AGREEMENT AND PLAN OF MERGER Dated as of January 10, 2006 by and among LOTTOMATICA S.P.A., GOLD HOLDING CO., GOLD ACQUISITION CORP. and GTECH HOLDINGS CORPORATION
EXHIBIT
2.1
EXECUTION
COPY
==========================================================
AGREEMENT
AND PLAN OF MERGER
ANNEX A Form of Amended and Restated Certificate of Incorporation
Dated
as
of January 10, 2006
by
and
among
LOTTOMATICA
S.P.A.,
GOLD
HOLDING CO.,
GOLD
ACQUISITION CORP.
and
GTECH
HOLDINGS CORPORATION
==========================================================
TABLE
OF
CONTENTS
Page
ARTICLE
I
The
Merger
|
|
SECTION
1.01. The Merger
|
1
|
SECTION
1.02. Closing
|
1
|
SECTION
1.03. Effective Time
|
2
|
SECTION
1.04. Effects
|
2
|
SECTION
1.05. Certificate of Incorporation and By-laws
|
2
|
SECTION
1.06. Directors
|
2
|
SECTION
1.07. Officers
|
2
|
|
|
ARTICLE
II
Effect
of the Merger on the Capital Stock of the Constituent Corporations;
Exchange of Certificates
|
|
SECTION
2.01. Effect on Capital Stock
|
3
|
SECTION
2.02. Exchange of Certificates
|
4
|
|
|
ARTICLE
III
Representations
and Warranties of the Company
|
|
SECTION
3.01. Organization, Standing and Power
|
6
|
SECTION
3.02. Company Subsidiaries; Equity Interests
|
7
|
SECTION
3.03. Capital Structure
|
7
|
SECTION
3.04. Authority; Execution and Delivery; Enforceability
|
9
|
SECTION
3.05. No Conflicts; Consents
|
10
|
SECTION
3.06. SEC Documents
|
11
|
SECTION
3.07. Absence of Certain Changes or Events
|
12
|
SECTION
3.08. Contracts
|
13
|
SECTION
3.09. Intellectual Property
|
16
|
SECTION
3.10. Taxes
|
18
|
SECTION
3.11. Absence of Changes in Company Benefit Plans and Company
Benefit
Agreements
|
19
|
SECTION
3.12. ERISA Compliance; Excess Parachute Payments
|
20
|
SECTION
3.13. Litigation
|
22
|
SECTION
3.14. Compliance with Applicable Laws and Reporting
Requirements
|
23
|
SECTION
3.15. Permits
|
24
|
SECTION
3.16. Property and Assets
|
24
|
SECTION
3.17. Brokers; Schedule of Fees and Expenses
|
25
|
SECTION
3.18. Opinion of Financial Advisors
|
25
|
SECTION
3.19. Environmental Laws
|
25
|
SECTION
3.20. Insurance
|
26
|
SECTION
3.21. Foreign Corrupt Practices Act
|
26
|
SECTION
3.22. Labor Matters
|
27
|
SECTION
3.23. Fraud; Infrastructure; Data Security
|
27
|
ARTICLE
IV
Representations
and Warranties of Parent and Acquisition Co
|
|
SECTION
4.01. Organization, Standing and Power
|
29
|
SECTION
4.02. Acquisition Co
|
29
|
SECTION
4.03. Authority; Execution and Delivery; Enforceability
|
29
|
SECTION
4.04. No Conflicts; Consents
|
29
|
SECTION
4.05. Brokers
|
30
|
SECTION
4.06. Financing
|
31
|
SECTION
4.07. Capital Resources
|
32
|
SECTION
4.08. Section 203 of the DGCL
|
32
|
ARTICLE
V
Covenants
Relating to Conduct of Business
|
|
SECTION
5.01. Conduct of Business
|
32
|
SECTION
5.02. No Solicitation
|
36
|
ARTICLE
VI
Additional
Agreements
|
|
SECTION
6.01. Preparation of Proxy Statement and Other Filings; Company
Stockholders Meeting
|
39
|
SECTION
6.02. Access to Information; Confidentiality
|
41
|
SECTION
6.03. Reasonable Best Efforts; Notification
|
42
|
SECTION
6.04. Equity Awards
|
45
|
SECTION
6.05. Benefit Plans
|
46
|
SECTION
6.06. Indemnification
|
47
|
SECTION
6.07. Fees and Expenses
|
48
|
SECTION
6.08. Public Announcements
|
50
|
SECTION
6.09. Transfer Taxes
|
51
|
SECTION
6.10. Acquisition Financing
|
51
|
-
ii
-
SECTION
6.11. Resignations
|
53
|
SECTION
6.12. Further Action
|
53
|
SECTION
6.13. Notification
|
53
|
SECTION
6.14. Transaction Litigation
|
54
|
SECTION
6.15. Convertible Debentures
|
54
|
SECTION
6.16. Tax Matters
|
54
|
ARTICLE
VII
Conditions
Precedent
|
|
SECTION
7.01. Conditions to Each Party’s Obligation To Effect The
Merger
|
55
|
SECTION
7.02. Conditions to Obligations of Parent and Acquisition
Co
|
55
|
SECTION
7.03. Conditions to Obligation of the Company
|
57
|
SECTION
7.04. Frustration of Closing Conditions
|
58
|
ARTICLE
VIII
Termination,
Amendment and Waiver
|
|
SECTION
8.01. Termination
|
58
|
SECTION
8.02. Effect of Termination
|
59
|
SECTION
8.03. Amendment
|
59
|
SECTION
8.04. Extension; Waiver
|
59
|
ARTICLE
IX
Guarantor
|
|
SECTION
9.01. Representations and Warranties of Guarantor
|
60
|
SECTION
9.02. Guarantor Covenants
|
61
|
ARTICLE
X
General
Provisions
|
|
SECTION
10.01. Nonsurvival of Representations and Warranties
|
63
|
SECTION
10.02. Notices
|
63
|
SECTION
10.03. Definitions
|
64
|
SECTION
10.04. Interpretation
|
65
|
SECTION
10.05. Severability
|
66
|
SECTION
10.06. Counterparts
|
66
|
SECTION
10.07. Entire Agreement; No Third-Party Beneficiaries
|
66
|
SECTION
10.08. Governing Law
|
66
|
-
iii
-
SECTION
10.09. Assignment
|
66
|
SECTION
10.10. Consent to Jurisdiction
|
66
|
SECTION
10.11. Waiver of Jury Trial
|
67
|
SECTION
10.12. Remedies
|
67
|
ANNEX A Form of Amended and Restated Certificate of Incorporation
-
iv
-
GLOSSARY
Terms
|
Section
|
Acquisition
Agreement
|
5.02(b)
|
Acquisition
Co
|
Preamble
|
Acquisition
Co Common Stock
|
2.01(a)(iii)
|
Acquisition
Financing
|
4.06
|
Adverse
Recommendation Change
|
5.02(b)
|
affiliate
|
10.03
|
Agreement
|
Preamble
|
Alternate
Financing
|
6.10(a)
|
Antitrust
Division
|
6.03(a)
|
Antitrust
Law
|
3.05(b)
|
Appraisal
Shares
|
2.01(b)
|
Assets
|
3.16
|
Atronic
Contracts
|
7.02(g)
|
Authorized
Agent
|
9.02(f)
|
business
day
|
10.03
|
Cap
Ex Budget
|
5.01(a)(ix)
|
Capital
Securities Backstop Letter
|
4.06
|
Capital
Securities Financing
|
4.06
|
Capitalization
Date
|
3.03(a)
|
Certificate
|
2.01(a)(ii)
|
Certificate
of Merger
|
1.03
|
Closing
|
1.02
|
Closing
Date
|
1.02
|
Code
|
2.02(h)
|
Commitment
Letters
|
4.06
|
Company
|
Preamble
|
Company
Benefit Agreement
|
3.11
|
Company
Benefit Plan
|
3.11
|
Company
Board
|
3.04(b)
|
Company
By-laws
|
3.01
|
Company
Capital Stock
|
2.01(a)
|
-
v -
Terms
|
Section
|
Company
Cash Balance
|
7.02(h)
|
Company
Certificate
|
1.05
|
Company
Common Stock
|
2.01(a)
|
Company
Disclosure Letter
|
Article III
|
Company
Employees
|
6.05(a)
|
Company
ERISA Affiliate
|
3.12(c)
|
Company
Intellectual Property
|
3.09(a)
|
Company
IT Systems
|
3.23(e)
|
Company
Pension Plans
|
3.12(a)
|
Company
Preferred Stock
|
3.03(a)
|
Company
Property
|
3.16
|
Company
Restricted Stock
|
3.03(a)
|
Company
SEC Documents
|
3.06(a)
|
Company
Senior Notes
|
3.07
|
Company
Stock Options
|
3.03(a)
|
Company
Stock Plans
|
3.03(a)
|
Company
Stockholder Approval
|
3.04(c)
|
Company
Stockholders Meeting
|
6.01(d)
|
Company
Subsidiaries
|
3.01
|
Company
Termination Fee
|
6.07(b)
|
Confidentiality
Agreement
|
5.02(a)
|
Consent
|
3.05(b)
|
Contract
|
3.05(a)
|
Convertible
Debentures
|
3.03(a)
|
Xx
Xxxxxxxx
|
4.06
|
DGCL
|
1.01
|
EC
Merger Regulation
|
6.03(a)
|
Effect
|
10.03
|
Effective
Time
|
1.03
|
Environmental
Laws
|
3.19(c)
|
Environmental
Permits
|
3.19(c)
|
ERISA
|
3.11
|
ESPP
|
3.03(a)
|
Exchange
Act
|
3.05(b)
|
-
vi -
Terms
|
Section
|
Exchange
Fund
|
2.02(a)
|
Filed
Company SEC Documents
|
Article III
|
Fraud
|
3.23(a)
|
Fraud
Losses
|
3.23(a)
|
FTC
|
6.03(a)
|
GAAP
|
3.06(b)
|
Games
|
3.23(a)
|
Gaming
Business
|
3.23(e)
|
Gaming
Laws
|
6.03(g)
|
Governmental
Entity
|
3.05(b)
|
Guarantee
|
9.02(a)
|
Guaranteed
Obligations
|
9.02(a)
|
Guarantor
|
Preamble
|
Guarantor
Stockholder Approval
|
4.04(b)
|
Guarantor
Stockholders Meeting
|
4.04(b)
|
HSR
Act
|
3.05(b)
|
HSR
Filing
|
6.03(a)
|
Incentive
Plans
|
6.05(c)
|
Indenture
|
6.15(a)
|
Intellectual
Property
|
3.09(c)
|
Inventors
|
3.09(a)
|
Joint
Venture Agreement
|
3.08(a)(xiv)
|
Judgment
|
3.05(a)
|
knowledge
|
10.03
|
Law
|
3.05(a)
|
Leased
Property
|
3.16
|
Legal
Impediment
|
6.03(b)
|
Liens
|
3.02(a)
|
Lottery
Business
|
6.03(g)
|
Lottery
Contract
|
3.08(a)(xiii)
|
Material
Adverse Effect
|
10.03
|
Material
Contracts
|
3.08(b)
|
Materials
of Environmental Concern
|
3.19(c)
|
Maximum
Premium
|
6.06(c)
|
-
vii -
Terms
|
Section
|
Merger
|
Recitals
|
Merger
Consideration
|
2.01(a)(ii)
|
Multiemployer
Plan
|
3.11
|
Notice
of Superior Proposal
|
5.02(b)
|
NYSE
|
3.05(b)
|
Other
Antitrust Filings
|
6.03(a)
|
Other
Filings
|
6.01(a)
|
Outside
Date
|
8.01(b)(i)
|
Owned
Property
|
3.16
|
Parent
|
Preamble
|
Parent
Termination Fee
|
6.07(c)
|
Paying
Agent
|
2.02(a)
|
Permits
|
3.15(a)
|
Permitted
Lien
|
3.08(d)
|
person
|
10.03
|
Pre-Closing
Service
|
6.05(d)
|
Pre-Underwriting
Agreement
|
4.06
|
Proxy
Statement
|
3.05(b)
|
Representatives
|
5.02(a)
|
Restraint
|
7.01(c)
|
Rights
Offering
|
4.06
|
Xxxxxxxx-Xxxxx
Act
|
3.06(b)
|
SEC
|
3.05(b)
|
Section 262
|
2.01(b)
|
Securities
Act
|
3.06(a)
|
Senior
Commitment Letter
|
4.06
|
subsidiary
|
10.03
|
Superior
Proposal
|
5.02(b)
|
Surviving
Corporation
|
1.01
|
Takeover
Proposal
|
5.02(a)
|
Tax
Return
|
3.10(g)
|
Taxes
|
3.10(g)
|
Transfer
Taxes
|
6.09
|
Video
Lottery Business
|
6.03(g)
|
-
viii -
Terms
|
Section
|
Voting
Company Debt
|
3.03(a)
|
-
ix -
AGREEMENT
AND PLAN OF MERGER (this “Agreement”)
dated
as of January 10, 2006, by and among LOTTOMATICA S.P.A., an Italian corporation
(“Guarantor”),
GOLD
HOLDING CO., a Delaware corporation and direct, wholly owned subsidiary of
Guarantor (“Parent”),
GOLD
ACQUISITION CORP., a Delaware corporation and direct, wholly owned subsidiary
of
Parent (“Acquisition
Co”),
and
GTECH HOLDINGS CORPORATION, a Delaware corporation (the “Company”).
WHEREAS
the respective boards of directors of Guarantor, Parent, Acquisition Co and
the
Company have approved the acquisition of the Company by Parent upon the terms
and subject to the conditions set forth in this Agreement;
WHEREAS
the respective boards of directors of Guarantor, Parent, Acquisition Co and
the
Company have approved this Agreement and the merger (the “Merger”)
of
Acquisition Co with and into the Company, upon the terms and subject to the
conditions set forth in this Agreement, whereby each issued and outstanding
share of Company Common Stock not owned by Guarantor, Parent, Acquisition
Co or
the Company or their respective subsidiaries shall be converted into the
right
to receive $35.00 in cash, without interest;
WHEREAS
Parent, Acquisition Co 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; and
WHEREAS
Guarantor desires to make certain representations, warranties, covenants,
agreements and to absolutely and unconditionally guarantee the payment and
performance when due of all of the covenants, agreements and obligations
of
Parent and Acquisition Co, and their respective successors and assigns,
contained in this Agreement.
NOW,
THEREFORE, the parties hereto agree as follows:
ARTICLE
I
The
Merger
SECTION
1.01. 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”),
Acquisition Co shall be merged with and into the Company at the Effective
Time.
At the Effective Time, the separate corporate existence of Acquisition Co
shall
cease and the Company shall continue as the surviving corporation (the
“Surviving
Corporation”).
SECTION
1.02. Closing.
Upon the
terms and subject to the conditions set forth in this Agreement, the closing
of
the Merger (the “Closing”)
shall
take place at
10:00 a.m.,
New York time, on the third business day after the satisfaction or (to
the extent permitted by applicable Law) waiver of the conditions set forth
in
Article VII (other than those that by their terms cannot be satisfied until
the time of the Closing), at the offices of Xxxxx Xxxxxxxxxx LLP,
1301 Avenue of the Americas, New York, New York,
or at
such other time, date or place agreed to in writing by Parent and the Company;
provided,
however,
that if
all the conditions set forth in Article VII shall not have been satisfied
or (to the extent permitted by applicable Law) waived on such
third business day, then the Closing shall take place on the
first business day on which all such conditions shall have been or can be
satisfied or (to the extent permitted by applicable Law) shall have been
waived.
The
date
on which the Closing occurs is referred to in this Agreement as the
“Closing
Date”.
SECTION
1.03. Effective
Time.
Upon the
terms and subject to the conditions set forth in this Agreement, as soon
as
practicable on or after the Closing Date, a certificate of merger or other
appropriate documents (in any such case, the “Certificate
of Merger”)
shall
be duly prepared, executed and acknowledged by the parties in accordance
with
the relevant provisions of the DGCL and filed with the Secretary of State
of the
State of Delaware. The Merger shall become effective upon the filing of the
Certificate of Merger with the Secretary of State of the State of Delaware
or at
such subsequent time or date as Parent and the Company shall agree and specify
in the Certificate of Merger. The time at which the Merger becomes effective
is
referred to in this Agreement as the “Effective
Time”.
SECTION
1.04. Effects.
The
Merger shall have the effects set forth in Section 259 of the
DGCL.
SECTION
1.05. Certificate
of Incorporation and By-laws.
(a) The
Certificate of Incorporation of the Company, as in effect immediately prior
to
the Effective Time (the “Company
Certificate”),
shall
be amended at the Effective Time to be in the form of Annex A and, as so
amended, such Company Certificate shall be the Certificate of Incorporation
of
the Surviving Corporation until thereafter changed or amended as provided
therein or by applicable Law.
(b)
The
By-laws of Acquisition Co, as in effect immediately prior to the Effective
Time
shall be the By-laws of the Surviving Corporation until thereafter changed
or
amended as provided therein or by applicable Law.
SECTION
1.06. Directors.
The
directors of the Company immediately prior to the Effective Time shall submit
their resignations to be effective as of the Effective Time. The directors
of
Acquisition Co immediately prior to the Effective Time shall be the directors
of
the Surviving Corporation, until the earlier of their resignation or removal
or
until their respective successors are duly elected and qualified, as the
case
may be.
SECTION
1.07. Officers.
The
officers of the Company immediately prior to the Effective Time shall be
the
officers of the Surviving Corporation, until the earlier
2
of
their
resignation or removal or until their respective successors are duly elected
or
appointed and qualified, as the case may be.
ARTICLE
II
Effect
of the Merger on the Capital Stock of the
Constituent
Corporations; Exchange of Certificates
SECTION
2.01. Effect
on Capital Stock.
(a)
Cancellation
and Conversion of Shares.
At the
Effective Time, by virtue of the Merger and without any action on the part
of
the holder of any shares of common stock, par value $0.01 per share, of the
Company (the “Company
Common Stock”
and,
together with the Company Preferred Stock, the “Company
Capital Stock”)
or any
shares of capital stock of Acquisition Co:
(i)
Cancellation
of Treasury Stock and Stock Owned by Guarantor, Parent or Acquisition
Co.
Each
share of Company Common Stock that is owned by the Company, Guarantor, Parent
or
Acquisition Co or owned by any direct or indirect subsidiary of such persons,
in
each case, immediately prior to the Effective Time shall automatically be
canceled and retired and shall cease to exist, and no consideration shall
be
delivered or deliverable in exchange therefor.
(ii)
Conversion
of Company Common Stock.
Each
share of Company Common Stock issued and outstanding immediately prior to
the
Effective Time (other than shares to be canceled in accordance with
Section 2.01(a)(i) and the Appraisal Shares), including the shares of
Company Restricted Stock, shall, subject to Section 2.02(h), be converted
into the right to receive $35.00 in cash, without interest (the “Merger
Consideration”).
At
the Effective Time all such shares shall no longer be outstanding and shall
automatically be canceled and retired and shall cease to exist, and each
holder
of a certificate that immediately prior to the Effective Time represented
any
such shares (a “Certificate”)
shall
cease to have any rights with respect thereto, except the right to receive
the
Merger Consideration.
(iii)
Conversion
of Acquisition Co Common Stock.
Each
share of common stock, par value $0.01 per share, of Acquisition Co
(“Acquisition
Co Common Stock”)
issued
and outstanding immediately prior to the Effective Time shall be converted
into
one share of common stock, par value $0.01 per share, of the Surviving
Corporation.
(b)
Appraisal
Rights.
Notwithstanding anything in this Agreement to the contrary, shares
(“Appraisal
Shares”)
of
Company Common Stock that are outstanding immediately prior to the Effective
Time and that are held by any person who is entitled to demand and properly
demands appraisal of such Appraisal Shares pursuant to, and who complies
in all
respects with, Section 262 of the DGCL (“Section 262”)
shall
not be converted into the right to receive the Merger Consideration as provided
in Section 2.01(a), but rather the holders of Appraisal Shares shall be
entitled to payment of
3
the
fair
value of such Appraisal Shares in accordance with Section 262; provided,
however,
that if
any such holder shall fail to perfect or otherwise shall waive, withdraw
or lose
the right to appraisal under Section 262, then the right of such holder to
be paid the fair value of such holder’s Appraisal Shares shall cease and such
Appraisal Shares shall be deemed to have been converted as of the Effective
Time
into, and to have become exchangeable solely for, the right to receive the
Merger Consideration as provided in Section 2.01(a). The Company shall
serve prompt notice to Parent of any demands received by the Company for
appraisal of any shares of Company Common Stock, and Parent shall have the
right
to participate in and direct all negotiations and proceedings with respect
to
such demands. Prior to the Effective Time, the Company shall not, without
the
prior written consent of Parent, make any payment with respect to, or settle
or
offer to settle, any such demands, or agree to do any of the
foregoing.
SECTION
2.02. Exchange
of Certificates.
(a)
Paying
Agent.
Prior to
the Effective Time, Parent shall select a bank or trust company reasonably
acceptable to the Company to act as paying agent (the “Paying
Agent”)
for
the payment of the Merger Consideration upon surrender of Certificates. Parent
shall provide, or cause the Surviving Corporation to provide, to the Paying
Agent immediately following the Effective Time all the cash necessary to
pay for
the shares of Company Common Stock converted into the right to receive cash
pursuant to Section 2.01(a) (such cash being hereinafter referred to as the
“Exchange
Fund”).
(b)
Exchange
Procedure.
As soon
as reasonably practicable after the Effective Time, the Paying Agent shall
mail
to each holder of record of a Certificate that immediately prior to the
Effective Time represented outstanding shares of Company Common Stock whose
shares were converted into the right to receive the Merger Consideration
pursuant to Section 2.01(a), (i) a letter of transmittal (which shall
specify that delivery shall be effected, and risk of loss and title to the
Certificates shall pass, only upon delivery of the Certificates to the Paying
Agent and shall be in such form and have such other provisions as Parent
may
reasonably specify) and (ii) instructions for use in effecting the
surrender of the Certificates in exchange for Merger Consideration. Upon
surrender of a Certificate for cancellation to the Paying Agent, together
with
such letter of transmittal, duly executed, and such other documents as may
reasonably be required by the Paying Agent, the holder of such Certificate
shall
be entitled to receive in exchange therefor the amount of cash into which
the
shares of Company Common Stock theretofore represented by such Certificate
shall
have been converted into the right to receive pursuant to Section 2.01, and
the Certificate so surrendered shall forthwith be canceled. In the event
of a
transfer of ownership of Company Common Stock that is not registered in the
stock transfer books of the Company, payment may be made to a person other
than
the person in whose name the Certificate so surrendered is registered, if
such
Certificate shall be properly endorsed or otherwise be in proper form for
transfer and the person requesting such payment shall pay any transfer or
other
taxes required by reason of the payment to a person other than the registered
holder of such Certificate or establish to the satisfaction of Parent that
such
tax has been paid or is not applicable. Until surrendered as contemplated
by
this Section 2.02, each Certificate shall be deemed at any time after the
Effective Time to represent only the right to receive upon such surrender
the
amount of cash, without interest, into which the shares of Company Common
Stock
4
theretofore
represented by such Certificate have been converted pursuant to
Section 2.01. No interest shall be paid or accrue on the cash payable upon
surrender of any Certificate.
(c)
No
Further Ownership Rights in Company Common Stock.
The
Merger Consideration paid in accordance with the terms of this Article II
upon the surrender of Certificates representing shares of Company Common
Stock
shall be deemed to have been paid in full satisfaction of all rights pertaining
to such shares of Company Common Stock, subject,
however,
to the
Surviving Corporation’s obligation to pay any dividends or make any other
distributions with a record date prior to the Effective Time that may have
been
declared or made by the Company on such shares of Company Common Stock in
accordance with the terms of this Agreement or prior to the date of this
Agreement and which remain unpaid at the Effective Time. At the close of
business on the day on which the Effective Time occurs, the stock transfer
books
of the Company shall be closed, and there shall be no further registration
of
transfers on the stock transfer books of the Surviving Corporation of shares
of
Company Common Stock that were outstanding immediately prior to the Effective
Time. If, after the Effective Time, any certificates formerly representing
shares of Company Common Stock are presented to the Surviving Corporation
or the
Paying Agent for any reason, they shall be canceled and exchanged as provided
in
this Article II.
(d)
Termination
of Exchange Fund.
Any
portion of the Exchange Fund that remains undistributed to the holders of
Company Common Stock for nine months after the Effective Time shall be delivered
to the Surviving Corporation, upon demand, and any holder of Company Common
Stock who has not theretofore complied with this Article II shall
thereafter look only to the Surviving Corporation for payment of its claim
for
Merger Consideration.
(e)
No
Liability.
