<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/X/ Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/ / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section240.14a-11(c) or
Section240.14a-12
PLAYERS INTERNATIONAL, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/ / No fee required.
/X/ Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11.
(1) Title of each class of securities to which transaction applies:
Common Stock
-----------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
32,100,237
-----------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
$0.25 (reflects increase of consideration from $8.25 to $8.50)
-----------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
$8,025,059
-----------------------------------------------------------------------
(5) Total fee paid:
$1,605
-----------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
-----------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
-----------------------------------------------------------------------
(3) Filing Party:
-----------------------------------------------------------------------
(4) Date Filed:
-----------------------------------------------------------------------
<PAGE>
AMENDED PROXY STATEMENT
MERGER PROPOSED--YOUR VOTE IS VERY IMPORTANT
The board of directors of Players International, Inc. has agreed on a merger
with Harrah's Entertainment, Inc. If the merger is completed, the Players
stockholders will receive $8.50 in cash for each share of Players common stock
which they own. As a result of the merger, Players will become a wholly-owned
subsidiary of Harrah's.
We cannot complete the merger unless we receive approval from our
stockholders. We are sending you this proxy statement to ask you to vote in
favor of the merger. We will hold a special meeting of our stockholders on
October 28, 1999 for this vote. This meeting will be in place of the previously
scheduled special meeting, which was to be held September 14, 1999 to approve
the merger of Players and Jackpot Enterprises, Inc. but has been cancelled.
Players terminated the merger agreement with Jackpot to enter into a new merger
agreement with Harrah's.
Your vote is very important. Please take the time to vote by completing the
enclosed proxy card and returning it in the return envelope provided, even if
you plan to attend the stockholders' meeting. Note that if you sign, date and
mail your proxy card without indicating how you wish to vote, your proxy will be
counted as a vote FOR the merger.
We encourage you to read this entire document carefully. You may also obtain
information about Players from publicly available documents that are filed with
the Securities and Exchange Commission.
I am very enthusiastic about the merger and the strength and capabilities we
expect from the combined companies. I join the members of the board of directors
in recommending that you vote in favor of the merger.
Sincerely,
<TABLE>
<S> <C>
[LOGO]
John Groom
President, Chief Executive Officer and
Chief Operating Officer
Players International, Inc.
</TABLE>
THE DATE OF THIS PROXY STATEMENT IS SEPTEMBER , 1999,
AND IT IS FIRST BEING MAILED TO STOCKHOLDERS ON OR ABOUT SEPTEMBER , 1999.
<PAGE>
REFERENCES TO ADDITIONAL INFORMATION
This document incorporates important business and financial information
about Players from documents that we have filed with the SEC that has not been
included in or delivered with this document. We will send this information to
you without charge. If you write or call us, we will send you the documents,
excluding exhibits, that this document incorporates by reference. You can
contact us at:
Players International, Inc.
1300 Atlantic Avenue, Suite 800
Atlantic City, New Jersey 08401
(609) 449-7727
PLEASE REQUEST DOCUMENTS BY OCTOBER 21, 1999 IN ORDER TO OBTAIN TIMELY
DELIVERY. IF YOU REQUEST ANY INCORPORATED DOCUMENTS, WE WILL MAIL THE DOCUMENTS
YOU REQUEST BY FIRST CLASS MAIL BY THE NEXT BUSINESS DAY AFTER WE RECEIVE YOUR
REQUEST.
See "Where You Can Find More Information" on page for more information
about the documents incorporated by reference in this document.
2
<PAGE>
PLAYERS INTERNATIONAL, INC.
1300 ATLANTIC AVENUE, SUITE 800
ATLANTIC CITY, NEW JERSEY 08401
------------------------
AMENDED NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON OCTOBER 28, 1999
------------------------
To the Stockholders of Players International, Inc.:
On July 26, 1999, we sent proxy materials to stockholders of record for a
special meeting of Players International, Inc., which was originally scheduled
to be held on September 14, 1999. The purpose of the special meeting was to vote
on a merger of Players and Jackpot Enterprises, Inc. On August 19, 1999, the
Players board of directors terminated the merger agreement with Jackpot to enter
into a new merger agreement with Harrah's Entertainment, Inc.
Players cancelled the September 14 special meeting and has scheduled a new
special meeting to be held on October 28, 1999 at 1:00 p.m., local time, at the
Riverport Casino Center, 777 Casino Center Drive, Maryland Heights, Missouri.
The special meeting is being called to:
(1) approve and adopt the Agreement and Plan of Merger, dated as of
August 19, 1999, among Players, Harrah's Entertainment, Inc. and HEI
Acquisition Corp. II, a Nevada corporation and wholly-owned subsidiary of
Harrah's, and approve the merger of HEI Acquisition Corp. II with and into
Players as provided for in the agreement;
(2) to consider and vote upon a proposal to grant the Players board of
directors discretionary authority to postpone or adjourn the special meeting
in order to solicit additional votes to approve any matter set forth in
paragraph (1) above if the Secretary of Players determines that there are
not sufficient votes to approve any such matter (the "board discretionary
authority"); and
(3) transact such other business as may properly come before the special
meeting or any adjournment or postponement thereof.
As a result of the proposed merger, each share of Players' issued and
outstanding common stock will be converted into the right to receive $8.50 in
cash. Players reserves the right to abandon the merger at any time prior to the
completion of the merger upon the terms and subject to the conditions of the
merger agreement.
The Players board of directors has fixed the close of business on September
9, 1999 as the record date for the determination of stockholders entitled to
notice of and to vote at the Players special meeting. A list of these
stockholders will be available for inspection by stockholders of record during
business hours at Players' executive offices at least 10 days prior to the
special meeting. The list will also be available at the special meeting. On
September 9, 1999, there were 32,100,237 shares of common stock outstanding.
Each share of common stock is entitled to one vote on all matters presented at
the special meeting.
A proxy card and a proxy statement containing more detailed information
about the matters Players stockholders will consider at the special meeting
accompany this notice.
If you do not specify your vote on the proxy card you return to us, your
shares of common stock will be voted FOR the adoption of the merger agreement
and approval of the merger and FOR approval of the Players board discretionary
authority. With respect to any other matter that may come before the special
meeting, the persons voting your shares will vote in their discretion. Your
failure to return a properly executed proxy card or to vote at the special
meeting will have the same effect as a vote against the merger.
The Players board of directors is making this proxy solicitation.
Under Nevada law, we must receive the affirmative vote of the holders of a
majority of the voting power of all of the Players shares entitled to vote on
the proposal to adopt the merger agreement and
<PAGE>
approve the merger. The affirmative vote of the holders of a majority of the
shares represented in person or by proxy and entitled to vote is required to
approve the board discretionary authority.
Adoption of the merger agreement by Players stockholders is a condition of
the merger.
PLAYERS STOCKHOLDERS HAVE NO DISSENTERS' OR APPRAISAL RIGHTS IN CONNECTION
WITH THE MERGER UNDER THE NEVADA REVISED STATUTES.
You are cordially invited to attend the special meeting. A white proxy card
is enclosed. The blue proxy card which accompanied the prior proxy materials to
stockholders of record on the original record date is no longer in effect.
Therefore, even if you returned the blue proxy, your votes will not be recorded
unless you return the white proxy or attend the special meeting in person.
Whether or not you plan to attend the special meeting in person, please
complete, sign and date the enclosed proxy and mail it promptly to the secretary
in the enclosed envelope. You may revoke your proxy at any time before the proxy
holder votes it at the special meeting in one of three ways: by giving notice of
your revocation either personally or in writing to the secretary at our
executive offices, by executing and delivering another proxy or by voting in
person at the special meeting. Returning the enclosed proxy to us will not
affect your right to vote in person if you do attend the special meeting.
THE PLAYERS BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR
ADOPTION OF THE MERGER AGREEMENT AND APPROVAL OF THE MERGER AND FOR APPROVAL OF
THE BOARD DISCRETIONARY AUTHORITY.
<TABLE>
<S> <C>
BY ORDER OF THE BOARD OF DIRECTORS,
[SIGNATURE]
Raymond A. Spera, Jr.
SECRETARY
Atlantic City, New Jersey
September , 1999
</TABLE>
2
<PAGE>
PROXY STATEMENT
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
-----------
<S> <C>
TABLE OF CONTENTS............................. i
QUESTIONS AND ANSWERS ABOUT THE MERGER........ 1
SUMMARY....................................... 3
SELECTED FINANCIAL DATA....................... 7
PRICE OF THE COMMON STOCK..................... 9
RECENT DEVELOPMENTS........................... 10
THE SPECIAL MEETING........................... 11
THE MERGER.................................... 13
General Description of the Merger........... 13
Background of the Merger.................... 13
Recommendation of the Players Board of
Directors; Players' Reasons for the
Merger.................................... 15
Opinion of Financial Advisor................ 16
Financing for the Merger.................... 20
Accounting Treatment........................ 20
Regulatory Approvals........................ 20
Interests of Certain Persons in the
Merger.................................... 21
Material Federal Income Tax Consequences.... 22
Stockholder Support Agreements and
Proxies................................... 23
THE MERGER AGREEMENT.......................... 25
<CAPTION>
PAGE
-----------
<S> <C>
The Merger.................................. 25
Conversion of Shares........................ 25
Exchange of Stock Certificates.............. 25
Stock Options............................... 26
Representations and Warranties.............. 26
Certain Covenants........................... 27
Conditions to the Merger.................... 30
Termination; Termination Fees and
Expenses.................................. 31
Amendment and Waiver........................ 33
REGULATORY APPROVALS OF GAMING AUTHORITIES
REQUIRED FOR THE MERGER..................... 34
STOCKHOLDER PROPOSALS FOR ANNUAL MEETINGS OF
STOCKHOLDERS................................ 35
WHERE YOU CAN FIND MORE INFORMATION........... 36
Cautionary Statement Regarding Forward-Looking
Statements.................................. 37
Appendix A-Agreement and Plan of Merger....... A-1
Appendix B-Opinion of Donaldson, Lufkin &
Jenrette Securities Corporation............. B-1
</TABLE>
1
TABLE OF CONTENTS
<PAGE>
QUESTIONS AND ANSWERS ABOUT THE MERGER
Q: WHY IS PLAYERS PROPOSING TO MERGE WITH HARRAH'S?
A: If we complete the merger, Players stockholders will receive merger
consideration of $8.50 in cash in exchange for each share of Players common
stock they own. We believe the offered price represents a superior offer to
the $8.25 cash-and-stock transaction previously proposed by Jackpot. We also
believe that our employees may benefit from greater opportunities for career
advancement in a larger organization like Harrah's and that our customers
may enjoy the benefits of Harrah's 18 casino properties which are all part
of the Harrah's "Total Gold" customer rewards program.
THE BOARD OF DIRECTORS OF PLAYERS UNANIMOUSLY RECOMMENDS THAT PLAYERS
STOCKHOLDERS APPROVE THE MERGER AGREEMENT AND MERGER.
Q: WHEN DO YOU EXPECT THE MERGER TO BE COMPLETED?
A: Before we complete the merger, Players stockholders must approve the
merger. We are also required to seek approval from gaming authorities in
Illinois, Kentucky, Louisiana and Missouri. We will complete the merger as
soon as possible after we obtain all the necessary approvals, subject to
certain deadlines in the merger agreement. We hope the merger will occur
toward the end of 1999, but we cannot assure you as to when or if the merger
will occur.
Q: WHAT ARE THE TAX CONSEQUENCES OF THE MERGER TO PLAYERS STOCKHOLDERS?
A: You will recognize gain or loss in an amount equal to the difference
between the sum of the cash you receive pursuant to the merger and the
adjusted tax basis in the shares of Players common stock you surrender in
the merger. If you are an individual, the U.S. federal income tax rate on
any gains you realize will not exceed 20% if, at the time of the merger, you
held your Players common stock for more than a year and you held it as a
capital asset.
Q: WHAT ARE THE CONSEQUENCES IF THE PLAYERS STOCKHOLDERS FAIL TO APPROVE THE
MERGER?
A: If the merger agreement is terminated because the Players stockholders
fail to approve the merger and a competing bid to acquire Players had been
publicly announced and is pending at the time of the stockholder vote,
Players will be required to pay a termination fee to Harrah's of $13.5
million and reimburse Harrah's for an additional $13.5 million that Harrah's
advanced to Jackpot as payment of the termination fee due under the Jackpot
merger agreement. If the merger agreement is terminated because the Players
stockholders fail to approve the merger when no competing bid is pending at
the time of the vote, Players will be required to pay a termination fee to
Harrah's of $3 million and reimburse Harrah's for up to $1 million of fees
and expenses incurred in connection with the transaction together with the
$13.5 million reimbursement of the Jackpot termination fee.
Q: WHAT DO I NEED TO DO NOW?
A: After you have finished reading this document, you should complete your
white proxy card and return it to Players. Indicate on your proxy card how
you want to vote, sign it and mail it in the enclosed prepaid return
envelope as soon as possible, so that your shares may be represented and
voted at the appropriate special meeting.
Q: IF MY BROKER HOLDS MY SHARES IN "STREET NAME," WILL MY BROKER VOTE MY SHARES
FOR ME?
A: No. If you do not instruct your broker how to vote, your shares will not
be voted. Your broker will only vote your shares if you follow the
directions your broker will provide to you regarding how to vote your
shares.
Q: CAN I CHANGE MY VOTE AFTER I HAVE MAILED MY SIGNED PROXY CARD?
1
<PAGE>
A: Yes. You can change your vote at any time before your proxy is voted at
the special meeting.
Q: SHOULD I SEND IN MY STOCK CERTIFICATES AT THIS TIME?
A: No. After we complete the merger, Harrah's will send Players stockholders
written instructions for exchanging Players common stock for cash.
Q: WHERE CAN I FIND MORE INFORMATION ABOUT THE COMPANIES?
A: Harrah's and Players file reports and other information with the SEC. You
may read and copy this information at the SEC's public reference facilities.
Please call the SEC at 1-800-SEC-0330 for information about these
facilities. This information is also available at the Internet site the SEC
maintains at http://www.sec.gov. You can also request copies of these
documents from us.
Q: I HAVE OTHER QUESTIONS. WHO CAN ANSWER THEM?
A: You should contact:
Players International, Inc.
