of capital stock
of any class (including shares of Company Common Stock) of the Company or any
of its subsidiaries, or securities convertible into or exchangeable for any
such shares or securities, or any rights, warrants or options to acquire any
such shares or securities, other than shares of Company Common Stock issued
upon exercise of the options disclosed in SCHEDULE 3.3, in each case as
disclosed on SCHEDULE 3.3;
(ii) redeem, purchase or otherwise acquire, or propose to redeem,
purchase or otherwise acquire, any of its outstanding capital stock, or other
securities of the Company or any of its subsidiaries;
(iii) split, combine, subdivide or reclassify any of its capital
stock or declare, set aside, make or pay any dividend or distribution on any
shares of its capital stock except for dividends or distributions to the
Company and its subsidiaries from their respective subsidiaries;
(iv) sell, pledge, dispose of or encumber any of its assets,
except for sales, pledges, dispositions or encumbrances in the ordinary
course of business consistent with past practices or between the Company and
its subsidiaries;
(v) incur or modify any indebtedness or issue or sell any debt
securities, or assume, guarantee, endorse or otherwise as an accommodation
become absolutely or contingently responsible for obligations of any other
person, or make any loans or advances, other than in the ordinary course of
business consistent with past practices;
(vi) adopt or amend any bonus, profit sharing, compensation,
severance, termination, stock option, pension, retirement, deferred
compensation, employment or other employee benefit agreements, trusts, plans,
funds or other arrangements for the benefit or welfare of any director,
officer or employee, or (except for normal increases in the ordinary course
of business that are consistent with past practices and that, in the
aggregate, do not result in a material increase in benefits or compensation
expense to the Company) increase in any manner the compensation or fringe
benefits of any director, officer or employee or pay any benefit not required
by any existing plan or arrangement (including, without limitation, the
granting or vesting of stock options or stock appreciation rights) or take
any action or grant any benefit not expressly required under the terms of any
existing agreements, trusts, plans, funds or other such arrangements or enter
into any contract, agreement, commitment or arrangement to do any of the
foregoing, or make or agree to make any payments to any directors, officers,
agents, contractors or employees relating to a change or potential change in
control of the Company;
21
(vii) acquire by merger, consolidation or acquisition of stock or
assets any corporation, partnership or other business organization or
division or make any investment either by purchase of stock or securities,
contributions to capital (other than to wholly-owned subsidiaries), property
transfer or purchase of any material amount of property or assets, in any
other person;
(viii) amend its certificate of incorporation, bylaws 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;
(ix) take any action other than in the ordinary course of business
and consistent with past practices, to pay, discharge, settle or satisfy any
claim, liability or obligation (absolute or contingent, accrued or unaccrued,
asserted or unasserted, or otherwise);
(x) change any method of accounting or accounting practice used by
the Company or any of its subsidiaries, except for any change required by
reason of a concurrent change in generally accepted accounting principles;
(xi) revalue in any respect any of its assets, including, without
limitation, writing off notes or accounts receivable other than in the
ordinary course of business consistent with past practices;
(xii) authorize any new capital expenditure or expenditures (A)
that, when aggregated with all other capital expenditures, exceeds the
Company's 1999 capital budget, or (B) that departs from such capital budget
with respect to any item of such capital budget by an aggregate amount
exceeding $5,000,000 without prior consultation with Parent;
(xiii) except in the ordinary course of business consistent with
past practice, make any tax election, settle or compromise any federal, state
or local tax liability or consent to the extension of time for the assessment
or collection of any federal, state or local tax;
(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 of this Agreement and disclosed on Schedules to this Agreement; or
(xvii) voluntarily take any action or willfully omit to take any
action that could make any representation or warranty in ARTICLE III untrue
or incorrect in any material respect at
22
any time, including as of the date of this Agreement and as of the Effective
Time, as if made as of such time.
SECTION 5.2 PROXY STATEMENT. Promptly after the execution of this
Agreement, the Company and Parent will cooperate with each other and use all
reasonable efforts to prepare, and the Company and Parent will file with the
SEC, as soon as is reasonably practicable, a proxy statement, together with a
form of proxy, or information statement, with respect to the Special Meeting
(as defined in SECTION 5.3). For the purposes of this Agreement, the term
"Proxy Statement" means such proxy or information statement filed in final
form with the SEC at the time it initially is mailed to the stockholders of
the Company and all amendments or supplements thereto, if any, similarly
filed and mailed. The parties will use all reasonable efforts to have the
Proxy Statement cleared by the SEC as promptly as practicable after filing
and, as promptly as practicable after the Proxy Statement has been so
cleared, will mail the Proxy Statement to the stockholders of the Company as
of the record date for the Special Meeting. The Company represents that none
of the information provided or to be provided by it, and Parent and Merger
Sub represent that none of the information provided or to be provided by
them, for use in the Proxy Statement will, on the date the Proxy Statement is
first mailed to the stockholders of the Company and on the date of the
Special Meeting, be false or misleading with respect to any 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, and Parent, the Company, and Merger Sub
each agrees to correct any information provided by it for use in the Proxy
Statement that has become false or misleading in any material respect and
file such amendments and supplements as are necessary. The Company agrees
that the Proxy Statement will comply as to form in all material respects with
all applicable requirements of federal securities laws and applicable state
laws.
SECTION 5.3 ACTION OF STOCKHOLDERS OF THE COMPANY; VOTING.
(a) The Company will take all action necessary in accordance with the
DGCL and the certificate of incorporation and bylaws of the Company, to call,
as soon as is practicable, a meeting of its stockholders (the "Special
Meeting") at which the stockholders of the Company will consider and vote
upon the Merger and this Agreement. Unless the fiduciary duties of the Board
of Directors under applicable law require otherwise, the Proxy Statement will
contain the unanimous recommendation of the Board of Directors of the Company
that the stockholders of the Company vote to adopt and approve the Merger and
this Agreement. The Company will, at the request of Parent, use all
reasonable efforts to obtain from its stockholders proxies in favor of such
adoption and approval and to take all other action necessary, or, in the
reasonable judgment of the Company and Parent, helpful to secure the vote or
consent of stockholders required by the DGCL to effect the Merger.