None of
Guarantor, Parent, Acquisition Co, the Company, the Paying Agent or any of
their
respective affiliates shall be liable to any person in respect of any cash
from
the Exchange Fund delivered to a public official pursuant to any applicable
abandoned property, escheat or similar Law. If any Certificate has not been
surrendered prior to three years after the Effective Time (or immediately
prior
to such earlier date on which Merger Consideration in respect of such
Certificate would otherwise escheat to or become the property of any
Governmental Entity), any such shares, cash, dividends or distributions in
respect of such Certificate shall, to the extent permitted by applicable
Law,
become the property of the Surviving Corporation, free and clear of all claims
or interest of any person previously entitled thereto.
(f)
Investment
of Exchange Fund.
The
Paying Agent shall invest any cash included in the Exchange Fund, as directed
by
Parent on a daily basis. Any interest and other income resulting from such
investments shall be paid to Parent. If for any reason (including losses)
the
cash in the Exchange Fund shall be insufficient to fully satisfy all of the
payment obligations to be made in cash by the Exchange Agent hereunder (but
subject to Sections 2.02(d) and 2.02(e)), Parent shall promptly deposit cash
into the Exchange Fund in an amount which is equal to the deficiency in the
amount of cash required to fully satisfy such cash payment
obligations.
5
(g)
Lost
Certificates.
If any
Certificate shall have been lost, stolen or destroyed, upon the making of
an
affidavit of that fact by the person claiming such Certificate to be lost,
stolen or destroyed and, if required by the Surviving Corporation, the posting
by such person of a bond in such reasonable amount as the Surviving Corporation
may direct as indemnity against any claim that may be made against it with
respect to such Certificate, the Paying Agent shall pay in respect of such
lost,
stolen or destroyed Certificate the Merger Consideration.
(h)
Withholding.
Parent,
the Surviving Corporation and the Paying Agent may withhold from the sum
payable
to any person under this Agreement, and pay to the appropriate taxing
authorities, any amounts which any of them may be required to withhold under
the
Internal Revenue Code of 1986 (the “Code”),
or
any provision of state, local or foreign Tax law. Any sum which is withheld
and
paid to a taxing authority as permitted by this Section will be deemed for
purposes of this Article II to have been paid to the person with regard to
whom
it is withheld.
ARTICLE
III
Representations
and Warranties of the Company
The
Company represents and warrants to Parent , Acquisition Co and Guarantor
that,
except as identified in the Company SEC Documents filed by the Company with
the
SEC and publicly available prior to the date of this Agreement (the
“Filed
Company SEC Documents”)
(other
than disclosures in “Certain Factors That May Effect Future Performance,” “Risk
Factors” and “Forward Looking Information” sections of the Filed Company SEC
Documents and any other disclosures included in any such Company SEC Documents
that are predictive or forward-looking in nature) or in the letter (it being
understood that each section or schedule of such letter qualifies the
correspondingly numbered representation, warranty or covenant hereof to the
extent specified therein and such other representations, warranties or covenants
to the extent a matter in such section or schedule is disclosed in such a
way as
to make its relevance to such other representation, warranty or covenant
readily
apparent), dated as of the date of this Agreement, from the Company to Parent
and Acquisition Co (the “Company
Disclosure Letter”):
SECTION
3.01. Organization,
Standing and Power.
Each of
the Company and each of its subsidiaries (the “Company
Subsidiaries”)
is
duly organized, validly existing and, where such concept is applicable, in
good
standing under the laws of the jurisdiction in which it is organized and
has
full corporate or similar power and authority and possesses all governmental
franchises, licenses, permits, authorizations and approvals necessary to
enable
it to own, lease or otherwise hold its properties and assets and to conduct
its
businesses as presently conducted, other than such franchises, licenses,
permits, authorizations and approvals the failure of which to possess,
individually or in the aggregate, (i) does not and would not reasonably be
expected to impair in any material respect the ability of the Company to
perform
its obligations under this Agreement, or prevent or materially impede the
consummation by the Company of the
6
Merger
or
the other transactions contemplated by this Agreement and (ii) has not had
and would not reasonably be expected to have a Material Adverse Effect. The
Company and each Company Subsidiary is duly qualified to do business in each
jurisdiction where the nature of its business or the ownership or leasing
of its
properties makes such qualification necessary, except such jurisdictions
where
the failure to be so qualified, (i) does not and would not reasonably be
expected to impair in any material respect the ability of the Company to
perform
its obligations under this Agreement, or prevent or materially impede the
consummation by the Company of the Merger or the other transactions contemplated
by this Agreement and (ii) has not had and would not reasonably be expected
to have a Material Adverse Effect. The Company has made available to Parent
true, complete and accurate copies of the Company Certificate and the By-laws
of
the Company, as amended through the date of this Agreement (as so amended,
the
“Company
By-laws”),
and
the comparable charter and organizational documents of each material Company
Subsidiary (including each material Company Subsidiary not wholly owned directly
or indirectly by the Company), in each case as amended through the date of
this
Agreement. Neither the Company nor GTECH Corporation is in violation of the
provisions of their respective governing documents. No material Company
Subsidiary (excluding GTECH Corporation which is the subject of the preceding
sentence) is in violation of the provisions of its governing documents in
any
material respect and no other Company Subsidiary (excluding GTECH Corporation
which is the subject of the preceding sentence) is in violation of the
provisions of its governing documents in a manner that is material to the
Company and the Company Subsidiaries, taken as a whole.
SECTION
3.02. Company
Subsidiaries; Equity Interests.
(a)
Schedule 3.02(a) of the Company Disclosure Letter sets forth a true and
complete list of each Company Subsidiary and its jurisdiction of organization
and, with respect to each Company Subsidiary not directly or indirectly
wholly-owned by the Company, the class and percentage of the outstanding
shares
of capital stock or other ownership interests of such Company Subsidiary
held by
the Company, by any other Company Subsidiary and by any other person. All
the
outstanding shares of capital stock of each Company Subsidiary have been
duly
authorized and validly issued and are fully paid and nonassessable, have
not
been issued in violation of any preemptive or similar rights, purchase option,
call or right of first refusal and, other than directors’ qualifying shares, are
owned by the Company and/or by one or more Company Subsidiaries, free and
clear
of all pledges, liens, charges, mortgages, encumbrances and security interests
of any kind or nature whatsoever (collectively, “Liens”).
(b)
Except for its interests in the Company Subsidiaries, the Company does not
own,
directly or indirectly, any capital stock, membership interest, partnership
interest, joint venture interest or other equity interest in any
person.
SECTION
3.03. Capital
Structure.
(a) The
authorized capital stock of the Company consists of 200,000,000 shares of
Company Common Stock and 20,000,000 shares of preferred stock, par value
$0.01 per share, of the Company (“Company
Preferred Stock”).
At
the close of business on January 6, 2006 (the “Capitalization
Date”),
(i) 126,447,121 shares of Company Common Stock were issued
7
and
outstanding (which number includes 960,521 shares of Company Common Stock,
assuming all unvested shares are vested, subject to transfer restrictions
or
subject to forfeiture back to the Company or repurchase by the Company (the
“Company
Restricted Stock”)),
and
0 shares of Company Common Stock were held by the Company in its treasury,
(ii) 6,945,056,234 shares of Company Common Stock were reserved and
available for issuance pursuant to the Company’s 1994 Stock Option Plan, as
amended and restated, 1996 Non Employee Directors’ Stock Option Plan,
as amended, 1997 Stock Option Plan, as amended, 1998 Non-Employee
Directors’ Stock Election Plan, 1999 Non-Employee Directors’ Stock Option
Plan, as amended, 2000 Restricted Stock Plan, 2000 Omnibus Stock
Option and Long-Term Incentive Plan, 2002 Omnibus Stock Option and
Long-Term Incentive Plan, 2004 Employee Stock Purchase Plan (the
“ESPP”)
and
Management Stock Bonus Plan (such plans, collectively, the “Company
Stock Plans”),
of
which (A) 7,719,241 shares of Company Common Stock were subject to
outstanding options (other than rights under the ESPP) to acquire shares
of
Company Common Stock from the Company (together with any options to purchase
shares of Company Common Stock granted after the Capitalization Date, the
“Company
Stock Options”)
and
(B) 42,665 shares of Company Common Stock were subject to outstanding
rights under the ESPP based on payroll information for the period ending
October
31, 2005 (assuming the fair market value per share of Company Common Stock
on
the last day of the offering period in effect under the ESPP on April 30,
2006
was equal to the Merger Consideration), (iii) 1,147,271 shares of
Company Common Stock were issuable upon conversion of the Company’s outstanding
1.75% Convertible Debentures due 2021 (the “Convertible
Debentures”)
and
(iv) no shares of Company Preferred Stock were issued or outstanding or held
by
the Company as treasury shares. No shares of Company Common Stock or Company
Preferred Stock are held by any Company Subsidiary. Except as set forth above,
at the close of business on the Capitalization Date, no shares of capital
stock
or voting securities of the Company were issued, reserved for issuance or
outstanding. From the close of business on the Capitalization Date to the
date
of this Agreement, the Company has not issued, granted, sold or otherwise
transferred, or reserved for issuance, sale, grant or transfer, any shares
of
capital stock, voting securities or Company Stock Options, other than the
issuance of Company Common Stock upon conversion of Convertible Debentures
and
issuances pursuant to the exercise of Company Stock Options and rights under
the
ESPP or otherwise pursuant to the Company’s obligations under the Company Stock
Plans. All outstanding shares of Company Capital Stock are, and all such
shares
that may be issued prior to the Effective Time will be when issued, duly
authorized, validly issued, fully paid and nonassessable and not subject
to or
issued in violation of any purchase option, call option, right of first refusal,
preemptive right, subscription right or any similar right under any provision
of
the DGCL, the Company Certificate, the Company By-laws or any Contract to
which
the Company is a party or otherwise bound. Other than the Convertible
Debentures, there are not any bonds, debentures, notes or other indebtedness
of
the Company having the right to vote (or convertible into, exchangeable for
or
exercisable for securities having the right to vote) on any matters on which
holders of Company Common Stock may vote (“Voting
Company Debt”).
As of
the Capitalization Date, there are outstanding Company Stock Options to acquire
7,719,241 shares of Company Common Stock at a weighted average exercise
price of $14.79 per share. Except for such Company Stock Options, the
8
outstanding
Convertible Debentures, outstanding shares of Company Restricted Stock subject
to forfeiture back to the Company for no consideration and rights to purchase
shares of Company Common Stock under the ESPP, as of the date of this Agreement,
there are not any options, warrants, rights, convertible or exchangeable
securities, “phantom” stock rights, stock appreciation rights, stock-based
performance units, commitments, Contracts, arrangements or undertakings of
any
kind to which the Company or any Company Subsidiary is a party or by which
any
of them is bound (i) obligating the Company or any Company Subsidiary to
issue, deliver or sell, or cause to be issued, delivered or sold, additional
shares of capital stock or other equity interests in, or any security
convertible or exercisable for or exchangeable into any capital stock of
or
other equity interest in, the Company or of any Company Subsidiary or any
Voting
Company Debt, (ii) obligating the Company or any Company Subsidiary to
issue, grant or enter into any such option, warrant, call, right, security,
commitment, Contract, arrangement or undertaking, or (iii) obligating the
Company or any Company Subsidiary to repurchase, redeem or otherwise acquire
any
shares of capital stock of or other equity interests in, or any securities
or
other rights convertible into, or exercisable or exchangeable for, any capital
stock of or other equity interest in, the Company or any Company
Subsidiary.
(b)
As of
the Capitalization Date, (i) each Company Stock Option has the exercise
price, is subject to the vesting schedule, has an exercise period and is
held by
the holder set forth with respect thereto, as set forth in
Schedule 3.03(b)(i) of the Company Disclosure Letter, and (ii) each
outstanding share of Company Restricted Stock is subject to the vesting schedule
and held by the holder set forth with respect thereto in
Schedule 3.03(b)(ii) of the Company Disclosure Letter.
SECTION
3.04. Authority;
Execution and Delivery; Enforceability.
(a)
The
Company has all requisite corporate power and authority to execute and deliver
this Agreement and, subject to the receipt of the Company Stockholder Approval,
to consummate the transactions contemplated by this Agreement. The execution
and
delivery by the Company of this Agreement and the consummation by the Company
of
the transactions contemplated hereby have been duly and validly authorized
by
all necessary corporate action on the part of the Company, subject, in the
case
of the Merger, to receipt of the Company Stockholder Approval. The Company
has
duly executed and delivered this Agreement, and this Agreement constitutes
its
legal, valid and binding obligation, enforceable against it in accordance
with
its terms.
(b)
The
Board of Directors of the Company (the “Company
Board”),
at a
meeting duly called and held, duly and unanimously (by all the directors
voting
at such meeting) adopted resolutions (i) approving this Agreement, the
Merger and the other transactions contemplated by this Agreement,
(ii) determining that the terms of the Merger and the other transactions
contemplated by this Agreement are fair to and in the best interests of the
stockholders of the Company, (iii) directing that this Agreement be
submitted to a vote at a meeting of the Company’s stockholders,
(iv) recommending that the Company’s stockholders adopt this Agreement and
(v) declaring that this Agreement is advisable. Assuming the representation
made in Section 4.08 is correct, the approval of this Agreement, the Merger
and the other transactions contemplated hereby by the Company Board referred
to
in this
9
Section 3.04(b)
constitutes approval of the Merger for purposes of Section 203 of the DGCL
and represents the only action necessary to ensure that the restrictions
on
“business combinations” (as such term is defined therein) set forth in
Section 203 of the DGCL does not and will not apply to the execution or
delivery of this Agreement and the consummation of the Merger and the other
transactions contemplated hereby. No other “fair price”, “moratorium”, “control
share acquisition” or other state takeover statute or similar statute or
regulation applies or purports to apply to the Company with respect to this
Agreement, the Merger or any other transaction contemplated by this Agreement.
There is no rights agreement, “poison pill” anti-takeover plan or other similar
plan, device or arrangement to which the Company or any Company Subsidiary
is a
party or by which it or they are bound with respect to any capital stock
of or
other equity interest in the Company.
(c)
The
only vote of holders of any class or series of Company Capital Stock necessary
to approve and adopt this Agreement and the Merger is the adoption of this
Agreement by the holders of a majority of the outstanding shares of Company
Common Stock (the “Company
Stockholder Approval”).
SECTION
3.05. No
Conflicts; Consents. (a)
The
execution and delivery by the Company of this Agreement do not, and the
consummation of the Merger and the other transactions contemplated by this
Agreement and compliance with the terms hereof will not, conflict with, or
result in any violation of or default (with or without notice or lapse of
time,
or both) under, or give rise to a right of termination, cancellation or
acceleration of any material obligation or to loss of a material benefit
under,
or result in the creation of any Lien upon any of the properties or assets
of
the Company or any Company Subsidiary under, any provision of (i) the
Company Certificate, the Company By-laws or the comparable charter or
organizational documents of any Company Subsidiary, (ii) any contract,
lease, license, indenture, note, bond, mortgage, agreement, permit, concession,
franchise, other instrument or obligation (a “Contract”)
to
which the Company or any Company Subsidiary is a party or by which any of
their
respective properties or assets is bound or (iii) subject to the filings
and other matters referred to in Section 3.05(b), any judgment, order or
decree (“Judgment”)
or
statute, law, ordinance, rule, regulation, code or principle of common law
and
equity (“Law”)
applicable to the Company or any Company Subsidiary or their respective
properties or assets, other than, in the case of clauses (ii) and (iii)
above, any such items that, individually or in the aggregate, (x) do not
and would not reasonably be expected to impair in any material respect the
ability of the Company to perform its obligations under this Agreement, or
prevent or materially impede the consummation by the Company of the Merger
or
the other transactions contemplated by this Agreement and (y) have not had
and would not reasonably be expected to have a Material Adverse Effect. This
Section 3.05(a) does not relate to matters with respect to employee
benefits, which are the subject of Section 3.12.
(b)
No
consent, approval, license, permit, order or authorization (“Consent”)
of, or
registration, declaration or filing with, or permit from, any Federal, state,
local or foreign government or any court of competent jurisdiction,
administrative agency or commission or other governmental authority or
instrumentality, domestic or foreign (a “Governmental
Entity”)
is
required to be obtained or made by or with respect
10
to
the
Company or any Company Subsidiary in connection with the execution, delivery
and
performance of this Agreement or the consummation of the transactions
contemplated by this Agreement, other than (i) compliance with and filings
under the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended
(the
“HSR
Act”),
or
any other applicable competition, merger control, antitrust or similar laws
(each, an “Antitrust
Law”)
of any
jurisdiction, (ii) the filing with the Securities and Exchange Commission
(the “SEC”)
of
(A) a proxy statement relating to the adoption of this Agreement by the
Company’s stockholders (the “Proxy
Statement”)
and
(B) such other reports under the Securities Exchange Act of 1934, as
amended (including the rules and regulations of the SEC promulgated thereunder,
the “Exchange
Act”),
as
may be required in connection with this Agreement, the Merger and the other
transactions contemplated by this Agreement, (iii) the filing of the
Certificate of Merger with the Secretary of State of the State of Delaware
and
appropriate documents with the relevant authorities of the other jurisdictions
in which the Company is qualified to do business, (iv) any filings required
under the rules and regulations of the New York Stock Exchange (the
“NYSE”)
and
(v) such other items that, individually or in the aggregate, (x) would
not reasonably be expected to impair in any material respect the ability
of the
Company to perform its obligations under this Agreement or prevent or materially
impede the consummation by the Company of the Merger or the other transactions
contemplated by this Agreement and (y) have not had and would not
reasonably be expected to have a Material Adverse Effect.
SECTION
3.06. SEC
Documents.
(a) The
Company has filed or furnished all reports, schedules, forms, certifications,
statements and other documents required to be filed with or furnished by
the
Company to the NYSE or the SEC under the registration and periodic disclosure
rules, regulations and requirements of the Securities Act of 1933, as amended
(including the rules and regulations of the SEC promulgated thereunder, the
“Securities
Act”),
or
the Exchange Act since January 31, 2002 (such documents, together with any
documents filed or furnished during such period by the Company with the SEC
on a
voluntary basis since February 23, 2003 on Current Reports on
Form 8-K, the “Company
SEC Documents”).
(b)
As of
its respective date, each Company SEC Document complied in all material respects
with, to the extent in effect at the time of filing, the requirements of
the
Securities Act, the Exchange Act, the Xxxxxxxx-Xxxxx Act of 2002 (including
the
rules and regulations of the SEC promulgated thereunder) (the “Xxxxxxxx-Xxxxx
Act”)
and
the rules of the NYSE, in each case as applicable to such Company SEC Document,
and did not contain any untrue statement of a material fact or omit to state
a
material fact required to be stated therein or necessary in order to make
the
statements therein, in light of the circumstances under which they were made,
not misleading. None of the Company SEC Documents, at the time it was filed,
or,
in the case of registration statements filed with the SEC, on the date of
effectiveness thereof, contained any untrue statement of a 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 were made, not misleading. The consolidated financial statements (including
the related notes and schedules) of the Company included in each of the Company
SEC Documents complied at the time it was filed as to form in all material
11
respects
with applicable accounting requirements and the published rules and regulations
of the SEC with respect thereto in effect at the time of filing, were prepared
in accordance with generally accepted accounting principles (“GAAP”)
(except, in the case of unaudited statements, as permitted by the rules and
regulations of the SEC) applied on a consistent basis during the periods
involved (except as may be indicated in the notes thereto) and fairly presented
in all material respects the consolidated financial position of the Company
and
its consolidated subsidiaries as of the dates thereof and the consolidated
results of their operations and cash flows for the periods shown (subject,
in
the case of unaudited statements, to normal year-end audit adjustments that,
individually and in the aggregate, have not had and would not reasonably
be
expected to have a Material Adverse Effect).
(c)
Neither the Company nor any Company Subsidiary has any liabilities or
obligations of any nature (whether accrued, absolute, contingent or otherwise)
other than liabilities or obligations (i) to the extent accrued or reserved
against in the most recent consolidated balance sheet of the Company included
in
the Filed Company SEC Documents or set forth in the notes thereto or
(ii) that have not had and would not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect.
SECTION
3.07. Absence
of Certain Changes or Events.
From
February 26, 2005 to the date of this Agreement, the Company has conducted
its business only in the ordinary course of business. Since February 26,
2005, there has not been any event, change, effect or development (including
changes in circumstances relating to any event or effect which has occurred
prior to the date hereof) except as, individually or in the aggregate, has
not
had and would not reasonably be expected to have a Material Adverse Effect.
From
February 26, 2005 to the date of this Agreement, there has not been:
(i) any declaration, setting aside or payment of any dividend or other
distribution (whether in cash, stock or property) with respect to any Company
Capital Stock or any repurchase for value by the Company or any Company
Subsidiary of any Company Capital Stock (other than (A) the regular
quarterly cash dividend with respect to the Company Common Stock of $0.085
per
share and (B) repurchases of any shares of Company Restricted Stock in
connection with forfeitures); (ii) any split, combination or
reclassification of any Company 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 Company Capital Stock; (iii) (A) except in
the ordinary course of business or as required pursuant to any Company Benefit
Plan or Company Benefit Agreement in effect on February 26, 2005, any
granting by the Company or any Company Subsidiary to any director or executive
officer of the Company or any Company Subsidiary of any equity-based awards
or
any increase in compensation, (B) any granting by the Company or any
Company Subsidiary to any director, executive officer or other employee of
any
severance or termination pay or any increase in severance or termination
pay or
(C) any entry by the Company or any Company Subsidiary into, or any
amendment of, any employment, severance or termination agreement with any
such
director, executive officer or other employee, other than, in the case of
clauses (iii)(B) and (C), grants of or increases in, or entry into of agreements
providing for or amendments providing increases in, severance or termination
pay
in respect of employees (other than directors
12
and
officers) in the aggregate amount not in excess of $2,000,000; (iv) any
change in accounting methods, principles or practices by the Company or any
Company Subsidiary materially affecting the consolidated assets, liabilities
or
results of operations of the Company, except insofar as may have been required
by a change in GAAP; (v) with respect to the Company or any Company
Subsidiary, any material election (or any change to a material election)
with
respect to Taxes, any material change in any accounting method in respect
of
Taxes, any entering into of a closing agreement relating to Taxes, any waiver
of
a statute of limitations relating to Taxes or any settlement or compromise
by
the Company or any Company Subsidiary of any material Tax liability or refund;
(vi) any redemption, repurchase, prepayment, defeasance or other
acquisition by the Company or any Company Subsidiary of any of the Company’s
4.75% Senior Notes due October 2010, 4.50% Senior Notes due
December 2009 or 5.25% Senior Notes due December 2014 (collectively,
the “Company
Senior Notes”);
(vii) any acquisition, by the Company or any Company Subsidiary, by merger,
consolidation, or purchase of a substantial equity interest in or portion
of the
assets of, or by any other manner, of any corporation, partnership, joint
venture, association or other business organization or division thereof for
consideration in excess of $5,000,000, (viii) incurrences or guarantees
made by the Company or any Company Subsidiary of more than $5,000,000 of
indebtedness for borrowed money, or modification in any material respect
by the
Company or any Company Subsidiary, of the terms of any indebtedness for borrowed
money of the Company or any Company Subsidiary, (ix) any sale, lease (as
lessor), license or other disposition by the Company or any Company Subsidiary
other than in the ordinary course of business consistent with past practice;
or
(x) any agreement by the Company or any of the Company Subsidiaries to take
any of the actions described in clauses (i) - (ix) above.