1300 Atlantic Avenue, Suite 800
Atlantic City, New Jersey 08401
Attention: Investor Relations
(609) 449-7727
2
<PAGE>
SUMMARY
THIS SUMMARY HIGHLIGHTS SELECTED INFORMATION FROM THIS DOCUMENT. IT DOES NOT
CONTAIN ALL OF THE INFORMATION THAT IS IMPORTANT TO YOU. WE URGE YOU TO READ THE
ENTIRE DOCUMENT AND THE OTHER DOCUMENTS REFERRED TO IN THIS DOCUMENT CAREFULLY.
TO SEE WHERE YOU CAN OBTAIN MORE INFORMATION ON PLAYERS GENERALLY, SEE "WHERE
YOU CAN FIND MORE INFORMATION" ON PAGE 37.
THE MERGER AGREEMENT BETWEEN HARRAH'S AND PLAYERS IS ATTACHED TO THIS
DOCUMENT AS APPENDIX A AND IS INCORPORATED IN ITS ENTIRETY INTO THIS DOCUMENT BY
REFERENCE.
<TABLE>
<S> <C>
THE MERGER
The Merger Each share of Players' issued and outstanding common stock,
(see page 13) other than any shares owned by Harrah's, will be converted
into the right to receive $8.50 in cash.
Recommendation of the Board The Players board of directors has concluded that the merger
of Directors; Reasons for of Harrah's and Players is fair to, and in the best
the Merger interests of, the stockholders and has recommended that the
(see page 15) stockholders approve the transaction.
We believe that the sale of the company will provide our
stockholders with better value than that which was
represented by the Jackpot merger agreement. The Harrah's
offer represents a substantial premium over the trading
price of our common stock prior to the announcement of the
merger.
Opinion of Financial Advisor We retained Donaldson, Lufkin & Jenrette Securities
(see page 16) Corporation to act as our financial advisor in connection
with the merger with Harrah's. DLJ delivered a written
opinion to the board of directors that, as of the date of
the merger agreement, the merger consideration to be
received by the Players stockholders was fair to such
stockholders from a financial point of view. This opinion is
not a recommendation to any stockholder as to how to vote on
the merger. We have attached this opinion to this document
as Appendix B. You should read this opinion carefully, as
well as the description of the analyses and assumptions on
which such opinion was based.
Stock Options All unexercised options for the purchase of Players common
(see page 26) stock will be canceled immediately prior to the time the
merger becomes effective and the holders of the options will
receive, in cash, the amount, if any, by which $8.50 exceeds
the applicable exercise price of each option.
Conversion of Players Shares Each share of Players common stock will be converted into
and Surrender of Stock the right to receive the cash payment as previously
(see page 25) described. As soon as practicable after the merger becomes
effective, a form letter of transmittal and instructions
will be mailed to each Players stockholder of record. The
letter of transmittal will instruct you on how to surrender
your Players stock certificates and receive the cash in
exchange.
DO NOT SEND IN YOUR CERTIFICATES UNTIL YOU RECEIVE THE
LETTER OF TRANSMITTAL.
</TABLE>
3
<PAGE>
<TABLE>
<S> <C>
Financing for the Merger Harrah's estimates that the cash portion of the
(see page 20) consideration to be paid to the Players stockholders,
amounts to be paid to holders of options for Players common
stock, other expenses of the merger and funds to conduct a
tender offer for Players' outstanding $150 million of
10 7/8% senior notes will aggregate approximately $430
million. Harrah's anticipates that the cash for these
purposes will be funded through borrowings under Harrah's
credit facility or the issuance of new public debt
securities if market conditions warrant.
Material Federal Income Tax The receipt of cash for shares of Players common stock in
Consequences the merger will be a taxable transaction to Players
(see page 22) stockholders for federal income tax purposes, and may also
be a taxable transaction under applicable foreign, state,
local and other income tax laws. A stockholder will
recognize gain or loss in an amount equal to the difference
between the sum of the cash received in the merger and the
adjusted tax basis of the stockholder in his Players shares.
Conditions to the Merger Completion of the merger is subject to conditions,
including:
(see page 30) - approval by the stockholders of the merger;
- the receipt of necessary gaming and other regulatory
approvals, including renewal of our licenses to operate our
Louisiana riverboats without imposition of any material
operating restrictions or fines; and
- the absence of any order or injunction that would prevent
the completion of the merger.
No Solicitation The merger agreement prevents Players and our directors and
(see page 28) officers from soliciting any proposals or offers for a
merger, consolidation, or other business combination with a
third party. However, if the merger has not yet been
approved by our stockholders and all of the following occur:
- we receive an unsolicited proposal from a third party,
- the third party making the proposal offers terms which are
superior, from a financial point of view, to the terms of
the merger with Harrah's,
- our financial advisor advises us that the third party
proposal is capable of being completed and our legal counsel
advises our board that its fiduciary duty requires it to
consider the proposal, and
- we notify Harrah's of the material terms of the proposal,
then we may accept such proposal and terminate the merger
agreement at any time after the third business day following
the giving of notice to Harrah's, subject to payment of the
termination fee described below.
Termination We may mutually agree with Harrah's in writing to terminate
(see page 31) the merger agreement at any time without completing the
merger, regardless of the stockholders' approval of the
merger.
</TABLE>
4
<PAGE>
<TABLE>
<S> <C>
In addition, either Players or Harrah's may decide to
terminate the merger agreement if:
- the merger has not been completed by October 31, 1999, or,
if the reason it has not been completed is because any of
the closing conditions have not been satisfied and are
reasonably capable of being satisfied, January 31, 2000;
- the merger has been legally prohibited;
- at any time prior to approval of the merger by our
stockholders, we receive a more favorable acquisition
proposal which our board of directors accepts or which
causes the board to withdraw or change its recommendation
to the stockholders concerning the merger with Harrah's;
- the other company breaches its representations or fails to
comply with obligations under the merger agreement and does
not cure its breach or failure to comply within 30 days;
or
- the vote of the Players stockholders is not obtained at
the special meeting.
In addition, Harrah's may decide to terminate the merger
agreement if the Louisiana Gaming Board revokes our license
to operate our Louisiana riverboats or gaming regulatory
authorities impose material fines against us or our existing
or former officers or representatives relating to the
current investigation of Players in Louisiana.
Termination Fees If either Harrah's or Players terminates the merger
(see page 32) agreement because we receive a more favorable acquisition
proposal which our board of directors accepts or which
causes the board to withdraw or change its recommendation to
the stockholders concerning the merger, or because the
stockholders fail to approve the merger when a competing
offer to acquire Players has been publicly announced and is
pending at the time of the stockholder vote, Players must
pay Harrah's a termination fee of $13.5 million. In the
event Harrah's terminates the merger agreement because the
Players stockholders fail to approve the merger other than
when a competing offer is pending, Players must pay a
termination fee of $3 million plus expenses of up to $1
million.
We must also reimburse Harrah's for the entire termination
fee advanced by Harrah's to pay Jackpot in five
circumstances:
- if Harrah's or Players terminates the merger agreement in
the event Players fails to obtain the required vote of
Players' stockholders;
- if Harrah's terminates the merger agreement in the event
Players' board withdraws its recommendation of the Harrah's
transaction;
- if Players terminates the merger agreement after Players
receives a superior proposal from a third party;
</TABLE>
5
<PAGE>
<TABLE>
<S> <C>
- if Harrah's terminates the merger agreement in the event
of a material breach of the agreement by Players; or
- if Harrah's terminates the merger agreement in the event
of the revocation of Players' gaming license in Louisiana or
the imposition of a materially adverse fine in connection
with the current investigation of Players in Louisiana.
For more information concerning this investigation, see
the "Recent Developments" section. This reimbursement
would be in addition to the payment of a termination fee
to Harrah's.
We must reimburse half of the $13.5 million termination fee
paid by Harrah's to Jackpot if the expiration date set forth
in the merger agreement passes and either party chooses to
terminate the agreement, or if completion of the merger is
permanently prohibited by a court or governmental entity.
Interests of Certain Persons Some of Players' executive officers have interests in the
in the Merger merger other than through stock ownership. These interests
(see page 21) include employment agreements, change of control agreements,
and stock options. You should be aware of these interests.
Based on the number of Players shares and options currently
held by them, executive officers and directors of Players
will receive an aggregate of approximately $6.4 million in
cash in the merger.
Regulatory Approvals The merger is subject to the prior approval of the gaming
(see page 20) authorities of Illinois, Kentucky, Louisiana and Missouri,
and to the expiration or termination of the waiting period
under the Hart-Scott-Rodino Antitrust Improvements Act, as
amended.
Accounting Treatment We expect the merger to be treated as a "purchase" for
(see page 20) accounting purposes. Under this method, the assets acquired
and liabilities assumed will be recorded on Harrah's balance
sheet at their fair market value when the merger closes.
Dissenters' Rights Players stockholders have no dissenters' or appraisal rights
in connection with the merger.
Voting Agreements All of the Players directors and executive officers and
(see page 23) Players' largest stockholder have agreed with Harrah's to
vote their Players common stock in favor of the merger.
These stockholders own, in the aggregate, approximately
15.3% of the outstanding Players common stock.
</TABLE>
6
<PAGE>
SELECTED FINANCIAL DATA
The following financial information was derived from audited financial
statements for, and as of the end of each of the years in the five year period
ended March 31, 1999 and unaudited financial statements for, and as of the end
of the three months ended June 30, 1999 and 1998. The information is only a
summary and should be read in conjunction with the historical financial
statements (and related notes) contained in our annual reports and other
information that we have filed with the Securities and Exchange Commission. See
"Where You Can Find More Information."
<TABLE>
<CAPTION>
THREE MONTHS
ENDED
JUNE 30, YEARS ENDED MARCH 31,
---------------- ---------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1999 1998 1999 1998 1997 1996 1995
------- ------- ------- ------- ---------- ------- ----------
<CAPTION>
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
OPERATIONS DATA:
Total revenues........................................ $84,050 $81,565 $331,078 $323,218 $ 291,210 $291,395 $ 223,695
Operating income (loss) (1)(2)(3)(4)(5)(6)............ $10,181 $ 9,641 $24,275 $26,612 $ (56,028) $43,871 $ 70,549
Net income (loss) (1)(2)(3)(4)(5)(6).................. $ 3,097 $ 2,440 $ 1,570 $ 1,951 $ (46,298) $22,320 $ 45,755
PER SHARE DATA:
Basic earnings (loss) per common share................ $ .10 $ .08 $ .05 $ .06 $ (1.56) $ .75 $ 1.68
Diluted earnings (loss) per common share.............. $ .10 $ .08 $ .05 $ .06 $ (1.56) $ .70 $ 1.47
Dividends on common stock............................. -- -- -- -- -- -- --
BALANCE SHEET DATA
(AT THE END OF THE PERIOD):
Cash, cash equivalents and marketable securities,
net................................................. $25,400 $19,238 $25,687 $17,223 $ 20,567 $23,247 $ 50,332
Total assets.......................................... $386,571 $404,914 $389,135 $409,587 $ 421,289 $413,432 $ 223,790
Long-term debt, net of current portion................ $150,000 $176,500 $155,000 $180,541 $ 187,500 $153,000 $ 5,532
Total stockholders' equity............................ $162,909 $160,354 $159,812 $157,914 $ 155,881 $193,627 $ 176,143
</TABLE>
- ------------------------
(1) During fiscal 1997, we recorded a loss on the sale of the Mesquite property
of $57.4 million. During fiscal 1998, the estimated remaining liabilities
associated with the Mesquite facility were re-evaluated and reduced by
$571,000.
(2) A restructuring charge of $9.0 million was recorded in fiscal 1997. The
charge reflects our decision to significantly reduce our pursuit of
development opportunities in new or emerging jurisdictions and to
concentrate instead on improving our existing operations.
(3) During fiscal 1997, we re-evaluated our investment in our horse racetrack
facility, committed to a plan to remove from service and replace a barge
utilized by one of our riverboat facilities and wrote-down to fair value
land that was contributed to the Maryland Heights joint venture. Impairment
losses and the write-down of assets totaling $7.4 million were recorded in
the year ended March 31, 1997.
(4) During fiscal 1998, we reached an agreement with the City of Lake Charles
both to settle litigation and to establish a permanent method of calculating
the city admission fee on our Louisiana riverboats. Under the new agreement,
the admission fee payments to the city will now be calculated as a
percentage of gaming revenue in lieu of a passenger admission fee. In
addition, the
7
<PAGE>
settlement called for a payment of $544,000 per year for ten years. The
present value of the fixed annual payments, including expenses, was
accounted for as a one-time charge of $4.2 million in fiscal 1998.
(5) In fiscal 1999, we demolished a hotel located in Lake Charles to accommodate
additional parking. The net book value of the demolished hotel was
approximately $6.1 million.
(6) In fiscal 1995, we acquired the former Players Hotel in Lake Charles for
$6.7 million plus future payments based on the number of passengers boarding
the riverboat casinos contiguous to it over the ensuing 28 years (the
"Patron Fee"). The estimated future payments were discounted at 11% and
recorded at their net present value of $25.6 million (the "Payment
Obligation"). Actual annual payments in excess of the amortization of the
net present value of the Payment Obligation are expensed as incurred. On
March 1, 1999, we entered into agreements (the "Patron Fee Buy-Out
Agreements") with two of the parties receiving approximately 48% of the
Patron Fee. We will terminate our obligation to make future Patron Fee
payments to these parties through a one-time lump sum payment. The portion
of the Payment Obligation related to the Patron Fee Buy-Out Agreement was
$12.1 million. Under the Patron Fee Buy-Out Agreements, we are obligated to
pay $16.8 million in the aggregate, subject to adjustments. The excess of
the payment amount over the proportionate Payment Obligation approximates
$4.7 million, and was charged to earnings in fiscal 1999.
8
<PAGE>
PRICE OF THE COMMON STOCK
On August 18, 1999, the last full trading day prior to the announcement of
the merger agreement, the last sale price of Players common stock was $7.9062.
On August 13, 1999, the last full trading day prior to the announcement of our
intent to terminate the Jackpot merger agreement, the last sale price of Players
common stock was $6.5625.
9
<PAGE>
RECENT DEVELOPMENTS
In April 1997, a federal investigation of former Louisiana Governor Edwin
Edwards, his son Stephen Edwards, Richard D. Shetler, and others with respect to
their involvement in the riverboat gaming industry and other matters became
public. Upon learning of the investigation, Players immediately began
cooperating with the federal authorities. (Stephen Edwards is a former outside
attorney and Richard D. Shetler is a former consultant to and lobbyist for
Players in Louisiana.) In August 1998, Players was advised in writing by the
United States Attorney that neither Players nor its current or former employees
were subjects or targets of the federal investigation. On October 9, 1998,
Richard D. Shetler pleaded guilty to conspiracy to commit extortion of Players.