(b) At the Special Meeting, Parent, Merger Sub and their subsidiaries
will vote, or cause to be voted, all of the shares of Company Common Stock
then owned by any of them in favor of the Merger.
23
SECTION 5.4 ADDITIONAL AGREEMENTS. Subject to the terms and conditions
of this Agreement and to the fiduciary obligations of the Board of Directors
of the Company under applicable law, each of the parties agrees to use their
respective best efforts to take, or cause to be taken, all actions to do, or
cause to be done, all things necessary, proper or advisable to consummate and
make effective as promptly as practicable the transactions contemplated by
this Agreement (including consummation of the Merger and the financing of the
transaction contemplated by this Agreement) and to cooperate with each other
in connection with the foregoing, including, without limitation, using their
respective best efforts (a) to obtain all necessary waivers, consents and
approvals from other parties to loan agreements, leases and other contracts,
(b) to obtain all necessary consents, approvals and authorizations as are
required to be obtained under any federal, state or foreign law or
regulations, (c) to lift or rescind any injunction or restraining order or
other order adversely affecting the ability of the parties to consummate the
transactions contemplated by this Agreement, (d) to prepare and effect all
necessary registrations and filings, and (e) to fulfill all conditions to and
covenants contained in this Agreement. If, after the Effective Time, any
action is necessary to effect the purposes of this Agreement, the proper
officers and directors of each party will take all such necessary action.
SECTION 5.5 GAMING APPROVALS.
(a) Upon the terms and subject to the conditions set forth in this
Agreement, each of the Company, Parent and Merger Sub 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, consents,
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, Parent and Merger Sub (i)
will use commercially reasonable best efforts to, and to cause their
respective officers, directors and affiliates to, file within 30 days after
the date of this Agreement, and in all events will file within 60 days after
the date of this Agreement, all required initial applications and documents
in connection with obtaining the Gaming Approvals; (ii) will act reasonably
and promptly thereafter in responding to additional requests in connection
therewith; and (iii) will use commercially reasonable best efforts to secure
all requisite Gaming Approvals. Parent and the Company will 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 Gaming Approvals. 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.
24
(b) If any person becomes an Ineligible Person (as defined below) prior
to the Effective Time, then (i) each Ineligible Person will, and the Company
will cause each Ineligible Person to, immediately and permanently, resign
from any position, including as director or officer, in the Company or any
subsidiary of the Company, and each Ineligible Person will have no further
management role in the Company or any such subsidiary; (ii) if required to do
so by any governmental entity as a condition to licensure, each Ineligible
Person will, and the Company will cause each Ineligible Person to, dispose of
all of its securities or other ownership interests in the Company; and (iii)
each Ineligible Person will, and the Company will cause each Ineligible
Person to, cooperate with the Company in their efforts to obtain and retain
in full force and effect the Gaming Approvals. "Ineligible Person" means any
officer, director or other 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 Effective Time; (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 or the
Surviving Corporation; or (iii) is expressly precluded from having any
continuing interest in the Company or the Surviving Corporation 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 5.6 NOTIFICATION OF CERTAIN MATTERS. The Company will give
prompt notice to Parent and Merger Sub, and Parent and Merger Sub will give
prompt notice to the Company, of (a) the occurrence, or failure to occur, of
any event, which occurrence or failure could cause any representation or
warranty contained in this Agreement to be untrue or inaccurate in any
material respect at any time, (b) any material failure of the Company,
Parent, or Merger Sub, as the case may be, or of any officer, director,
employee or agent of the Company, Parent or Merger Sub, as the case may be,
to comply with or satisfy any covenant, condition or agreement to be complied
with or satisfied by it under this Agreement, (c) any act, omission to act,
event or occurrence that, with notice, the passage of time or otherwise,
could result in a Company Material Adverse Effect or a Parent Material
Adverse Effect, as the case may be, and (d) any contingent liability of the
Company for which it reasonably believes it will, with the passage of time or
otherwise, become liable. No such notification will affect the
representations or warranties of the parties or the conditions to the
obligations of the parties under this Agreement.
SECTION 5.7 ACCESS TO INFORMATION.
(a) From the date of this Agreement to the Effective Time, the Company
will, and will cause its subsidiaries, officers, directors, employees and agents
upon reasonable notice to, afford to officers, employees, and agents of Parent,
Merger Sub and their affiliates and the banks, other financial institutions, and
investment bankers working with Parent or Merger Sub, and their respective
officers, employees and agents, complete access at all reasonable times to its
officers, employees, agents, properties, books, records and contracts, and will
furnish Parent, Merger Sub and their affiliates and the banks, other financial
institutions and investments bankers working
25
with Parent or Merger Sub, all financial, operating and other data and
information as they reasonably request.
(b) Each of Parent and Merger Sub will hold and will cause its
directors, officers, agents, employees, consultants and advisors to hold in
confidence, unless compelled to disclose by judicial or administrative
process or, in the written opinion of its legal counsel, by other
requirements of law, all documents and information concerning the Company and
its subsidiaries furnished to such persons in connection with the
transactions contemplated by this Agreement (except to the extent that such
information can be shown to have been (i) previously known by such persons
from sources other than the Company, or its directors, officers,
representatives or affiliates; (ii) in the public domain through no fault of
such persons; or (iii) later lawfully acquired by such persons on a
non-confidential basis from other sources who are not known by Parent or
Merger Sub to be bound by a confidentiality agreement or otherwise prohibited
from transmitting the information to Parent or Merger Sub by a contractual,
legal or fiduciary obligation) and will not release or disclose such
information to any other person, except its directors, officers, agents,
employees, consultants and advisors, in connection with this Agreement who
need to know such information. If the transactions contemplated by this
Agreement are not consummated, such confidence shall be maintained and, if
requested by or on behalf of the Company, Parent and Merger Sub will, and
will use all reasonable efforts to cause their auditors, attorneys, financial
advisors and other consultants, agents and representatives to, return to the
Company or destroy all copies of written information furnished by the Company
to Parent and Merger Sub or their agents, representatives or advisors. It is
understood that Parent and Merger Sub will be deemed to have satisfied their
obligation to hold such information confidential if they exercise the same
care as they take to preserve confidentiality for their own similar
information.