SECTION
3.08. Contracts.
(a) As
of the date of this Agreement, neither the Company nor any Company Subsidiary
is
a party to or bound by any:
(i)
written employment Contract that provides for annual cash compensation in
excess
of $100,000 and is not terminable by the Company or any Company Subsidiary
by
notice of not more than 90 days for a cost of less than
$100,000;
(ii)
collective bargaining agreement or other Contract with any labor organization,
union or association;
(iii)
Contract that materially restricts the ability of the Company or any Company
Subsidiary to compete with any business or in any geographical area or to
solicit customers or other service providers;
(iv)
Contract (other than this Agreement) that is required to be disclosed pursuant
to Items 404 or 601(b)(10) of Regulation S-K under the Securities Act
(other than employment agreements covered by clause (i)
above);
(v)
lease, sublease or similar Contract with any person (other than the Company
or a
Company Subsidiary directly or indirectly wholly owned by
13
the
Company) under which the Company or a Company Subsidiary is a lessor or
sublessor of, or makes available for use to any person (other than the Company
or a Company Subsidiary directly or indirectly wholly owned by the Company),
(A) any Company Property that is material to the conduct of the business of
the Company and the Company Subsidiaries as presently conducted or (B) any
portion of any premises otherwise occupied by the Company or a Company
Subsidiary;
(vi)
lease, sublease or similar Contract with any person (other than the Company
or a
Company Subsidiary directly or indirectly wholly owned by the Company) under
which the Company or a Company Subsidiary is a lessor or sublessor of, or
makes
available for use by any person, any tangible personal property owned or
leased
by the Company or a Company Subsidiary (other than the ordinary course lease
of
terminals and other equipment to customers pursuant to the terms of any Lottery
Contract or other commercial services arrangement), in any such case which
provides for a future liability or receivable, as the case may be, in excess
of
$1,000,000 annually or $5,000,000 over the term of the Contract, and is not
terminable by the Company or a Company Subsidiary by notice of not more than
90 days for a cost of less than $500,000;
(vii)
Contract under which the Company or a Company Subsidiary has borrowed any
money
from, or issued any note, bond, debenture or other evidence of indebtedness
to,
any person (other than the Company or a Company Subsidiary directly or
indirectly wholly owned by the Company), in each case involving an aggregate
principal amount in excess of $5,000,000, other than trade payables arising
in
the ordinary course of business;
(viii)
Contract (including any so-called take-or-pay or keepwell agreements) under
which (A) any person, other than the Company or a Company Subsidiary, has
guaranteed indebtedness, liabilities or obligations of the Company or a Company
Subsidiary or (B) the Company or a Company Subsidiary has guaranteed or is
required to guarantee indebtedness, liabilities or obligations of any person,
other than the Company or a Company Subsidiary, directly or indirectly wholly
owned by the Company, in each case involving an aggregate guaranteed amount
in
excess of $5,000,000;
(ix)
Contract (other than a Joint Venture Agreement) under which the Company or
a
Company Subsidiary has made or is required to make, any advance, loan, extension
of credit or capital contribution to, or other investment in, any person
(other
than the Company or a Company Subsidiary and other than extensions of trade
credit and other advances of operating expenses in the ordinary course of
business), in each case involving an aggregate amount in excess of
$5,000,000;
14
(x)
Contract creating or granting any Lien (including Liens upon properties acquired
under conditional sales and capital leases but excluding Permitted Liens),
other
than Liens granted in the ordinary course of business consistent with past
practice which are not material to the Company and the Company
Subsidiaries;
(xi)
Contract for the purchase of raw materials, supplies or equipment or for
any
other capital expenditure that provides for cash payments by the Company
or any
Company Subsidiary that are reasonably expected to exceed $5,000,000 per
annum;
(xii)
Contract (other than Lottery Contracts) for the sale of any asset of the
Company
or a Company Subsidiary having a fair market value in excess of $5,000,000
or
the grant of any preferential rights to purchase any such asset or requiring
the
consent of any party to the transfer thereof;
(xiii)
Facilities Management Contract, Product Sales Contract or Video Lottery Contract
(as those terms are used in the Company SEC Documents) (each, a “Lottery
Contract”),
other
than any Lottery Contract with respect to which the Company or any Company
Subsidiary expects to generate revenue of less than $5,000,000 over its term;
(xiv)
Contract for any joint venture, partnership or similar arrangement (each,
a
“Joint
Venture Agreement”);
(xv)
Contract for the acquisition of assets or any business (whether by merger,
consolidation, acquisition of stock or assets or otherwise) for an amount
in
excess of $5,000,000; or
(xvi)
settlement or conciliation agreement or similar agreement (except for Company
Benefit Plans and Company Benefit Agreements) or order or consent of a
Governmental Entity to which the Company or any of the Company Subsidiaries
is a
party involving future performance by the Company or any Company Subsidiary
in
excess of $5,000,000.
(b)
All
Contracts filed or furnished (or required to be filed or furnished) as an
exhibit to a Company SEC Document or required to be set forth in
Schedule 3.08 of the Company Disclosure Letter (the “Material
Contracts”)
are
valid, binding and in full force and effect and are enforceable by the Company
or the applicable Company Subsidiary in accordance with their terms, except
for
such failures to be valid, binding, in full force and effect or enforceable
that, individually or in the aggregate, have not had and would not reasonably
be
expected to have a Material Adverse Effect. Except as set forth in
Schedule 3.08 of the Company Disclosure Letter, the Company or the
applicable Company Subsidiary has performed all obligations required to be
performed by it under the Material Contracts, and it is not (with or without
the
lapse of time or the giving of notice, or both) in breach or default in any
respect thereunder and, to the knowledge of the Company, no other party to
any
Material Contract is (with or without the lapse of
15
time
or
the giving of notice, or both) in breach or default in any respect thereunder,
except for such noncompliance, breaches and defaults that, individually or
in
the aggregate, have not had and would not reasonably be expected to have
a
Material Adverse Effect. To the knowledge of the Company, no event has occurred
that, with or without notice or lapse of time or both, would result in a
breach
or a default under any Material Contract, except for such breaches and defaults
that, individually or in the aggregate, have not had and would not reasonably
be
expected to have a Material Adverse Effect. Neither the Company nor any Company
Subsidiary has received any notice or claim of default under any Material
Contract or any notice of an intention to, and to the knowledge of the Company,
no other party to any Material Contract intends to, terminate, not renew
or
challenge the validity or enforceability of any Material Contract (including
as
a result of the execution and performance of this Agreement). True, complete
and
accurate copies of all Material Contracts, together with all modifications
and
amendments thereto, have been made available to Parent.
(c)
Schedule 3.08(c) of the Company Disclosure Letter sets forth a true and
complete list of all Lottery Contracts that, pursuant to the terms thereof,
require a consent, approval, order or authorization to be obtained in connection
with the execution, delivery or performance of this Agreement or the
consummation of the transactions contemplated hereby.
(d)
In
this Agreement:
“Permitted
Lien”
means
(i) Liens for Taxes, assessments and governmental charges or levies not yet
due and payable or being contested in good faith by appropriate proceedings
by
the Company or a Company Subsidiary in each case for which appropriate reserves
have been established, (ii) Liens imposed by applicable Law which are not
yet due and payable and have arisen in the ordinary course of business or
for
which appropriate reserves have been established by appropriate proceedings,
(iii) pledges or deposits to secure obligations under workers’ compensation
Laws or similar legislation or to secure public or statutory obligations,
(iv) easements, covenants and rights of way (unrecorded and of record) and
other similar restrictions of record that do not adversely affect in any
material respect the current use of the applicable property owned, leased,
used
or held for use by the Company or a Company Subsidiary, (v) mechanics’,
carriers’, workmen’s, repairmen’s or other similar Liens arising or incurred in
the ordinary course of business, (vi) any Lien the existence of which is
expressly disclosed in the notes to the consolidated financial statements
of the
Company included in the Filed Company SEC Documents and (vii) zoning,
building and other similar restrictions that do not adversely affect in any
material respect the current use of the applicable Company Property.
SECTION
3.09. Intellectual
Property.
(a)
Schedule 3.09(a) of the Company Disclosure Letter sets forth, as of the
date of this Agreement, a true and complete list of all material Intellectual
Property owned or used by or licensed to the Company or any Company Subsidiary.
The Intellectual Property set forth on Schedule 3.09(a) of the Company
Disclosure Letter is referred to in this Agreement as the “Company
Intellectual Property”.
Except
as, individually or in the aggregate, has not
16
had,
and
would not reasonably be expected to have, a Material Adverse Effect,
(i) the Company or any Company Subsidiary own all right, title and interest
in, or have a valid right to use, pursuant to a license or otherwise, all
Intellectual Property necessary for the operation of the businesses of the
Company and the Company Subsidiaries as is currently conducted free and clear
of
all Liens, and the consummation of the Merger or the other transactions
contemplated hereby will not impair such ownership or rights, (ii) the
Company or a Company Subsidiary is the sole and exclusive owner of, and the
Company and the Company Subsidiaries have the right to use, execute, reproduce,
display, perform, modify, enhance, distribute, prepare derivative works of
and
sublicense, without payment to any other person, all the Company Intellectual
Property that is owned by the Company or a Company Subsidiary, and the
consummation of the transactions contemplated hereby does not and will not
conflict with, alter or impair any such rights, (iii) during the past six
years neither the Company nor any of the Company Subsidiaries has received
any
written communication from any person asserting any ownership interest in
or
challenging the validity of the Company’s or the Company Subsidiaries’ interests
in any owned Company Intellectual Property, and (iv) all Company
Intellectual Property owned by the Company is valid and subsisting and in
full
force and effect and all Contracts relating to licenses of Intellectual Property
necessary for the operation of the businesses of the Company and the Company
Subsidiaries as currently conducted are valid and enforceable. Except as,
individually or in the aggregate, has not had, and would not reasonably be
expected to have, a Material Adverse Effect, the Company and the Company
Subsidiaries have obtained valid and effective work made for hire agreements
and
assignments from all of their employees, former employees (or persons they
currently intend to hire), independent contractors and former independent
contractors (collectively, the “Inventors”)
of all
such Inventors’ rights in any Company Intellectual Property. Except as,
individually or in the aggregate, has not had, and would not reasonably be
expected to have, a Material Adverse Effect, the Company and the Company
Subsidiaries have taken all action necessary to maintain and preserve the
Company Intellectual Property, including by entering into valid and effective
confidentiality or non-disclosure agreements with all third parties to whom
it
discloses any confidential information or trade secrets and payment of
maintenance and similar fees for any Company Intellectual Property.
(b)
Neither the Company nor any Company Subsidiary has granted any license of
any
kind relating to any owned, used or licensed Company Intellectual Property
or
the marketing or distribution thereof, except (i) nonexclusive licenses
granted in the ordinary course of business and (ii) exclusive licenses
relating to the development of Intellectual Property specifically for a customer
and licenses to such customer in the ordinary course of business. Neither
the
Company nor any Company Subsidiary is bound by or a party to any option,
license
or similar Contract relating to the Intellectual Property of any other person
for the use of such Intellectual Property in the conduct of the business
of the
Company and the Company Subsidiaries that is material to the conduct of the
business of the Company and the Subsidiaries as presently conducted, except
for
so-called “shrink-wrap” license agreements relating to computer software
licensed to the Company or a Company Subsidiary in the ordinary course of
business. The conduct of the business of the Company and the Subsidiaries
as
presently conducted does not violate, conflict with, misappropriate or infringe,
and has not violated, misappropriated or infringed, the Intellectual Property
of
any other person, except for such violations,
17
conflicts
or infringements that, individually or in the aggregate, have not had and
would
not reasonably be expected to have a Material Adverse Effect. No claims are
pending or, to the knowledge of the Company, threatened, as of the date of
this
Agreement against the Company or any Company Subsidiary by any person with
respect to the ownership, validity, enforceability, effectiveness, legality
or
use in the business of the Company and the Company Subsidiaries of any
Intellectual Property (including any claim that the Company must license
or
refrain from using any Intellectual Property rights of any third party),
except
for such claims that, individually or in the aggregate, have not had and
would
not reasonably be expected to have a Material Adverse Effect.
(c)
In
this Agreement:
“Intellectual
Property”
means
any patent (including all improvements, reissues, divisions, continuations,
continuations-in-part, extensions and reexaminations thereof), patent
application, patent right, invention (whether or not patentable), trademark,
trademark registration, trademark application, service xxxx, service xxxx
application, trade dress, logo, domain name, corporate name, copyright
registration, copyright application, trade name, brand name, copyright,
registration, design, design registration, trade secret, internet domain
name,
internet domain name registration or any right, license, sublicense or
agreement, and the goodwill associated with or to any of the
foregoing.
SECTION
3.10. Taxes.
(a) Each
of the Company and each Company Subsidiary has timely filed, or has caused
to be
timely filed on its behalf, all Tax Returns required to be filed by it, and
all
such Tax Returns are true, complete and accurate. All Taxes shown to be due
on
such Tax Returns, or otherwise owed, have been timely paid.
(b)
No
deficiency with respect to any Taxes has been proposed, asserted or assessed
that has not been paid in full or otherwise settled, no audit or other
administrative proceeding or judicial proceeding with respect to any Taxes
is in
progress or pending against the Company or any Company Subsidiary, and no
requests for waivers of the time to assess any Taxes are pending.
(c)
The
Federal income Tax Returns of the Company and each Company Subsidiary
consolidated in such Tax Returns have been examined by and settled with the
United States Internal Revenue Service, or have closed by virtue of the
expiration of the relevant statute of limitations, for all years through
the
fiscal year that ended in February 2001. All material assessments for Taxes
due
with respect to such completed and settled examinations or any concluded
litigation have been fully paid.
(d)
There
are no material Liens for Taxes (other than for current Taxes not yet due
and
payable) on the assets of the Company or any Company Subsidiary. Neither
the
Company nor any Company Subsidiary is bound by any agreement or similar
arrangement with respect to liability for, sharing of or indemnity in respect
of
Taxes.
(e)
(i) All Taxes of the Company and the Company Subsidiaries that are not yet
due and payable have been adequately provided for on the most recent
18
consolidated
balance sheet of the Company included in the Filed Company SEC Documents
other
than those Taxes accrued in the ordinary course of business since the date
of
such balance sheet; (ii) the Company and each Company Subsidiary have withheld
and paid all material Taxes required to have been withheld and paid in
connection with amounts paid or owing to any employee, independent contractor,
creditor, stockholder, or other third party, (iii) neither the Company nor
any
Company Subsidiary has been a member of an affiliated group filing a
consolidated federal income tax return (other than a group the common parent
of
which was the Company) or has any material liability for the Taxes of any
Person
(other than the Company or any Company Subsidiary) under Treasury Regulation
section 1.1502-6 (or any similar provision of state, local or foreign law)
as
transferee or successor, by contract or otherwise, (iv) neither the Company
nor
any Company Subsidiary has been distributed or has distributed the stock
of
another company in a transaction that was purported or intended to be governed
by section 355 of the Code, (v) neither the Company nor any Company
Subsidiary has been a party to any “closing agreement” described in Code § 7121
(or any comparable provision of state, local or foreign Tax law) or has
requested or received any Tax ruling, transfer pricing agreement, or similar
agreement, (vi) neither the Company nor any Company Subsidiary will be required
to recognize for tax purposes in a tax period ending on or after the Closing
Date any material income or gain as a result of using the installment method
of
accounting, or making or being required to make any change in method of
accounting or otherwise, and (vii) neither the Company nor any Company
Subsidiary has engaged in any “reportable transaction” for purposes of Treasury
Regulation section 1.6011-4(b) or any analogous provision of state or local
law.
(f)
Company Common Stock is not a United States real property interest for purposes
of section 897(c) of the Code.
(g)
For
purposes of this Agreement:
“Taxes”
includes all forms of taxation, whenever created or imposed, and whether
of the
United States or elsewhere, and whether imposed by a local, municipal,
governmental, state, foreign, Federal or other Governmental Entity or in
connection with any agreement with respect to Taxes, and whether estimated
or
actual, and including all interest, penalties and additions imposed with
respect
to such amounts.
“Tax
Return”
means
all Federal, state, local, provincial and foreign Tax returns, declarations,
statements, reports, schedules, forms and information returns and any amended
Tax return, including in each case attachments thereto, relating to
Taxes.
SECTION
3.11. Absence
of Changes in Company Benefit Plans and Company Benefit
Agreements.
Each
bonus, pension, profit sharing, deferred compensation, incentive compensation,
stock ownership, stock purchase, stock option, phantom stock, retirement,
vacation, severance, disability, death benefit, hospitalization, medical
or
other employee benefits plan, arrangement or understanding, in each case
maintained or contributed to, or required to be maintained or contributed
to, by
the Company or any Company Subsidiary for the benefit of any current or former
employee, officer or director of the Company or any Company Subsidiary, other
than any
19
(a) “multiemployer
plan” (within the meaning of Section 3(37) of the Employee Retirement Income
Security Act of 1974, as amended (“ERISA”)
(a
“Multiemployer
Plan”))
or
(b) any plan, arrangement or policy mandated by applicable Law, is herein
referred to as a “Company
Benefit Plan”.
Each
employment, consulting, indemnification, severance or termination agreement
or
arrangement between the Company or any Company Subsidiary and any current
or
former employee, officer or director of the Company or any Company Subsidiary,
other than any agreement or arrangement mandated by applicable Law, is herein
referred to as a “Company
Benefit Agreement”.
Except
in the ordinary course of business or as disclosed in the Filed Company SEC
Documents, from February 26, 2005 to the date of this Agreement, there has
not
been any adoption or material amendment by the Company or any Company Subsidiary
of any Company Benefit Plan or Company Benefit Agreement.
SECTION
3.12. ERISA
Compliance; Excess Parachute Payments.
(a)
The
Company Disclosure Letter sets forth a true and complete list, as of the
date of
this Agreement, of all material Company Benefit Plans that are “employee pension
benefit plans” (as defined in Section 3(2) of ERISA) (“Company
Pension Plans”),
all
material Company Benefit Plans that are “employee welfare benefit plans” (as
defined in Section 3(1) of ERISA) and all other material Company Benefit
Plans and all material Company Benefit Agreements. Each Company Benefit Plan
has
been administered in compliance with its terms and applicable Law (including
ERISA and the Code), other than instances of noncompliance that, individually
and in the aggregate, have not had and would not reasonably be expected to
have
a Material Adverse Effect. The Company has made available to Parent true,
complete and accurate copies of (i) each material Company Benefit Plan and
each material Company Benefit Agreement, other than any Company Benefit Plan
or
Company Benefit Agreement that the Company or any Company Subsidiary is
prohibited from making available to Parent as the result of applicable Laws
relating to the safeguarding of data privacy, (ii) the most recent annual
report on Form 5500 filed with the Internal Revenue Service with respect to
each Company Benefit Plan (if any such report was required by applicable
Law)
and (iii) the most recent summary plan description for each Company Benefit
Plan for which a summary plan description is required by applicable Law or,
for
Company Benefit Plans for which a summary plan description is not so required,
such other written description of such Company Benefit Plan provided to
participants therein, if any.
(b)
Except as disclosed in the Company Disclosure Letter, all Company Pension
Plans
that are intended to be qualified for United States Federal income tax purposes
have been the subject of determination letters from the Internal Revenue
Service
to the effect that such Company Pension Plans are so qualified and exempt
from
United States Federal income taxes under Sections 401(a) and 501(a),
respectively, of the Code, and no such determination letter has been revoked
nor, to the knowledge of the Company, has revocation been threatened. The
Company has made true, complete and accurate copies of the most recent of
such
determination letters available to Parent.
(c)
None
of the Company Benefit Plans is subject to Section 302 or Title IV of
ERISA or Section 412 of the Code. None of the Company, any Company
Subsidiary or any other person or entity under common control with the Company
within
20
the
meaning of Section 414(b), (c), (m) or (o) of the Code (a “Company
ERISA Affiliate”)
sponsors, participates in, or is required to contribute to, any Multiemployer
Plan or any plan subject to Title IV of ERISA or Section 412 or 4971 of the
Code.
(d)
Except as individually or in the aggregate has not had and would not reasonably
be expected to have a Material Adverse Effect, (i) none of the Company, any
Company Subsidiary, any officer of the Company or any Company Subsidiary
or any
of the Company Benefit Plan that is subject to ERISA, including any Company
Pension Plan, or, to the knowledge of the Company, any trust created thereunder
or any trustee or administrator thereof, has engaged in a “prohibited
transaction” (as such term is defined in Section 406 of ERISA or
Section 4975 of the Code) or any other breach of fiduciary responsibility
that could subject the Company, any Company Subsidiary or any officer of
the
Company or any Company Subsidiary to the Tax or penalty on prohibited
transactions imposed by such Section 4975 of the Code or to any liability
under Section 502(i) or 502(1) of ERISA; (ii) there are no
unresolved claims or disputes under the terms of, or in connection with,
any
Company Benefit Plan or Company Benefit Agreement other than claims for benefits
which are payable in the ordinary course of business; (iii) no litigation
has been commenced with respect to any Company Benefit Plan or Company Benefit
Agreement and, to the knowledge of the Company, no such litigation is threatened
(other than routine claims for benefits in the normal operation of such Company
Benefit Plan or Company Benefit Agreement); and (iv) there are no audits or
investigations by any Governmental Entity pending or, to the knowledge of
the
Company, threatened in connection with any Company Benefit Plan or Company
Benefit Agreement.
(e)
No
Company Benefit Plan provides health benefits (whether or not insured) with
respect to employees or former employees (or any of their beneficiaries)
of the
Company or any Company Subsidiary after retirement or other termination of
service (other than coverage or benefits (i) required to be provided under
Part 6 of Title I of ERISA or any other similar applicable Law or
(ii) the full cost of which is borne by the employee or former employee (or
any of their beneficiaries)).
(f)
Except as may be required by applicable Law or as permitted under this
Agreement, neither the Company nor any Company Subsidiary has announced any
plan
or commitment to create any additional material Company Benefit Plans or
to
enter into any additional material Company Benefit Agreements or to materially
amend or modify any existing Company Benefit Plan or Company Benefit Agreement
in such a manner as to materially increase the costs to the Company or any
Company Subsidiary.
(g)
Except as provided in this Agreement or as required under applicable Law,
neither the execution and delivery of this Agreement nor the consummation
of the
transactions contemplated by this Agreement will (either alone or together
with
any other event): (i) result in any material payment (including any bonus,
severance, unemployment compensation, deferred compensation, forgiveness
of
indebtedness or golden parachute payment) becoming due to any current or
former
employee under any Company Benefit Plan or Company Benefit Agreement;
(ii) increase in any material respect any benefit otherwise payable under
any Company Benefit Plan or Company
21
Benefit
Agreement; (iii) result in the acceleration in any material respect of the
time of payment or vesting of any material benefits under any Company Benefit
Plan or Company Benefit Agreement; or (iv) result in any obligation to
contribute a material amount to fund any trust or other arrangement with
respect
to compensation or benefits under a Company Benefit Plan or Company Benefit
Agreement.
(h)
Except as has not had and would not reasonably be expected to have, individually
or in the aggregate, a Material Adverse Effect, neither the Company nor any
Company Subsidiary has classified any individual as an independent contractor
or
similar status who, according to any Company Benefit Plan or Company Benefit
Agreement or applicable Law, should have been classified as an employee of
the
Company or any Company Subsidiary.
(i)
Other
than payments that may be made to the persons listed in Schedule 3.12(i) of
the Company Disclosure Letter, any amount that could be received (whether
in
cash or property or the vesting of property) as a result of the Merger or
any
other transactions contemplated by this Agreement by any employee, officer
or
director of the Company or any of its affiliates who is a “disqualified
individual” (as such term is defined in Treasury Regulation
Section 1.280G-1) under any employment, severance or termination agreement,
other compensation arrangement or Company Benefit Plan or Company Benefit
Agreement currently in effect would not be characterized as an “excess parachute
payment” (as defined in Section 280G(b)(1) of the Code).
SECTION
3.13. Litigation.
There is
no suit, action or proceeding pending or, to the knowledge of the Company,
threatened against the Company or any Company Subsidiary except those that,
individually and in the aggregate, (i) do not and would not reasonably be
expected to impair in any material respect the ability of the Company to
perform
its obligations under this Agreement, or prevent or materially impede the
consummation by the Company of the Merger or the other transactions contemplated
by this Agreement and (ii) have not had and would not reasonably be
expected to have a Material Adverse Effect. With respect to any suits, actions
or proceedings pending or threatened against the Company or any Company
Subsidiary that are disclosed in the Filed Company SEC Documents, there has
not
been any change in circumstance since August 27, 2005 except as
individually and in the aggregate, (i) do not and would not reasonably be
expected to impair in any material respect the ability of the Company to
perform
its obligations under this Agreement, or prevent or materially impede the
consummation by the Company of the Merger or the other transactions contemplated
by this Agreement and (ii) have not had and would not reasonably be
expected to have a Material Adverse Effect. Neither the Company nor any Company
Subsidiary nor any of their respective properties is or are a party or subject
to or in default under any Judgment except as individually and in the aggregate,
(i) do not and would not reasonably be expected to impair in any material
respect the ability of the Company to perform its obligations under this
Agreement, or prevent or materially impede the consummation by the Company
of
the Merger or the other transactions contemplated by this Agreement and
(ii) have not had and would not reasonably be expected to have a Material
Adverse Effect. To the knowledge of the Company, there are no formal or informal
SEC inquiries or investigations, other governmental inquiries or
22
investigations
(other than routine governmental inquiries or investigations relating to
licensing and similar matters that would not reasonably be expected to have
a
material impact on the business or operations of the Company and the Company
Subsidiaries) or internal investigations or material whistle blower complaints
pending or threatened or otherwise involving the Company or any Company
Subsidiary, including, regarding any accounting practices of the Company
or any
malfeasance by any executive officer of the Company.
SECTION
3.14. Compliance
with Applicable Laws and Reporting Requirements.
(a)
Neither the Company nor any Company Subsidiary is in violation of, or has
violated, any Law, or has received any written notice of any violation of
Law,
in each case, except for any violations or possible violations that,
individually or in the aggregate, have not had and would not reasonably be
expected to have a Material Adverse Effect;
(b)
(i)
Since the enactment of the Xxxxxxxx-Xxxxx Act, the Company has been and is
in
compliance in all material respects with (A) the applicable provisions of
the Xxxxxxxx-Xxxxx Act and (B) the applicable listing and corporate
governance rules and regulations of the NYSE. Schedule 3.14(b)(i) of the
Company Disclosure Letter sets forth, as of the date hereof, a true and complete
schedule of all officers and directors of the Company who may have outstanding
loans from the Company, and there has been no default on, or forgiveness
or
waiver of, in whole or in part, any such loan during the two years immediately
preceding the date hereof.