On November 6, 1998, a grand jury of the United States District Court for the
Middle District of Louisiana returned an indictment against Edwin Edwards,
Stephen Edwards, and four other defendants for matters relating to the riverboat
casino industry. The indictment charges Edwin Edwards and Stephen Edwards with
extorting and conspiring to extort Players in violation of the Racketeer
Influenced Corrupt Organizations Act, and interstate travel in aid of
racketeering. On November 12, 1998, the defendants pleaded not guilty to the
allegations set forth in the indictment. The Missouri Gaming Commission, the
Illinois Gaming Board and the Louisiana Gaming Control Board are each aware of
and are each investigating the involvement of Players in the Shetler and Edwards
cases to determine the suitability of Players and its subsidiaries for continued
licensure. Players has cooperated and will continue to cooperate with the gaming
regulatory authorities in their investigations. To date, none of the gaming
regulatory authorities has commenced any disciplinary action against Players or
any of its employees as a result of the Shetler and Edwards cases or other
related matters. Effective July 12, 1999, Howard A. Goldberg, the former Acting
Chairman of the Board, President and Chief Executive Officer of Players,
resigned all of his positions with Players. Mr. Goldberg was the last remaining
senior executive of Players who was an executive at the times relevant to the
Louisiana investigation.
On Tuesday, August 17, 1999, the Louisiana Gaming Control Board received and
made public a report by the Riverboat Gaming Division of the Louisiana State
Police concerning its investigation of Players in relation to the Shetler and
Edwards cases. The report alleges, among other things, that Players did not
report certain matters to the Louisiana regulatory authorities and that these
actions may provide grounds for the Louisiana Gaming Control Board to not renew
Players' licenses or to impose sanctions as a condition of license renewal. The
Louisiana Gaming Control Board took no action on the report, but a hearing will
be scheduled at a later date. The Louisiana Gaming Control Board also
conditionally renewed one of Players' two licenses, pending the outcome of a
hearing on the report.
Assurances cannot be given that disciplinary action will not be commenced,
that licenses will be renewed or that the gaming regulatory authorities will
approve the merger, or as to the timing of any such approvals. Players is unable
at this stage to determine the likely outcome of these gaming regulatory
investigations or estimate the amount or range of potential loss, if any.
10
<PAGE>
THE SPECIAL MEETING
MATTERS TO BE CONSIDERED
The special meeting will be held on October 28, 1999, at 1:00 p.m., local
time, at the Riverport Casino Center, 777 Casino Center Drive, Maryland Heights,
Missouri. At the special meeting, stockholders will vote on:
(1) a proposal to approve and adopt the merger agreement and approve the
merger;
(2) a proposal to grant our board of directors discretionary authority to
postpone or adjourn the special meeting in order to solicit additional
votes to approve any matter set forth in paragraph (1) above if the
secretary of Players determines that there are not sufficient votes to
approve any such matter (the "board discretionary authority"); and
(3) such other business as may properly come before the special meeting or
any adjournment or postponement.
The board of directors has unanimously approved the merger agreement and the
merger and unanimously recommends that the stockholders vote "FOR" approval and
adoption of the merger agreement and approval of the merger and to vote "FOR"
the proposal to grant the board discretionary authority.
RECORD DATE, OUTSTANDING SHARES AND REQUIRED VOTE
Only holders of record of common stock at the close of business on September
9, 1999 will be entitled to receive notice of and vote at the special meeting.
Each share of common stock is entitled to one vote. As of September 9, 1999,
there were 32,100,237 shares of common stock outstanding. Holders of a majority
of the outstanding common stock entitled to vote, present in person or
represented by proxy, will constitute a quorum for the transaction of business
at the special meeting. The affirmative vote of the holders of a majority of the
outstanding shares of common stock is required to approve the merger. For each
other proposal, the affirmative vote of the holders of a majority of the shares
represented in person or by proxy and entitled to vote on the proposal will be
required for approval. As of September 9, 1999, our current directors and
executive officers and their affiliates may be deemed to have beneficially owned
553,600 shares of Players common stock, excluding shares which may be acquired
upon exercise of options. This is approximately 1.7% of the then outstanding
shares of common stock. Each of the directors and executive officers and
Players' largest stockholder, The Griffin Group, Inc. have agreed to vote their
shares, aggregating 4,920,950 shares, or approximately 15.3% of the outstanding
Players common stock as of September 9, 1999, for approval of the merger.
VOTING AND REVOCATION OF THE PROXIES
Shares represented by a proxy will be voted at the special meeting as
specified in the proxy. Properly executed proxies that do not contain voting
instructions will be voted FOR approval and adoption of the merger agreement and
approval of the merger and approval of the board discretionary authority.
We will count properly executed proxies marked "Abstain" for purposes of
determining whether there is a quorum, but the shares that any of these proxies
represent will not be voted at the special meeting.
Under NASDAQ rules, your broker cannot vote shares of common stock without
specific instructions from you. You should follow the directions your broker
provides to you regarding how to instruct your broker to vote your shares.
Without your instructions, your shares will not be voted on the merger, which
will have the same effect as voting against approval and adoption of the merger
agreement and approval of the merger.
11
<PAGE>
The board does not know of any matters other than those described in the
notice of the meeting that are to come before such meeting. If any other matters
properly come before the special meeting for consideration, the persons named in
the enclosed forms of proxy generally will have discretion to vote on such
matters using their best judgment.
Your grant of a proxy on the enclosed proxy card does not prevent you from
voting in person or otherwise revoking your proxy. A stockholder may revoke a
proxy at any time before its exercise by delivering a duly executed revocation
or a proxy bearing a later date to Raymond A. Spera, Jr., Secretary of Players
International, Inc., 1300 Atlantic Avenue, Suite 800, Atlantic City, New Jersey
08401.
In addition, you may revoke your proxy by voting your shares in person at
the special meeting.
SOLICITATION OF PROXIES
Players will bear the cost of solicitation of proxies from the holders of
common stock. In addition to solicitation by mail, our directors, officers and
employees may solicit proxies from holders of common stock by telephone, in
person or through other means. We will not compensate these people for this
solicitation, but we will reimburse these people for reasonable out-of-pocket
expenses they have in connection with this solicitation. We will also arrange
for brokerage firms, fiduciaries and other custodians to send solicitation
materials to the beneficial owners of shares held of record by these persons. We
will reimburse these brokerage firms, fiduciaries and other custodians for their
reasonable out-of-pocket expenses.
12
<PAGE>
THE MERGER
GENERAL DESCRIPTION OF THE MERGER
We are proposing a combination in which we will merge with HEI Acquisition
Corp. II, a wholly-owned subsidiary of Harrah's created for the purpose of
effecting the merger. As a result of the merger, we will become a wholly-owned
subsidiary of Harrah's. In connection with the proposed merger, each share of
Players' issued and outstanding common stock will be converted into the right to
receive $8.50 in cash.
BACKGROUND OF THE MERGER
In March 1998, Players was approached by Hollywood Park, Inc. concerning a
stock-for-stock merger proposal. Our board of directors declined to pursue the
proposal and undertook an evaluation of its strategic alternatives, with the
assistance of DLJ. In particular, the board considered independent operating
alternatives, acquisition strategies and merger transactions with entities that
had expressed interest in a merger with Players. In late April 1998, our board
of directors authorized management to pursue discussions with Harrah's, which at
that time proposed a stock-for-stock, tax-free merger in which our stock would
be valued at $7.50 per share. Our board instructed management to seek to raise
the value for Players stock to at least $8.00 per share. The board also
instructed management to explore alternative acquisition proposals or other
strategic alternatives which would provide superior value to the stockholders.
During the period from May to August 1998, we and our advisors negotiated with
Harrah's concerning its proposal for a stock-for-stock merger. In the course of
the negotiations, Harrah's fixed the ratio at which it was willing to exchange
its shares for Players shares.
During the period of these negotiations, the stock of gaming companies in
general and the stock of Harrah's decreased markedly in price. In August 1998,
we authorized DLJ to conduct a market survey to gauge potential interest among
other companies who might be interested in acquiring us. While the market survey
elicited preliminary indications of interest from several potential acquirers,
no potential acquirer was in a position to complete its due diligence
investigation promptly enough to allow it to compete with the proposal which we
had been negotiating with Harrah's.
As required by Harrah's, our board of directors met on August 31, 1998 to
consider a negotiated definitive agreement for a stock-for-stock acquisition. On
that date, the Dow Jones Industrial Average declined by a record amount and the
value of the proposal to the Players stockholders, had the transaction been
consummated on that date, would have been materially less than $5.00 per share.
The board of directors declined to approve the agreement and communicated its
decision to Harrah's. Given the unsettled state of financial markets on that
date, the board instructed management to bring closure to all discussions with
potential acquirers.
On November 2, 1998, we again received an unsolicited proposal from
Hollywood Park offering to acquire each outstanding share of Players common
stock for $6.00 per share in cash. On November 9, 1998, we responded to the
proposal by inviting Hollywood Park to sign a confidentiality agreement in order
that we could disclose to Hollywood Park certain nonpublic information which we
believed might cause Hollywood Park to substantially increase its valuation of
Players. Hollywood Park responded to our letter by issuing a press release on
November 10, 1998, making public its proposal and asserting that it was
"disappointed" in our response. We also requested DLJ to prepare an opinion
concerning the adequacy of the Hollywood Park offer. On November 12, 1998 the
board of directors met and received an opinion from DLJ that, based upon and
subject to the assumptions and qualifications in such opinion, the consideration
to be paid to the stockholders of Players in the Hollywood Park proposal was
inadequate to the stockholders from a financial point of view. We instructed DLJ
to contact other potential acquirers to ascertain whether they would be
interested in entering into a transaction with us at a price level superior to
$6.00 per share. We issued a press release reporting
13
<PAGE>
rejection of the Hollywood Park offer and indicated that we had requested DLJ to
evaluate strategic alternatives for the company.
DLJ then contacted thirteen entities that might have had an interest in
acquiring us. At least six entities responded with some level of interest and
entered into confidentiality agreements under which they were given access to
due diligence materials. DLJ established a deadline of December 18, 1998 by
which indications of interest were to be received. Seven entities submitted
written and verbal indications of interest for all or part of Players. Jackpot
entered into a confidentiality agreement and submitted a written indication of
interest by the deadline. After having considered all such indications of
interest, the board of directors authorized management to enter into an
exclusivity agreement with a European-based, international leisure and gaming
company which had offered all-cash consideration of $7.50 per share, not subject
to financing. This potential acquirer was unrelated to Harrah's, Jackpot, or
Hollywood Park.
On December 31, 1998 we entered into an exclusivity agreement with this
potential acquirer for a term lasting until January 26, 1999. During that
period, we negotiated a merger agreement with the potential acquirer that would
have provided for consideration of $7.50 in cash for all outstanding shares of
Players common stock and that was not subject to financing. It was agreed among
the parties that, prior to execution of the definitive agreement, the final
draft of the agreement had to be approved by the board of directors of both
companies. The boards of directors of both companies met on January 26th to
consider the agreement, and prior to the beginning of our board meeting, we were
informed that the potential acquirer had decided not to proceed with the
proposed transaction. In conversations with the potential acquirer on January
26, 1999, our management received assurances from the potential acquirer that it
made its decision not to proceed with the acquisition for reasons unrelated to
Players. By its terms, the exclusivity agreement terminated at 5:00 p.m.,
January 26, 1999.
Immediately following termination of the exclusivity period, we authorized
DLJ to contact each of the entities that had submitted indications of interest
in December to let them know that we were once again free to entertain proposals
and that written indications of interest would be due no later than February 5,
1999. The board scheduled a meeting on February 8th to consider indications of
interest.
In discussions with DLJ, Jackpot indicated that it wished to negotiate the
form of a definitive agreement which had been made available to interested
parties in December 1998 so that a fully negotiated agreement with Players would
be ready for consideration by the Players board of directors at the February 8th
meeting. From January 29th to February 8th representatives of Players and
Jackpot negotiated a merger agreement and DLJ continued discussions with other
interested entities.
At our board of directors meeting on February 8th, DLJ presented to the
board one written and two verbal indications of interest with prices between
$7.00 and $8.00 per share and a draft merger agreement with Jackpot with
consideration of $8.00 consisting of $6.40 in cash and $1.60 of Jackpot stock.
The board considered the three indications of interest and the draft Jackpot
merger agreement, and decided to focus on the merger agreement with Jackpot. The
board raised several issues that were not dealt with to its satisfaction in the
agreement, and on February 8th representatives of Players and Jackpot negotiated
terms of the definitive merger agreement to deal adequately with such issues,
including increasing the merger consideration from $8.00 to $8.25 per share,
consisting of $6.75 in cash and $1.50 in Jackpot common stock. Following
completion of these negotiations, the board received DLJ's opinion that the
consideration to be received by the Players stockholders pursuant to the merger
agreement was fair to the Players stockholders from a financial point of view,
and the board unanimously approved the merger agreement, as so negotiated, on
February 8, 1999. Players and Jackpot executed the merger agreement later that
same day.
After the merger agreement with Jackpot was signed, we undertook all steps
necessary to complete the merger, including pursuing required regulatory
approvals, filing a proxy statement and scheduling a special meeting of
stockholders to be held on September 14, 1999 for the purpose of approving the
14
<PAGE>
transaction. On August 9, 1999, we received an unsolicited bona fide written
proposal from Harrah's offering to acquire us for $8.50 per share in cash, not
subject to any financing contingency, accompanied by a draft merger agreement
that Harrah's indicated it was prepared to sign. After consulting with our
financial and legal advisors, on August 13 the board determined, as provided
under the Jackpot merger agreement, that Harrah's proposal was superior to the
Jackpot merger agreement, and authorized us to commence substantive negotiations
with Harrah's. In reaching this determination, the board considered the higher
per share valuation, the all-cash consideration, the lack of a financing
contingency, the higher probability of expeditious regulatory approval, and
Harrah's willingness to advance the termination fee to Jackpot.
During the next several days, numerous conversations took place among our
company and Harrah's and our counsel and advisors concerning the terms of the
transaction and the merger agreement, and a form of definitive merger agreement
was negotiated. Following completion of these negotiations, at a meeting held on
August 15, the board received DLJ's opinion that the consideration to be
received by the Players stockholders pursuant to the merger agreement was fair
to the stockholders from a financial point of view, and the board unanimously
approved the merger agreement and authorized sending a notice of termination to
Jackpot.