(c) No investigation pursuant to this SECTION 5.7 will affect any
representations or warranties of the parties in this Agreement or the
conditions to the obligations of the parties to this Agreement.
SECTION 5.8 PUBLIC ANNOUNCEMENTS. Parent and Merger Sub, on the one
hand, and the Company, on the other hand, will consult with each other before
issuing any press release or otherwise making any public statements with
respect to this Agreement, or the other transactions contemplated by this
Agreement, and will not issue any such press release or make any such public
statement prior to such consultation, except as may be required by law or the
listing requirements of any securities exchange.
SECTION 5.9 OFFICERS' AND DIRECTORS' INDEMNIFICATION.
(a) The indemnification obligations set forth in the Company's certificate
of incorporation and bylaws on the date of this Agreement shall survive the
Merger and shall not be amended, repealed or otherwise modified for a period of
six years after the Effective Time in any manner that would adversely affect the
rights thereunder of individuals who on or prior to the
26
Effective Time were directors, officers, employees or agents of the Company
(the "Indemnified Parties").
(b) Notwithstanding any other provision of this Agreement, the Company
may expend up to $500,000 to purchase a "tail" with a term of not more than 5
years for its current officers and directors liability insurance policy.
(c) In the event 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 5.9. In the event the Surviving Corporation transfers
any material portion of its assets, in a single transaction or in a series of
transactions, Parent will either guarantee the indemnification obligations
referred to in SECTION 5.9(a) or take such other action to ensure that the
ability of the Surviving Corporation to satisfy such indemnification
obligations will not be diminished in any material respect.
(d) This SECTION 5.9 shall survive the consummation of the Merger at
the Effective Time, is intended to benefit the Company, Parent, the Surviving
Corporation and the Indemnified Parties, and shall be binding on all
successors and assigns of Parent and the Surviving Corporation.
(e) In the event any action, suit, proceeding or investigation relating
to this Agreement or to the transactions contemplated by this Agreement is
commenced by a third party, whether before or after the Effective Time, the
parties to this Agreement agree, subject to the fiduciary duties of the
respective directors of the Company and Parent, to cooperate and use all
reasonable efforts to defend against and respond to such action, suit,
proceeding or investigation.
(f) As of the Effective Time, Parent shall guaranty the obligations of
the Company under indemnification agreements between the Company and its
directors and executive officers, copies of which have been provided to
Parent.
SECTION 5.10 EMPLOYEE OPTIONS. As soon as practicable following the
date of this Agreement, the Company will use its reasonable best efforts to
cause all outstanding Employee Options to be exercised as of the Effective
Time or to take such actions as are required to provide that each stock
option to purchase shares of Company Common Stock outstanding immediately
prior to the consummation of the Merger, whether or not then exercisable,
will be canceled immediately prior to the consummation of the Merger in
exchange for an amount in cash payable at the time of such cancellation equal
to the product of (a) the number of shares of Company Common Stock subject to
such stock option and unexercised immediately prior to the consummation of
the Merger and (b) the excess of the Merger Consideration over the per share
exercise price pursuant to such stock option.
27
SECTION 5.11 OTHER ACTIONS BY THE COMPANY. If any "fair price,"
"moratorium," "control share acquisition" or other form of antitakeover
statute, regulation, charter provision or contract is or becomes applicable
to the transactions contemplated by this Agreement, the Company and the
members of the Board of Directors of the Company will use their best efforts
to grant such approvals and take such actions as are necessary under such
laws, provisions or contracts so that the transactions contemplated by this
Agreement may be consummated as promptly as practicable on the terms
contemplated by this Agreement and otherwise act to eliminate or minimize the
effects of such statute, regulation, provision or contract on the
transactions contemplated by this Agreement.
SECTION 5.12 AVAILABLE FUNDS. Parent and Merger Sub will use their
commercially reasonable best efforts to pursue and obtain the financing
sufficient to allow consummation of the transactions contemplated by this
Agreement from recognized national financial institutions as soon as
practicable, including, without limitation, preserving its right to borrow
pursuant to the terms of a letter dated March 9, 1999 from Bank of America
National Trust and Savings Association and NationsBanc Xxxxxxxxxx Securities
LLC by securing an extension of such commitment or by executing definitive
loan agreements as contemplated by such letter.
SECTION 5.13 LETTERS OF ACCOUNTANTS. The Company shall use its
commercially reasonable best efforts to cause to be delivered to Parent
"comfort" letters of KPMG L.L.P., the Company's independent public
accountants, dated and delivered on the date on which the Proxy Statement is
mailed to the Company's stockholders and on 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 5.14 EMPLOYEES; TRANSITION After the Effective Time, Anchor
will expand its board of directors and offer seats thereon to Xxxxxxx X. Xxxx
and Xxxxxxx X. Xxxxxxxx. Promptly after the Closing, Parent will grant to
employees of the Company as of the date of this Agreement that are still
employed by Parent or its affiliates on the 60th day after the Effective Time
options to purchase an aggregate of 350,000 shares of common stock, par value
$.01 per share, of Parent, which options will have reasonable vesting and
other terms approved by a committee comprising Xxxxxxx X. Xxxxxxx, Xxxxxxx X.
Xxxx and Xxxxxxx X. Xxxxxxxx. For 12 months after the Effective Time, Parent
will not require any senior executive of the Company to relocate without a
relocation exepense plan approved of by Xxxxxxx X. Xxxx and Xxxxxxx X.
Xxxxxxxx.
ARTICLE VI
CONDITIONS TO CONSUMMATION OF THE MERGER
SECTION 6.1 MUTUAL CONDITIONS. The respective obligations of each
party to effect the Merger are subject to the satisfaction prior to the
Effective Time of the following conditions:
28
(a) This Agreement will have been adopted and approved by the
affirmative vote of the stockholders of the Company in accordance with the
certificate of incorporation and bylaws of the Company and with applicable
law.