(ii)
The
Company has established disclosure controls and procedures to ensure that
material information relating to the Company, including its consolidated
Company
Subsidiaries, is made known to the officers who certify the Company’s financial
reports and to other members of senior management and the Company
Board.
(iii)
The
Company has disclosed, based on its most recent evaluation of internal control
over financial reporting prior to the date hereof, to the Company’s auditors and
the audit committee of the Company Board (A) all significant deficiencies
and
material weaknesses (each as defined in PCAOB Auditing Standard 2) in the
design or operation of internal controls over financial reporting which are
reasonably likely to adversely affect in any material respect the Company’s
ability to record, process, summarize and report financial information and
(B)
any fraud or allegation of fraud, whether or not material, that involves
management or other employees who have a significant role in the Company’s
internal controls over financial reporting.
(iv)
As
of the date hereof, to the knowledge of the Company, the Company has not
identified any material control deficiencies. To the knowledge of the Company,
there is no reason to believe that its auditors and its chief executive officer
and chief financial officer will not be able to give the certifications and
attestations required pursuant to the rules and regulations adopted pursuant
to
Section 404 of the Xxxxxxxx-Xxxxx Act, without qualification, when next
due.
23
(c)
None
of the Company Subsidiaries is, or has at any time since January 11, 2002
been, subject to the reporting requirements of Sections 13(a) or 15(d) under
the
Exchange Act.
(d)
This
Section 3.14 does not relate to matters with respect to Taxes, which are
the subject of Section 3.10, or matters with respect to employee benefits,
which are the subject of Section 3.12.
SECTION
3.15. Permits.
(a)
Schedule 3.15 of the Company Disclosure Letter sets forth, as of the date
of this Agreement, a true and complete list of all certificates, licenses,
permits, authorizations and approvals (“Permits”)
issued
or granted to the Company or a Company Subsidiary that are material to the
conduct of the business of the Company and the Company Subsidiaries as presently
conducted (other than any certificate, license, permit, authorization or
approval granted pursuant to the terms of any Lottery Contract). To the
knowledge of the Company, all such Permits are validly held by the Company
or a
Company Subsidiary, and the Company or the applicable Company Subsidiary
has
complied in all material respects with all terms and conditions thereof.
During
the past three years, none of the Company and the Company Subsidiaries has
received notice of any suit, action or proceeding relating to the revocation
or
modification of any such Permits, except with respect to Permits, the loss
of
which, individually or in the aggregate, has not had and would not reasonably
be
expected to have a Material Adverse Effect.
(b)
The
Company and the Company Subsidiaries possess or have applied for all Permits
to
own or hold under lease and operate their respective assets and to conduct
the
business of the Company and the Company Subsidiaries as currently conducted,
other than such Permits the absence of which, individually or in the aggregate,
has not had and would not reasonably be expected to have a Material Adverse
Effect.
SECTION
3.16. Property
and Assets.
Schedule
3.16 of the Company Disclosure Letter sets forth, as of the date of this
Agreement, a true and complete list of all real property and interests in
real
property owned in fee by the Company or any Company Subsidiary (individually,
an
“Owned
Property”).
Schedule 3.16 of the Company Disclosure Letter sets forth, as of the date
of
this Agreement, a true and complete list of all real property and interests
in
real property leased by the Company or any Company Subsidiary (individually,
a
“Leased
Property”).
The
Company or a Company Subsidiary has good, marketable and insurable fee title
to
all Owned Property and good and valid title to the leasehold estates in all
Leased Property (an Owned Property or Leased Property being sometimes referred
to herein, individually, as a “Company
Property”),
in
each case free and clear of all Liens except Permitted Liens. There is no
pending, or, to the knowledge of the Company, threatened eminent domain,
condemnation or similar proceeding affecting any Company Property. There
are no
written or oral subleases, licenses, occupancy agreements or other contracts
that grant the right of use or occupancy of any material Company Property
other
than to, and there is no person in possession of any material Company Property
other than, the Company and the Company Subsidiaries. The Company and the
Company Subsidiaries have good and marketable title to, or, in the case of
property held under a license, lease or other
24
Contract,
a leasehold interest in, or right to use all of their material properties,
rights and assets, whether real or personal and whether tangible or intangible,
including all assets reflected in the most recent consolidated balance sheet
of
the Company included in the Filed Company SEC Reports or acquired after the
date
of such balance sheet (except for such assets which have been sold or otherwise
disposed of since the date of such balance sheet in the ordinary course of
business) (collectively, the “Assets”).
The
Assets that are used in the operations of their business, taken as a whole,
are
(i) in good operating condition and repair, ordinary wear and tear
excepted, and (ii) have been maintained in accordance with normal industry
practices, in each case except as has not had and would not reasonably be
expected to have a Material Adverse Effect.
SECTION
3.17. Brokers;
Schedule of Fees and Expenses.
No
broker, investment banker, financial advisor or other person, other than
Citigroup Global Markets Inc and Xxxxxxxx Xxxxx Xxxxxx and Xxxxx, the fees
and
expenses of each of which will be paid by the Company, is entitled to any
broker’s, finder’s, financial advisor’s or other similar fee or commission in
connection with the Merger and the other transactions contemplated by this
Agreement based upon arrangements made by or on behalf of the
Company.
SECTION
3.18. Opinion
of Financial Advisors.
The
Company has received the opinion of Citigroup Global Markets Inc, and of
Xxxxxxxx Xxxxx Xxxxxx and Xxxxx, each dated the date of this Agreement, to
the
effect that, as of such date, and subject to the qualifications and assumptions
set forth in each such opinion, the Merger Consideration to be received in
the
Merger by the holders of Company Common Stock is fair from a financial point
of
view. A true, complete and accurate signed copy of each such opinion will
be
made available to Parent.
SECTION
3.19. Environmental
Laws.
(a)
Except as has not had and would not reasonably be expected to have a Material
Adverse Effect: (i) the Company and each Company Subsidiary comply and have
complied with all applicable Environmental Laws, possess, comply and have
complied with all applicable Environmental Permits required under such laws
to
operate as it presently operates and have made all appropriate filings for
issuance or renewal of Environmental Permits; (ii) to the knowledge of the
Company, there are no Materials of Environmental Concern at any property
currently or formerly owned or operated by the Company or any Company
Subsidiary, under circumstances that have resulted in or are reasonably likely
to result in a liability of the Company or Company Subsidiary under any
applicable Environmental Law; (iii) neither the Company nor any Company
Subsidiary has received any notification (including any request for information
pursuant to section 104(e) of the Comprehensive Environmental Response,
Compensation, and Liability Act or similar state statute) alleging that it
is
liable under any Environmental Law (including any such Environmental Law
concerning any release or threatened release of Materials of Environmental
Concern at any location), and there are no suits, actions or proceedings
pending
or, to the knowledge of the Company, threatened against the Company or any
Company Subsidiary with respect to a violation of or liability under any
Environmental Law; and (iv) the Company has made available to Parent true,
complete and accurate copies of any reports, studies, analyses, tests or
monitoring possessed or initiated by the
25
Company
or any Company Subsidiary with respect to the Company’s facilities or operations
and any Environmental Laws or Materials of Environmental Concern.
(b)
Notwithstanding any other representations and warranties in this Agreement,
the
representations and warranties in this Section 3.19 are the only
representations and warranties in this Agreement with respect to environmental
matters.
(c)
For
purposes of this Agreement, the following terms have the meanings assigned
below:
“Environmental
Laws”
means
all Federal, state, local or foreign statutes, regulations, ordinances, codes,
and legally binding guidance documents, including any common law cause of
action
and all applicable judicial and administrative orders, decisions and decrees
relating to pollution, contamination, protection of the environment or human
health or safety as it relates to the environment.
“Environmental
Permits”
means
all permits, licenses, registrations, and other authorizations required under
applicable Environmental Laws.
“Materials
of Environmental Concern”
means
any hazardous, acutely hazardous, or toxic substances or wastes that are
regulated by, or may form the basis of liability under, any Environmental
Laws,
including asbestos and asbestos-containing materials, poly-chlorinated
biphenyls, petroleum and any by-products or fractions thereof, radon, lead-based
paint or urea-formaldehyde insulation.
SECTION
3.20. Insurance.
As of
the date of this Agreement, a true and complete list of all material insurance
policies maintained by the Company and the Company Subsidiaries are set forth
on
Schedule 3.20 of the Company Disclosure Letter. All such insurance policies
are in full force and effect and provide insurance in such amounts and against
such risks as the management of the Company reasonably has determined to
be
prudent in accordance with industry practices or as is required by Law, and
all
premiums due and payable thereon have been paid. Neither the Company nor
any of
the Company Subsidiaries is in material breach or default, and neither the
Company nor any of the Company Subsidiaries has taken any action or failed
to
take any action which, with notice or the lapse of time, would constitute
such a
breach or default, or permit termination or material modification of any
of such
insurance policies, other than the actions contemplated by this
Agreement.
SECTION
3.21. Foreign
Corrupt Practices Act.
None of
the Company, any Company Subsidiary or, to the knowledge of the Company,
any of
their affiliates or any other persons acting on their behalf has, in connection
with the operation of their respective businesses, (i) used any corporate
or
other funds for unlawful contributions, payments, gifts or entertainment,
or
made any unlawful expenditures relating to political activity to government
officials, candidates or members of political parties or organizations, or
established or maintained any unlawful or unrecorded funds in violation of
Section 104 of the Foreign Corrupt Practices Act of 1977, as amended, or
any
other similar applicable Federal, state or foreign law, (ii) paid, accepted
or
received any
26
unlawful
contributions, payments, expenditures or gifts, or (iii) violated or operated
in
noncompliance with any export restrictions, anti-boycott regulations, embargo
regulations or other applicable domestic or foreign laws and
regulations.
SECTION
3.22. Labor
Matters.
Except
as individually or in the aggregate has not had and would not reasonably
be
expected to have, a Material Adverse Effect, (a) there are no pending or,
to the knowledge of the Company, threatened organizational activities or
demands
in writing for recognition by a labor organization seeking to represent
employees of the Company or any Company Subsidiary, and no such organizational
activities or demands in writing for recognition have occurred in the past
three
years; (b) no grievance, arbitration, or complaint relating to labor or
employment matters is pending or, to the knowledge of the Company, threatened
in
writing against the Company or any Company Subsidiary before the National
Labor
Relations Board or any comparable Governmental Entity; (c) neither the
Company nor any Company Subsidiary is a party to or bound by any contract,
collective bargaining agreement or works council agreement with any labor
or
similar organization; (d) there are no charges or actions pending or, to
the
knowledge of the Company, threatened in writing, before the Equal Employment
Opportunity Commission, the Department of Labor, Occupational Safety and
Health
Administration or any other Governmental Entity responsible for the prevention
of unlawful employment practices; (e) neither the Company nor any Company
Subsidiary has received written notice during the past three years of the
intent of any Governmental Entity responsible for the enforcement of labor
or
employment laws to conduct an investigation of or affecting the Company or
a
Company Subsidiary and, to the knowledge of the Company, no such investigation
is in progress; (f) the Company and the Company Subsidiaries are in
compliance with all applicable Laws relating to employment and employment
practices, wages, hours and terms and conditions of employment; and
(g) there is no labor dispute, strike or work stoppage against the Company
or Company Subsidiaries pending, or to the knowledge of the Company, threatened,
and no such labor dispute, strike or work stoppage has occurred in the past
three years.
SECTION
3.23. Fraud; Infrastructure; Data Security. (a) The Company and the
Company Subsidiaries have taken all commercially reasonable actions consistent
with standards in the Lottery Business and/or the Video Lottery Business
in
order to detect (i) fraud committed against or (ii) any other conduct designed
to violate the integrity of any game or gaming device operated by, in each
case
the Company or a Company Subsidiary as part of the Gaming Business (such
games
and gaming devices, collectively the “Games,” and such fraud or other
conduct, collectively “Fraud”) by any person, including players
participating in such Games and employees and independent contractors of
the
Company or the Company Subsidiaries. The Company and the Company Subsidiaries
have taken all commercially reasonable actions consistent with standards
in the
Lottery Business and/or the Video Lottery Business in order to minimize
any
losses incurred by the Games as a result of Fraud (“Fraud Losses”). The
Company and the Company Subsidiaries have audited and continue to audit
the
Games on a regular basis in order to ascertain whether any Fraud has occurred
as
well as the amount of any Fraud Losses.
27
(b)
The
material Company IT Systems have been properly maintained by technically
competent personnel in accordance with standards set by the manufacturers
or
otherwise in accordance with standards prudent in the Lottery Business
and/or
Video Lottery Business for proper operation, monitoring and use. The material
Company IT Systems are in good working condition to perform all information
technology operations reasonably necessary for the conduct of the Gaming
Business effectively. Neither the Company nor any Company Subsidiary has
experienced within the past twelve months any material disruption to, or
material interruption in, its conduct of the Gaming Business attributable
to a
defect, bug, breakdown or other failure or deficiency on the part of the
Company
IT Systems.
(c)
Except for scheduled or routine maintenance which would not reasonably
be
expected to cause any material disruption to, or material interruption
in, the
conduct of the Gaming Business, the Company IT Systems are in all material
respects available for use during normal working hours and other times
when the
Games are available to players. The Company and the Company Subsidiaries
have
taken commercially reasonable steps to provide for the backup and recovery
of
the data and information critical to the conduct of the Gaming Business
(including such data and information that is stored on magnetic or optical
media
in the ordinary course) without material disruption to, or material interruption
in, the conduct of the Gaming Business.
(d)
The
Company and Company Subsidiaries have taken commercially reasonable actions,
consistent with standards in the Lottery Business and/or the Video Lottery
Business, with respect to the Company IT Systems to detect and prevent
the
disclosure to unauthorized persons of, and keep secure, any material
confidential information, trade secrets, or other material proprietary
information stored on Company IT Systems including the designs, policies,
processes, and procedures comprising the material Games and material information
relating to the composition and structure of the Company IT
Systems.
(e)
In this
Agreement:
“Company
IT Systems”
means
any and all information technology and computer systems (including computers,
software, programs, databases, middleware, firmware and other embedded software,
servers, workstations, terminals, routers, hubs, switches, networks, data
communications lines, hardware and other equipment and all other information
technology equipment) relating to the transmission, storage, maintenance,
organization, presentation, generation, processing or analysis of data and
information whether or not in electronic format, which technology and systems
are used in or necessary to the conduct of the Gaming Business, including
the
end-products used by the players of the Games and any of the aforementioned
types of information technology and computer systems supporting the provision
of
the Games.
“Gaming
Business”
means
both the Lottery Business and the Video Lottery Business as conducted by
the
Company and the Company Subsidiaries.
28
ARTICLE
IV
Representations
and Warranties of Parent and Acquisition Co
Parent
and Acquisition Co represent and warrant to the Company that:
SECTION
4.01. Organization,
Standing and Power.
Parent
is duly organized, validly existing and in good standing under the laws of
the
State of Delaware. Acquisition Co is duly organized, validly existing and
in
good standing under the laws of the State of Delaware. Each of Parent and
Acquisition Co has full corporate power and authority and possesses all
governmental franchises, licenses, permits, authorizations and approvals
necessary to enable it to own, lease or otherwise hold its properties and
assets
and to conduct its businesses as presently conducted, other than such
franchises, licenses, permits, authorizations and approvals the failure of
which
to possess, individually or in the aggregate, do not and would not reasonably
be
expected to (i) impair in any material respect the ability of Parent or
Acquisition Co to perform its obligations under this Agreement or
(ii) prevent or materially impede the consummation by Parent or Acquisition
Co of the Merger or the other transactions contemplated by this
Agreement.
SECTION
4.02. Acquisition
Co.
(a)
Since the date of its incorporation, Acquisition Co has not carried on any
business or conducted any operations (other than the execution of this
Agreement, the performance of its obligations hereunder and matters ancillary
thereto).
(b)
As of
the date of this Agreement, the authorized capital stock of Acquisition Co
consists of 100 shares of Acquisition
Co Common Stock, 100 of which have
been
duly authorized and validly issued, are fully paid and nonassessable and
are
owned by Parent free and clear of any Lien.
SECTION
4.03. Authority;
Execution and Delivery; Enforceability.
Each of
Parent and Acquisition Co has all requisite corporate power and authority
to
execute and deliver this Agreement and, to the extent it is a party thereto,
the
Senior Commitment Letter and to consummate the transactions contemplated
hereby
and thereby. The execution and delivery by each of Parent and Acquisition
Co of
this Agreement and, to the extent it is a party thereto, the Senior Commitment
Letter and the consummation by them of the transactions contemplated hereby
and
thereby have been duly and validly authorized by all necessary corporate
action
on the part of Parent and Acquisition Co. Each of Parent and Acquisition
Co has
duly executed and delivered this Agreement and, to the extent it is a party
thereto, the Senior Commitment Letter, and this Agreement and, to the extent
it
is a party thereto, the Senior Commitment Letter constitute the legal, valid
and
binding obligation of each of Parent and Acquisition Co, enforceable against
it
in accordance with their respective terms.
SECTION
4.04. No
Conflicts; Consents.
(a) The
execution and delivery by each of Parent and Acquisition Co of this Agreement
and, to the extent it is a party thereto, the Senior Commitment Letter, do
not,
and the consummation of the Merger and the other transactions contemplated
by
this Agreement and the Senior Commitment
29
Letter
and compliance with the terms hereof and thereof will not, conflict with,
or
result in any violation of or default (with or without notice or lapse of
time,
or both) under, or give rise to a right of termination, cancellation or
acceleration of any obligation or to loss of a material benefit under, or
result
in the creation of any Lien upon any of the properties or assets of Parent
or
Acquisition Co or any of their respective subsidiaries under, any provision
of
(i) the charter or organizational documents of Parent, Acquisition Co or
any of their respective subsidiaries, (ii) any Contract to which Parent,
Acquisition Co or any of their respective subsidiaries is a party or by which
any of their respective properties or assets is bound or (iii) subject to
the filings and other matters referred to in Section 4.04(b), any Judgment
or Law applicable to Parent, Acquisition Co or any of their respective
subsidiaries or their respective properties or assets, other than, in the
case
of clauses (ii) and (iii) above, any such items that, individually or in
the aggregate, do not and would not reasonably be expected to (i) impair in
any material respect the ability of Parent or Acquisition Co to perform its
obligations under this Agreement and, to the extent it is a party thereto,
the
Senior Commitment Letter or (ii) prevent or materially impede the
consummation by Parent or Acquisition Co of the Merger or the other transactions
contemplated by this Agreement and the Senior Commitment Letter.
(b)
No
Consent of, or registration, declaration or filing with, or permit from,
any
Governmental Entity is required to be obtained or made by or with respect
to
Parent, Acquisition Co or any of their respective subsidiaries in connection
with the execution, delivery and performance of this Agreement or the Senior
Commitment Letter or the consummation of the transactions contemplated by
this
Agreement, other than (i) compliance with and filings under the HSR Act or
any other applicable Antitrust Laws of any foreign jurisdiction, (ii) the
Exchange Act, (iii) any filings required under the rules and regulations of
the NYSE, (iv) the filing of the Certificate of Merger with the Secretary
of State of the State of Delaware, (v) such Consents, registrations,
declarations or filings with any Governmental Entity that generally regulates
aspects of the provision of lottery or gaming systems, products and services
in
any jurisdiction in which the Company or any Company Subsidiary conducts
business, including pursuant to any Lottery Contract with any Governmental
Entity, (vi) any filings relating to (A) the approval of the increase in
the share capital of Guarantor in connection with the Rights Offering by
the
stockholders of Guarantor (the “Guarantor
Stockholder Approval”),
(B)
the extraordinary meeting of the stockholders of Guarantor to obtain the
Guarantor Stockholder Approval (the “Guarantor
Stockholders Meeting”)
or (C)
the Acquisition Financing (or the Alternate Financing), and (vii) such
other items that do not and would not reasonably be expected to, individually
or
in the aggregate, (A) impair in any material respect the ability of Parent
or
Acquisition Co to perform its obligations under this Agreement or (B) prevent
or
materially impede the consummation of the Merger or the other transactions
contemplated by this Agreement.
SECTION
4.05. Brokers.
No
broker, investment banker, financial advisor or other person, other than
Credit
Suisse First Boston LLC and Xxxxxxx Xxxxx International, the fees and expenses
of which will be paid by Parent,
is
entitled to any broker’s, finder’s, financial advisor’s or other similar fee or
commission in connection with the Merger and the other transactions contemplated
by this Agreement based upon arrangements made by or on behalf of Parent
or any
of its affiliates, except for any fees
30
and
expenses incurred or to be incurred in connection with the Acquisition Financing
(or the Alternate Financing).
SECTION
4.06. Financing.
Parent
has made available to the Company true and complete copies of (i) the
Pre-Underwriting Agreement, dated as of January 10,
2006 (as
amended or modified in accordance with Section 6.10(c), the “Pre-Underwriting
Agreement”),
among
Credit Suisse First Boston (Europe) Limited, Xxxxxxx Sachs International,
Guarantor and Xx Xxxxxxxx S.p.A., an Italian corporation (“Xx
Xxxxxxxx”),
pursuant to which, and subject to the terms and conditions thereof, the joint
lead underwriters set forth therein have committed to enter into an underwriting
agreement to underwrite that portion of a rights offering by Guarantor (the
“Rights
Offering”)
other
than the portion subscribed to by Xx Xxxxxxxx, the proceeds of which will
be
used to provide Parent with a portion of the financing to consummate the
Merger
and the other transactions contemplated by this Agreement and (ii) (x) the
Capital Securities Backstop Letter, dated as of January 10,
2006 by
and among Credit Suisse First Boston (Europe) Limited and Guarantor and related
terms sheets (such backstop letter and related term sheets, as may be amended,
modified or syndicated in accordance with Section 6.10(c), the “Capital
Securities Backstop Letter”)
pursuant to which Credit Suisse First Boston (Europe) Limited has agreed,
in
certain circumstances, to subscribe for and underwrite an issue of capital
securities of Guarantor (the “Capital
Securities Financing”)
and
(y) the Senior Facilities Commitment Letter, dated as of January 10,
2006 by
and among Credit Suisse First Boston International, Credit Suisse, London
Branch
and Acquisition Co and related terms sheets (such commitment letter and related
term sheets, as may be amended, modified or syndicated in accordance with
Section 6.10(c), the “Senior
Commitment Letter”
and,
together with the Capital Securities Backstop Letter, the “Commitment
Letters”)
pursuant to which, and subject to the terms and conditions thereof, Credit
Suisse First Boston International, Credit Suisse, London Branch and Xxxxxxx
Sachs International have committed to provide Parent or its affiliates with
a
portion of the financing to consummate the Merger and the other transactions
contemplated by this Agreement (such financing, together with (x) the Capital
Securities Financing and (y) the financing pursuant to the Rights Offering,
the
“Acquisition
Financing”).
As of
the date hereof, the Pre-Underwriting Agreement and the Commitment Letters
are
in full force and effect and have not been withdrawn or terminated or otherwise
amended or modified in any respect. The only conditions precedent to the
obligations of the lenders and underwriters to make the Acquisition Financing
available to Parent or its affiliates are those contemplated by the terms
of the
Commitment Letters and the Pre-Underwriting Agreement. As of the date hereof,
neither Parent, Acquisition Co nor any of their respective affiliates has
any
knowledge that any event has occurred which, with or without notice, lapse
of
time or both, would constitute a default or breach on the part of Parent
or any
of its affiliates under any term or condition of the Pre-Underwriting Agreement
or any of the Commitment Letters. As of the date hereof, neither Parent,
Acquisition Co nor any of their respective affiliates has any reason to believe
that it will be unable to satisfy on a timely basis any term or condition
to be
satisfied by it and contained in the Pre-Underwriting Agreement or the
Commitment Letters. Parent and its affiliates have fully paid any and all
commitment fees or other fees required by the terms of the Pre-Underwriting
Agreement or the Commitment Letters to be paid on or before the date of this
Agreement. Assuming the satisfaction of the condition set forth in 7.02(h),
the
proceeds from the Acquisition Financing constitute all of the financing
31
required
to be provided by Parent for the consummation of the Merger and other
transactions contemplated by this Agreement.
SECTION
4.07. Capital
Resources.
The
aggregate proceeds to be disbursed pursuant to the Acquisition Financing,
together with the Company Cash Balance on the Closing Date will be sufficient
to
effect the Closing on the terms contemplated hereby.
SECTION
4.08. Section 203
of the DGCL.
None of
Parent, Acquisition Co or any of their respective “affiliates” or “associates”
is, or has been within the last three years, an “interested stockholder” of the
Company as those terms are defined in Section 203 of the DGCL.
ARTICLE
V
Covenants
Relating to Conduct of Business
SECTION
5.01. Conduct
of Business.