Accordingly, on August 15, we delivered a notice to Jackpot in order to
terminate the Jackpot merger agreement. Under its terms, the Jackpot agreement
would terminate three business days after the delivery of the notice and upon
the payment of a termination fee from Players. At a board meeting held on the
evening of August 18, the board reaffirmed its approval of the terms of the
Harrah's merger agreement. On August 19, Harrah's advanced the termination fee
to Jackpot, the Jackpot merger agreement was terminated, and we executed the new
merger agreement with Harrah's.
RECOMMENDATION OF THE BOARD OF DIRECTORS; REASONS FOR THE MERGER
In approving the merger agreement and the transactions contemplated thereby,
the board of directors considered a number of factors. The factors material to
the decision of the board of directors are summarized below:
- The superiority of the terms of Harrah's proposal to the terms of the
final Jackpot merger agreement.
- The advancement by Harrah's of the $13.5 million termination fee (subject
to reimbursement in some circumstances) due under the Jackpot merger
agreement.
- The terms and conditions of the merger agreement, including the amount and
form of the consideration to be received in the merger.
- The lack of a financing contingency in the Harrah's merger agreement.
- Current industry, economic and market conditions.
- The historical market prices and trading information with respect to the
Players common stock.
- The presentation by DLJ to the board of directors on August 15, 1999 and
DLJ's written opinion, dated August 19, 1999, to the effect that, as of
the date of such opinion and based upon and subject to the assumptions,
limitations and qualifications set forth therein, the consideration to be
received by the stockholders pursuant to the merger agreement is fair to
the stockholders from a financial point of view.
- The substantial premium over the recent trading prices of Players common
stock represented by the $8.50 per share merger consideration.
15
<PAGE>
- The history of Players' discussions over a total period of sixteen months
with other parties including Jackpot, including (a) the two fully
negotiated transactions which were not completed, (b) the fair and ample
opportunity provided to interested parties to submit proposals to Players,
(c) that none of the other proposals contemplated the acquisition of
Players for more than $8.50 per share, and (d) that since the Jackpot
agreement was executed in February 1999, no other parties had indicated an
interest in acquiring Players until the Harrah's proposal was received.
- Our ability to terminate the new merger agreement with Harrah's and accept
another proposal in the event that a proposal was received which was
otherwise more favorable to Players.
The Players board of directors did not assign relative weights to the
factors discussed above and individual directors may have given differing
weights to different factors.
OPINION OF FINANCIAL ADVISOR
We selected DLJ as our financial advisor with respect to the merger because
DLJ is a nationally recognized investment banking firm that has substantial
experience in the gaming and resort industries and is familiar with us and our
business. DLJ, as part of its investment banking services, is regularly engaged
in the valuation of businesses and securities in connection with mergers and
acquisitions, underwritings, sales and distributions of listed and unlisted
securities, private placements and valuations for corporate and other purposes.
In its role as financial advisor, DLJ was asked by the board of directors to
render an opinion as to the fairness from a financial point of view to the
stockholders of Players of the consideration to be received by such stockholders
pursuant to the terms of the merger agreement. On August 19, 1999, DLJ delivered
its written opinion to the board of directors to the effect that, as of such
date and based upon and subject to the assumptions, limitations and
qualifications in such opinion, the consideration to be received by the
stockholders of Players pursuant to the merger agreement is fair to such
stockholders from a financial point of view.
A COPY OF THE DLJ OPINION IS ATTACHED AS APPENDIX B. YOU ARE URGED TO READ
THE DLJ OPINION CAREFULLY IN ITS ENTIRETY FOR THE ASSUMPTIONS MADE, THE
PROCEDURES FOLLOWED, THE MATTERS CONSIDERED AND THE LIMITS OF THE REVIEW MADE BY
DLJ IN CONNECTION WITH ITS OPINION. DLJ prepared its opinion for the Players
board of directors. The opinion is directed only to the fairness of the
consideration to be received by stockholders of Players from a financial point
of view. The DLJ opinion does not constitute a recommendation to any stockholder
as to how to vote on the merger. DLJ did not, and was not requested by the board
of directors to, make any recommendation as to the form or amount of the
consideration to be paid in the merger, which issues were resolved in
arms-length negotiations between Players and Harrah's.
In preparing its opinion, DLJ:
- Reviewed the merger agreement;
- Reviewed financial and other information that was publicly available or
furnished to it by Players, including information provided during
discussions with management;
- Compared certain financial and securities data of Players with various
other companies whose securities are traded in public markets;
- Reviewed the historical stock prices and trading volumes of the common
stock of Players;
- Reviewed prices and premiums paid in certain other business combinations;
and
- Conducted such other financial studies, analyses and investigations as it
deemed appropriate for purposes of its opinion.
16
<PAGE>
Included in the information provided during discussions with management were
certain financial projections of Players for the period beginning July 1, 1999
and ending March 31, 2004 prepared by our management.
In rendering its opinion, DLJ relied upon and assumed the accuracy and
completeness of all of the financial and other information that was available to
it from public sources, that was provided to it by Players or that was otherwise
reviewed by it. DLJ assumed that the financial projections provided to it were
reasonably prepared on the basis reflecting the best currently available
estimates and judgments of the management of Players as to the future operating
and financial performance of Players. DLJ did not assume any responsibility for
making an independent evaluation of any assets or liabilities or for making any
independent verification of any of the information reviewed by it. DLJ also
relied as to certain legal matters on advice of counsel to Players.
The DLJ opinion is necessarily based on economic, market, financial and
other conditions as they existed on, and on the information made available to
DLJ as of, the date of the opinion. It does not address the relative merits of
the merger and the other business strategies being considered by the board of
directors, nor does it address the board's decision to proceed with the merger.
The DLJ opinion does not constitute a recommendation to any stockholder as to
how such stockholder should vote on the merger.
The following is a summary of the material financial analyses presented by
DLJ to the Players board of directors on August 15, 1999. DLJ drew no specific
conclusions from any of these analyses into its qualitative assessment of the
relevant facts and circumstances. You should read the information presented in
the tables together with the accompanying text.
STOCK PRICE AND TRADING HISTORY. DLJ reviewed the daily trading activity,
including price and volume, of Players from December 31, 1997 to August 13,
1999. DLJ noted that the daily trading price of our common stock ranged from a
high of $7.19 on June 30, 1999 to a low of $3.13 on January 2, 1998 and the
daily trading volume ranged from 2,500 to 1,165,700 shares. DLJ also noted that
Players closing price on the date of the Harrah's proposal of August 9, 1999 was
$6.50, and the closing price one day prior to the public announcement of the
Jackpot proposal of February 9, 1999 was $6.00 and one day prior to the
Hollywood Park proposal of November 10, 1998 was $5.00.
PREMIUMS PAID ANALYSIS. DLJ analyzed the purchase price premium paid over
the market price prior to announcement in selected merger and acquisition
transactions since January 1, 1994 involving cash consideration and with
valuations ranging from $300.0 million to $700.0 million. DLJ analyzed the
average premiums in these transactions one day prior, one week prior and four
weeks prior to the public announcement of the respective transaction, and
applied the average premiums to our closing share prices one day prior, one week
prior and four weeks prior to the public announcement of the Harrah's proposal
of August 16, 1999, the Jackpot proposal of February 9, 1999 and the Hollywood
17
<PAGE>
Park proposal of November 10, 1998 to calculate the implied price per share of
Players. This analysis yielded the following results:
<TABLE>
<CAPTION>
AVERAGE
PREMIUMS IN IMPLIED
PLAYERS CLOSING SELECTED PLAYERS
STOCK PRICE TRANSACTIONS STOCK PRICE
--------------- --------------- -------------
<S> <C> <C> <C>
One day prior to Harrah's proposal (08/13/99)................ $ 6.56 24.7% $ 8.18
One week prior to Harrah's proposal (08/06/99)............... 6.56 23.7 8.12
Four weeks prior to Harrah's proposal (07/16/99)............. 6.94 23.0 8.53
One day prior to Jackpot proposal (02/08/99)................. $ 6.00 24.7% $ 7.48
One week prior to Jackpot proposal (02/01/99)................ 5.69 23.7 7.04
Four weeks prior to Jackpot proposal (01/11/99).............. 5.88 23.0 7.23
One day prior to HPK proposal (11/09/98)..................... $ 5.00 24.7% $ 6.23
One week prior to HPK proposal (11/02/98).................... 4.50 23.7 5.57
Four weeks prior to HPK proposal (10/12/98).................. 3.50 23.0 4.30
</TABLE>
ANALYSIS OF SELECTED COMPARABLE GAMING MERGER AND ACQUISITION
TRANSACTIONS. DLJ analyzed the implied transaction multiples paid in selected
comparable gaming merger and acquisition transactions specifically. The
transactions were: Blue Chip Casino, Inc./Boyd Gaming Corporation, Caesars
World, Inc. /Park Place Entertainment, Inc., Diamond Jo Casino/AB Capital, CRC
Holdings, Inc./Jackpot Enterprises, Inc. (terminated), Empress Entertainment,
Inc./Horseshoe Gaming, LLC., Harvey's Casino Resorts, Inc./Colony Capital and
Casino Magic Corporation/Hollywood Park, Inc. DLJ analyzed the multiple of the
enterprise value in the comparable transactions to EBITDA for the latest twelve
months and for the next projected year of the targets in such transactions.
Enterprise value is equity market value plus total debt and the book value of
preferred stock less excess cash and cash equivalents. DLJ also calculated the
price per share of Players implied by the average transaction multiples. The
one-year projected EBITDA for the above targets was obtained from research
analyst estimates at the time of the announcement of each of the transactions.
This analysis provided the following results:
<TABLE>
<CAPTION>
IMPLIED PLAYERS STOCK PRICE
BASED ON MULTIPLE OF
ENTERPRISE VALUE TO
------------------------------
LATEST 12 MONTHS PROJECTED
EBITDA EBITDA
----------------- -----------
<S> <C> <C>
Players merger....................................................... $ 8.50 $ 8.50
Selected transactions................................................ 7.15 7.51
</TABLE>
ANALYSIS OF SELECTED PUBLICLY-TRADED GAMING COMPANIES. DLJ analyzed the
implied price per share of Players based on the market values and trading
multiples of selected publicly traded, riverboat gaming companies. The riverboat
gaming companies consisted of Argosy Gaming Company, Hollywood Casino
Corporation, Isle of Capri Casinos, Inc., Lady Luck Gaming Corp., and President
Casinos Enterprises. DLJ compared the enterprise values of the comparable
companies as multiples of their latest twelve months revenue, EBITDA, earnings
before interest and taxes, or EBIT, estimated calendar 1999 and projected
calendar 2000 EBITDA. DLJ also compared the closing stock prices of each of the
comparable companies as multiples of their estimated calendar 1999 earnings per
share and projected calendar 2000 earnings per share. In each case mentioned
above, DLJ derived the implied price per share for Players based on the average
of each of the multiples. EBITDA and earnings per share projections for Players
were based upon estimates provided to DLJ by the management of Players. EBITDA
projections for the comparable companies were based upon publicly available
research analyst estimates. Earnings per share projections for the comparable
companies were based upon First Call Research Network consensus research analyst
estimates. All multiples were based on closing stock
18
<PAGE>
prices on August 13, 1999. The ranges of multiples and the implied prices per
share of Players based on the average of the multiples analyzed were as follows:
<TABLE>
<CAPTION>
SELECTED RIVERBOAT
GAMING COMPANIES
IMPLIED PLAYERS ---------------------------------
STOCK PRICE AVERAGE HIGH LOW
----------------- ----------- --------- ---------
<S> <C> <C> <C> <C>
Enterprise value as multiple of:
Latest twelve months revenue........................... $ 7.86 1.2x 1.5x 0.7x
Latest twelve months EBITDA............................ 5.96 5.4 5.9 4.3
Latest twelve months EBIT.............................. 5.35 8.6 13.0 5.7
1999 EBITDA............................................ 5.59 4.8 5.8 3.3
2000 EBITDA............................................ 5.95 4.4 5.3 2.8
Stock price as multiple of:
1999 earnings per share................................ $ 5.70 12.7x 13.7x 11.7x
2000 earnings per share................................ 6.05 9.5 10.0 9.0
</TABLE>
No company or transaction used in the "Selected Comparable Gaming Merger and
Acquisition Transactions" or "Analysis of Selected Publicly-Traded Gaming
Companies" as a comparison is identical to Players or the merger. Accordingly,
an analysis of the results of the foregoing is not entirely mathematical;
rather, it involves complex considerations and judgments concerning differences
in financial and operating characteristics and other factors that could affect
the acquisition, public trading or other values of the comparable companies,
comparable transactions or the business segment, company or transaction to which
they are being compared.
DISCOUNTED CASH FLOW ANALYSIS. DLJ performed a discounted cash flow
analysis of Players using projections and assumptions provided by the management
of Players. The discounted cash flow for Players was estimated using discount
rates ranging from 12.5% to 17.5% and estimated EBITDA multiples in 2004 ranging
from 4.5x to 6.5x. This analysis yielded implied prices per share for Players
ranging from $6.47 to $11.57.
The summary set forth above is not a complete description of the analyses
performed by DLJ but describes, in summary form, the principal elements of the
presentation by DLJ to the Players board of directors in connection with its
opinion. The preparation of a fairness opinion involves various determinations
about the most appropriate and relevant methods of financial analysis and the
application of these methods to the particular circumstances. Therefore, such an
opinion is not readily susceptible to summary description. Each of the analyses
conducted by DLJ was carried out in order to provide a different perspective on
the acquisition and add to the total mix of information available. DLJ did not
form a conclusion as to whether any individual analysis, considered in
isolation, supported or failed to support an opinion as to fairness from a
financial point of view. Rather, in reaching its conclusion, DLJ considered the
results of the analyses together and did not place particular reliance or weight
on any individual analysis and ultimately reached its opinion based on the
results of all analyses taken as a whole. DLJ believes that its analyses must be
considered as a whole and that selecting portions of its analysis and the
factors considered by it, without considering all analyses and factors, could
create an incomplete or misleading view of the evaluation process underlying its
opinions. The analyses performed by DLJ are not necessarily indicative of actual
values or future results, which may be significantly more or less favorable than
suggested by such analyses.
We have agreed to pay DLJ for its services in connection with the merger an
aggregate financial advisory fee of 0.85% of the value of the total transaction,
including an aggregate fee of $350,000 for providing advisory services and
rendering its fairness opinion to our board of directors with respect to the
merger. We also have agreed to reimburse DLJ for travel and other out-of-pocket
expenses, including the fees and expenses of its legal counsel. We have also
agreed to indemnify DLJ and related persons against liabilities, including
liabilities under the federal securities laws, arising out of DLJ's engagement.