(b) No federal or state statute, rule, regulation, injunction, decree
or order will be enacted, promulgated, entered or enforced that would
prohibit consummation of the Merger or of the other transactions contemplated
by this Agreement; PROVIDED that the parties to this Agreement agree to use
their respective commercially reasonable best efforts to have any such
injunction, decree or order lifted.
(c) The waiting period applicable to the consummation of the Merger
under the HSR Act will have expired or been terminated.
SECTION 6.2 ADDITIONAL CONDITIONS TO OBLIGATIONS OF PARENT AND MERGER SUB.
The obligations of Parent and Merger Sub to effect the Merger are also
subject to the following conditions:
(a) Each of the representations and warranties of the Company contained
in this Agreement will be true and correct in all material respects (except
that where any statement in a representation or warranty expressly includes a
standard of materiality, such statement will be true and correct in all
respects giving effect to such standard) as of the Closing Date as though
made on and as of the Closing Date, provided that those representations and
warranties which address matters only as of a particular date will remain
true and correct in all material respects (except that where any statement in
a representation or warranty expressly includes a standard of materiality,
such statement will be true and correct in all respects giving effect to such
standard) as of such date. Parent will have received a certificate of the
Chief Executive Officer and Chief Financial Officer of the Company to such
effect.
(b) The Company will 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
will have received a certificate of the Chief Executive Officer and Chief
Financial Officer of the Company to that effect.
(c) The stockholders of the Company party to the Voting Agreements will
have performed all of their obligations thereunder at or prior to the Closing
Date.
(d) The Company will have delivered, or caused to be delivered, to
Parent (i) a certificate of good standing from the Delaware Secretary of
State 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 certificate of
29
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 bylaws or comparable governing instruments, as amended,
of the Company and its subsidiaries certified by the Secretary of the Company
and its subsidiaries, as applicable.
(e) Parent will have received "comfort" letters from KPMG L.L.P. on the
date the Proxy Statement is mailed to the Company's stockholders and on the
Closing Date.
(f) From and including the date of this Agreement, there will not have
occurred a Company Material Adverse Change.
(g) Parent will 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, Merger Sub or Parent from all
governmental entities as are required before consummation of the Merger and
the transactions contemplated hereby, have been obtained or made, as
applicable, by the Company, Merger Sub or Parent, as the case may be, without
the imposition of any limitations, prohibitions or requirements that could
reasonably be expected to result in a Company Material Adverse Effect of a
Parent Material Adverse Effect, and are in full force and effect, other than
those Consents and Filings (i) that, if not obtained or made, could not
reasonably be expected to have a Parent Material Adverse Effect or Company
Material Adverse Effect before or immediately after the Effective Time; (ii)
from those jurisdictions designated on SCHEDULE 6.2(g) ; or (iii) the failure
to receive which is primarily the result of regulatory concerns regarding
Parent or its affiliates or as a result of a breach by Parent or Merger Sub
of Section 5.5(a).
(h) Parent will have received evidence, in form and substance
reasonably satisfactory to it, that all consents, approvals and waivers,
required under the terms of any contract or agreement required to be listed
on SCHEDULE 3.21 (other than the agreements with respect to funded
indebtedness listed on Schedule 3.21) have been obtained or made, as
applicable, by the Company, Merger Sub or Parent, as the case may be, without
the imposition of any limitations, prohibitions or requirements that could
reasonably be expected to result in a Company Material Adverse Effect of a
Parent Material Adverse Effect, and are in full force and effect, other than
those that, if not obtained or made, could not reasonably be expected to have
a Parent Material Adverse Effect or Company Material Adverse Effect before or
immediately after the Effective Time. Without prejudice to any other rights
of any Party to this Agreement, should Parent and the Company disagree as to
whether the terms of any such agreement or contract require consent, approval
or waiver by the other party thereto prior to the Merger or in order to
effect the transactions contemplated by this Agreement, the Parent may by
written notice delivered not more than 30 days after the date of this
Agreement require that the Company provide an opinion of independent counsel
addressed to the Parent as to whether it is reasonably likely that such
consent, approval or waiver is required; provided that such right may be
exercised by Parent with
30
respect to no more than two such contracts or agreements. Unless such
counsel concludes, without unreasonable qualification, that such consent,
waiver or approval is reasonably likely to be required under the terms of
such contract or agreement, then the condition set forth in this SECTION
6.2(g) will be deemed satisfied with respect to such contract or agreement.
Otherwise, the terms of this SECTION 6.2(g) will apply to such contract or
agreement.
(i) Parent shall have received an opinion of counsel to the Company,
Xxxxxx & Xxxxxx LLP with respect to the matters set forth in SECTIONS 3.1,
3.2, 3.3, 3.4, 3.5, 3.8 and 3.12. In rendering such opinion, such counsel
may rely on opinions of local counsel to the extent such counsel deems it
reasonable to do so. Such counsel will also state that the Proxy Statement
complied as to form in all material respects with the requirements of the
Exchange Act and the rules thereunder. In addition, such counsel will state
that it has participated in the preparation of the Proxy Statement, and that,
although such counsel is not assuming responsibility for the matters stated
in the Proxy Statement, such counsel has no reason to believe that the Proxy
Statement on the date the Proxy Statement was first mailed to the
stockholders of the Company and on the date of the Special Meeting or the
Closing Date, contained a false or misleading statement of any material fact
or omitted 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.
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) Each of the representations of Parent and Merger Sub contained in
this Agreement will be true and correct in all material respects (except that
where any statement in a representation or warranty expressly includes a
standard of materiality, such statement will be true and correct in all
respects giving effect to such standard) as of the Closing Date as though
made on and as of the Closing Date, provided that those representations and
warranties which address matters only as of a particular date will remain
true and correct in all material respects (except that where any statement in
a representation or warranty expressly includes a standard of materiality,
such statement will be true and correct in all respects giving effect to such
standard) as of such date. The Company will have received a certificate of
the Chief Executive Officer and Chief Financial Officer of Parent to such
effect.