(a)
Conduct
of Business by the Company.
Except
for matters set forth in the Company Disclosure Letter or otherwise expressly
contemplated by this Agreement or as required to comply with applicable Law,
from the date of this Agreement to the Effective Time the Company shall,
and
shall cause each Company Subsidiary to, conduct its business in the usual,
regular and ordinary course in substantially the same manner as previously
conducted and, to the extent consistent therewith, use all commercially
reasonable efforts to preserve intact its current business organization,
keep
available the services of its current officers and employees and keep its
relationships with customers, suppliers, licensors, licensees, distributors
and
others having business dealings with them to the end that its goodwill and
ongoing business shall be unimpaired at the Effective Time. In addition,
except
for matters set forth in Schedule 5.01 of the Company Disclosure Letter or
otherwise expressly contemplated by this Agreement or as required to comply
with
applicable Law, from the date of this Agreement to the Effective Time, the
Company shall not, and shall not permit any Company Subsidiary to, do any
of the
following without the prior written consent of Parent (such consent not to
be
unreasonably withheld or delayed):
(i)
(A) declare, set aside or pay any dividends on, or make any other
distributions in respect of, any of its capital stock or other equity interests
or any securities or other rights convertible into or exchangeable for or
entitling any person to acquire, any of its capital stock or other equity
interests, other than (1) dividends and distributions by a direct or
indirect wholly owned Company Subsidiary to its parent, (2) regular
quarterly cash dividends with respect to the Company Common Stock, not in
excess
of $0.085 per share, with usual declaration, record and payment dates and
in
accordance with the Company’s past dividend policy and (3) interest
payments by the Company in respect of its outstanding Convertible Debentures
in
accordance with their terms, (B) split, combine or reclassify any of its
capital stock or other equity
32
interests
or issue or authorize the issuance of any other securities in respect of,
in
lieu of or in substitution for shares of its capital stock or other equity
interests, or (C) purchase, redeem or otherwise acquire any shares of
capital stock of the Company or any Company Subsidiary or any equity interests
or securities thereof or any rights, warrants or options to acquire any such
shares, equity interests or other securities (other than (1) upon any
conversion of Convertible Debentures, (2) upon forfeiture of shares of
Company Restricted Stock for no consideration and (3) net exercises of
Company Stock Options, in each case in accordance with the terms
thereof);
(ii)
issue, deliver, sell, transfer, convey, dispose of, grant, pledge or encumber
(A) any shares of its capital stock or any of its other equity interests,
(B) any Voting Company Debt or other voting securities, (C) any
securities convertible into or exchangeable for, or any options, warrants
or
rights to acquire, any such shares or other equity interests, Voting Company
Debt, voting securities or convertible or exchangeable securities, options,
warrants or rights to acquire such shares or other equity interests, Voting
Company Debt, voting securities or convertible or exchangeable securities,
or
(D) any “phantom” stock, “phantom” stock rights, stock appreciation rights
or stock-based performance units, other than (1) the issuance of Company
Common
Stock upon the exercise of Company Stock Options and rights under the ESPP
outstanding on the date of this Agreement and in accordance with their present
terms, (2) the issuance of Company Common Stock as required to comply with
any Company Benefit Plan or Company Benefit Agreement as in effect on the
date
of this Agreement, (3) the issuance of Company Common Stock upon the
conversion of Convertible Debentures outstanding as the date of this Agreement
and in accordance with their present terms and (4) the issuance of Company
Restricted Stock up to the number of shares set forth in Schedule 5.01(a)
of the Company Disclosure Letter, and the grant of Company Stock Options
to
purchase shares of Company Common Stock up to the number of shares set forth
in
Schedule 5.01(a) of the Company Disclosure Letter, in each case consistent
with the Company’s past practice;
(iii)
amend its certificate of incorporation, by-laws or other comparable charter
or
organizational documents;
(iv)
acquire or agree to acquire by merging or consolidating with, or by purchasing
a
substantial equity interest in or portion of the assets of, or by any other
manner, any business or any corporation, partnership, joint venture, association
or other business organization or division thereof to the extent the aggregate
purchase price payable in respect of all such acquisitions during the term
of
this Agreement exceeds $5,000,000 (provided
that the
terms of any such acquisition would not reasonably be expected to materially
delay or interfere with the consummation of the Merger or any of the other
transactions contemplated by this Agreement);
33
(v)
except (A) as required by applicable Law, (B) as otherwise expressly
contemplated by this Agreement or (C) as required pursuant to the terms of
any Company Benefit Plan or Company Benefit Agreement in effect on the date
of
this Agreement (1) grant to any officer, director or employee of the
Company or any Company Subsidiary any increase in compensation (other than
ordinary course salary increases to employees who are not officers or directors
of the Company in amounts consistent with past practice), (2) grant to any
officer, director or employee of the Company or any Company Subsidiary any
increase in severance or termination pay, (3) enter into, amend or modify
any employment, consulting, severance or termination agreement to increase
the
benefits payable thereunder or otherwise in any material respect,
(4) establish, adopt, enter into or amend in any material respect any
collective bargaining agreement, Company Benefit Plan, or Company Benefit
Agreement to increase the benefits payable thereunder or otherwise in any
material respect, or (5) take any action to accelerate any rights or
benefits, or make any material determinations, under any collective bargaining
agreement, Company Benefit Plan or Company Benefit Agreement; provided,
however,
that
the foregoing clauses (1), (2), and (3) shall not restrict the Company or
any Company Subsidiary from entering into or making available to newly hired
employees or to employees in the context of promotions based on job performance
or workplace requirements, in each case in the ordinary course of business
consistent with past practice, plans, agreements, benefits and compensation
arrangements (including incentive grants) that have, consistent with past
practice, been made available to newly hired or promoted employees in similar
positions;
(vi)
make
any change in accounting methods, principles or practices materially affecting
the reported consolidated assets, liabilities or results of operations of
the
Company, except insofar as may have been required by a change in
GAAP;
(vii)
sell, lease (as lessor), license or otherwise dispose of or subject to any
Lien
(other than a Permitted Lien) any properties or assets of the Company or
any
Company Subsidiary, except (A) sales, leases or dispositions made, or
licenses or Liens granted, in the ordinary course of business consistent
with
past practice, including pursuant to the terms of any Lottery Contract,
(B) Liens granted to secure indebtedness permitted to be incurred pursuant
to Section 5.01(a)(viii) and (C) sales, leases or dispositions of
assets with a fair value not in excess of $5,000,000 in the
aggregate;
(viii)
incur any indebtedness for borrowed money or guarantee any such indebtedness
of
another person, issue or sell any debt securities or warrants or other rights
to
acquire any debt securities of the Company or any Company Subsidiary, guarantee
any debt securities of another person, enter into any “keep well” or other
agreement to maintain any financial statement condition of another person
or
enter into any arrangement having the economic effect of any of the foregoing,
except for (1) borrowings between the Company and
34
any
of
its direct or indirect wholly owned Subsidiaries and (2) other borrowings
in the
aggregate not in excess of $5,000,000 incurred in the ordinary course of
business consistent with past practice;
(ix)
make
or agree to make any new capital expenditure or expenditures other than (1)
capital expenditures in accordance with the specified items of, and pursuant
to
the time frame specified in, the capital expenditure budget set forth in
Section 5.01(a)(ix) of the Company Disclosure Letter (the “Cap
Ex
Budget”)
and
(2) other capital expenditures in an aggregate amount not in excess of
$5,000,000;
(x)
make
or change any material Tax election or change any material method of Tax
accounting except to the extent required to comply with new requirements
set
forth by the Internal Revenue Service or requirements imposed as a result
of
being an SEC reporting company, settle or compromise any Tax liability or
refund
having a value greater than $2,000,000, file any amended Tax Return with
respect
to any Tax having a value greater than $2,000,000, enter into any closing
agreement or request any ruling relating to any Tax or surrender any right
to
claim a Tax refund having a value greater than $2,000,000;
(xi)
terminate, assign or otherwise alter or amend or waive in a manner material
and
adverse to the Company any Lottery Contract (other than the termination of
a
Lottery Contract with a customer that occurs in connection with the entering
into of a replacement or renewal Lottery Contract with such customer and
except
for alterations, amendments and waivers under any Lottery Contract that,
taken
as a whole, are not material and adverse to the Company in respect of such
Lottery Contract);
(xii)
enter into any lease (including renewals) of real property, except in the
ordinary course of business, including to the extent necessary to provide
services to any customer pursuant to the terms of any Lottery
Contract;
(xiii)
enter into, make any proposal for, renew, extend or amend or modify in any
material respect, terminate, cancel, or waive, release or assign any right
or
claim under, any contract or agreement which is or, if applicable, would
be, a
Material Contract or is or would be material to the Company or the Company
Subsidiaries (provided,
that,
for purpose of this clause (xiii), the term “Material
Contract”
shall
have the meaning assigned to such term in Section 3.08(a) (excluding the
Lottery Contracts referred to in clause (xiii) of Section 3.08(a))
other than material purchase contracts in the ordinary course of business
and
not in excess of $10,000,000;
(xiv)
except in connection with hedging transactions entered into in the ordinary
course of business, enter into any hedging or swap arrangements or contracts
or
other similar financing instruments or redeem, repurchase, prepay, defease
or
otherwise acquire any of the Company Senior Notes;
35
(xv)
settle or dismiss any suit, action or claim threatened against, relating
to or
involving the Company and any Company Subsidiary in connection with any
business, asset or property of the Company and any Company Subsidiary, other
than in the ordinary course of business but not, in any individual case,
in
excess of $5,000,000 or in a manner that would prohibit or materially restrict
in any material respect the operation of the Company;
(xvi)
except to the extent necessary to take any actions that the Company is otherwise
permitted to take pursuant to Section 5.02 (and in such case only in
accordance with the terms of Section 5.02), waive any of its rights under,
or release any other party from, amend, or fail to enforce its rights under,
any
standstill provision of any agreement;
(xvii)
enter into or make any proposal for any Lottery Contract with respect to
which
the Company or any Company Subsidiary expects to incur expenses of more than
$10,000,000 in any year, or renew or extend any Lottery Contract other than
on
terms no less favorable to the Company than the terms of such Lottery Contract,
taken as a whole, immediately prior to such renewal or extension;
(xviii)
fail to (x) timely file or furnish to or with the SEC all Company SEC
Reports required to be filed or furnished or (y) comply in all materials in
respect with the requirements of the Xxxxxxxx-Xxxxx Act applicable to it;
(xix)
accelerate the receipt of amounts due with respect to accounts receivable
or
lengthen the customary period for payment of accounts payable; or
(xx)
authorize any of, or commit or agree to take any of, the foregoing
actions.
(b)
Advice
of Changes.
The
Company shall promptly advise Parent in writing of any matter or event that
results in any breach of any representation, warranty or consent that would
reasonably be expected to result in a failure of a condition to the Merger
set
forth in Article VII.
(c)
Notice
to Company Subsidiaries.
Promptly after the date hereof, the Company shall notify the directors and
officers of each Company Subsidiary of the Company’s obligations pursuant to
this Section 5.01.
SECTION
5.02. No
Solicitation.
(a) The
Company shall not, nor shall it permit any Company Subsidiary to, nor shall
it
authorize any person or permit any director, officer or employee of the Company
or any Company Subsidiary, or any investment banker, attorney, accountant
or
other advisor or representative (collectively, “Representatives”)
of the
Company or any Company Subsidiary to, directly or indirectly, (i) solicit,
initiate or encourage the submission of any Takeover Proposal or the making
of
any inquiry or proposal that could reasonably be expected to lead to a Takeover
36
Proposal
or (ii) enter into, continue or otherwise participate in any discussions or
negotiations regarding, or furnish to any person (other than Parent, Acquisition
Co or their respective Representatives or the Company’s Representatives) any
information with respect to any Takeover Proposal; provided,
however,
that at
any time prior to obtaining the Company Stockholder Approval, the Company
Board
may, in response to a written Takeover Proposal that the Company Board
determines, in good faith, after consultation with outside counsel and financial
advisors, constitutes, or could reasonably be expected to lead to, a Superior
Proposal, and which Takeover Proposal did not result from a breach of this
Section 5.02, and subject to compliance with Section 5.02(b), (c) and
(d), (x) furnish information with respect to the Company and the Company
Subsidiaries to the person making such Takeover Proposal (and its
Representatives) pursuant to a customary confidentiality agreement not less
restrictive of the other party, in any material respect, than the Mutual
Confidentiality Agreement, dated December 9, 2005, between Guarantor and
the Company (the “Confidentiality
Agreement”)
and
(y) participate in discussions or negotiations with the person making such
Takeover Proposal (and its Representatives) regarding such Takeover Proposal;
provided
further,
however,
that,
subject
to the right of the Company to withhold such
portions of documents or information relating to pricing or other matters
that
are highly sensitive if the exchange of such documents (or portions thereof)
or
information, as reasonably determined by the Company’s counsel in consultation
with counsel to Parent, would be reasonably likely to result in antitrust
difficulties for the Company (or any of its affiliates),
the
Company shall promptly provide to Parent any non-public information that
is
provided to the person making such Company Takeover Proposal or its
Representatives which was not previously provided to Parent or Acquisition
Co.
Without
limiting the foregoing, it is understood that any violation of the restrictions
set forth in the preceding sentence by any director, officer or employee
of the
Company or any Company Subsidiary or any Representative of the Company or
any
Company Subsidiary shall be deemed to be a breach of this Section 5.02(a)
by the Company. The Company shall immediately cease and cause to be terminated
any existing activities, discussions or negotiations with any persons conducted
heretofore with respect to any Takeover Proposal. The Company also shall,
if it
has not already done so, promptly request that each person that has heretofore
executed a confidentiality agreement within the 12 months prior to the date
of this Agreement in connection with its consideration of any Takeover Proposal,
return or destroy all confidential information or data heretofore furnished
to
any person by or on behalf of it or any of its Subsidiaries.
For
purposes of this Agreement, the term “Takeover
Proposal”
means
any inquiry, proposal or offer from any person (other than Parent or its
affiliates) relating to, or that is reasonably likely to lead to, any direct
or
indirect acquisition, in one transaction or a series of transactions, including
by way of any merger, consolidation, tender offer, exchange offer, stock
acquisition, asset acquisition, binding share exchange, business combination,
recapitalization, liquidation, dissolution, joint venture or similar
transaction, of (A) assets or businesses that constitute or represent 20%
or more of the total revenue or assets of the Company and the Company
Subsidiaries, taken as a whole, or (B) 20% or more of the outstanding
shares of Company Common Stock or of any class of capital stock of, or other
equity or voting interests in, one or more of the Company Subsidiaries which,
in
the aggregate, directly or indirectly hold the assets or businesses referred
to
in
37
clause (A)
above, in each case other than the transactions contemplated by this
Agreement.
(b)
The
Company Board shall not (i) withdraw or modify in a manner adverse to
Parent or Acquisition Co, or propose publicly to withdraw or modify in a
manner
adverse to Parent or Acquisition Co, the recommendation or declaration of
advisability by the Company Board of this Agreement or the Merger or resolve
or
agree to take any such action (any such action or any such resolution or
agreement to take such action being referred to herein as an “Adverse
Recommendation Change”),
unless at any time prior to obtaining the Company Stockholder Approval, the
Company Board determines in good faith, after receipt of advice from its
outside
legal counsel, that the failure to take such action would be reasonably likely
to result in a breach of its fiduciary duties under applicable Law,
(ii) recommend, adopt or approve any Takeover Proposal or propose publicly
to recommend, adopt or approve any Takeover Proposal or resolve or agree
to take
any such action or (iii) cause or permit the Company to enter into any
letter of intent, memorandum of understanding, agreement in principle,
acquisition agreement, merger agreement, option agreement, joint venture
agreement, partnership agreement or other agreement (each, an “Acquisition
Agreement”)
constituting or related to, or which is intended to or is reasonably likely
to
lead to, any Takeover Proposal (other than a confidentiality agreement) or
resolve or agree to take any such action. Notwithstanding anything in this
Section 5.02(b) to the contrary, at any time prior to obtaining the Company
Stockholder Approval, the Company Board may, in response to a Superior Proposal
that did not result from a breach of Section 5.02(a), cause the Company to
terminate this Agreement pursuant to Section 8.01(f) in order to
concurrently enter into an Acquisition Agreement; provided,
however,
that
the Company shall not terminate this Agreement pursuant to Section 8.01(f),
and any purported termination pursuant to Section 8.01(f) shall be void and
of no force or effect, unless the Company shall have complied with all the
provisions of this Section 5.02, including the notification provisions in
this Section 5.02, and with all applicable requirements of
Section 6.07(b) in connection with such Superior Proposal; and provided further,
however,
that
the Company shall not exercise its right to terminate this Agreement pursuant
to
Section 8.01(f) until after the fifth business day following Parent’s
receipt of written notice (a “Notice
of Superior Proposal”)
from
the Company advising Parent that the Company Board has received a Superior
Proposal, specifying the material terms and conditions of the Superior Proposal,
identifying the person making such Superior Proposal and stating that the
Company Board intends to exercise its right to terminate this Agreement pursuant
to Section 8.01(f) (it being understood and agreed that, prior to any such
termination taking effect, (i) any amendment to the price or any other material
term of a Superior Proposal shall require a new Notice of Superior Proposal
and
a new five business day period and (ii) the Company Board shall discuss with
Parent and take into account any changes to the terms of this Agreement proposed
by Parent in response to such Superior Proposal or otherwise).
(c)
For
purposes of this Agreement, the term “Superior
Proposal”
means
any written offer made by a third party that the Company Board reasonably
determines to be bona fide for a transaction that (a) if consummated, would
result in such third party (or in the case of a direct merger between such
third
party and the Company, the
38
stockholders
of such third party) acquiring, directly or indirectly, more than 50% of
the
voting power of the Company Common Stock or all or substantially all the
assets
of the Company and the Company Subsidiaries, taken as a whole, for consideration
consisting of cash and/or securities payable to holders of shares of Company
Common Stock that the Company Board determines in good faith, after consultation
with its financial advisors, to have a higher value per share of Company
Common
Stock than the consideration payable in the Merger, taking into account any
changes to the terms of this Agreement proposed by Parent in response to
such
Superior Proposal or otherwise and (b) the Company Board reasonably
believes in good faith is reasonably capable of being completed, taking into
account all financial, regulatory, legal and other aspects of such offer
and
transaction.
(d)
In
addition to the obligations of the Company set forth in paragraphs (a) and
(b) of this Section 5.02, the Company promptly (but in any event within
24 hours of the receipt thereof) shall advise Parent orally and in writing
of any Takeover Proposal, or any inquiry the Company reasonably believes
is
reasonably likely to lead to a Takeover Proposal, the material terms and
conditions of such Takeover Proposal or inquiry and the identity of the person
making any such Takeover Proposal or inquiry. The Company shall, unless the
Company Board determines, after receipt of advice from its outside legal
counsel, that such action would be reasonably likely to result in a breach
of
its fiduciary duties under applicable Law, keep Parent reasonably informed
on a
current basis of the status and material details of any such Takeover Proposal
or inquiry.
(e)
Nothing contained in this Section 5.02 or elsewhere in this Agreement shall
prohibit the Company from (i) taking and disclosing to its stockholders a
position contemplated by Rule 14d-9 and 14e-2(a) promulgated under the
Exchange Act or (ii) making any disclosure to the Company’s stockholders
if, in the good faith judgment of the Company Board, after receipt of advice
from its outside legal counsel, failure so to disclose would be inconsistent
with applicable Law; provided,
however,
that in
no event shall the Company or the Company Board or any committee thereof
take,
agree or resolve to take any action prohibited by
Section 5.02(b).
ARTICLE
VI
Additional
Agreements
SECTION
6.01. Preparation
of Proxy Statement and Other Filings; Company Stockholders
Meeting.
(a) As
promptly as practicable following the date of this Agreement, the Company
shall
prepare and file with the SEC the Proxy Statement in preliminary form, and
each
of the Company and Parent shall, and shall cause their respective affiliates
to,
prepare and file with the SEC, to the extent required under applicable Law,
and
all other documents required to be filed by them with the SEC in connection
with
the Merger (the “Other
Filings”).
Parent and the Company will, and will cause their respective affiliates to,
cooperate with each other in the preparation of the Proxy Statement and the
Other Filings. Without limiting the generality of the foregoing,
39
(i) the
Company and Parent will, and will cause their respective affiliates to, provide
each other with a reasonable opportunity to review and comment on the Proxy
Statement and the Other Filings and (ii) Parent and the Company will
provide each other the information relating to it and its affiliates required
by
the Securities Act and the Exchange Act to be set forth in the Proxy Statement
and Other Filings. The Company and Parent shall cause the Proxy Statement
and
each Other Filing to be made by it or its affiliates to comply as to form
and
substance in all material respects with the applicable requirements of
(i) the Exchange Act and (ii) the rules and regulations of the
NYSE.
(b)
The
Company agrees that none of the information supplied or to be supplied by
the
Company for inclusion or incorporation by reference in the Proxy Statement
and
the Other Filings will, at the date it is first filed with the SEC, the date
it
is first mailed to the stockholders of the Company and at the time of the
Company Stockholders Meeting, contain any untrue statement of a material
fact or
omit to state any material fact required to be stated therein or necessary
in
order to make the statements therein, in the light of the circumstances under
which they are made, not misleading. Parent and Acquisition Co agree that
none
of the information supplied or to be supplied by Parent or Acquisition Co
for
inclusion or incorporation by reference in the Proxy Statement and the Other
Filings will, at the date it is first filed with the SEC, the date it is
first
mailed to the stockholders of the Company and at the time of the Company
Stockholders Meeting, contain any untrue statement of a material fact or
omit to
state any material fact required to be stated therein or necessary in order
to
make the statements therein, in the light of the circumstances under which
they
are made, not misleading. For purposes of the foregoing, it is understood
and
agreed that information concerning or related to the Company or any Company
Subsidiary will be deemed to have been supplied by the Company and information
concerning or related to Parent, Acquisition Co or their respective affiliates
and the financing for the Merger will be deemed to have been supplied by
Parent.
If at any time prior to the Company Stockholders Meeting any event or
circumstances relating to the Company, any Company Subsidiary, Parent,
Acquisition Co or any affiliate of Parent or Acquisition Co, or their respective
officers or directors, should be discovered by any party that should be set
forth in an amendment or a supplement to the Proxy Statement or the Other
Filings, then the Company or Parent shall promptly inform the other party
and,
after consultation with such party, file such amendment or supplement with
the
SEC. The Company shall not mail any Proxy Statement, or any amendment or
supplement thereto, to which Parent reasonably objects.
(c)
Each
of the Company and Parent shall use its reasonable best efforts, after
consultation with the other party, to resolve all SEC comments with respect
to
the Proxy Statement or the Other Filings as promptly as practicable after
receipt thereof. Each of the Company and Parent shall as soon as reasonably
practicable notify the other party of the receipt of any comments from or
other
correspondence with the SEC or its staff with respect to the Proxy Statement
or
the Other Filings and any request by the SEC or its staff for amendments
or
supplements to the Proxy Statement or the Other Filings or for additional
information and shall supply the other party with copies of all correspondence
between it and any of its Representatives or affiliates, on the one hand,
and
the SEC or its staff, on the other hand, with respect to the Proxy Statement
or
Other Filings. If at any time prior to receipt of the Company Stockholder
Approval there shall
40
occur
any
event that should be set forth in an amendment or supplement to the Proxy
Statement, the Company shall promptly prepare and mail to its stockholders
such
an amendment or supplement. The Company shall use its reasonable best efforts
to
cause the Proxy Statement to be mailed to the Company’s stockholders as promptly
as practicable after filing with the SEC.
(d)
The
Company shall, as promptly as practicable following the date of this Agreement,
duly call, give notice of, convene and hold a meeting of its stockholders
(the
“Company
Stockholders Meeting”)
for
the purpose of seeking the Company Stockholder Approval. The Company shall,
through the Company Board, recommend to its stockholders that they give the
Company Stockholder Approval, except to the extent that the Company Board
shall
have withdrawn or modified its approval or recommendation of this Agreement
or
the Merger as permitted by Section 5.02(b). Without limiting the generality
of the foregoing, the Company agrees that its obligations pursuant to the
first
sentence of this Section 6.01(d) shall not be affected by the commencement,
public proposal, public disclosure or communication to the Company of any
Takeover Proposal.
SECTION
6.02. Access
to Information; Confidentiality.