We paid DLJ a fee of $750,000 for rendering an opinion that the $8.25 stock and
cash
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consideration to be received by our stockholders pursuant to the Jackpot
proposal was fair from a financial point of view. Such fee will be credited
toward the percentage fee based on the value of the transaction. We paid DLJ a
fee of $500,000 for rendering an opinion that the proposal made on November 10,
1998 by Hollywood Park, Inc. to acquire us at $6.00 per share was inadequate to
the stockholders from a financial point of view. One half of this fee and
certain other fees will be credited toward the percentage fee based on the value
of the transaction.
DLJ has advised us that, in the ordinary course of business, DLJ and its
affiliates may actively trade or hold the securities of Players and Harrah's for
their own account or for the account of customers and, accordingly, may at any
time hold a long or short position in their securities. DLJ has performed
investment banking and other services for us in the past and has been
compensated for such services. DLJ served as lead-manager of our $112.5 million
public equity offering in July 1993 and as lead-manager of our $150.0 million
senior notes offering in April 1995. DLJ has also performed investment banking
and other services for Harrah's in the past has been compensated for such
services. In April 1992, DLJ served as lead-manager of Harrah's (at the time
known as Embassy Suites, Inc.) $200.0 million Guaranteed Senior Subordinated
Notes offering, in November 1994 as lead-manager of the Harrah's Jazz $435.0
million First Mortgage Notes offering and in January 1999 as co-manager of
Harrah's $500.0 million Senior Notes offering.
FINANCING FOR THE MERGER
Harrah's and HEI Acquisition have agreed to have sufficient funds available
to enable them to pay the cash payment to our stockholders and repurchase any of
our 10 7/8% Senior Notes due 2005 or complete a tender offer for the Senior
Notes, if the documents governing the Senior Notes require a repurchase or if
Harrah's feels it is necessary or desirable to tender for the notes. Harrah's
anticipates that the cash for these purposes will be funded through borrowings
under the Harrah's credit facility or the issuance of new public debt securities
if market conditions warrant.
ACCOUNTING TREATMENT
We expect that the merger will be accounted for under the "purchase" method
of accounting. If this is the case, a determination of the fair value of
Players' assets and liabilities will be made in order to allocate the purchase
price to the assets acquired and the liabilities assumed.
REGULATORY APPROVALS
ANTITRUST. Transactions such as the merger are reviewed by the Antitrust
Division of the United States Department of Justice and the United States
Federal Trade Commission to determine whether they comply with applicable
antitrust laws. Under the provisions of the Hart-Scott-Rodino Antitrust
Improvements Act, the merger may not be completed until the waiting period
requirements of the HSR Act have been satisfied. Players and Harrah's intend to
file notification reports, together with requests for early termination of the
waiting period, with the Department of Justice and the Federal Trade Commission
as soon as practiable.
GAMING REGULATION. Gaming operations are subject to extensive regulation.
We now hold gaming or horse racing licenses or permits in Illinois, Kentucky,
Louisiana, and Missouri. In each such jurisdiction, regulatory requirements must
be complied with, applications filed, and/or certain approvals must be obtained
in connection with the merger. Harrah's' and Players' obligations to complete
the merger are subject to the condition that all necessary gaming regulatory
approvals and authorizations shall have been obtained. Harrah's also holds
gaming licenses in Illinois, Louisiana and Missouri and is approved to own an
interest in a horse racing facility in Kentucky. No assurances can be given that
the necessary gaming regulatory approvals and authorizations will be obtained or
that they will be obtained on a timely basis.
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Review of the merger by gaming regulatory authorities will involve
examination of the structure of the combined company and its financial stability
after the merger and will require the demonstration of qualifications and
suitability of key individuals associated with Harrah's. See "Regulatory
Approvals of Gaming Authorities Required for the Merger" for a more complete
discussion of the approvals required from gaming regulatory authorities needed
to complete the merger.
INTERESTS OF CERTAIN PERSONS IN THE MERGER
EMPLOYMENT AND CHANGE OF CONTROL AGREEMENTS
Players previously entered into an employment agreement with Howard A.
Goldberg, our former acting chairman of the board, president and chief executive
officer. Players and Mr. Goldberg entered into a separation agreement on July 1,
1999 whereby Mr. Goldberg's employment with Players was terminated effective
July 12, 1999. Upon completion of the merger, or the occurrence of certain other
transactions, Mr. Goldberg will receive a lump sum payment of approximately
$2.29 million in accordance with the change in control provisions of his
original employment agreement. Any benefits payable under the separation
agreement to Mr. Goldberg are limited to the maximum amount that may be paid
without resulting in the imposition of parachute tax penalties under Section
280G of the Internal Revenue Code.
Players has change of control agreements with two other executives, John
Groom and Raymond A. Spera. It is anticipated that Mr. Groom will cease to be
employed by Players on the effective date of the merger.
Players is also a party to employment agreements with two former executives,
Peter Aranow and Patrick Madamba, Jr. Mr. Aranow's employment with Players
terminated as of March 23, 1999, and Mr. Madamba's employment with Players
terminated as of April 7, 1999. Players is a party to severance agreements with
Messrs. Aranow and Madamba, respectively, each dated as of March 23, 1999. Under
such severance agreements, the change of control provisions of each of Mr.
Aranow's and Mr. Madamba's employment agreements continue to be applicable to
the merger and certain other transactions. Mr. Aranow agreed to provide
consulting services to Players after his termination. Mr. Aranow receives $5,000
per month for his services.
The merger will constitute a change of control under the Players employment
agreements and the change of control agreements, and upon completion of the
merger each of Messrs. Aranow, Madamba and Groom will be considered to be
terminated in connection with a change of control under their agreements. As a
result, Messrs. Aranow, Madamba and Groom, subject to limitation discussed in
the final paragraph of this subsection, will each receive as severance
compensation (1) a lump sum payment equal to the present value of the base
compensation that would be due him for a period of 36 months following his
termination of employment, based on his average monthly base compensation for
the 36-month period preceding his termination (reduced, in the case of Messrs.
Aranow and Madamba by any payments already received under clause (1) of the
immediately preceding paragraph), and (2) a lump sum payment equal to the
present value of the aggregate performance bonuses that he received for the
36-month period preceding his termination. Each of Messrs. Aranow, Madamba and
Groom will continue to participate in Players' employee benefit programs during
the period for which he receives severance compensation (without regard to
whether payments are made in a lump sum), unless Players provides him with a
payment equal to the cost of such coverage. Benefits, or payments in lieu of
benefits, provided to Mr. Aranow or Mr. Madamba under their respective severance
agreements shall be credited against the foregoing obligation. In addition, all
unvested Players stock options held by Mr. Groom will vest upon such change of
control. The merger will also constitute a change of control under Mr. Spera's
change of control agreement, but Mr. Spera will not be deemed terminated as a
result of the merger. Provided Mr. Spera remains employed by Players through the
effective date of the merger, he will receive a lump sum payment equal to the
base compensation that would be due him for
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a period of six months following the effective date of the merger. However, if
there is a termination of Mr. Spera's employment within six months before or
twenty-four months after the effective date of the merger, then Mr. Spera will
receive as severance compensation a lump sum payment equal to the base
compensation that would be due him for a period of twelve months following such
termination of employment, less any amounts already paid under the immediately
proceeding sentence.
The benefits payable under the employment agreements, severance agreements
and change of control agreements to Messrs. Aranow, Madamba and Groom are also
limited to the maximum amount that may be paid without resulting in the
imposition of parachute tax penalties under Section 280G of the Internal Revenue
Code. Estimated severance payments, without regard to the application of such
limit, will total approximately $1,178,000 for Mr. Aranow, $737,000 for Mr.
Madamba and $1,864,000 for Mr. Groom.
STOCK OPTIONS
The executives' outstanding stock options and stock appreciation rights will
become fully vested and will be cashed out in connection with the merger (as
described in "The Merger Agreement--Stock Options" below), resulting in payments
of $2,244,563 for Mr. Goldberg, $335,000 for Mr. Aranow, $876,250 for Mr. Groom
and $47,996 for Mr. Spera, based on their stock option holdings as of August 27,
1999. In addition, the stock options of all non-employee directors of Players
will also become fully vested and cashed out in connection with the merger,
resulting in the following payments to such directors: Mr. Buggy, $116,563; Mr.
Cohen, $56,719; Mr. Geller, $172,880; Mr. Masson, $56,719; Mr. Naimoli,
$116,563; Mr. Seidler, $183,281, and Mr. Webb, $56,719.
MATERIAL FEDERAL INCOME TAX CONSEQUENCES
The following general description of the material federal income tax
consequences of the merger does not take into account the facts and
circumstances of any particular holder of Players common stock. The following
discussion does not address the consequences of the merger under state, local or
foreign law, nor does the discussion address all the aspects of federal income
taxation that may be relevant to a holder of Players common stock in light of
such stockholder's particular circumstances. EACH HOLDER OF PLAYERS COMMON STOCK
SHOULD CONSULT SUCH HOLDER'S OWN TAX ADVISOR ABOUT THE SPECIFIC TAX CONSEQUENCES
TO SUCH HOLDER OF THE PROPOSED TRANSACTIONS INCLUDING THE APPLICATION AND EFFECT
OF STATE, LOCAL, FOREIGN, AND OTHER TAX LAWS, CHANGES IN SUCH TAX LAWS, AND TAX
RETURN REPORTING REQUIREMENTS. Special tax consequences not described herein may
be applicable to a particular class of taxpayers, such as financial
institutions, insurance companies, broker-dealers, individuals and entities who
are not citizens or residents of the United States, tax exempt entities, persons
holding Players common stock as part of an integrated investment composed of
Players common stock and one or more other positions and stockholders who
acquired their Players common stock through the exercise of an employee stock
option or otherwise as compensation.
This discussion is based upon the Internal Revenue Code of 1986, as amended
(the "Code"), applicable Treasury Department regulations thereunder, judicial
authority and current administrative ruling and practice, all as in effect as of
the date of this document. Future legislative, judicial or administrative
changes or interpretations could alter or modify the statements and conclusions
set forth herein, and any such changes or interpretations could have retroactive
effect and could affect the federal income tax consequences to the holder of
Players common stock. The following discussion does not address the tax
consequences of any transaction other than the merger.
The receipt of cash in exchange for shares of Players common stock will be a
taxable transaction for U.S. federal income tax purposes under the Code, and may
also be a taxable transaction under applicable state, local, foreign and other
tax laws. Generally, for U.S. federal income tax purposes, a Players stockholder
will recognize gain or loss in an amount equal to the difference between the sum
of
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the cash received by the stockholder pursuant to the merger and the
stockholder's adjusted tax basis in the shares of common stock surrendered
pursuant to the merger. For federal income tax purposes, such gain or loss will
be capital gain or loss to the stockholders if the common stock surrendered was
a capital asset in the hands of the stockholder and will be long-term capital
gain or loss if the stockholder held the shares of common stock for more than
one year. Long-term capital gain of individuals will be subject to federal
income tax at a maximum rate of 20 percent.
Payments to a Players stockholder in connection with the merger may be
subject to 31 percent "backup withholding" unless the stockholder provides its
taxpayer identification number or social security number and certifies that such
number is correct or properly certifies that it has applied for and is awaiting
such a number. Certain holders (including, among others, all corporations and
certain foreign individuals) are not subject to these backup withholding and
certain other reporting requirements. If backup withholding applies, Harrah's is
required to withhold 31% of any payments made pursuant to the merger. Backup
withholding is not an additional tax, but rather it is an advance tax payment
that is subject to refund if it results in an overpayment of tax. Certain
penalties apply for failure to furnish correct information and for failure to
include reportable payments in income.
STOCKHOLDER SUPPORT AGREEMENTS AND PROXIES
As an inducement and condition to the willingness of Harrah's to enter into
the merger agreement, Alan R. Buggy, Lawrence Cohen, Marshall Geller, John
Groom, Charles Masson, Vince J. Naimoli, Lee Seidler, Earl E. Webb and The
Griffin Group entered into stockholder support agreements. At the record date
for the Players special meeting, these stockholders collectively held
approximately 15.3% of the combined voting power and outstanding common stock.
Together, these stockholders are able to significantly influence the vote on the
approval and adoption of the merger agreement and the approval of the merger.
Under the stockholder support agreements, at the special meeting or any
other meeting of stockholders, however called, and in any action by written
consent of the stockholders, each signing stockholder agreed:
- to vote all of its stock in favor of the adoption of the merger agreement
and approval of the merger;
- to vote all of its stock against any proposal for any significant
transaction which would result in a breach of any of Players' covenants,
representations, warranties, agreements or other obligations, or the
nonfulfillment of any conditions under the merger agreement;
- to vote all of its stock in favor of any matter necessary to approve the
merger;
- not to sell, assign, transfer, pledge, encumber or otherwise dispose of
any of its common stock;
- not to deposit any common stock into any voting trust or enter into a
voting agreement or arrangement inconsistent with the stockholder support
agreement;
- not to enter into any contract, option or other arrangement or undertaking
with respect to the sale, assignment, transfer or other disposition of any
common stock;
- not to initiate, solicit or encourage the submission of any proposal to
acquire Players;
- not to agree to or recommend any other proposal to acquire Players; and
- not to engage in negotiations or discussions concerning, or provide any
non-public information to any person or entity relating to, any other
proposal to acquire Players.
Each stockholder support agreement also grants an irrevocable proxy to
Harrah's if the stockholder fails to vote as required. In such event, the proxy
allows Harrah's to vote all of such
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stockholder's common stock in favor of the adoption of the merger agreement. The
proxy also allows Harrah's to vote such stock on all other matters which might
delay or prevent the consummation of the merger.
The stockholder support agreements terminate upon the earlier of the closing
of the merger or any termination of the merger agreement. The irrevocable
proxies terminate upon the termination of the stockholder support agreements.
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THE MERGER AGREEMENT
THE FOLLOWING SUMMARIZES THE MATERIAL TERMS OF THE MERGER AGREEMENT, A COPY
OF WHICH IS ATTACHED AS APPENDIX A TO THIS DOCUMENT AND IS INCORPORATED HEREIN
BY REFERENCE. THIS SUMMARY IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE
MERGER AGREEMENT. WE URGE YOU TO READ THE MERGER AGREEMENT IN ITS ENTIRETY FOR A
MORE COMPLETE DESCRIPTION OF THE TERMS AND CONDITIONS OF THE MERGER.