(b) Parent will 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 will
have received a certificate of the Chief Executive Officer and Chief
Financial Officer of Parent to such effect.
(c) Parent will have delivered to the Company (i) a certificate of
existence from the Nevada Secretary of State stating that Parent is a validly
existing corporation together with a certificate of good standing from the
Nevada Secretary of State stating that Merger Sub is a validly existing
corporation in good standing; (ii) duly adopted resolutions of the Board of
Directors of each of Parent and Merger Sub approving the execution, delivery
and performance
31
of this Agreement and the instruments contemplated hereby, each certified by
the Secretary or the Assistant Secretary of the Company; and (iii) a true and
complete copy of the certificates of incorporation, as amended, of Parent and
Merger Sub certified by the Secretary of State of the state of each of their
incorporation, and a true and complete copy of the bylaws, as amended, of
Parent and Merger Sub certified by the Secretary or Assistant Secretary of
Parent and Merger Sub, as applicable.
ARTICLE VII
TERMINATION; AMENDMENT; WAIVER
SECTION 7.1 TERMINATION. This Agreement may be terminated and the
Merger may be abandoned at any time prior to the Effective Time
(notwithstanding approval of the Merger by the Company's stockholders):
(a) by mutual written consent of Parent, Merger Sub, and the Company;
(b) by Parent and Merger Sub, on the one hand, or the Company, on the
other hand, if any court of competent jurisdiction or other governmental body
has issued a final order, decree or ruling or taken any other final action
restraining, enjoining or otherwise prohibiting the Merger and such order,
decree, ruling or other action is or has become nonappealable;
(c) by the Company if a person or group has made a bona fide offer (i)
that the Board of Directors of the Company by a majority vote determines in
its good faith judgment and in the exercise of its fiduciary duties, after
consultation with its legal and financial advisors would result in a
transaction more favorable to the Company's stockholders than the transaction
contemplated by this Agreement (any Acquisition Proposal meeting such
criteria being a "Superior Proposal"); and (ii) as a result of which the
Board of Directors of the Company determines that it would be inconsistent
with its fiduciary duties under applicable law not to terminate this
Agreement, provided that such termination under this CLAUSE (c) will not be
effective until payment of the fee required by SECTION 7.3(b);
(d) by Parent and Merger Sub, if (i) there has been a breach (which
breach is not cured or not capable of being cured prior to 10 days following
notice to the Company by Parent of such breach) of any representation or
warranty on the part of the Company having a Company Material Adverse Effect
or materially adversely affecting the ability of Parent or Merger Sub to
consummate the Merger (including the Financing); (ii) there has been a breach
(which breach is not cured or not capable of being cured prior to 10 days
following notice to the Company by Parent of such breach) of any covenant or
agreement on the part of the Company resulting in a Company Material Adverse
Effect or materially adversely affecting or delaying the ability of Parent or
Merger Sub to consummate the Merger (including the Financing); (iii) the
Company engages in negotiations with any person or group (other than Parent
or Merger Sub) that has proposed a Third Party Acquisition (as defined in
SECTION 7.3(c)) except to the extent permitted by SECTION 8.8; (iv) the
Company enters into an agreement, letter of intent or arrangement with
32
respect to a Third Party Acquisition; or (v) the Board has withdrawn or
modified in a manner adverse to Parent or Merger Sub its approval or
recommendation of this Agreement, or the Merger or has recommended another
transaction, or has adopted any resolution to effect any of the foregoing;
(e) by the Company if (i) there has been a breach (which breach is not
cured or not capable of being cured prior to 10 days following notice to
Parent of such breach) of any representation or warranty on the part of
Parent or Merger Sub that materially adversely affects (or materially delays)
the consummation of the Merger or (ii) there has been a material breach
(which breach is not cured or not capable of being cured prior to 10 days
following notice to Parent of such breach) of any covenant or agreement on
the part of Parent or Merger Sub that materially adversely affects (or
materially delays) the consummation of the Merger;
(f) by the Company, if the Merger has not occurred by September 30,
1999, unless (i) 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 Company (in
which case such date will be extended by the number of days attributable to
such breach) or (ii) the failure to consummate the Merger is the result of
the failure to be fulfilled of the condition set forth in SECTION 6.2(g), in
which case such date will be October 31, 1999, provided that Parent shall
have diligently pursued fulfillment of such condition prior to September 30,
1999; or by Parent, if the Merger has not occurred by November 30, 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 Parent (in which
case such date will be extended by the number of days attributable to such
breach);
(g) by either Parent or the Company (provided that the terminating
party is not in material breach of any of its representations, warranties, or
obligations under this Agreement), if the 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
(h) by Parent if the First District Court of Appeal of the State of
Florida in the matter of GTech Corporation v. State of Florida Department of
Lottery and Automated Wagering International, Inc., Case No. 98-1155 (Fla.
1st DCA), on or before July 15, 1999 shall have reversed or rendered an
adverse decision with respect to the Final Order entered by the State of
Florida Department of Lottery on March 23, 1998; PROVIDED, HOWEVER, that if
such Court shall have so reversed or rendered an adverse decision with
respect to such Final Order on or before such date, then the parties agree to
negotiate in good faith for a period of two weeks from the date of such
reversal or adverse determination to reach a mutually satisfactory amendment
to this Agreement to eliminate any adverse effect to the Parent or Merger Sub
that could result from such reversal or adverse determination before Parent
will be entitled to exercise its right of termination under this SECTION
7.1(h); or
33
(i) by the Company (provided that Parent does not have the right to
terminate this Agreement) if the Merger is not effected because Parent has
failed to secure sufficient funds to satisfy its obligations under this
Agreement on or before November 30, 1999 (and all other conditions to the
obligations of the Company to close under this Agreement have been fulfilled
or waived).
SECTION 7.2 EFFECT OF TERMINATION. In the event of the termination and
abandonment of this Agreement pursuant to SECTION 7.1, this Agreement will
become void and have no effect, without any liability on the part of any
party to this Agreement or its affiliates, directors, officers or
stockholders, other than the provisions of this SECTION 7.2 and SECTIONS
5.7(b), 5.8 and 7.3. Nothing contained in this SECTION 7.2 will relieve any
party from liability for any willful breach of this Agreement.