The
Company shall, and shall cause each Company Subsidiary to, afford to Parent,
Acquisition Co and its financing sources and to their respective officers,
employees and Representatives reasonable access during normal business hours
during the period prior to the Effective Time to all their respective
properties, books, contracts, commitments, personnel and records, but only
to
the extent that such access does not unreasonably interfere with the business
or
operations of the Company and the Company Subsidiaries, and, during such
period,
the Company shall, and shall cause each of the Company Subsidiaries to, furnish
promptly to Parent (a) a copy of each report, schedule, registration
statement and other document filed or furnished by it during such period
pursuant to the requirements of Federal or state securities laws and
(b) all other information concerning its business, properties and personnel
as Parent may reasonably request (including unaudited monthly consolidated
balance sheets of the Company and the Company Subsidiaries for each month
then
ended and related consolidated statements of earnings, cash flows and
stockholders’ equity (which the Company will use reasonable best efforts to
furnish within fifteen days after the end of each month); provided,
however,
that
the Company may withhold (i) any document or information to the extent that
such document or information is subject to the terms of a confidentiality
agreement with a third party (provided
that the
Company shall use its reasonable best efforts to obtain waivers under such
agreements or implement requisite procedures to enable reasonable access
without
violating such agreement), (ii) any document or information to the extent
that the disclosure thereof would result in the loss of attorney-client
privilege (provided
that the
Company shall use its reasonable best efforts to put in place an arrangement
to
permit such disclosure without loss of attorney-client privilege),
(iii) any document or information to the extent required by applicable law
(provided
that the
Company shall use its reasonable best efforts to enable the provision of
reasonable access without violating such law) or (iv) such portions of
documents or information relating to pricing or other matters that are highly
sensitive if the exchange of such documents (or portions thereof) or
information, as reasonably determined by the Company’s counsel in
41
consultation
with counsel to Parent, would be reasonably likely to result in antitrust
difficulties for the Company (or any of its affiliates). If any material
is
withheld by the Company or a Company Subsidiary pursuant to the proviso to
the
preceding sentence, such party shall inform Parent as to the general nature
of
what is being withheld. All information exchanged pursuant to this
Section 6.02 shall be subject to the Confidentiality
Agreement.
SECTION
6.03. Reasonable
Best Efforts; Notification.
(a) Upon
the terms and subject to the conditions set forth in this Agreement, unless,
to
the extent permitted by Section 5.02(b), the Company Board approves or
recommends a Superior Proposal, each of the parties shall use its reasonable
best efforts to take, or cause to be taken, all actions, and to do, or cause
to
be done, and to assist and cooperate with the other parties in doing, all
things
necessary, proper or advisable to consummate and make effective, in the most
expeditious manner practicable, the Merger and the other transactions
contemplated by this Agreement, including, to the extent consistent with
its
obligation to use its reasonable best efforts, (i) obtaining necessary
actions or nonactions, waivers and Consents from Governmental Entities that
are
required to be obtained to satisfy the conditions set forth in
Section 7.01(b) and Section 7.02(e)(i) and (e)(ii) and making all necessary
registrations and filings (including filings with Governmental Entities,
if any)
and taking all reasonable steps as may be necessary to obtain a Consent or
waiver from any Governmental Entity that is required to be obtained to satisfy
the conditions set forth in Section 7.01(b) and Section 7.02(e)(i) and
(e)(ii) and (ii) executing and delivering of any additional instruments
necessary to consummate the Merger and the other transactions contemplated
by
this Agreement and to fully carry out the purposes of this Agreement. In
connection with and without limiting the foregoing, the Company shall, and
Parent shall cause its affiliates to, duly file with the U.S. Federal Trade
Commission (the “FTC”)
and
the Antitrust Division of the Department of Justice (the “Antitrust
Division”)
the
notification and report form (the “HSR
Filing”)
required under the HSR Act with respect to the transactions contemplated
by this
Agreement and duly make, or cause to be made, the filings and authorizations
(the “Other
Antitrust Filings”)
required under the Merger Regulation of the European Community (the
“EC
Merger Regulation”)
with
respect to the transactions contemplated by this Agreement. The HSR Filing
and
the Other Antitrust Filings shall be made as promptly as practicable after
the
date of this Agreement and shall be in compliance with the requirements of
the
HSR Act or the EC Merger Regulation. Each of Parent and the Company shall
cooperate with the other, and Parent shall cause its affiliates to cooperate
with the Company, to the extent necessary to assist the other in preparation
of
its HSR Filing and the Other Antitrust Filings and to request early termination
of the waiting period required by the HSR Act and the EC Merger
Regulation.
(b)
The
Company shall, and Parent shall cause its affiliates to, (i) respond as
promptly as practicable under the circumstances to any inquiries received
from
the FTC or the Antitrust Division for additional information or documentation
and to all inquiries and requests received from any Governmental Entity on
antitrust or competition matters, (ii) not extend any waiting period under
the HSR Act or EC Merger Regulation without the prior written consent of
the
other parties hereto (such consent not to be unreasonably withheld or delayed)
and (iii) not enter into any agreement with any
42
Governmental
Entity not to consummate the transactions contemplated by this Agreement
without
the prior written consent of the other parties hereto. Parent and the Company
shall, and Parent shall cause its affiliates to, from the date hereof until
the
Outside Date, use their respective reasonable best efforts to avoid the entry
of, or to have lifted, vacated or terminated, any injunction, decree, order
or
judgment that would restrain, prevent or delay the Closing (a “Legal
Impediment”).
(c)
For
purposes of this Section 6.03, “reasonable best efforts” shall, if
requested by Parent in writing, require the Company or any Company Subsidiary
to, prior to the Outside Date, (i) propose, negotiate, offer to commit and
effect (and if such offer is accepted, commit to and effect), by consent
decree,
hold separate order or otherwise, the sale, divestiture or disposition of
any
shares, assets or businesses of the Company and the Company Subsidiaries,
(ii) otherwise offer to take or offer to commit to take any action which it
is capable of taking and, if the offer is accepted, take or commit to take
such
action, that limits freedom of action with respect to, or ability to retain,
any
of the shares, assets or businesses of the Company and the Company Subsidiaries
and (iii) amend or to agree to amend any Lottery Contract as a condition to
obtaining any waiver or Consent, provided, however, that the consummation
of
each such action or transaction contemplated by clauses (i) - (iii)
shall be expressly conditioned upon the consummation of the Merger and the
other
transactions contemplated hereby.
(d)
For
purposes of this Section 6.03, “reasonable best efforts” shall not require
Parent or any of its affiliates to (i) propose, negotiate, offer to commit
or effect, by consent decree, hold separate order or otherwise, the sale,
divestiture or disposition of any shares, assets or businesses of Parent
or any
of its affiliates, (ii) otherwise offer to take or offer to commit to take
any action which it is capable of taking or take or commit to take such action,
that limits freedom of action with respect to, or ability to retain, any
shares,
assets or businesses of the Company and the Company Subsidiaries, or
(iii) amend or to agree to amend any Lottery Contract or any other lottery
contract as a condition to obtaining any waiver or Consent. For purposes
of this
Agreement, “reasonable best efforts” shall not require Parent or any of its
affiliates to hold the Guarantor Stockholders Meeting to approve the Rights
Offering before Guarantor’s next ordinary general meeting of stockholders
expected to occur in April 2006.
(e)
In
addition, each of Parent and the Company shall, subject to applicable Law
and
the limitations set forth in Section 6.02 and except as prohibited by any
applicable representative of any applicable Governmental Entity,
(i) promptly notify the other party of any written communication to that
party (or any of its affiliates) concerning this Agreement or the Merger
from
any Governmental Entity and permit such other party to review in advance
any
proposed written communication to any of the foregoing, (ii) not agree to
participate or permit any of its affiliates to participate in any substantive
meeting or discussion with any Governmental Entity in respect of any filings,
investigation or inquiry concerning this Agreement or the Merger unless it
consults with the other party in advance and, to the extent permitted by
such
Governmental Entity, gives the other party the opportunity to attend and
participate thereat and (iii) furnish the other party with copies of all
correspondence, filings and written communications (and memoranda setting
forth
the substance thereof) between it and its affiliates and their
43
respective
Representatives on the one hand, and any Governmental Entity or members or
their
respective staffs on the other hand, in each case with respect to this Agreement
and the transactions contemplated by this Agreement, provided
that no
party shall be required hereunder to furnish to the other party hereto any
proprietary information or personal information regarding the officers,
directors, employees, partners, shareholders of it or any of its affiliates
if
such information is submitted on a confidential basis to any Government Entity
or members of their respective staffs, whether contained in the applicable
personal disclosure forms, business entity forms or otherwise.
(f)
From
and after the date hereof, the Company and (subject to Section 6.03(d)) Parent
shall use their respective reasonable best efforts to take, or to cause to
be
taken, all actions and to do, or cause to be done, all things reasonably
necessary (a) to obtain or retain, and to cause the Company Subsidiaries
to
obtain or retain, all Permits under the Gaming Laws required in order for
the
Company Subsidiaries involved in the gaming industry or Video Lottery Business,
including Spielo Manufacturing ULC, to continue to operate their respective
businesses after the Closing substantially in the manner in which such
businesses are conducted as of the date of this Agreement, and (b) in order
for the Company and the Company Subsidiaries to obtain, prior to December
29,
2006 (or such later date to which such deadline shall be extended pursuant
to
the terms of such agreement (as amended)), all Permits the obtaining of which
are closing conditions under the Kaufvertrag dated December 5, 2004 between
Messrs. Xxxx and Xxxxxxx Xxxxxxxxxx, on the one hand, and GTECH Corporation
on
the other (it being acknowledged that the execution and delivery of this
Agreement or the consummation of the transactions contemplated hereby may
delay
the obtaining of such Permits beyond the date which they would otherwise
have
been obtained and may delay the obtaining of such Permits beyond December
29,
2006 (or such later date to which such deadline shall be extended pursuant
to
the terms of such agreement (as amended)), including (i) cooperating with
the
other parties hereto in making all filings or submissions necessary to obtain
such Permits and in connection with any investigation or other inquiry,
including any proceeding initiated by a private party, relating to such Permits;
(ii) keeping the other parties informed of any substantive communication
received by it from, or given by it to, any Governmental Entity, or in
connection with a proceeding by any private party, in each case in connection
with the obtaining of such Permits; and (iii) giving the other parties hereto
the opportunity to review and approve any substantive communication proposed
to
be given by it to, and consult with the other parties hereto in advance of
any
proposed meeting or conference with, any Governmental Entity or, in connection
with any proceeding by a private party, with any other Person, relating to
such
Permits, and give the other parties the opportunity to attend and participate
in
such meetings and conferences.
(g)
For
purposes of this Agreement:
“Gaming
Laws”
means
any federal, state, local or foreign Law or Permit governing or related to
the
manufacture or distribution of gaming devices (including so-called “video
lottery terminals”).
44
“Lottery
Business”
means
any business involving the provision of any goods and/or services (including
the
provision of any equipment, hardware, software, technology and/or related
services) to a customer in support of the sale of any lottery product (including
the sale of online and off-line lottery tickets and instant tickets) and/or
the
operation and/or sales of any such lottery product, but excluding any Video
Lottery Business.
“Video
Lottery Business”
means
any business involving the provision of any or all of the following:
(i) interactive electronic gaming devices (including so called “video
lottery terminals” and “slot machines”) which are activated by the player by the
insertion of a coin or other consideration constituting the player’s wager and
which display the play and outcome of a game of chance (such as “five card
draw” poker, “Blackjack,” or “21” and simulated spinning reels with fruit and
bars) upon such player-activation using microprocessors and video display;
(ii) central processing systems used in connection with the operation of
interactive gaming devices described in clause (i); and (iii) any
services related thereto.
SECTION
6.04. Equity
Awards.
(a) As
soon as practicable following the date of this Agreement, the Company Board
(or,
if appropriate, any committee administering the Company Stock Plans) shall
adopt
such resolutions or take such other actions as may be required to provide
that,
at the Effective Time, each unexercised Company Stock Option that is outstanding
immediately prior to the Effective Time shall be canceled, with the holder
of
each such Company Stock Option becoming entitled to receive an amount in
cash
equal to (i) the excess, if any, of (x) the Merger Consideration over
(y) the exercise price per share of Company Common Stock subject to such
Company Stock Option, multiplied by (ii) the number of shares of Company
Common Stock subject to such Company Stock Option.
(b)
All
amounts payable pursuant to this Section 6.04, and all amounts payable at
the Effective Time pursuant to Section 2.01(b) in respect of shares of
Company Restricted Stock, shall be subject to any required withholding of
Tax or
proof of eligibility for exemption therefrom, and shall be paid as soon as
practicable following the Effective Time, without interest.
(c)
As
soon as practicable following the date of this Agreement, the Company Board
(or,
if appropriate, any committee administering the Company Stock Plans)
shall adopt such resolutions or take such other actions as may be required
to
provide that, with respect to the ESPP, (i) each individual who elects to
participate in the ESPP during any Offering Period (as defined in the ESPP)
that
commences after the date of this Agreement shall not be permitted to increase
the amount of his or her rate of contributions thereunder from the rate in
effect when such Offering Period commences, (ii) no individual who does not
elect to participate in the ESPP on the date an Offering Period commences
shall
be permitted to commence participation in the ESPP following such date, and
(iii) immediately prior to the Effective Time, each participant's accumulated
payroll deductions shall be used to purchase shares of Company Common Stock
in
accordance with the terms of the ESPP, and the shares of Company Common Stock
purchased thereunder shall be canceled at the Effective Time and converted
into
45
the
right
to receive the Merger Consideration pursuant to Section 2.01(a)(ii). The
Company shall cause the ESPP to terminate at the Effective Time, and no further
purchase rights shall be granted or exercised under the ESPP
thereafter.
SECTION
6.05. Benefit
Plans.
(a) For
the period commencing on the Effective Time and ending on December 31,
2006, Surviving Corporation shall either (i) maintain for the benefit of
the employees of the Company and the Company Subsidiaries immediately prior
to
the Effective Time (the “Company
Employees”),
other
than those Company Employees covered by a collective bargaining agreement,
the
Company Benefit Plans and Company Benefit Agreements at the benefit levels
in
effect on the date of this Agreement, other than the Company Stock Plans,
or
(ii) provide or cause to be provided benefits to each Company Employee
that, taken as a whole, have a value that is not less favorable in the aggregate
than the benefits provided to such Company Employee on the date of this
Agreement (excluding, however, in the case of each of (i) and (ii),
equity-based compensation and change-in-control benefits), provided
that,
subject to the Surviving Corporation’s compliance with its obligations in this
Section 6.05 it may, from and after the Effective Time, (i) terminate
the employment of any Company Employee or (ii) amend or terminate any
Company Benefit Plan or Company Benefit Agreement in accordance with its
terms.
(b)
Without limiting the generality of Section 6.05(a) and subject to the
qualifications therein, from and after the Effective Time, Surviving Corporation
shall honor all the Company’s employment, severance, termination and deferred
compensation agreements, plans and policies, as in effect at the Effective
Time,
in accordance with the terms thereof.
(c)
Without limiting the generality of Section 6.05(a), Surviving Corporation
shall
(i) maintain the Management Incentive Plan, Project Incentive Plan, Global
Sales Incentive Plan, Account Development Manager Plan and Building Excellence
Recognition Program (the “Incentive
Plans”)
pursuant to their respective terms as in effect as of the Effective Time
with
respect to all performance periods thereunder commencing prior to the Effective
Time and ending at the end of such performance period or December 31, 2006,
whichever is earlier, and (ii) at the times prescribed by the Incentive
Plans as in effect as of the Effective Time, make payments to the Company
Employees in accordance with the applicable terms of the Incentive Plans
as in
effect as of Effective Time.
(d)
With
respect to any “employee benefit plan”, as defined in Section 3(3) of
ERISA, maintained by Surviving Corporation or any of its subsidiaries (including
any severance plan), for all purposes, including determining eligibility
to
participate, level of benefits, vesting, benefit accruals and early retirement
subsidies, each Company Employee’s service with the Company or any Company
Subsidiary (as well as service with any predecessor employer of the Company
or
any Company Subsidiary, to the extent service with the predecessor employer
is
recognized by the Company or any Company Subsidiary) (“Pre-Closing
Service”)
shall
be treated as service with Surviving Corporation or any of its subsidiaries;
provided,
however,
that
such service need not be recognized to the extent that such recognition would
result in any duplication of benefits
46
or
service credit under a newly established plan for which prior service is
not
taken into account. Notwithstanding the foregoing, the Surviving Company
and its
subsidiaries shall only be required to provide credit for Pre-Closing Service
under a defined benefit pension plan if such plan is a Company Benefit Plan
or
if such plan has assumed the assets and/or liabilities of a Company Benefit
Plan.
(e)
Surviving Corporation shall waive, or cause to be waived, any pre-existing
condition limitations, exclusions and actively-at-work requirements under
any
welfare benefit plan maintained by Surviving Corporation or any of its
affiliates in which Company Employees (and their eligible dependents) will
be
eligible to participate after the Effective Time, except to the extent that
such
pre-existing condition limitations would have been applicable under the
comparable Company Benefit Plan immediately prior to the commencement of
participation therein. Surviving Corporation shall recognize, or cause to
be
recognized, the dollar amount of all expenses incurred by each Company Employee
(and his or her eligible dependents) during the calendar year in which the
commencement of participation begins for purposes of satisfying such year’s
deductible and co-payment limitations under the relevant welfare benefit
plans
in which they will be eligible to participate after the Effective
Time.
SECTION
6.06. Indemnification.
(a)
Parent and the Company agree that all rights to indemnification and exculpation
from liabilities for acts or omissions occurring at or prior to the Effective
Time (and rights for advancement of expenses) now existing in favor of the
current or former directors or officers of the Company and the Company
Subsidiaries as provided in their respective certificates of incorporation
or
bylaws (or comparable organizational documents) and any indemnification or
other
agreements of the Company and/or the Company Subsidiaries as in effect on
the
date of this Agreement shall be assumed by the Surviving Corporation in the
Merger, without further action, at the Effective Time and shall survive the
Merger and shall continue in full force and effect in accordance with their
terms. Parent shall cause the Surviving Corporation to perform all such
obligations in accordance with their terms.
(b)
In
the event that Parent or the Surviving Corporation or any of its successors
or
assigns (i) consolidates with or merges into any other person and is not
the continuing or surviving corporation or entity of such consolidation or
merger or (ii) transfers or conveys all or substantially all its properties
and assets to any person (including by dissolution), then, and in each such
case, Parent shall cause proper provision to be made so that the successors
and
assigns of Parent or the Surviving Corporation assume and honor the obligations
set forth in this Section 6.06.
(c)
For
six years after the Effective Time, Parent shall cause the Surviving Corporation
to maintain in effect directors’ and officers’ liability insurance covering each
person currently covered by the Company’s current directors’ and officers’
liability insurance policy for acts or omissions occurring prior to the
Effective Time on terms with respect to such coverage and amounts no less
favorable than those of such policy in effect on the date of this Agreement;
provided
that the
Surviving Corporation may substitute therefor policies of a reputable insurance
company the material terms of which, including coverage and amount, are no
less
favorable to such directors and officers than the
47
insurance
coverage otherwise required under this Section 6.06(c); provided,
however,
that
the Surviving Corporation shall not be obligated to make annual premium payments
for such insurance to the extent such premiums exceed 300% of the annual
premiums paid as of the date hereof by the Company for such insurance (such
300%
amount, the “Maximum
Premium”).
If
such insurance coverage cannot be obtained at all, or can only be obtained
at an
annual premium in excess of the Maximum Premium, the Surviving Corporation
shall
maintain the most advantageous policies of directors’ and officers’ insurance
obtainable for an annual premium equal to the Maximum Premium. The Company
represents to Parent that the Maximum Premium is the amount set forth in
Schedule 6.06(c) of the Company Disclosure Letter. The Surviving Company
may satisfy in full its obligation under this Section 6.06(c) by acquiring
a tail directors’ and officers’ liability insurance policy (a) that covers
each person currently covered by the Company’s current directors’ and officers’
liability insurance policy for acts or omissions occurring prior to the
Effective Time on terms with respect to such coverage and amounts no less
favorable than those of such policy in effect on the date of this Agreement,
and
(b) in respect of which the premium for a period until the sixth
anniversary of the Effective Time is prepaid at the commencement of such
period.
At the request of Parent, the Company shall cooperate with Parent to obtain
such
a tail policy effective as of the Effective Time.
SECTION
6.07. Fees
and Expenses.
(a)
Except as provided below, all fees and expenses incurred in connection with
the
Merger and the other transactions contemplated by this Agreement shall be
paid
by the party incurring such fees or expenses, whether or not the Merger is
consummated.
(b)
In
the event that
(i)
(A) a Takeover Proposal has been publicly proposed by any person (other
than Parent or any of its affiliates) or any such person has publicly announced
(and has not subsequently publicly withdrawn) an intention (whether or not
conditional) to make a Takeover Proposal, or any such Takeover Proposal or
intention otherwise becomes publicly known to the stockholders of the Company,
(B) thereafter this Agreement is terminated by either Parent or the Company
pursuant to Section 8.01(b)(iii) and (C) within 12 months after
such termination, the Company or any of the Company Subsidiaries enters into
a
definitive agreement providing for, or consummates, any Takeover Proposal
(other
than with Parent or any of its affiliates) (provided
that
solely for purposes of this Section 6.07(b)(i)(C) and
Section 6.07(b)(ii)(C), the term “Takeover Proposal” shall have the meaning
set forth in the definition of Takeover Proposal contained in
Section 5.02(a) except that all references to 20% shall be deemed
references to 50%),
(ii)
(A)
a Takeover Proposal has been proposed to the Company or any of its
Representatives, or publicly proposed, by any person (other than Parent or
any
of its affiliates) or any such person has indicated to the Company or any
of its
Representatives, or publicly announced (and has not subsequently withdrawn)
an
intention (whether or not conditional) to make a Takeover
48
Proposal,
(B) thereafter this Agreement is terminated pursuant to Section 8.01(b)(i)
(but
only if the Company Stockholders Meeting has not been held by the date that
is
prior to the date of such termination) or 8.01(d) (but only as a result of
a
willful and intentional breach by the Company) and (C) within 9 months
after such termination, the Company or any of the Company Subsidiaries enters
into a definitive agreement providing for, or consummates, any Takeover Proposal
(other than with Parent or any of its affiliates),
(iii)
this Agreement is terminated by Parent pursuant to Section 8.01(c),
or
(iv)
this
Agreement is terminated by the Company pursuant to
Section 8.01(f),
then
the
Company shall pay to Parent the Company Termination Fee. The “Company Termination
Fee”
shall
be equal to $163,000,000. The Company Termination Fee shall be paid by wire
transfer of same day funds to an account designated by Parent (x) in the
case of a termination by Parent pursuant to Section 8.01(c), within
two business days after such termination, (y) in the case of a
termination by the Company pursuant to Section 8.01(f), prior to or
concurrently with such termination and (z) in the case of a payment as a
result of any event referred to in Section 6.07(b)(i)(C) or Section
6.07(b)(ii)(C), upon the first to occur of such events. The Company acknowledges
that the agreements contained in this Section 6.07(b) are an integral part
of the transactions contemplated by this Agreement, and that, without these
agreements, Parent would not enter into this Agreement.
(c)
In
the event that
(i)
(A)
this Agreement is terminated (1) by Parent or the Company pursuant to
Section 8.01(b)(i) as a result of the failure of the condition set forth in
Section 7.02(i) to be satisfied (which shall be deemed to occur if
all
conditions set forth in Sections 7.01 or 7.02, other than the conditions
set forth in Section 7.02(c) and Section 7.02(i) and any condition to deliver
a
certificate pursuant to Section 7.02, would have been satisfied on the date
of
termination if the Closing had occurred on such date) or
(2) by
the Company pursuant to Section 8.01(e) as a result of the occurrence of
any
event which would give rise to the failure of the condition set forth in
Section 7.02(c), provided
the
condition set forth in Section 7.02(c) is not or would not be satisfied
solely
due to the
failure of the condition set forth in Section 7.02(i) to be satisfied and
(B) the
primary
cause of the failure
of
the
condition set forth in Section 7.02(i) to be satisfied is not
as a
result of any action
or
failure to act by the Company, which action or failure to act constitutes
a
breach of this Agreement;
(ii)
(A)
this Agreement is terminated (1) by Parent or the Company pursuant to
Section 8.01(b)(i) as a result of the failure of the condition set
49
forth
in
Section 7.02(c) to be satisfied (which shall be deemed to occur if
all
conditions set forth in Sections 7.01 or 7.02, other than the conditions
set forth in Section 7.02(c) and any condition to deliver a certificate pursuant
to Section 7.02, would have been satisfied on the date of termination if
the
Closing had occurred on such date) or
(2) by
the Company pursuant to Section 8.01(e) or by Parent pursuant to Section
8.01(d), in each case, as a result of the occurrence of any event which would
give rise to the failure of the condition set forth in Section 7.02(c), (B)
the condition set forth in Section 7.02(c) is not or would not be satisfied
due
to
the failure of the Rights Offering to be consummated and
(C)
the
primary
cause of the failure
of the Rights Offering to be consummated
is
not
as a
result of any action
or
failure to act by the Company, which action or failure to act constitutes
a
breach of this Agreement; or
(iii)
(A)
this Agreement is terminated by Parent pursuant to Section 8.01(d) as a result
of the occurrence of any event which would give rise to the failure of the
condition set forth in Section 7.02(i) or as a result of the occurrence of
any event which would give rise to the failure of the condition set forth
in
Section 7.02(c), provided
the
condition set forth in Section 7.02(c) is not or would not be satisfied
solely
due to the
failure of the condition set forth in Section 7.02(i) to be satisfied, and
(B) the
primary
cause of the failure of the condition set forth in Section 7.02(i) is
not
as a
result of any action
or
failure to act by the Company, which action or failure to act constitutes
a
breach of this Agreement;
then,
if,
and only if, the Company makes a demand for the Parent Termination Fee in
writing (a) within six business days in the case of a termination by Parent
or
(b) concurrent with such termination in the case of a termination by the
Company, Parent shall pay to the Company the Parent Termination Fee. The
“Parent
Termination Fee”
shall
be equal to $50,000,000. The Parent Termination Fee shall be paid by wire
transfer of same day funds to an account designated by Parent within
two business days after the written demand for such by the Company. Parent
acknowledges that the agreements contained in this Section 6.07(c) are an
integral part of the transactions contemplated by this Agreement, and that,
without these agreements, the Company would not enter into this
Agreement.