THE MERGER
Following the approval of the merger by the stockholders and the
satisfaction of the other conditions to the merger, HEI Acquisition, Harrah's
wholly-owned subsidiary, will be merged with and into Players and we will become
a wholly-owned subsidiary of Harrah's.
If the merger agreement is approved, the merger closing will take place no
later than the third business day after the last of the conditions of the merger
is satisfied. On the date the merger closes, Harrah's and Players will file
articles of merger with the Secretary of State of Nevada. The merger will become
effective when the articles of merger are duly filed with the Nevada Secretary
of State, or, if agreed to by Players and Harrah's, at a later time not to
exceed 90 days after filing.
CONVERSION OF SHARES
Each outstanding share of Players common stock will be converted into the
right to receive $8.50 in cash.
All shares of Players common stock held by Players as treasury shares or
owned by Harrah's will be canceled, and each issued and outstanding share of HEI
Acquisition stock will be converted into an equivalent share of common stock of
the surviving corporation in the merger. As of the date of this document,
Harrah's does not own any shares, of the outstanding Players common stock.
EXCHANGE OF STOCK CERTIFICATES
EXCHANGE AGENT. Harrah's anticipates it will designate D.F. King to act as
exchange agent upon consummation of the merger and will deposit with the
exchange agent the funds to be paid in the merger.
DO NOT SEND IN YOUR STOCK CERTIFICATES AT THIS TIME. YOU WILL RECEIVE A
LETTER OF TRANSMITTAL AND FURTHER INSTRUCTIONS AS SOON AS PRACTICABLE AFTER THE
MERGER IS EFFECTIVE.
Each record holder of Players common stock will be entitled to receive $8.50
per share in cash upon surrender of the holder's Players stock certificate or
certificates and a properly executed letter of transmittal to the exchange
agent. The stock certificate or certificates surrendered will be canceled. After
the merger is effective, Players stock certificates will represent only the
right to receive $8.50 per share in cash. All cash issued in exchange for
certificates of Players common stock will be considered to have been exchanged
in full payment for the shares of Players common stock. After the closing of the
merger, our stock transfer books will not register transfers of shares that were
outstanding prior to the closing of the merger. If shares of Players common
stock are presented to Harrah's after the merger for any reason, the
certificates will be canceled and exchanged for $8.50 per share in cash.
NO LIABILITY. None of Harrah's, HEI Acquisition, Players or the exchange
agent will be liable to any Players stockholder for any cash delivered to a
public official pursuant to abandoned property, escheat or similar laws.
LOST CERTIFICATES. If any Players stock certificates are lost, stolen, or
destroyed prior to the closing of the merger, the owner may be required to
submit an affidavit of that fact to the exchange agent. Also, Harrah's may
require the owner to post a bond in a reasonable amount as indemnity against any
potential claim regarding the lost certificates. In exchange for lost, stolen or
destroyed stock certificates,
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after the owner has made the affidavit and posted the bond, the exchange agent
will issue to the owner $8.50 per share in cash.
STOCK OPTIONS
Immediately prior to the merger becoming effective, we will cause all
outstanding stock options granted under any stock option or other stock-based
incentive plan to be accelerated and canceled. Holders of unexercised options
will be entitled to receive a cash payment equal to the product of (i) the
number of shares of Players common stock subject to each option and (ii) the
excess, if any, of $8.50 over the per share exercise price of such option.
It is estimated that the aggregate cash payments required to be made in
respect of unexercised options will be approximately $5.9 million.
REPRESENTATIONS AND WARRANTIES
The merger agreement contains customary representations and warranties made
by Players and Harrah's which each company relied on when agreeing to the merger
and will rely on when closing the merger. These representations and warranties
deal with issues such as:
- the organization, valid existence and good standing of Players, Harrah's
and their subsidiaries, and similar corporate matters;
- the capital structure of Players;
- the authorization, execution, delivery and enforceability of the merger
agreement and the transactions contemplated by the merger agreement and
that the agreement and the transactions do not conflict with charter
documents, material contracts or applicable licenses, statutes or orders;
- the required consents and approvals for the merger;
- the documents and financial statements filed by Players and Harrah's with
the Securities and Exchange Commission and the accuracy of information
contained in them;
- the absence of undisclosed liabilities of Players;
- the absence of material adverse events or changes to Players;
- taxes and tax returns of Players;
- properties of Players;
- intellectual property of Players;
- agreements, contracts and commitments of Players;
- litigation of Players;
- environmental matters and hazardous substances of Players;
- employee benefit plans of Players;
- compliance with laws by Players;
- labor matters of Players;
- insurance of Players;
- the material accuracy of information supplied by Players in connection
with this document;
- opinion of Players' financial advisor;
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- voting requirements for Players stockholders to approve the merger;
- Year 2000 computer issues of Players;
- the inapplicability to the merger of certain provisions of the Nevada
Revised Statutes;
- the absence of any brokers; and
- Harrah's ability to finance the merger and related transactions.
CERTAIN COVENANTS
The merger agreement contains a number of covenants, most of which provide
limitations within which we will operate our business until the merger closes.
These covenants include the following:
CONDUCT OF BUSINESS PENDING THE MERGER
From the date of the merger agreement until the earlier of the closing of
the merger or the termination of the merger agreement, we will:
- continue to operate our business in the usual, regular and ordinary course
substantially consistent with past practices;
- pay our debts and taxes when due;
- pay or perform other obligations when due; and
- use commercially reasonable efforts to preserve our business organization,
management team and business relationships.
This conduct is subject to exceptions included in the merger agreement
disclosure schedules.
ADDITIONAL COVENANTS
The merger agreement also provides that, from the date of the merger
agreement until the earlier of the closing of the merger or the termination of
the merger agreement, subject to certain exceptions, neither we nor any of our
subsidiaries will:
- declare, set aside or pay dividends on or make any other distributions on
any of our capital stock, split, combine, or reclassify or make other
changes in our capitalization, or purchase, redeem or acquire any shares
of our capital stock;
- issue, other than upon exercise of outstanding options, or sell any stock
or securities convertible into shares of our stock, or any subscriptions,
rights, warrants or options;
- amend our articles of incorporation, bylaws or other organizational
documents;
- make any material acquisitions;
- sell, lease, license, mortgage or otherwise dispose of material properties
or assets outside the ordinary course of business;
- incur debt for borrowed money;
- increase the compensation of officers or employees (other than increases
to non-officer employees consistent with past practices), grant additional
severance or termination pay, enter into employment or severance
agreements, take certain actions regarding benefit plans for our
directors, officers, or employees or enter into any collective bargaining
or similar agreement;
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- accelerate, amend or change the exercise period of options or restricted
stock granted under employee stock plans or authorize cash payments in
exchange for options granted under employee stock plans;
- enter into any material agreement or contract;
- make any material change in our accounting methods or policies;
- make any material tax elections or settle any material tax claims;
- settle any litigation that would require payment over $250,000 above the
amount covered by insurance, excluding the deductible to such insurance;
or
- make capital expenditures in excess of $250,000 individually or $1,000,000
in the aggregate.
NO SOLICITATION
The merger agreement also provides that, from the date of the merger
agreement until the earlier of the closing of the merger or the termination of
the merger agreement, we will not, directly or indirectly:
- solicit, initiate or encourage or take any action to facilitate any
inquiries or proposals that are or could lead to a proposal or offer for a
merger, business combination or similar transaction, other than the merger
with Harrah's;
- engage in negotiations or discussions other than with Harrah's concerning
a proposal for a merger or similar transaction;
- provide non-public information to any person or entity relating to a
proposal for a merger or similar transaction; or
- agree to or recommend any proposal for a merger or similar transaction.
However, we or our board of directors may, prior to the time that the merger
is approved by the stockholders, either (1) furnish non-public information to or
enter into discussions or negotiations with a person or entity that has made an
unsolicited bona fide written proposal for a merger or similar transaction; or
(2) modify or withdraw our recommendation regarding the merger or recommend an
unsolicited bona fide written acquisition proposal to our stockholders, if in
the case of either (1) or (2):
-- the board of directors believes the terms of the proposal are
superior to Players stockholders from a financial point of view than
the terms of the merger with Harrah's;
-- the board of directors believes in good faith, after consultation
with its financial advisor, that the proposal is reasonably capable
of being completed on substantially the terms proposed; and
-- the board of directors determines in good faith, after consultation
with outside legal counsel, that such action is required for the
board to comply with its fiduciary duties to stockholders under
applicable law.
The merger agreement requires us to provide Harrah's notice indicating the
identity of any third party making a proposal and the material terms and
conditions of the proposal at least three days prior to us accepting such
proposal.
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DIRECTOR AND OFFICER INDEMNIFICATION
After the merger, Harrah's has agreed to provide each director and officer
of Players with the following protections with respect to acts or omissions
before the merger, whether the claim is asserted or claimed prior to, at or
after the closing of the merger:
- indemnity against costs or expenses (including attorneys' fees),
judgments, fines, losses, claims, damages, liabilities or amounts paid in
settlement in connection with any claim, action, suit, proceeding or
investigation, whether civil, criminal, administrative or investigative,
and
- directors' and officers' liability insurance coverage in effect for three
years.
The insurance coverage will be at least as favorable as our existing
coverage. However, Harrah's will not be required to spend more than twice the
annual premium we currently pay for coverage. If the premium would at any time
exceed twice the current premium, then Harrah's will maintain insurance policies
which provide the maximum coverage available at an annual premium equal to twice
the current premium. The companies will also be obligated to advance expenses as
incurred to the fullest extent permitted. However, the person to whom expenses
are advanced must provide an undertaking to repay the advances if it is
ultimately determined that the person is not entitled to indemnification.
EMPLOYEE BENEFITS; SEVERANCE
Harrah's will cause Players, as the surviving corporation in the merger, to
honor all written employment, severance and termination agreements between
Players and its employees disclosed to Harrah's on or prior to the date of the
merger agreement. For purposes where length of service is relevant, except for
pension benefit accruals, under any employee benefit plan, the plans of the
surviving corporation will recognize credit for service with Players and any of
its subsidiaries to the same extent that such service was recognized before the
merger.
OTHER COVENANTS
The merger agreement also provides that each of Players and Harrah's will:
- promptly provide the other party with copies of all filings made with
governmental entities in connection with the merger;
- give prompt notice to the other of, and use commercially reasonable
efforts to cure, any circumstance which causes a breach of any
representation, warranty, covenant or agreement;
- file this document;
- obtain all permits, registrations, licenses, findings of suitability,
consents, variances, exemptions, orders, approvals and authorizations of
all governmental entities or other third parties in connection with the
merger;
- make all necessary filings and submissions with respect to the merger
under federal, state and foreign securities laws, antitrust laws and other
applicable laws and file, within 30 days after the date of the merger
agreement, all initial applications and documents required in connection
with obtaining governmental approvals;
- consult with the other party, and use reasonable efforts to agree upon
press releases or other public statements concerning the merger; and
- use best efforts to consummate the merger as promptly as practicable;
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and that Players will:
- give Harrah's access to all its personnel, properties, books, contracts,
commitments and records, and to furnish related information reasonably
requested by Harrah's, subject to the confidentiality agreements signed by
Harrah's; and
- fully perform its obligations under the stockholder support agreements.
CONDITIONS TO THE MERGER
The merger is subject to satisfaction or waiver of certain conditions. The
following conditions must be satisfied before either Harrah's or Players is
obligated to effect the merger:
- the merger shall have been approved by the Players stockholders;
- any applicable Hart-Scott-Rodino Act waiting period shall have expired or
been terminated;
- approvals from government entities or regulatory bodies necessary to avoid
a material adverse effect on the merger shall have been received;
- Players shall have obtained the renewal by the Louisiana Gaming Control
Board of licenses necessary for Players to operate its Lake Charles casino
riverboats without any material restrictions and without any fines by any
gaming authority related to the Shetler-Edwards matter that would have a
material adverse effect on the business of the Lake Charles casino,
determined with respect to the casino's enterprise value; and
- no government entity or regulatory body shall have taken any action which
has the effect of making the merger illegal or otherwise prohibits the
merger.
The obligation of Harrah's to effect the merger is subject to the
satisfaction or waiver of the following additional conditions:
- the representations and warranties of Players set forth in the merger
agreement shall be true and correct as of the date of the merger agreement
and (except for representations and warranties which speak as of an
earlier date) as of the closing of the merger, except for (a) changes
contemplated by the merger agreement and (b) inaccuracies which, in the
aggregate, are not materially adverse to the business, financial condition
or results of operations of Players and its subsidiaries, taken as a
whole, and Harrah's shall have received a certificate signed on behalf of
Players by the chief executive officer and the chief financial officer of
Players to that effect;
- Players shall have materially performed all material obligations required
to be performed by it under the merger agreement at or prior to the
closing of the merger, and Harrah's shall have received a certificate
signed on behalf of Players by the chief executive officer and the chief
financial officer of Players to that effect; and
- no event shall have occurred that would result in triggering any right of
Players stockholders under Players' rights agreement.
Our obligation to effect the merger is subject to the satisfaction or waiver
of the following additional conditions:
- the representations and warranties of Harrah's set forth in the merger
agreement shall be true and correct as of the date of the merger agreement
and (except for representations and warranties which speak as of an
earlier date) as of the closing of the merger, except for (a) changes
contemplated by the merger agreement and (b) inaccuracies which, in the
aggregate, are not materially adverse to the business, financial condition
or results of operations of Harrah's and its subsidiaries, taken as a
whole, and Players shall have received a certificate signed on
30
<PAGE>
behalf of Harrah's by the chief executive officer and the chief financial
officer of Harrah's to that effect; and
- Harrah's shall have materially performed all obligations required to be
performed by it under the merger agreement at or prior to the closing of
the merger, and Players shall have received a certificate signed on behalf
of Harrah's by the chief executive officer and the chief financial officer
of Harrah's to that effect.
TERMINATION; TERMINATION FEES AND EXPENSES
TERMINATION
The merger agreement may be terminated at any time before the merger becomes
effective, whether before or after approval of the merger by the stockholders of
Players,
- by mutual written consent of Players and Harrah's;
- by either Players or Harrah's if the merger has not been completed by
October 31, 1999, although either Players or Harrah's may extend the
termination date to January 31, 2000 if any of the closing conditions have
not been satisfied by October 31, 1999 and the conditions are reasonably
capable of being satisfied by the extended date.