SECTION 7.3 FEES AND EXPENSES. (a) In the event Parent and Merger Sub
terminate this Agreement pursuant to SECTION 7.1(d) or the Company terminates
this Agreement pursuant to SECTION 7.1(c), the Company will reimburse Parent,
Merger Sub and their affiliates (not later than three business days after
submission of statements together with reasonable documentation therefor) for
all out-of-pocket fees and expenses actually incurred by any of them or on
their behalf in connection with the Merger, the Financing and the proposed
consummation of all transactions contemplated by this Agreement, including,
without limitation, filing fees and fees payable to legal counsel, financing
sources, investment bankers, counsel to any of the foregoing and accountants
(the "Parent Expenses") in an amount not to exceed $2,500,000 in the
aggregate.
(b) If (i) (A) Parent and Merger Sub terminate this Agreement pursuant
to SECTION 7.1(d)(iii) or (iv) or in circumstances that would permit Parent
and Merger Sub to terminate this Agreement pursuant to SECTIONS 7.1(d)(iii)
or (iv) or (B) if the Company terminates this Agreement pursuant to SECTION
7.1(c) and, within 270 days after a termination pursuant to CLAUSE (A) or
CLAUSE (B), the Company enters into an agreement, letter of intent or
arrangement with respect to a Third Party Acquisition, or a Third Party
Acquisition occurs, then in either case the Company will pay to Parent,
within one business day following the execution and delivery of such
agreement or letter of intent or the entering into of such an arrangement or
the occurrence of such Third Party Acquisition, as the case may be, or
simultaneously with such termination, a fee, in cash, of $9,000,000 and
reimburse Parent for all Parent Expenses not to exceed $2,500,000 in the
aggregate. For the purposes of this Agreement, "Third Party Acquisition"
means the occurrence of any of the following events (i) the acquisition of
the Company by merger or otherwise by any person or group other than Parent,
Merger Sub or any affiliate of Parent or Merger Sub (a "Third Party"); (ii)
the acquisition by a Third Party of more than 19.9% of the total assets of
the Company and its subsidiaries, taken as a whole; (iii) the acquisition by
a Third Party of 19.9% or more of the outstanding shares of Company Common
Stock from the Company or in a transaction or series of related transactions
that results in a change of control of the Company; (iv) the adoption by the
Company of a plan of liquidation or the declaration or payment of an
extraordinary dividend; or (v) the acquisition by the Company or any of its
subsidiaries of more than 19.9% of the outstanding shares of Company Common
Stock.
34
(c) If the Company terminates this Agreement pursuant to SECTION
7.1(e), then Parent will reimburse the Company (not later than three business
days after such termination and submission of statements together with
reasonable documentation therefor) for all out-of-pocket fees and expenses
actually incurred by the Company or on its behalf in connection with the
Merger and the proposed consummation of all transactions contemplated by this
Agreement (including, without limitation, filing fees and fees payable to
legal counsel, investment bankers, counsel to any of the foregoing and
accountants), in an amount not to exceed an aggregate of $2,500,000.
(d) If the Company terminates this Agreement pursuant to SECTION
7.1(i), Parent will pay to the Company promptly upon demand a fee, in cash,
of $9,000,000 and reimburse the Company (not later than three business days
after such termination and submission of statements together with reasonable
documentation therefor) for all out-of-pocket fees and expenses actually
incurred by the Company or on its behalf in connection with the Merger and
the proposed consummation of all transactions contemplated by this Agreement
(including, without limitation, filing fees and fees payable to legal
counsel, investment bankers, counsel to any of the foregoing and
accountants), in an amount not to exceed an aggregate of $2,500,000.
(e) Except as specifically provided in this SECTION 7.3 each party will
bear its own expenses in connection with this Agreement and the transactions
contemplated by this Agreement.
SECTION 7.4 AMENDMENT. This Agreement may not be amended except in an
instrument in writing signed on behalf of all of the parties to this
Agreement; PROVIDED, HOWEVER, that after approval of the Merger by the
stockholders of the Company, no amendment that would either decrease the
Merger Consideration or change any other term or condition of this Agreement,
if any such change, alone or in the aggregate, would materially and adversely
affect the stockholders of the Company, may be made without the further
approval of the stockholders of the Company; PROVIDED, FURTHER, that, after
the Merger, no amendment may be made to SECTION 5.9 without the consent of
the Indemnified Parties.
SECTION 7.5 WAIVER. At any time prior to the Effective Time, whether
before or after the Special Meeting, any party to this Agreement may (a)
subject to the second proviso in SECTION 7.4, extend the time for the
performance of any of the obligations or other acts of any other party or
parties to this Agreement, (b) subject to the provisos contained in SECTION
7.4, waive any inaccuracies in the representations and warranties contained
in this Agreement by any other applicable party or in any documents,
certificate, or writing delivered pursuant to this Agreement by any other
applicable party, or (c) subject to the provisos contained in SECTION 7.4,
waive compliance with any of the agreements of any other party or with any
conditions to its own obligations. Any agreement on the part of a party to
this Agreement to any such extension or waiver will be valid only if set
forth in an instrument in writing signed on behalf of such party by a duly
authorized officer.
35
ARTICLE VIII
MISCELLANEOUS
SECTION 8.1 SURVIVAL OF REPRESENTATIONS, WARRANTIES, AND AGREEMENTS.
The representations and warranties made in this Agreement will not survive
beyond the Effective Time or the termination of this Agreement, as the case
may be. No investigation made, or information received by, any party to this
Agreement will affect any representation or warranty made by any other party
to this Agreement. The covenants and agreements of the parties to this
Agreement will survive in accordance with their terms.