SECTION
6.08. Public
Announcements.
Except
with respect to any Adverse Recommendation Change or other action taken by
the
Company or the Company Board pursuant to Section 5.02(b), Guarantor, Parent
and Acquisition Co and their affiliates, on the one hand, and the Company,
on
the other hand, shall, to the extent practicable, consult with each other
before
issuing, and provide each other the opportunity to review and comment upon,
any
press release or other public statements with respect to the Merger and the
other transactions contemplated by this Agreement and shall not issue any
such
press release or make any such public statement prior to such consultation,
except as may be required by applicable Law, court process or by obligations
pursuant to any listing agreement with any national securities exchange.
The
parties agree that the initial press release to be issued with respect to
the
transactions
50
contemplated
hereby and all communications material to employees of the Company made on
the
day of the public announcement of the Merger shall be in the form heretofore
agreed to by the parties. Subject to the other provisions of this
Section 6.08 and except to the extent required by applicable Law, the
Company agrees that neither it nor any of its Subsidiaries will make any
communications to its employees regarding their rights to payments or other
benefits in connection with or after the Merger without the prior consent
of
Parent (which consent shall not be unreasonably withheld or
delayed).
SECTION
6.09. Transfer
Taxes.
All
stock transfer, real estate transfer, documentary, stamp, recording and other
similar Taxes (including interest, penalties and additions to any such Taxes)
(“Transfer
Taxes”)
incurred in connection with the transactions contemplated by this Agreement
shall be paid by either Parent or the Surviving Corporation, and the Company
shall cooperate with Parent in preparing, executing and filing any Tax Returns
with respect to such Transfer Taxes.
SECTION
6.10. Acquisition
Financing.
(a)
Parent and Acquisition Co shall use their reasonable best efforts to obtain
the
Acquisition Financing as promptly as practicable on the terms and conditions
described in the Pre-Underwriting Agreement and the Commitment Letters,
including using their reasonable best efforts to (i) negotiate definitive
agreements with respect to the Acquisition Financing on the terms and conditions
contained in the Pre-Underwriting Agreement and the Commitment Letters,
as
applicable and (ii) satisfy all conditions applicable to Parent and Acquisition
Co contained in such definitive agreements. In the event that any portion
of the
Acquisition Financing becomes unavailable in the manner or from the sources
contemplated in the Pre-Underwriting Agreement or the Commitment Letters,
Parent
shall use its reasonable best efforts to arrange for alternative sources
alternative financing that, taken as a whole (including the credit rating
arising therefrom), is in all material respects no less favorable to Parent
and
its affiliates (as determined by Parent in its reasonable judgment) (an
“Alternate
Financing”).
(b)
Prior to the
Closing, the Company shall, and shall cause its Subsidiaries to, provide
to
Parent, and shall use its reasonable best efforts to cause the respective
officers, employees, agents, Representatives (including legal and accounting
advisors) of the Company and the Company Subsidiaries to provide to Parent
all
cooperation reasonably requested by Parent in connection with the Acquisition
Financing, including (i) participating in a reasonable number of meetings,
presentations, road shows, due diligence sessions and sessions with rating
agencies, (ii) preparing or assisting with the preparation of materials
for
rating agency presentations, offering documents, private placement memoranda,
registration statements, bank information memoranda, prospectuses, business
projections and similar documents, (iii) assisting in the negotiation and
preparation of, and executing and delivering at the Effective Time, definitive
financing documents, including pledge and security documents, and certificates,
legal opinions, management representation letters or other documents (including
providing a certificate of the chief financial officer of the Company with
respect to solvency matters and using reasonable best efforts to obtain
consents
of accountants for use of their reports in materials relating to the Acquisition
Financing),
51
(iv) assisting
in the preparation of, and executing and delivering at the Effective Time,
supplemental indentures and such other documents, including certificates
and
legal opinions, as are necessary to refinance the Company Senior Notes in
accordance with the applicable provisions of the Indentures applicable to
the
Company Senior Notes, (v) providing reasonable access to the books and
records, officers, directors, agents and Representatives of the Company and
its
Subsidiaries, (vi) assisting in obtaining surveys and title insurance,
(vii) furnishing to Acquisition Co and its financing sources all financial
and other pertinent information regarding the Company reasonably requested
by
Acquisition Co, including audited consolidated financial statements for the
Company for each of the five prior fiscal years of the Company and unaudited
consolidated financial statements for the Company for subsequent interim
periods
and for all other probable or pending acquisitions (including pro forms
financial statements giving effect to the Merger and the Acquisition Financing
and any other pending or probable acquisitions), all meeting the requirements
of
Regulation S-X, Regulation S-K and the other accounting rules and
regulations of the SEC for Form S-1 or Form F-1 registration statements and
otherwise of the type and in the form customarily included in private placement
memoranda relating to private placements under Rule 144A of the Securities
Act, and (viii) taking all corporate actions reasonably necessary to permit
consummation of the Acquisition Financing and the actions with respect to
the
Company Senior Notes referred to in clause (iv) above. In addition to the
foregoing, the Company will provide Guarantor with the information relating
to
the Company and its affiliates that is required to be included in any materials
disclosed to stockholders of Guarantor in connection with the Guarantor
Stockholders Meeting and the Acquisition Financing. The Company agrees that
none
of the information supplied or to be supplied by the Company or its affiliates
for inclusion or incorporation by reference in the materials disclosed to
stockholders of Guarantor in connection with the Guarantor Stockholders Meeting
or the Acquisition Financing will, on the date such materials are first
disclosed to the stockholders of Guarantor, on the date such materials are
first
disclosed to potential investors in connection with the Acquisition Financing,
and at the time of the Guarantor Stockholders Meeting, contain any untrue
statement of a material fact or omit to state any material fact required
to be
stated therein or necessary in order to make the statements therein, in the
light of the circumstances under which they are made, not misleading. The
Company agrees that none of the information supplied or to be supplied by
the
Company or its affiliates for inclusion or incorporation by reference in
the
materials
submitted to a Governmental Entity in connection with the Guarantor Stockholders
Meeting or the Acquisition Financing will, on the date such materials are
submitted to a Governmental Entity or at any time such materials are amended
or
supplemented, 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 the light of the circumstances under which they
are
made, not misleading. Parent shall promptly, upon request by the Company,
reimburse the Company for all reasonable out-of-pocket costs incurred by
the
Company or any Company Subsidiaries in connection with their compliance
with
this Section 6.10(b).
(c)
Parent shall not agree to any amendments or modifications to, or grant
any
waivers of, any condition or other material provision under the Pre-Underwriting
Agreement or the Commitment Letters without the consent of the Company
(such
52
consent
not to be unreasonably withheld or delayed) if such amendments, modifications
or
waivers (A) reduce the aggregate amount of the Acquisition Financing or
(B)
would amend, modify or waive any of the conditions to the receipt of the
Acquisition Financing in a manner that would reasonably be expected to
cause any
delay in the satisfaction of the conditions set forth in Sections 7.01
or 7.02
or the entry of any Legal Impediment.
SECTION
6.11. Resignations.
To the
extent requested by Parent in writing prior to Closing Date, on the Closing
Date, the Company shall cause to be delivered to Parent duly signed
resignations, effective as of the Effective Time, of the directors of the
Company Subsidiaries designated by Parent and shall take such other action
as is
necessary to accomplish the foregoing.
SECTION
6.12. Further
Action.
(a)
Prior to the Effective Time, if, and only if, requested by Parent, the Company
shall terminate and settle with effect as of the Effective Time all swap
agreements set forth on Schedule 6.12(a) of the Company Disclosure
Letter.
(b)
The
Company shall sell or cause to be sold in market transactions, in a manner
such
that the cash proceeds of such sale are received by the Company prior to
Closing, such portion of its portfolio of marketable securities as shall
be
requested by Parent no later than two business days after the later of (x)
delivery of a request by Parent that the Company effect such sales or (y)
the
satisfaction or (to the extent permitted by Law) waiver of the conditions
set
forth in Article VII (other than those that by their terms cannot be
satisfied until the time of Closing), provided,
that in
the event Parent makes such a request, Parent hereby acknowledges that Parent
and Acquisition Co shall not be entitled to claim a condition set forth in
Article VII has not been satisfied as a result of events or circumstances
existing at or prior to the time of such request.
(c)
The
Company shall use its reasonable best efforts to cause prior to the Effective
Time the transactions contemplated by this Agreement, including (x) any
dispositions of shares of Company Common Stock (including derivative securities
with respect to such shares of Company Common Stock) and (y) the
transactions contemplated by Section 6.04 of this Agreement, in each case,
by each individual who is or will be subject to the reporting requirements
of
Section 16(a) of the Exchange Act with respect to the Company, to be exempt
from liability under Section 16(b) of the Exchange Act in accordance with
the procedures set forth in Rule 16b-3 promulgated under the Exchange
Act.
SECTION
6.13. Notification.
During
the period commencing upon the execution and delivery of this Agreement by
all
of the parties hereto and terminating upon the earlier to occur of the Effective
Time and the termination of this Agreement pursuant to and in accordance
with
Section 8.01, the Company shall promptly notify Parent in writing upon
becoming aware of any event, condition, fact or circumstance that would make
the
timely satisfaction of any of the conditions set forth in Section 7.01 or
Section 7.02(a) or (b) impossible or unlikely. No such notification shall
be deemed to supplement or amend the Company Disclosure Letter for the purpose
of (i) determining the accuracy of any of the representations and
warranties made by the Company in this
53
Agreement,
or (ii) determining whether any of the conditions set forth in
Section 7.01, Section 7.02 or Section 7.03 has been
satisfied.
SECTION
6.14. Transaction
Litigation.
The
Company shall give Parent the opportunity to participate in the defense or
settlement of any security holder or other litigation against the Company
and/or
its directors relating to the transactions contemplated hereby, and no such
litigation shall be settled without Parent’s prior written consent.
SECTION
6.15. Convertible
Debentures.
(a) The
Company shall use reasonable best efforts to provide, or shall use reasonable
best efforts to cause to be provided, in accordance with the applicable
provisions of the Indenture, dated as of December 18, 2001, relating to the
Convertible Debentures (the “Indenture”),
to
the trustee under the Indenture and to each Holder (as defined in the
Indenture), any notices required by the Indenture (including those notices
that
may be required pursuant to Section 10.1, 10.5 and 10.6) in connection with
the transactions contemplated hereby.
(b)
The
Surviving Corporation shall, on the Closing Date, execute such supplemental
indenture to the Indenture as may be required under the Indenture (including
under Section 10.4 thereof).
(c)
The
Company shall use reasonable best efforts to take all such further actions,
including the delivery of any officers’ certificates and opinions of counsel
required by the Indenture (including by Sections 5.1(c), 7.1, 7.2, 10.5 and
12.4, thereof) as may be necessary to comply with all of the terms and
conditions of the Indenture.
SECTION
6.16. Tax
Matters.
(a) The
parties intend that the Merger shall be treated, and agree to treat the Merger,
for income Tax purposes as a taxable purchase of the shares of Company Common
Stock by Parent to the extent of funds provided by Parent directly or through
Acquisition Co (other than by way of a loan to Acquisition Co) and as a taxable
redemption of the shares of Company Common Stock by the Company to the extent
of
the borrowed funds provided to Acquisition Co or the Company.
(b)
The
Company agrees to deliver to Parent on or prior to the Effective Time, to
the
extent it is able to do so as a matter of law, a certification in accordance
with Treasury Regulation Section 1.1445-2(c), in form and substance reasonably
satisfactory to Parent, certifying that interests in the Company are not
United
States real property interests because the Company is not and has not been
a
United States real property holding corporation (as defined in Section 897(c)(2)
of the Code) during the applicable period specified in Section 897(c)(1)(A)(ii)
of the Code.
54
ARTICLE
VII
Conditions
Precedent
SECTION
7.01. Conditions
to Each Party’s Obligation To Effect The Merger.
The
respective obligation of each party to effect the Merger is subject to the
satisfaction or waiver on or prior to the Closing Date of the following
conditions:
(a)
Company
Stockholder Approval.
The
Company shall have obtained the Company Stockholder Approval.
(b)
Antitrust.
Any
waiting period (and any extension thereof) applicable to the Merger under
the
HSR Act or the EC Merger Regulation shall have been terminated or shall have
expired.
(c)
No
Injunctions or Restraints.
No
temporary restraining order, preliminary or permanent injunction or other
judgment or order issued by any court or agency of competent jurisdiction
or
other Law (each, a “Restraint”)
preventing the consummation of the Merger shall be in effect (provided,
however,
that
prior to asserting this condition, each of the parties shall have used its
reasonable best efforts (in the manner contemplated by Section 6.03) to
prevent the entry of any such injunction or other order and to appeal as
promptly as possible any such judgment that may be entered).
SECTION
7.02. Conditions
to Obligations of Parent and Acquisition Co.
The
obligations of Parent and Acquisition Co to effect the Merger are further
subject to the satisfaction or waiver on or prior to the Closing Date of
the
following conditions:
(a)
Representations
and Warranties.
The
representations and warranties of the Company set forth in Sections 3.03,
3.04, 3.17 and 3.18 of this Agreement (disregarding all qualifications,
limitations and exceptions therein regarding materiality or a Material Adverse
Effect or any similar standard as qualification) shall be true and correct
in
all material respects as of the Closing Date, as though made on the Closing
Date, except to the extent such representations and warranties expressly
relate
to an earlier date (in which case such representations and warranties shall
be
true and correct in all material respects on and as of such earlier date),
and
the other representations and warranties of the Company set forth in this
Agreement (disregarding all qualifications, limitations and exceptions therein
regarding materiality or a Material Adverse Effect or any similar standard
as
qualification) shall be true and correct in all respects as of the Closing
Date,
as though made on the Closing Date, except to the extent such representations
and warranties expressly relate to an earlier date (in which case such
representations and warranties shall be true and correct as of such earlier
date) and except to the extent that the failure of such representations and
warranties to be so true and correct as of the Closing Date or such earlier
date, as the case may be (disregarding all qualifications, limitations and
exceptions therein regarding materiality or a Material Adverse Effect or
any
similar standard as qualification), individually or in the aggregate, have
not
had and would not reasonably be expected to have a Material Adverse Effect.
55
Parent
and Acquisition Co shall have received a certificate signed on behalf of
the
Company by the chief executive officer and the chief financial officer of
the
Company to such effect.
(b)
Performance
of Obligations of the Company.
The
Company shall have complied in all material respects with its obligations
required to be complied with by it under this Agreement at or prior to the
Closing Date, and Parent shall have received a certificate signed on behalf
of
the Company by the chief executive officer and the chief financial officer
of
the Company to such effect.
(c)
Financing.
All
funds to be received pursuant to the Acquisition Financing (or any Alternate
Financing) shall be available pursuant to the terms thereof and all funds
contemplated by the Acquisition Financing (or any Alternate Financing)
to fund
the Merger shall have been received.
(d)
Material
Adverse Effect.
No
event, development, circumstance or occurrence shall have occurred, since
the
date hereof that, individually or in the aggregate, has had or would reasonably
be expected to have a Material Adverse Effect. Parent and Acquisition Co
shall
have received a certificate signed on behalf of the Company by the chief
executive officer and the chief financial officer of the Company to such
effect.
(e)
Lottery
Contracts.
(i) The
consents, approvals, orders and authorizations set forth on Schedule 7.02(e)(i)
of the Company Disclosure Letter shall
have
been obtained (and shall be in effect at the Effective Time);
(ii) The
counterparties to Lottery Contracts set forth on Schedule 7.02(e)(ii) of
the
Company Disclosure Letter representing at least 87.5% of the aggregate revenues
realized by the Company and the Company Subsidiaries over the 12 month period
ending November 30, 2005 pursuant to all Lottery Contracts set forth on Schedule
7.02(e)(ii) of the Company Disclosure Letter (which revenues are set forth
on
such schedule) shall have provided reasonably satisfactory oral or written
confirmation that the consummation of the Merger shall not result in the
termination of, or the commencement of formal termination procedures in respect
of, the Lottery Contracts to which such counterparties are party;
and
(iii) There
shall have been no termination of, and there shall not have commenced, nor
shall
the Company have received written notice of the commencement of, formal
termination procedures (except to the extent such notice has been withdrawn
or
such procedures have been terminated) in respect of (A) any Lottery Contract
set
forth on Schedule 7.02(e)(i) of the Company Disclosure Letter and (B) Lottery
Contracts set forth on Schedule 7.02(e)(ii) of the Company Disclosure Letter
representing at least 90% of the aggregate revenues realized by the Company
and
the Company Subsidiaries over the 12 month period ending November 30, 2005
pursuant to all such Lottery Contracts set forth on Schedule 7.02(e)(ii)
of the
Company Disclosure Letter (which revenues are set forth on such
schedule).
56
(f)
Appraisal
Shares.
The
Appraisal Shares shall include no more than 10% of the Company Common Stock
outstanding immediately prior to the Effective Time.
(g)
Atronic.
(i) The
Company shall not be in breach of any of its obligations under the Mastervertrag
and/or the Kaufvertrag, each dated December 5, 2004, by and between Messrs.
Xxxx
and Xxxxxxx Xxxxxxxxxx, on the one hand, and GTECH Corporation on the other
hand
(the “Atronic Contracts”), to the extent such breach would and (ii) there
shall not have occurred any other event that would, in either case, be
reasonably likely to permit Messrs. Xxxx and Xxxxxxx Gausselmann to terminate
such agreement pursuant to the terms thereof. The amendment to the Atronic
Contracts dated January 10, 2006 shall be in full force and
effect.
(h)
Cash
Balance.
On the
Closing Date, the Company shall have at least $400 million, in the aggregate,
of
(i) cash on hand that has not otherwise been pledged, hypothecated or encumbered
by the Company except in the ordinary course of business, including the cash
proceeds received by the Company from sales of its marketable securities
in
accordance with Section 6.12(b), and (ii) marketable securities (at fair
market
value) (collectively, the “Company
Cash Balance”);
provided,
however,
this
condition shall be deemed satisfied if the Company Cash Balance is at least
$370
million on the Closing Date and the Company provides Parent written notice
of
the estimated Company Cash Balance to be available on the Closing Date at
least
15 business days prior to the Closing Date.
(i)
Ratings.
Guarantor shall have obtained and maintained a corporate and senior loan
credit
rating of at least Baa3/BBB- by, respectively, Xxxxx’x Investors Services and
Standard & Poor’s on a pro forma post-Merger basis.
SECTION
7.03. Conditions
to Obligation of the Company.
The
obligation of the Company to effect the Merger is further subject to the
satisfaction or waiver on or prior to the Effective Time of the following
conditions:
(a)
Representations
and Warranties.
The
representations and warranties of Guarantor, Parent and Acquisition Co contained
in this Agreement (disregarding all qualifications, limitations and exceptions
therein regarding materiality) shall be true and correct as of the Closing
Date
as though made on the Closing Date, except to the extent such representations
and warranties expressly relate to an earlier date (in which case such
representations and warranties shall be true and correct on and as of such
earlier date) and except to the extent that the failure of such representations
and warranties to be true and correct as of the Closing Date (disregarding
all
qualifications, limitations and exceptions therein regarding materiality),
individually or in the aggregate, would not reasonably be expected to
(i) impair in any material respect the ability of Guarantor, Parent or
Acquisition Co to perform its obligations under this Agreement or
(ii) prevent or materially impede the consummation of the Merger or the
other transactions contemplated by this Agreement. The Company shall have
received a certificate signed on behalf of Guarantor, Parent and Acquisition
Co
by an executive officer of each such party to such effect.
57
(b)
Performance
of Obligations of Guarantor, Parent and Acquisition Co.
Guarantor, Parent and Acquisition Co shall have performed in all material
respects all material obligations required to be performed by it under this
Agreement at or prior to the Closing Date, and the Company shall have received
a
certificate signed on behalf of Guarantor, Parent and Acquisition Co by an
executive officer of each such party to such effect.
SECTION
7.04. Frustration
of Closing Conditions.
Neither
the Company, Parent nor Acquisition Co may rely on the failure of any condition
set forth in Section 7.01, 7.02 or 7.03, as the case may be, to be
satisfied if such failure was caused by such party’s failure to use reasonable
best efforts to consummate the Merger and the other transactions contemplated
by
this Agreement, as required by and subject to Section 6.03.
ARTICLE
VIII
Termination,
Amendment and Waiver
SECTION
8.01. Termination.
This
Agreement may be terminated, and the Merger contemplated hereby may be
abandoned, at any time prior to the Effective Time:
(a)
by
mutual written consent of each party hereto;
(b)
by
either Parent or the Company:
(i)
if
the Merger shall not have been consummated on or before October 10, 2006
(such
date, the “Outside
Date”);
provided,
however,
that
the right to terminate this Agreement under this Section 8.01(b)(i) shall
not be available to any party whose action or failure to act has been a
principal cause of or resulted in the failure of the Merger to occur on or
before such date and such action or failure to act constitutes a breach of
this
Agreement;
(ii)
if
any Restraint having the effect set forth in Section 7.01(c) shall be in
effect and shall have become final and nonappealable; or
(iii)
if,
upon a vote at a duly held Company Stockholders Meeting to obtain the Company
Stockholder Approval, the Company Stockholder Approval shall not have been
obtained;
(c)
by
Parent in the event an Adverse Recommendation Change has occurred;
(d)
by Parent, if any event shall have occurred which (i) would give rise to
the failure of any condition set forth in Section 7.02(a), (b), (c) or
(i) and (ii) is incapable of being cured by the Company by the Outside
Date; provided,
however,
that
Parent shall not have the right to terminate this Agreement under
58
this
Section 8.01(d) if any breach of this Agreement by Parent shall have been a
principal cause of the failure of such condition to be satisfied;
(e)
by the Company, if any event shall have occurred which (i) would give rise
to the failure of any condition set forth in Section 7.02(c) or
7.03(a) or (b) and (ii) is incapable of being cured by Parent by
the Outside Date; provided,
however,
that
the Company shall not have the right to terminate this Agreement under this
Section 8.01(e) if any breach of this Agreement by the Company shall have
been the principal cause of the failure of any such condition to be satisfied;
or
(f)
by
the Company in accordance with the terms and subject to the conditions of
Section 5.02(b).
SECTION
8.02. Effect
of Termination.
In the
event of termination of this Agreement by either the Company or Parent as
provided in Section 8.01, this Agreement shall forthwith become void and
have no effect, without any liability or obligation on the part of Parent,
Acquisition Co or the Company, other than the last sentence of
Section 6.02, Section 6.07, Section 6.08, this Section 8.02,
clauses (a) through (d) and (f) of Section 9.02 and Article X, which
provisions shall survive such termination, and except to the extent that
such
termination results from the willful or intentional breach by a party of
any
representation, warranty or covenant set forth in this Agreement.
SECTION
8.03. Amendment.
Subject
to applicable Law, this Agreement may be amended by the parties at any time
before or after receipt of the Company Stockholder Approval; provided,
however,
that
after receipt of the Company Stockholder Approval, any amendment that by
Law
requires further approval by the stockholders of the parties shall be subject
to
the further approval of such stockholders. This Agreement may not be amended
except by an instrument in writing signed on behalf of each of the parties
hereto.
SECTION
8.04. Extension;
Waiver.
At any
time prior to the Effective Time, the parties may, subject to applicable
Law,
(a) extend the time for the performance of any of the obligations or other
acts of the other parties, (b) waive any inaccuracies in the
representations and warranties contained in this Agreement or in any document
delivered pursuant to this Agreement or (c) waive compliance with any of
the agreements or conditions contained in this Agreement; provided,
however,
that
after receipt of the Company Stockholder Approval, any waiver that by Law
requires further approval by the stockholders of the parties shall be subject
to
the further approval of such stockholders. Any agreement on the part of a
party
to any such extension or waiver shall be valid only if set forth in an
instrument in writing signed on behalf of such party. The failure of any
party
to this Agreement to assert any of its rights under this Agreement or otherwise
shall not constitute a waiver of such rights nor shall any single or partial
exercise by any party to this Agreement of any of its rights under this
Agreement preclude any other or further exercise of such rights or any other
rights under this Agreement.