- by either Players or Harrah's if a court of competent jurisdiction or
other governmental entity has issued a nonappealable final order or taken
any other nonappealable final action permanently restraining, enjoining or
prohibiting the merger;
- by either Players or Harrah's, if the Players stockholders have not
approved the merger;
- by Players, if any of the following occurs:
-- after Players receives from an outside party a proposal for a merger
or similar transaction, Players delivers to Harrah's, prior to
approval of the merger by the Players stockholders, a written notice
regarding an unsolicited acquisition proposal from a third party and
completes a waiting period of at least three business days from the
date of notice;
-- upon breach of any material representation, warranty, covenant or
agreement on the part of Harrah's, or if any material representation
or warranty of Harrah's shall become untrue, and such breach, if
curable, is not cured within 30 days.
- by Harrah's, if any of the following occurs:
-- the Players board of directors has withdrawn or modified its
recommendation of the merger to the stockholders or recommends a
merger or similar transaction with another entity;
-- Harrah's requests that the Players board of directors reconfirm its
recommendation of the merger to the Players stockholders and it fails
to do so after it receives Harrah's request;
-- upon breach of any material representation, warranty, covenant or
agreement on the part of Players or if any material representation or
warranty of Players shall become untrue and such breach, if curable,
is not cured within 30 days; or
-- the Louisiana Gaming Control Board revokes Players' licenses or
permits to operate its Lake Charles casino riverboats or one or more
gaming regulatory authorities imposes material fines, penalties or
payments on Players or our current and former directors, officers or
employees relating to the Shetler and Edwards matter.
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<PAGE>
In the event of termination of the merger agreement by Players or Harrah's
as provided above, the merger agreement will become void, and, except as set
forth below or in the event of a willful breach of the merger agreement, there
will be no liability or obligation on the part of Players, Harrah's, HEI
Acquisition or their respective officers, directors, stockholders or affiliates
as a result of termination. The termination provisions described below will
remain in full force and effect and survive any termination of the merger
agreement.
TERMINATION FEES PAYABLE BY PLAYERS
Players will pay Harrah's a termination fee of $13.5 million upon
termination of the merger agreement in any of the following circumstances:
- termination by either Harrah's or Players because the Players stockholders
fail to approve the merger and if a proposal for a merger or similar
transaction with a third party involving Players has been publicly
announced prior to the Players stockholders meeting and is pending at the
time of the meeting;
- termination by Harrah's if the Players board of directors has either (i)
withdrawn or modified its merger recommendation, (ii) failed to reconfirm
its recommendation at the request of the Harrah's board, (iii) recommends
an alternative transaction to the Players stockholders; or
- termination by Players if, prior to the Players stockholders meeting, the
Players board, after consultation with its financial and legal advisors,
has recommended a merger or similar transaction with another entity that
is superior to the merger with Harrah's.
Players will pay Harrah's a termination fee of $3 million and reimburse
Harrah's for certain expenses incurred in connection with the transaction as
described below under "Reimbursement of Expenses," in the event of termination
of the merger agreement by either Players or Harrah's because of Players'
failure to receive stockholder approval of the merger, other than in the
circumstances described above requiring payment of the $13.5 million fee.
REIMBURSEMENT OF EXPENSES
Players will reimburse Harrah's all fees and expenses incurred in connection
with the merger up to an amount equal to $1 million, upon the occurrence of any
of the following events:
- termination of the merger agreement by either Players or Harrah's because
the Players stockholders fail to approve the merger;
- termination of the merger agreement by Harrah's upon breach of any
material representation, warranty, covenant or agreement on the part of
Players which, if curable, is not cured within 30 days;
- termination of the merger agreement by either Players or Harrah's because
the merger was not consummated by October 31, 1999 (or January 31, 2000,
if extended) and all governmental approvals were not obtained due to facts
or circumstances relating to Players, its employees or operations not
previously disclosed to Harrah's; or
- termination of the merger agreement by Harrah's if:
-- the Louisiana Gaming Control Board revokes Players' licenses or
permits to operate its Lake Charles casino riverboats or
-- any gaming authority imposes fines on Players related to the
Shetler-Edwards matter that would have a material adverse effect on
the business of the Lake Charles casino, determined with respect to
the casino's enterprise value.
32
<PAGE>
Harrah's will reimburse Players all fees and expenses incurred in connection
with the merger up to an amount equal to $1 million upon the occurrence of any
of the following events:
- termination of the merger agreement by Players upon a breach of any
material representation, warranty, covenant or agreement on the part of
Harrah's which, if curable, is not cured within 30 days; or
- termination of the merger agreement by either Players or Harrah's because
the merger was not consummated by October 31, 1999 (or January 31, 2000,
if extended) and all governmental approvals were not obtained due to facts
or circumstances relating to Harrah's, its employees or operations.
REIMBURSEMENT OF JACKPOT TERMINATION FEE
Players must reimburse Harrah's for the entire $13.5 million termination fee
advanced by Harrah's to pay Jackpot in five circumstances:
- if Harrah's or Players terminates the merger agreement in the event
Players fails to obtain the required vote of Players' stockholders;
- if Harrah's terminates the merger agreement in the event Players' board
withdraws its recommendation of the Harrah's transaction or recommends an
alternative transaction;
- if Players terminates the merger agreement after Players receives a
superior proposal from a third party;
- if Harrah's terminates the merger agreement in the event of a material
breach of the agreement by Players; or
- if Harrah's terminates the merger agreement in the event of the revocation
of Players' gaming license in Louisiana or the imposition of a materially
adverse fine in connection with the Shetler-Edwards matter.
This reimbursement would be in addition to the payment of the $13.5 million
termination fee to Harrah's in the circumstances specified in the merger
agreement.
Players must reimburse Harrah's for half the $13.5 million termination fee
paid by Harrah's to Jackpot if the expiration date passes and either party
chooses to terminate the merger agreement, or if completion of the merger is
permanently prohibited by a court or governmental entity.
Except as set forth above, whether or not the merger is consummated, all
fees, costs and expenses incurred in connection with the merger will be paid by
the party incurring the expenses.
AMENDMENT AND WAIVER
The merger agreement may be amended by Harrah's and Players by their
respective boards of directors at any time before or after approval of the
merger by the Players stockholders. However, certain amendments may by law
require further stockholder approval. Amendments must be in a written document
signed by each of the parties.
At any time prior to the closing of the merger, Harrah's and Players may:
- extend the time for performing any of the obligations or other acts of the
other parties;
- waive any inaccuracies in the representations and warranties in the merger
agreement or in any of the other documents for the merger; and
- waive compliance with any of the agreements or conditions contained in any
of the documents relating to the merger.
The above actions must be properly approved or authorized by the respective
boards of directors of Harrah's and Players and must be in writing.
33
<PAGE>
REGULATORY APPROVALS OF GAMING AUTHORITIES REQUIRED FOR THE MERGER
ILLINOIS
Illinois gaming laws and regulations require the prior approval of the
Illinois Gaming Board of the proposed transfer of the ownership of Players to
Harrah's as contemplated by the merger. In determining whether to approve the
transfer, the Illinois Gaming Board will consider the suitability or
qualification and financial stability of Harrah's and its key persons. In
addition, the Illinois Gaming Board will evaluate the overall impact the merger
would have on the financial, operational and other aspects of the surviving
entity. Harrah's is currently licensed to own and operate another riverboat
casino in Illinois. No assurances can be given that the Illinois Gaming Board
will approve the merger or as to the timing of any such approval.
LOUISIANA
Louisiana gaming laws and regulations require that prior to the transfer of
an interest in a licensee as contemplated by the merger, the proposed transfer
and the proposed transferee must receive the approval of the Louisiana Gaming
Control Board. In determining whether to approve the transfer, the Louisiana
Gaming Control Board will consider the suitability or qualification and
financial stability of Harrah's and its key persons. Harrah's is currently
licensed to own and operate another riverboat casino and a land-based casino in
Louisiana. On Tuesday, August 17, 1999, the Louisiana Gaming Control Board
received and made public a report by the Riverboat Gaming Division of the
Louisiana State Police concerning its investigation of Players in relation to
the Shetler and Edwards cases. The report alleges that Players did not report
certain matters to the Louisiana regulatory authorities and that its failure to
have done so may provide grounds for the Louisiana Gaming Control Board to not
renew Players' licenses or to impose sanctions as a condition of license
renewal. The Louisiana Gaming Control Board took no action on the report, but a
hearing will be scheduled at a later date. The Louisiana Gaming Control Board
also conditionally renewed one of Players' two licenses, pending the outcome of
a hearing on the report. No assurances can be given that the Louisiana Gaming
Control Board will approve the merger or as to the timing of any such approval.
See "Recent Developments."
MISSOURI
Missouri gaming laws and regulations require that prior to the transfer of
an interest in and change of control of a licensee as contemplated by the
merger, the proposed transfer and the proposed transferee must receive the
approval of the Missouri Gaming Commission. In determining whether to approve
the transfer, the Missouri Gaming Commission will consider the suitability or
qualification and financial stability of Harrah's and its key persons. In
addition, the Missouri Gaming Commission will consider the effect of the
contemplated transaction on the surviving entity and its operations
post-acquisition. Harrah's is currently licensed to own and operate another
riverboat casino in Missouri. No assurances can be given that the Missouri
Gaming Commission will approve the merger or as to the timing of any such
approval.
KENTUCKY
To operate Bluegrass Downs following the consummation of the merger,
Harrah's must obtain a license to operate the racetrack from the Kentucky Racing
Commission. After pre-approval is received from the Kentucky Racing Commission,
Harrah's must provide evidence to the commission that the merger has been
consummated, and that Players has become a subsidiary of Harrah's, before the
commission will issue the final approval of the change in ownership. Harrah's is
currently approved to own an interest in another racetrack in Kentucky. No
assurances can be given that the Kentucky Racing Commission will approve the
change in ownership to Harrah's.
34
<PAGE>
STOCKHOLDER PROPOSALS
Due to the contemplated consummation of the merger, Players does not
currently expect to hold any further Annual Meetings of Stockholders, as Players
common stock will not be publicly traded after the merger. If the merger is not
consummated and such a meeting is held, stockholder proposals for inclusion in
proxy materials for such meeting were required to have been received by Players
by no later than June 30, 1999 in order to be considered for inclusion in such
proxy materials. Such proposals must also meet the other requirements of the
rules of the SEC relating to stockholder proposals.
35
<PAGE>
WHERE YOU CAN FIND MORE INFORMATION
We file reports, proxy statements and other information with the SEC under
the Securities Exchange Act of 1934. Please call the SEC at 1-800-SEC-0330 for
further information on the public reference rooms. You may read and copy this
information at the following locations of the SEC:
<TABLE>
<S> <C> <C>
Public Reference Section, Northeast Regional Office Midwest Regional Office
Room 1024 7 World Trade Center 500 West Madison Street
450 Fifth Street, N.W., Suite 1300 Suite 1400
Judiciary Plaza New York, New York 10048 Chicago, Illinois 60661-2511.
Washington, D.C. 20549
</TABLE>
The SEC maintains an Internet World Wide Web site (http://www.sec.gov) that
contains reports, proxy statements and other information about issuers,
including Players, who file electronically with the SEC. The Players common
stock is traded on the Nasdaq National Market.
The SEC allows us to "incorporate by reference" information into this
document. This means that we can disclose important information to you by
referring you to another document filed separately with the SEC. The information
incorporated by reference is considered to be a part of this document, except
for any information that is superseded by information that is included directly
in this document.
This document incorporates by reference the documents listed below that we
have previously filed with the SEC. They contain important information about
Players and its financial condition.
<TABLE>
<CAPTION>
SEC FILINGS (FILE NO. 0-14897) DESCRIPTION OR PERIOD/AS OF DATE
- -------------------------------------------------------- --------------------------------------------------------
<S> <C>
Annual Report on Form 10-K Year ended March 31, 1999
Quarterly Report on Form 10-Q Quarter ended June 30, 1999
Current Report on Form 8-K Report dated August 19, 1999
</TABLE>
We incorporate by reference additional documents that we may file with the
SEC between the date of this document and the date of the special meeting. These
documents include periodic reports, including Annual Reports on Form 10-K,
Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, as well as proxy
statements.
You can obtain any of the documents incorporated by reference into this
document through us, or from the SEC through the SEC's web site at the address
provided above. Documents incorporated by reference are available from the
companies without charge, excluding any exhibits to those documents unless the
exhibit is specifically incorporated by reference as an exhibit in this
document. You can obtain documents incorporated by reference in this document by
requesting them in writing or by telephone from us at the following addresses:
Players International, Inc.
1300 Atlantic Avenue
Suite 800
Atlantic City, New Jersey 08401
Attn: Investor Relations
(609) 449-7727
If you would like to request documents, please do so by October 14, 1999 to
receive them before the special meetings. If you request any incorporated
documents from us, we will mail them to you by first class mail, or another
equally prompt means, within one business day after we receive your request.
We have not authorized anyone to give any information or make any
representation about the mergers or our companies that differs from, or adds to,
the information in this document or in our
36
<PAGE>
documents that are publicly filed with the SEC. Therefore, if anyone does give
you different or additional information, you should not rely on it.
If you are in a jurisdiction where it is unlawful to offer to exchange or
sell, or to ask for offers to exchange or buy, the securities offered by this
document or to ask for proxies, or if you are a person to whom it is unlawful to
direct these activities, then the offer presented by this document does not
extend to you.
The information contained in this document speaks only as of its date unless
the information specifically indicates that another date applies.
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
This document contains forward-looking statements about the merger, which
represent expectations or beliefs of our management concerning future events.
It also includes statements using words like "believes," "expects,"
"anticipates," or "estimates." These forward-looking statements involve risks
and uncertainties. Although our management believes its expectations are based
upon reasonable assumptions, we cannot assure you that actual results will not
be different than expected results. Factors and possible events that may cause
different outcomes include:
- difficulties obtaining regulatory licenses or approvals;
- increased competition in existing markets;
- a decline in the public acceptance of gaming;
- adverse regulatory developments, including the limitation, conditioning,
revocation, non-renewal or suspension of any of the gaming licenses of
Harrah's, Players or any of their officers, directors, significant
stockholders or key employees;
- increases in or new taxes imposed on gaming revenues or gaming devices;
- a finding of unsuitability by regulatory authorities with respect to any
of the officers, directors or key employees of Harrah's or Players;
- significant increases in fuel or transportation prices;
- adverse economic conditions, or severe weather, in key markets; and
- adverse results of significant litigation matters.
We caution you not to place undue reliance on forward-looking statements,
which speak only as of the date of this document, or in the case of any document
incorporated by reference, the date of that document. We have no obligation to
revise any forward-looking statements, whether as a result of new information,
future events or otherwise.