SECTION 8.2 BROKERAGE FEES AND COMMISSIONS. The Company hereby
represents and warrants to Parent with respect to the Company and any of its
subsidiaries, that except for the Advisor, and Parent and Merger Sub hereby
represent and warrant to the Company with respect to Parent or any of its
subsidiaries that, except for Xxxxxxx Xxxxx & Co., Inc., no person is
entitled to receive from the Company, Parent, Merger Sub or any of their
subsidiaries, respectively, any investment banking, brokerage or finder's fee
or fees in connection with this Agreement or any of the transactions
contemplated by this Agreement.
SECTION 8.3 ENTIRE AGREEMENT; ASSIGNMENT. This Agreement, together
with all the Schedules and Annexes, (a) constitutes the entire agreement
between the parties with respect to the subject matter of this Agreement and
supersedes all other prior written agreements and understandings and all
prior and contemporaneous oral agreements and understandings between the
parties to this Agreement or any of them with respect to the subject matter
of this Agreement and (b) will not be assigned by operation of law or
otherwise, provided that Parent may assign its rights under this Agreement,
or those of Merger Sub, including, without limitation, the right to
substitute in place of Merger Sub a subsidiary as one of the constituent
corporations to the Merger as provided in SECTION 2.1 to any direct or
indirect subsidiary of Parent, but no such assignment will relieve the
assigning party of its obligations under this Agreement. Any purported
assignment of this Agreement not made in accordance with this SECTION 8.3
will be null, void, and of no effect. No party to this Agreement has relied
upon any representation or warranty, oral or written, of any other party to
this Agreement or any of their officers, directors or stockholders except for
the representations and warranties contained in this Agreement.
SECTION 8.4 SEVERABILITY. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of
law or public policy, all other terms and provisions of this Agreement will
nevertheless remain in full force and effect. Upon any final judicial
determination that any term or other provision is invalid, illegal or
incapable of being enforced, the parties to this Agreement will negotiate in
good faith to modify this Agreement so as to effect the original intent of
the parties as closely as possible in an acceptable manner to the end that
the transactions contemplated by this Agreement be consummated to the extent
possible.
SECTION 8.5 NOTICES. All notices, requests, claims, demands and other
communications under this Agreement will be in writing and will be deemed to
have been duly
36
given when delivered in person, by cable, telegram or telex, facsimile or by
registered or certified mail (postage prepaid, return receipt requested) to
the respective parties as follows:
(a) if to Parent or Merger Sub, to:
Anchor Gaming
000 Xxxxx Xxxx, Xxxxx X
Xxx Xxxxx, Xxxxxx 00000
Attention: Xxxxxxx Xxxxxxx
Fax: (000) 000-0000
and
Olive AP Acquisition Corporation
000 Xxxxx Xxxx, Xxxxx X
Xxx Xxxxx, Xxxxxx 00000
Attention: Xxxxxxx Xxxxxxx
Fax: (000) 000-0000
with a copy to:
Xxxxxx & Xxxx, L.L.P.
0000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attention: Xxxx X. Xxxxxxxxx
Fax: (000) 000-0000
(b) if to the Company, to:
Powerhouse Technologies, Inc.
000 Xxxxxxxxx Xxxxx, Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxx
Xxxx X. Xxxxxxx
Fax: (000) 000-0000
with a copy to:
37
Xxxxxx & Hardin LLP
2700 International Tower
000 Xxxxxxxxx Xxxxxx, X.X.
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxxxx X. Xxxxxx
Fax: (000) 000-0000
or to such other address as the person to whom notice is given may have
previously furnished to the others in writing in the manner set forth above
(provided that notice of any change of address will be effective only upon
receipt).
SECTION 8.6 GOVERNING LAW. THIS AGREEMENT WILL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, REGARDLESS OF
THE LAWS THAT MIGHT OTHERWISE GOVERN UNDER APPLICABLE PRINCIPLES OF CONFLICT
OF LAWS.
SECTION 8.7 SPECIFIC PERFORMANCE. Each of the parties to this
Agreement acknowledges and agrees that the other parties to this Agreement
would be irreparably damaged in the event any of the provisions of this
Agreement were not performed in accordance with their specific terms or were
otherwise breached. Accordingly, each of the parties to this Agreement
agrees that each of them will be entitled to an injunction or injunctions to
prevent breaches of the provisions of this Agreement and to enforce
specifically this Agreement and the terms and provisions of this Agreement in
any action instituted in any court of the United States or any state having
subject matter jurisdiction, in addition to any other remedy to which such
party may be entitled, at law or in equity.
SECTION 8.8 OTHER POTENTIAL BIDDERS.
(a) The Company shall not, directly or indirectly, through any officer,
director, employee, representative or agent of the Company or any of its
subsidiaries, solicit, facilitate or encourage (including by way of
furnishing information) the initiation of any inquires or proposals regarding
a Third Party Acquisition (any of the foregoing inquiries or proposals being
referred to in this Agreement as an "Acquisition Proposal"). Provided that
the Company and the Board shall have complied with the first sentence of this
SECTION 8.8(a), nothing contained in this SECTION 8.8(a) or any other
provision of this Agreement shall prevent the Board if it determines in good
faith, after consultation with, and the receipt of advice from, outside
counsel, that not to do so would be inconsistent with its fiduciary duties
under applicable law, from considering, negotiating, approving and
recommending to the stockholders of the Company an unsolicited bona fide
written Acquisition Proposal that the Board of Directors of the Company
determines to be a Superior Proposal. Nothing in this SECTION 8.8 shall
prohibit the Company from complying with Rules 14d-9 and 14e-2 under the
Exchange Act with respect to any Superior Proposal that takes the form of a
tender offer.
(b) The Company shall promptly, but in no event later than 24 hours,
notify Parent after receipt of any Acquisition Proposal or any request for
nonpublic information relating to the
37
Company or any of its subsidiaries in connection with an Acquisition Proposal
or for access to the properties, books or records of the Company or any
subsidiary by any person that informs the Board that it is considering
making, or has made, an Acquisition Proposal. Such notice to Parent shall be
made orally and in writing and shall indicate in reasonable detail the
identity of the offeror and the terms and conditions of such proposal,
inquiry or contact.