59
ARTICLE
IX
Guarantor
SECTION
9.01. Representations
and Warranties of Guarantor.
Guarantor represents and warrants to the Company as follows:
(a)
Organization,
Standing and Power.
Guarantor is duly organized, validly existing and in good standing under
the
laws of Italy. Guarantor has full corporate power and authority and possesses
all governmental franchises, licenses, permits, authorizations and approvals
necessary to enable it to own, lease or otherwise hold its properties and
assets
and to conduct its businesses as presently conducted, other than such
franchises, licenses, permits, authorizations and approvals the failure of
which
to possess, individually or in the aggregate, do not and would not reasonably
be
expected to (i) impair in any material respect the ability of Guarantor to
perform its obligations under this Agreement or (ii) prevent or materially
impede the consummation the Merger or the other transactions contemplated
by
this Agreement (including the Acquisition Financing).
(b)
Authority;
Execution and Delivery; Enforceability.
Guarantor has all requisite corporate power and authority to execute and
deliver
this Agreement, the Pre-Underwriting Agreement and the Capital Securities
Backstop Letter and to perform its obligations thereunder. The execution
and
delivery by Guarantor of this Agreement, the Pre-Underwriting Agreement and
the
Capital Securities Backstop Letter and the performance by it of its obligations
hereunder and thereunder and the consummation of the transactions contemplated
hereby and thereby have been duly and validly authorized by all necessary
corporate action on the part of Guarantor (other than, in connection with
the
Rights Offering, the requisite approval of the Guarantor board of directors
and
the Guarantor Stockholder Approval). Guarantor has duly executed and delivered
this Agreement, the Pre-Underwriting Agreement and the Capital Securities
Backstop Letter, and this Agreement, the Pre-Underwriting Agreement and the
Capital Securities Backstop Letter constitute the legal, valid and binding
obligations of Guarantor, enforceable against Guarantor in accordance with
their
respective terms.
(c)
No
Conflicts.
The
execution and delivery by Guarantor of this Agreement, the Pre-Underwriting
Agreement and the Capital Securities Backstop Letter, do not, and the
consummation of the Merger and the other transactions contemplated hereby
and
thereby and compliance with the terms hereof and thereof will not (subject
with
respect to clause (i) the requisite approval of the Guarantor board of directors
in connection with the Rights Offering and the Guarantor Stockholder Approval),
conflict with, or result in any violation of or default (with or without
notice
or lapse of time, or both) under, or give rise to a right of termination,
cancellation or acceleration of any obligation or to loss of a material benefit
under, or result in the creation of any Lien upon any of the properties or
assets of Guarantor or any of its affiliates under, any provision of (i)
the
charter or organizational documents of Guarantor or any of its affiliates,
(ii) any Contract to which Guarantor or any of its affiliates is a party or
by which any of their respective properties or assets is bound or (iii) subject
to the filings and other matters
60
referred
to in Section 4.04(b), any Judgment or Law applicable to Guarantor or any
of its
affiliates or their respective properties or assets, other than, in the case
of
clauses (ii) and (iii) above, any such items that, individually or in the
aggregate, do not and would not reasonably be expected to (i) impair in any
material respect the ability of Guarantor to perform its obligations under
this
Agreement, the Pre-Underwriting Agreement and the Capital Securities Backstop
Letter or (ii) prevent or materially impede the consummation of the Merger
or
the other transactions contemplated by this Agreement, the Pre-Underwriting
Agreement and the Capital Securities Backstop Letter.
(d)
No
Consents.
No
Consent of, or registration, declaration or filing with, or permit from,
any
Governmental Entity is required to be obtained or made by or with respect
to
Guarantor or any of its subsidiaries in connection with the execution, delivery
and performance of this Agreement, the Pre-Underwriting Agreement and the
Capital Securities Backstop Letter or the consummation of the transactions
contemplated hereby and thereby, other than the filings and other matters
referred to in Section 4.04(b).
SECTION
9.02. Guarantor
Covenants.
(a)
Guarantor hereby absolutely and unconditionally guarantees to the Company
and
the express third party beneficiaries hereof, as a primary obligor and not
merely as a surety, the payment and performance when due of all of the
covenants, agreements and obligations of Parent and Acquisition Co, and their
respective successors and assigns, contained in this Agreement (the
“Guaranteed
Obligations”,
and
such guarantee, the “Guarantee”).
(b)
The
Guarantee is an absolute, unconditional and continuing guarantee of the full
and
punctual payment and performance when due of the Guaranteed Obligations,
and not
of their collectibility only, and is in no way conditioned upon any requirement
that the Company or any other person first attempt to collect such Guaranteed
Obligations from Parent or Acquisition Co or resort to any security or other
means of collecting payment or performance. Should Parent or Acquisition
Co
default in the payment or performance of any Guaranteed Obligation, Guarantor’s
obligations hereunder shall become immediately due and (if applicable) payable.
Claims under the Guarantee may be made on one or more occasions. All payments
of
money made by Guarantor in performance and satisfaction of its obligations
hereunder shall be made in lawful money of the United States, in immediately
available funds, unless payment by another means is authorized by the
Agreement.
(c)
Guarantor hereby waives notice of acceptance of this Guarantee and notice
of the
Guaranteed Obligations, waives presentment, demand for payment, protest,
notice
of dishonor or non-payment of the Guaranteed Obligations, notice of acceleration
or intent to accelerate the Guaranteed Obligations, and any other notice
to
Guarantor, and waives (subject to the following sentence) to the fullest
extent
permitted by law, defenses generally, and neither the Company nor any other
person is obligated to file any suit or take any action, or provide any notice
to, Parent, Acquisition Co, Guarantor, or others, except as expressly provided
in this Agreement. Without limiting the generality of the foregoing, Guarantor
agrees that the obligation of Guarantor hereunder shall not be released or
discharged, in whole or in part, or otherwise affected by: (i) the failure
of
the Company or any other person to assert any claim or demand or to enforce
any
right or
61
remedy
against Parent or Acquisition Co with respect to the Guaranteed Obligations;
(ii) any extensions or renewals of the Guaranteed Obligations; (iii) any
rescissions, waivers, amendments or modifications of the Agreement; (iv)
the
adequacy of any means available to the Company or any other person to claim
payment or performance of the Guaranteed Obligations; (v) except as otherwise
provided herein, the addition or release of any person or entities primarily
or
secondarily liable for the Guaranteed Obligations (including Guarantor) or
(vi)
any other act or omission that might in any means or to any extent vary the
risk
of Guarantor or otherwise operate as a release or exchange of Guarantor,
all of
which may be done without notice to Guarantor. However, Guarantor reserves
the
right to assert defenses that Parent or Acquisition Co may have to payment
or
performance of the Guaranteed Obligations, other than defenses arising from
the
bankruptcy, insolvency or similar rights of Parent or Acquisition Co, or
defenses related to Parent’s or Acquisition Co’s capacity to enter into this
Agreement.
(d)
Guarantor agrees that the Guarantee shall continue to be effective, or be
reinstated, as the case may be, if at any time payment or performance, or
any
part thereof, of any of the Guaranteed Obligations is rescinded or must
otherwise be restored or returned by the Company or any other person entitled
thereto upon the insolvency, bankruptcy, dissolution, liquidation or
reorganization of Parent or Acquisition Co or upon or as a result of the
appointment of a receiver, intervenor or conservator of, or trustee or similar
officer for, Parent or Acquisition Co or any substantial part of its property,
or otherwise, all as though such payments or performance had not been
made.
(e)
Guarantor will use its reasonable best efforts to consummate the Merger,
the
other transactions contemplated hereby and the Acquisition Financing as soon
as
practicable following the date hereof, including using its reasonable best
efforts to cause all conditions to the Acquisition Financing to be satisfied
as
soon as reasonably practicable after the date of this Agreement. Guarantor
will
use its reasonable best efforts (x) to perform in all material respects all
of its covenants and obligations under the Pre-Underwriting Agreement and
the
Capital Securities Backstop Letter and (y) to cause all of its
representations and warranties under the Pre-Underwriting Agreement and the
Capital Securities Backstop Letter to be true and correct in all material
respects. Without limiting the generality of the foregoing and subject to
Section 6.03, (i) the board of directors of Guarantor will take all
corporate action necessary to consummate the Rights Offering in accordance
with
the terms of the Pre-Underwriting Agreement, (ii) Guarantor will prepare,
file and distribute any filings relating to the Guarantor Stockholder Approval
and the Guarantor Stockholders Meeting, (iii) Guarantor will use its reasonable
best efforts to obtain the Guarantor Stockholder Approval and any other Consent
required to consummate the Rights Offering and (iv) as soon as practicable
after
obtaining the Guarantor Stockholder Approval, Guarantor will use its reasonable
best efforts to commence and consummate the Rights Offering in accordance
with
the terms of the Pre-Underwriting Agreement.
(f)
Guarantor (a) hereby appoints The Corporation Trust Company, Corporation
Trust
Center, 1209 Orange Street, Wilmington, Delaware, as its authorized agent
(the
“Authorized
Agent”)
upon
whom process may be served in any suit, action or proceeding arising out
of or
based upon this Agreement or the transactions contemplated
62
hereby
which may be instituted in any Delaware court and
(b)
agrees that service of process upon such Authorized Agent shall be deemed
in
every respect effective service of process upon Guarantor in any such suit
or
proceeding.
Guarantor hereby represents and warrants that the Authorized Agent has accepted
such appointment and has agreed to act as such agent for service of process,
and
Guarantor agrees to take any and all action, including the filing of any
and all
documents that may be necessary to continue such appointment in full force
and
effect as aforesaid.
ARTICLE
X
General
Provisions
SECTION
10.01. Nonsurvival
of Representations and Warranties.
None of
the representations and warranties in this Agreement or in any instrument
delivered pursuant to this Agreement shall survive the Effective Time. This
Section 10.01 shall not limit any covenant or agreement of the parties
which by its terms contemplates performance after the Effective
Time.
SECTION
10.02. Notices.
All
notices, requests, claims, demands and other communications under this Agreement
shall be in writing and shall be deemed given upon receipt by the parties
at the
following addresses (or at such other address for a party as shall be specified
by like notice):
(a)
if to
Guarantor, Parent or Acquisition Co, to
Lottomatica
S.p.A.
Xxxxx
xxx
Xxxxx Xxxxxx x. 00/X
00000
Xxxx
Attention: General
Counsel
Facsimile
No: x00
00
00000000
with
copies to:
Xxxxx
Xxxxxxxxxx LLP
0000
Xxxxxx xx xxx Xxxxxxxx
Xxx
Xxxx,
XX 00000
Attention:
Xxxxxx X. Xxxxxx, Esq.
Xxxx
X. Xxxxxx,
Esq.
Facsimile
No: (000) 000-0000
(b)
if to
the Company, to
GTECH
Holding Corporation
00
Xxxxxxxxxx Xxx
00
Xxxx
Xxxxxxxxx, XX 00000
Attention:
General Counsel
Facsimile
No: (000) 000-0000
with
copies to:
Cravath,
Swaine & Xxxxx LLP
Worldwide
Plaza
000
Xxxxxx Xxxxxx
Xxx
Xxxx,
XX 00000
Attention:
Xxxxxx X. Xxxxxxx, Esq.
Xxxxxx Xxxxxxxx, Esq.
Facsimile
No: (000) 000-0000
and
Xxxxxxx
Xxxxxx Xxxxxx & Dodge LLP
0000 Xxxxxxxxx
Xxxxx
Xxxxxxxxxx,
XX 00000
Attention:
Xxxxxx X.X. Xxxx, Esq.
Facsimile
No: (000) 000-0000
SECTION
10.03. Definitions.
For
purposes of this Agreement:
An
“affiliate”
of
any
person means another person that directly or indirectly, through one or more
intermediaries, controls, is controlled by, or is under common control with,
such first person.
A
“business
day”
means
any day, other than a Saturday, Sunday or day on which clearing banks in
New York or Italy are not open for the transaction of normal
business.
The
“knowledge”
of
the
Company means the actual knowledge of the individuals identified in
Schedule 10.03(a) of the Company Disclosure Letter.
A
“Material
Adverse Effect”
means
any state of facts, change, development, effect or occurrence (any such item,
an
“Effect”)
that
is materially adverse to the business, assets, financial condition or results
of
operations of the Company and the Company Subsidiaries, taken as a whole;
provided,
however,
that in
no event shall any of the following, alone or in combination, be deemed to
constitute, nor shall any of the following be taken into account in determining
whether there has been, a Material Adverse Effect: (i) any change in the
price or trading volume of the Company Common Stock in and of itself (it
being
understood that the Effects underlying such change may be deemed to constitute,
or may be taken into account in determining whether there has been, a Material
Adverse Effect); (ii) any failure, in and of itself, by the Company to meet
any internal or published projections, forecasts or revenue or earnings
predictions (it
64
being
understood that the Effects giving rise to or contributing to such failure
may
be deemed to constitute, or may be taken into account in determining whether
there has been, a Material Adverse Effect); (iii) any Effect to the extent
resulting from changes affecting the financial or securities markets or the
economy in general unless
such Effect has had, or would reasonably be expected to have, a materially
disproportionate impact on the business, assets, financial condition or results
of operations of the Company and the Company Subsidiaries taken as a whole
relative to other participants in the industries in which the Company and
the
Company Subsidiaries operate;
(iv) the failure of the Company or any Company Subsidiary to be awarded any
Lottery Contract with respect to which a bid or proposal is made (including
any
bids or proposals pending as of the date of this Agreement) or the failure
of
any customer with respect to any existing Lottery Contract to renew or replace
such Lottery Contract with the Company or the applicable Company Subsidiary
and
(v) the failure of any of the officers of the Company set forth on
Schedule 10.03(b) to be employed by the Company at the Effective
Time.
A
“person”
means
any individual, firm, corporation, partnership, company, limited liability
company, trust, joint venture, association, Governmental Entity or other
entity.
A
“subsidiary”
of
any
person means another person, an amount of the voting securities, other voting
ownership or voting partnership interests of which is sufficient to elect
at
least a majority of its Board of Directors or other governing body (or, if
there
are no such voting interests, 50% or more of the equity interests of which)
is
owned directly or indirectly by such first person.
SECTION
10.04. Interpretation.
When a
reference is made in this Agreement to an Article, Section, Exhibit or Schedule,
such reference shall be to an Article of, a Section of, or an Exhibit or
Schedule to, this Agreement unless otherwise indicated. The table of contents
and headings contained in this Agreement are for reference purposes only
and
shall not affect in any way the meaning or interpretation of this Agreement.
Whenever the words “include”, “includes”, “including” or “such as” are used in
this Agreement, they shall be deemed to be followed by the words “without
limitation”. The words “hereof”, “herein” and “hereunder” and words of similar
import when used in this Agreement shall refer to this Agreement as a whole
and
not to any particular provision of this Agreement. References to “this
Agreement” shall include the Company Disclosure Letter. All terms defined in
this Agreement shall have the defined meanings when used in any certificate
or
other document made or delivered pursuant hereto unless otherwise defined
therein. The definitions contained in this Agreement are applicable to the
singular as well as the plural forms of such terms and to the masculine as
well
as to the feminine and neuter genders of such term. Any Contract, instrument
or
Law defined or referred to herein or in any Contract or instrument that is
referred to herein means such Contract, instrument or Law as from time to
time
amended, modified or supplemented, including (in the case of Contracts or
instruments) by waiver or consent and (in the case of Laws) by succession
of
comparable successor Laws and references to all attachments thereto and
instruments incorporated therein. References to a person are also to its
permitted successors and assigns.
65
SECTION
10.05. Severability.
If any
term or other provision of this Agreement is invalid, illegal or incapable
of
being enforced by any rule or Law, or public policy, all other conditions
and
provisions of this Agreement shall nevertheless remain in full force and
effect
so long as the economic or legal substance of the transactions contemplated
hereby is not affected in any manner materially adverse to any party. Upon
such
determination that any term or other provision is invalid, illegal or incapable
of being enforced, the parties hereto shall 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 transactions contemplated
hereby are fulfilled to the extent possible.
SECTION
10.06. Counterparts.
This
Agreement may be executed in one or more counterparts, all of which shall
be
considered one and the same agreement and shall become effective when one
or
more counterparts have been signed by each of the parties and delivered to
the
other parties.
SECTION
10.07. Entire
Agreement; No Third-Party Beneficiaries.
This
Agreement, taken together with the Company Disclosure Letter and the
Confidentiality Agreement, (a) constitute the entire agreement, and
supersede all prior agreements and understandings, both written and oral,
among
the parties with respect to the transactions and (b) are not intended to
confer upon any person other than the parties any rights or remedies.
Notwithstanding clause (b) of the immediately preceding sentence, following
the Effective Time (i) the provisions of Article II shall be enforceable by
holders of Certificates and (ii) the provisions of Sections 6.04 and
6.06 shall be enforceable by the beneficiaries expressly identified
therein.
SECTION
10.08. Governing
Law.
This
Agreement shall 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 conflicts of laws thereof.
SECTION
10.09. Assignment.
Neither
this Agreement nor any of the rights, interests or obligations under this
Agreement shall be assigned, in whole or in part, by operation of law or
otherwise by any of the parties without the prior written consent of the
other
parties, except that Parent and Acquisition Co may assign, in their sole
discretion, any of or all their rights, interests and obligations under this
Agreement to any affiliate of Parent that would not reasonably be expected
to
cause any delay in the satisfaction of the condition set forth in
Section 7.01(b) or the entry of any Legal Impediment, but no such
assignment shall relieve Parent or Acquisition Co of any of its obligations
under this Agreement. Any purported assignment without such consent shall
be
void. Subject to the preceding sentences, this Agreement will be binding
upon,
inure to the benefit of, and be enforceable by the parties and their respective
successors and assigns.
SECTION
10.10. Consent
to Jurisdiction.
Each
party irrevocably submits to the exclusive jurisdiction of any Delaware State
court for the purposes of any suit, action or other proceeding arising out
of
this Agreement or any transaction contemplated hereby. Each party agrees
to
commence any such action, suit or proceeding in such a
66
court.
Each party further agrees that service of any process, summons, notice or
document by U.S. registered mail to such party’s respective address set forth
above shall be effective service of process for any action, suit or proceeding
in Delaware with respect to any matters to which it has submitted to
jurisdiction in this Section 10.10. Each party irrevocably and
unconditionally waives any objection to the laying of venue of any action,
suit
or proceeding arising out of this Agreement or the transactions contemplated
hereby in any Delaware State court and hereby further irrevocably and
unconditionally waives and agrees not to plead or claim in any such court
that
any such action, suit or proceeding brought in any such court has been brought
in an inconvenient forum.
SECTION
10.11. Waiver
of Jury Trial.
Each
party hereto hereby waives, to the fullest extent permitted by applicable
Law,
any right it may have to a trial by jury in respect of any suit, action or
other
proceeding directly or indirectly arising out of, under or in connection
with
this Agreement. Each party hereto (a) certifies that no representative,
agent or attorney of any other party has represented, expressly or otherwise,
that such party would not, in the event of any action, suit or proceeding,
seek
to enforce the foregoing waiver and (b) acknowledges that it and the other
parties hereto have been induced to enter into this Agreement, by, among
other
things, the mutual waiver and certifications in this
Section 10.11.
SECTION
10.12. Remedies.
Notwithstanding any other provision of this Agreement (including
Section 6.07 and Section 8.02) other than the last sentence of this
Section 10.12, the parties hereto agree that irreparable damage would occur,
damages would be difficult to determine and would be an insufficient remedy
and
no other adequate remedy would exist at law or in equity, in each case in
the
event that any of the provisions of this Agreement were not performed in
accordance with their specific terms or were otherwise breached (or any party
hereto threatens such a breach). It is accordingly agreed that in the event
of a
breach or threatened breach of this Agreement, the other parties hereto shall
be
entitled to an injunction or injunctions to prevent breaches of this Agreement
and to enforce specifically the terms and provisions of this Agreement, in
addition to any other remedy to which they are entitled at law or in equity.
Each party hereto irrevocably waives any defenses based on adequacy of any
other
remedy, whether at law or in equity, that might be asserted as a bar to the
remedy of specific performance of any of the terms or provisions hereof or
injunctive relief in any action brought therefor by any other party hereto.
The
Company acknowledges that if, and only if, Parent pays to the Company the
Parent
Termination Fee after a demand therefor by the Company, then such amount
shall
constitute the Company’s sole and exclusive remedy for the termination of this
Agreement regardless of the circumstances giving rise to such termination,
the
Company shall have no further rights, directly or indirectly, against any
Parent
or any of its affiliates, whether at law or equity, in contract, in tort
or
otherwise in respect of this Agreement and the Company shall not be able
to
assert any claim against Parent or its affiliates in respect of this
Agreement.
67
IN
WITNESS WHEREOF, Guarantor, Parent, Acquisition Co and the Company have duly
executed this Agreement, all as of the date first written above.
LOTTOMATICA S.P.A., | ||
|
|
|
by | /s/ Xxxxxxx Xxxxxxx | |
Name: Xxxxxxx Xxxxxxx Title:
Chairman and Managing Director
|
||
GOLD HOLDING CO., | ||
|
|
|
by | /s/ Xxxxx Xxxx | |
Name: Xxxxx Xxxx Title:
President
|
||
GOLD ACQUISITION CORP., | ||
|
|
|
by | /s/ Xxxxx Xxxx | |
Name: Xxxxx Xxxx Title:
President
|
||
GTECH HOLDINGS CORPORATION, | ||
|
|
|
by | /s/ Xxxxxx X. Xxxxx, Xx. | |
Name: Xxxxxx X. Xxxxx, Xx. Title:
Chairman of the Board
|
||
68
ANNEX
A
FORM
OF
AMENDED
AND RESTATED CERTIFICATE OF INCORPORATION
Certificate
of Incorporation of
GTECH
Holdings Corporation
1.
The
name of the Corporation is GTECH Holdings Corporation.
2.
The
address of the Corporation’s registered office in the State of Delaware is
Corporation
Trust Center, 0000 Xxxxxx Xxxxxx, xx xxx Xxxx xx Xxxxxxxxxx, Xxxxxx of New
Castle.
The name
of its registered agent at such address is The
Corporation Trust Company.
3.
The
nature of the business and the purposes to be conducted and promoted by the
Corporation are to conduct any lawful business, to promote any lawful purpose
and to engage in any lawful act or activity for which corporations may be
organized under the DGCL.
4.
The
total number of shares of stock which the Corporation shall have authority
to
issue is one hundred (100) shares of common stock, $0.01 par value per share
(“Common
Stock”).
Shares
of
Common Stock may be issued from time to time as the Board of Directors of
the
Corporation shall determine and on such terms and for such consideration
as
shall be fixed by the Board of Directors. The amount of the authorized Common
Stock of the Corporation may be increased or decreased by the affirmative
vote
of the holders of a majority of the outstanding stock of the Corporation
entitled to vote.
5.
Elections of directors need not be by written ballot unless required by the
by-laws of the Corporation. Any director may be removed from office either
with
or without cause at any time by the affirmative vote of the holders of a
majority of the outstanding stock of the Corporation entitled to vote, given
at
a meeting of the stockholders called for that purpose, or by the consent
of the
holders of a majority of the outstanding stock of the Corporation entitled
to
vote, given in accordance with DGCL Section 228.
6.
In
furtherance and not in limitation of the powers conferred upon the Board
of
Directors by law, the Board of Directors shall have the power to make, adopt,
alter, amend and repeal from time to time the by-laws of the Corporation
subject
to the right of the stockholders entitled to vote with respect thereto to
alter,
amend and repeal by-laws made by the Board of Directors.
7.
The
personal liability of the directors of the Corporation is hereby eliminated
to
the fullest extent permitted by paragraph (7) of subsection (b) of DGCL
Section
102, as the same may be amended and supplemented from time to time. Any
repeal
or modification of this Section 7 by the stockholders of the Corporation
shall
not adversely affect any right or protection of a director of the Corporation
existing at the time of such repeal or modification.
8.
The
Corporation shall, to the fullest extent permitted by the provisions of
DGCL
Section 145, as the same may be amended and supplemented from time to time,
indemnify any and all persons whom it shall have the power to indemnify
under
said section from and against any and all of the expenses, liabilities,
or other
matters referred to in or covered by said section, and the indemnification
provided for herein shall not be deemed exclusive of any other rights to
which
those indemnified may be entitled under any by-law, agreement, vote of
stockholders or disinterested directors or otherwise, both as to action
in
official capacity and as to action in another capacity while holding such
office, and shall continue as to a person who has ceased to be a director,
officer, employee, or agent and shall inure to the benefit of the heirs,
executors, and administrators of such a person.
2