(c) If the Board receives a request for material nonpublic information
by a person that makes an unsolicited bona fide Acquisition Proposal and the
Board determines that such proposal, if consummated pursuant to its terms
would be a Superior Proposal, then, and only in such case, the Company may,
subject to the execution of a confidentiality agreement substantially
identical to that then in effect between the Company and Parent, provide such
party with access to information regarding the Company.
(d) The Company shall immediately cease and cause to be terminated any
existing discussions or negotiations with any parties (other than Parent and
Merger Sub) conducted heretofore with respect to any of the foregoing. The
Company agrees not to release any third party from any confidentiality or
standstill agreement to which the Company is a party.
(e) The Company shall ensure that the officers, directors and employees
of the Company and its subsidiaries and any investment banker or other
advisor or representative retained by the Company are aware of the
restrictions described in this SECTION 8.8; and shall be responsible for any
breach of this SECTION 8.8 by such bankers, advisors and representatives.
SECTION 8.9 DESCRIPTIVE HEADINGS; REFERENCES. The descriptive headings
in this Agreement are inserted for convenience of reference only and are not
intended to be part of or to affect the meaning or interpretation of this
Agreement. References in this Agreement to Sections, Annexes and Schedules
are references to the Sections, Annexes and Schedules of this Agreement
unless the context indicates otherwise.
SECTION 8.10 PARTIES IN INTEREST. This Agreement will be binding upon
and inure solely to the benefit of each party to this Agreement, and, except
as provided in SECTIONS 5.9 and 8.11, nothing in this Agreement, express or
implied, is intended to confer upon any other person any rights or remedies
of any nature whatsoever under or by reason of this Agreement.
SECTION 8.11 BENEFICIARIES. Parent hereby acknowledges that SECTION
5.9 is intended to benefit the Indemnified Parties referred to in SECTION
5.9, any of whom will be entitled to enforce SECTION 5.9 against the
Surviving Corporation or the Company, as the case may be.
SECTION 8.12 COUNTERPARTS. This Agreement may be executed in any
number of counterparts, each of which will be deemed to be an original, but
all of which will constitute one and the same agreement.
39
SECTION 8.13 OBLIGATIONS. Parent will perform or cause Merger Sub to
perform all of the obligations of Merger Sub under this Agreement, including
consummation of the Merger, in accordance with the terms of this Agreement.
SECTION 8.14 CERTAIN DEFINITIONS. For the purposes of this Agreement:
(a) the term "subsidiary" means each person in which a person owns or
controls, directly or through one or more subsidiaries, 50 percent or more of
the stock or other interests having general voting power in the election of
directors or persons performing similar functions or more than 50% of the
equity interests; (b) the term "person" will be broadly construed to include
any individual, corporation, company, partnership, trust, joint stock
company, association or other private or governmental entity; (c) the term
"group" has the meaning given in Section 13(d)(3) of the Exchange Act; (d)
the term "affiliate" has the meaning given in Rule 144(a)(1) under the
Securities Act; and (e) the term "business day" has the meaning given in Rule
14d-1(c)(6) under the Exchange Act.
[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
40
IN WITNESS WHEREOF, Parent, Merger 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:
ANCHOR GAMING, a Nevada corporation
By: /s/ Xxxxxxx Xxxxxx
--------------------------------
Name: Xxxxxxx Xxxxxx
--------------------------------
Title: Chairman
--------------------------------
MERGER SUB:
OLIVE AP ACQUISITION CORPORATION, a
Delaware corporation
By: /s/ Xxxxxxx Xxxxxxx
--------------------------------
Name: Xxxxxxx Xxxxxxx
--------------------------------
Title: CEO
--------------------------------
COMPANY:
POWERHOUSE TECHNOLOGIES, INC., a
Delaware corporation
By: /s/ Xxxxxxx Xxxxxxxx
--------------------------------
Name: Xxxxxxx Xxxxxxxx
--------------------------------
Title: CEO
--------------------------------
41
EXHIBIT A-1
Each director and executive officer of the Company within the meaning of
Section 16 under the Exchange Act.
EXHIBIT A-2
FORM OF VOTING AGREEMENT
VOTING AGREEMENT
March ___, 1999
Anchor Gaming
000 Xxxxx Xxxx, Xxxxx X
Xxx Xxxxx, Xxxxxx 00000
Re: Agreement of Stockholders Concerning Transfer and Voting of Shares
of Powerhouse Technologies, Inc.
I understand that you and Powerhouse Technologies, Inc. (the "Company"),
of which the undersigned is a stockholder, are prepared to enter into an
agreement for the merger of a wholly-owned subsidiary of Parent ("Merger
Sub") into the Company (the "Merger"), 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. Terms used but not otherwise defined in this letter
will 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 (the "Shares"), 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.
2. 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, unless, as a
condition to receipt of such Shares, the transferee agree to bound by the
terms of this letter.
3. NO SOLICITATION. From the date of this letter until the
termination of this letter, I will not, directly or indirectly, engage in any
activity this if attributed to the Company would be prohibited under SECTION
8.8 of the Merger Agreement, or otherwise assist, facilitate or encourage,
any person (other than Parent and Merger Sub) that may be considering making,
or has made, a Acquisition Proposal. I will promptly notify Merger Sub after
receipt of any Acquisition Proposal or any indication that any such third
party is considering making a Acquisition 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 Acquisition Proposal and will keep Parent fully informed of
the status and details of any such Acquisition Proposal, indication or
request. The foregoing provisions of this SECTION 3 will 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.
4. EFFECTIVE DATE; SUCCESSION; REMEDIES; TERMINATION. Upon your
acceptance and execution of the Agreement, this letter agreement will
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. We agree that in
light of the inadequacy of damages as a remedy, specific performance will be
available to you, in addition to any other remedies you may have for the
violation of this letter agreement. This letter agreement will terminate on
the termination of the Agreement.
5. NATURE OF HOLDINGS; SHARES. All references in this letter to our
holdings of the Shares will be deemed to include Shares held or controlled by
the undersigned, individually, jointly, or in any other capacity, and will
extend to any securities issued to the undersigned in respect of the Shares.
-----------------------------------
Name:
-----------------------------