37
<PAGE>
AGREEMENT AND PLAN OF MERGER
DATED AS OF AUGUST 19, 1999
AMONG
HARRAH'S ENTERTAINMENT, INC.,
HEI ACQUISITION CORP. II
AND
PLAYERS INTERNATIONAL, INC.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
ARTICLE I. THE MERGER................................................................ A-1
Section 1.1. The Merger............................................................ A-1
Section 1.2. Effective Time of the Merger.......................................... A-1
Section 1.3. Closing............................................................... A-2
Section 1.4. Effect of the Merger.................................................. A-2
Section 1.5. Articles of Incorporation and Bylaws of the Surviving Corporation..... A-2
Section 1.6. Directors and Officers of the Surviving Corporation................... A-2
ARTICLE II. EFFECT OF THE MERGER ON SECURITIES OF THE CONSTITUENT CORPORATIONS....... A-2
Section 2.1. Conversion of Securities.............................................. A-2
Section 2.2. Exchange of Certificates.............................................. A-3
Section 2.3. Acceleration and Payment for Players Options.......................... A-4
ARTICLE III. REPRESENTATIONS AND WARRANTIES OF PLAYERS............................... A-5
Section 3.1. Organization of Players and its Subsidiaries.......................... A-5
Section 3.2. Capitalization........................................................ A-5
Section 3.3. Authority; No Conflict; Required Filings and Consents................. A-6
Section 3.4. Public Filings; Financial Statements.................................. A-7
Section 3.5. No Undisclosed Liabilities............................................ A-8
Section 3.6. Absence of Certain Changes or Events.................................. A-8
Section 3.7. Taxes................................................................. A-8
Section 3.8. Real Property, Title and Related Matters.............................. A-9
Section 3.9. Title to Personal Property; Liens..................................... A-10
Section 3.10. Intellectual Property................................................ A-11
Section 3.11. Agreements, Contracts and Commitments................................ A-11
Section 3.12. Litigation........................................................... A-12
Section 3.13. Environmental Matters................................................ A-12
Section 3.14. Employee Benefit Plans............................................... A-13
Section 3.15. Compliance........................................................... A-14
Section 3.16. Labor Matters........................................................ A-15
Section 3.17. Insurance............................................................ A-15
Section 3.18. Information in Proxy Statement....................................... A-15
Section 3.19. State Takeover Statute............................................... A-16
Section 3.20. Voting Requirements.................................................. A-16
Section 3.21. Players Rights Agreement............................................. A-16
Section 3.22. Year 2000............................................................ A-16
Section 3.23. Opinion of Financial Advisor......................................... A-16
Section 3.24. Brokers.............................................................. A-16
ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF BUYER AND MERGER SUB................... A-16
Section 4.1. Organization of Buyer and Merger Sub.................................. A-17
Section 4.2. Capitalization of Merger Sub.......................................... A-17
Section 4.3. Authority; No Conflict; Required Filings and Consents................. A-17
Section 4.4. Public Filings; Financial Statements.................................. A-18
Section 4.5. Proxy Statement....................................................... A-18
Section 4.6. Brokers............................................................... A-18
Section 4.7. Ownership of Securities............................................... A-19
</TABLE>
i
<PAGE>
<TABLE>
<S> <C>
Section 4.8. Financing............................................................. A-19
ARTICLE V. COVENANTS................................................................. A-19
Section 5.1. Conduct of Business of Players........................................ A-19
Section 5.2. Cooperation; Notice; Cure............................................. A-21
Section 5.3. No Solicitation....................................................... A-21
Section 5.4. Proxy Statement....................................................... A-22
Section 5.5. Special Meeting....................................................... A-22
Section 5.6. Access to Information................................................. A-22
Section 5.7. Governmental Approvals................................................ A-22
Section 5.8. Publicity............................................................. A-23
Section 5.9. Indemnification....................................................... A-23
Section 5.10. Stockholder Litigation............................................... A-24
Section 5.11. Employee Benefits.................................................... A-24
Section 5.12. Further Assurances and Actions....................................... A-25
Section 5.13. Rights Agreement..................................................... A-26
ARTICLE VI. CONDITIONS TO MERGER..................................................... A-26
Section 6.1. Conditions to Each Party's Obligation to Effect the Merger............ A-26
Section 6.2. Additional Conditions to Obligations of Players....................... A-27
Section 6.3. Additional Conditions to Obligations of Buyer......................... A-27
ARTICLE VII. TERMINATION AND AMENDMENT............................................... A-28
Section 7.1. Termination........................................................... A-28
Section 7.2. Effect of Termination................................................. A-29
Section 7.3. Fees and Expenses..................................................... A-29
Section 7.4. Amendment............................................................. A-30
Section 7.5. Extension; Waiver..................................................... A-30
ARTICLE VIII. MISCELLANEOUS.......................................................... A-31
Section 8.1. Nonsurvival of Representations, Warranties and Agreements............. A-31
Section 8.2. Notices............................................................... A-31
Section 8.3. Interpretation........................................................ A-31
Section 8.4. Counterparts.......................................................... A-32
Section 8.5. Entire Agreement; No Third Party Beneficiaries........................ A-32
Section 8.6. Governing Law......................................................... A-32
Section 8.7. Assignment............................................................ A-32
Section 8.8. Severability; Enforcement............................................. A-32
Section 8.9. Specific Performance.................................................. A-32
</TABLE>
ii
<PAGE>
TABLE OF DEFINED TERMS
<TABLE>
<CAPTION>
CROSS REFERENCE
TERMS IN AGREEMENT
- ----------------------------------------------------------------------------------------------- -----------------
<S> <C>
1985 Plan Section 2.3
1990 Plan Section 2.3
1993 Plan Section 2.3
1994 Plan Section 2.3
Accountant Section 5.11(d)
Accountant's Report Section 5.11(d)
Acquisition Proposal Section 5.3
Agreement Preamble
Articles of Merger Section 1.2
Buyer Preamble
Buyer Disclosure Schedule Article IV
Buyer Material Adverse Effect Section 4.1
Buyer SEC Reports Section 4.4(a)
Closing Section 1.3
Closing Date Section 1.3
Code Section 2.2(f)
Confidentiality Agreement Section 5.6
DLJ Section 3.23
Effective Time Section 1.2
Employment Agreements Section 5.11(d)
Encumbrances Section 3.8(b)
Environmental Law Section 3.13(b)
ERISA Section 3.14(a)
ERISA Affiliate Section 3.14(a)
Exchange Act Section 3.3(c)
Exchange Agent Section 2.2(a)
Exchange Fund Section 2.2(a)
Executives Section 5.11(d)
GAAP Section 3.4(b)
Governmental Approvals Section 5.7(a)
Governmental Entity Section 3.3(c)
Hazardous Substance Section 3.13(c)
HSR Act Section 3.3(c)
Indebtedness Section 3.11(a)
Indemnified Parties Section 5.9(a)
IRS Section 3.7(b)
Jackpot Merger Agreement Preamble
Leased Real Property Section 3.8(b)
Liens Section 3.1
Merger Preamble
Merger Consideration Section 2.1(a)
Merger Sub Preamble
Merger Sub Common Stock Section 4.2
Multiemployer Plan Section 3.14(e)
Notifying Party Section 5.7(a)
NRS Section 1.1
Offer Documents Section 5.12(c)
</TABLE>
iii
<PAGE>
<TABLE>
<CAPTION>
CROSS REFERENCE
TERMS IN AGREEMENT
- ----------------------------------------------------------------------------------------------- -----------------
<S> <C>
Outside Date Section 7.1(b)
Owned Real Property Section 3.8(b)
PBGC Section 3.14(f)
Players Preamble
Players Balance Sheet Section 3.4(b)
Players Common Stock Section 2.1(a)
Players Disclosure Schedule Article III
Players Employee Plans Section 3.14(a)
Players Gaming Laws Section 3.15(b)
Players Material Adverse Effect Section 3.1
Players Material Contracts Section 3.11(a)
Players Option Section 2.3
Players Permits Section 3.15(a)
Players Preferred Stock Section 3.2(a)
Players SAR Section 2.3
Players SEC Reports Section 3.4(a)
Players Special Meeting Section 5.5
Players Stock Option Plans Section 2.3
Players Stockholder Approval Section 3.20
Players Welfare Plan Section 3.14(g)
Players, Inc. Section 1.5
Permitted Encumbrances Section 3.8(b)
Perskie Option Section 2.3
Proxy Statement Section 5.4(a)
Reduced Amount Section 5.11(d)
Reimbursement Payment Section 7.3(b)
Rights Agreement Section 3.2(b)
SEC Section 3.3(c)
Securities Act Section 3.4(a)
Senior Notes Section 4.8
Software Section 3.22
Stock Option Plan for Non-Employee Directors Section 2.3
Stockholder Support Agreements Preamble
Subsidiary Section 3.1
Superior Proposal Section 5.3
Surviving Corporation Section 1.1
Taxes Section 3.7(a)
Tender Offer Section 5.12(c)
Tender Offer and Consent Solicitation Section 5.12(c)
Terminating Buyer Breach Section 7.1(h)
Terminating Players Breach Section 7.1(g)
Third Party Section 5.3
Voting Debt Section 3.2(b)
</TABLE>
iv
<PAGE>
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER (the "AGREEMENT"), dated as of August 19, 1999,
by and among HARRAH'S ENTERTAINMENT, INC. a Delaware corporation ("BUYER"), HEI
ACQUISITION CORP. II, a Nevada corporation and a wholly-owned subsidiary of
Buyer ("MERGER SUB"), and PLAYERS INTERNATIONAL, INC., a Nevada corporation
("Players").
WHEREAS, the Board of Directors of Players has determined that the merger of
Merger Sub with and into Players, upon the terms and subject to the conditions
set forth in this Agreement (the "MERGER"), is fair to, and in the best
interests of, Players and its stockholders;
WHEREAS, the Boards of Directors of Buyer and Merger Sub have determined
that the Merger is in the best interests of Buyer and Merger Sub and their
respective stockholders;
WHEREAS, the Boards of Directors of Buyer, Merger Sub and Players have each
approved and adopted this Agreement and approved the Merger and the other
transactions contemplated hereby; and
WHEREAS, concurrently with the execution and delivery of this Agreement and
as a condition and inducement to each of Buyer's and Merger Sub's willingness to
enter into this Agreement, certain stockholders of Players have entered into
Stockholder Support Agreements with Buyer, dated as of the date of this
Agreement in the forms attached hereto as Exhibit A (the "STOCKHOLDER SUPPORT
AGREEMENTS"), pursuant to which such stockholders have agreed, among other
things, to vote all voting securities of Players, beneficially owned by them in
favor of approval of the transactions contemplated by this Agreement;
WHEREAS, Players was formerly a party to an Agreement and Plan of Merger
dated as of February 8, 1999, by and among Jackpot Enterprises, Inc., a Nevada
corporation, JEI Merger Corp, a Nevada corporation and a wholly-owned subsidiary
of Jackpot, and Players (the "JACKPOT MERGER AGREEMENT"), which has now been
terminated; and
WHEREAS, in connection with the termination of the Jackpot Merger Agreement,
Buyer paid, on Players' behalf, the $13.5 million termination fee owed to
Jackpot to terminate the Jackpot Merger Agreement;
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth below, the
parties agree as follows:
ARTICLE I.
THE MERGER
Section 1.1. THE MERGER. Upon the terms and subject to the provisions of
this Agreement and in accordance with Chapter 92A of the Nevada Revised Statutes
(the "NRS"), at the Effective Time (as defined in Section 1.2), Merger Sub shall
be merged with and into Players. As a result of the Merger, the separate
corporate existence of Merger Sub shall cease and Players shall continue as the
surviving corporation (the "SURVIVING CORPORATION").
Section 1.2. EFFECTIVE TIME OF THE MERGER. Subject to the provisions of
this Agreement (including Section 7.1 hereof), articles of merger with respect
to the Merger in such form as is required by NRS Section 92A.200 (the "ARTICLES
OF MERGER") shall be duly prepared, executed and acknowledged and thereafter
delivered to the Secretary of State of the State of Nevada for filing, as
provided in the NRS, as early as practicable on the Closing Date (as defined in
Section 1.3). The Merger shall become effective at the later of the date of
filing of the Articles of Merger or at such time within 90 days of the date of
filing as is specified in the Articles of Merger (the "EFFECTIVE TIME").
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Section 1.3. CLOSING. The closing of the Merger (the "CLOSING") will take
place at such time and place to be agreed upon by the parties hereto, on a date
to be specified by Buyer and Players, which shall be no later than the third
business day after satisfaction or, if permissible, waiver of the conditions set
forth in Article VI (the "CLOSING DATE"), unless another date is agreed to by
Buyer and Players.
Section 1.4. EFFECT OF THE MERGER. Upon becoming effective, the Merger
shall have the effects set forth in the NRS. Without limiting the generality of
the foregoing, and subject thereto, at the Effective Time, all properties,
rights, privileges, powers and franchises of Merger Sub and Players shall vest
in the Surviving Corporation, and all debts, liabilities and duties of Merger
Sub and Players shall become the debts, liabilities and duties of the Surviving
Corporation.
Section 1.5. ARTICLES OF INCORPORATION AND BYLAWS OF THE SURVIVING
CORPORATION. At the Effective Time, the Articles of Incorporation and Bylaws of
the Surviving Corporation shall be amended to be identical to the Articles of
Incorporation and Bylaws, respectively, of Merger Sub as in effect immediately
prior to the Effective Time (except that the name of the Surviving Corporation
shall be "Players"), in each case until duly amended in accordance with
applicable law.
Section 1.6. DIRECTORS AND OFFICERS OF THE SURVIVING CORPORATION. The
directors of Merger Sub immediately prior to the Effective Time shall be the
initial directors of the Surviving Corporation, each to hold office in
accordance with the Articles of Incorporation and Bylaws of the Surviving
Corporation. The officers of Merger Sub immediately prior to the Effective Time
shall be the initial officers of the Surviving Corporation, each to hold office
in accordance with the Articles of Incorporation and Bylaws of the Surviving
Corporation.
ARTICLE II.
EFFECT OF THE MERGER ON SECURITIES OF THE CONSTITUENT CORPORATIONS
Section 2.1. CONVERSION OF SECURITIES. At the Effective Time, by virtue of
the Merger and without any action on the part of any of the parties hereto or
the holders of any of the following:
(a) PLAYERS COMMON STOCK. Each share of common stock, par value $0.005
per share, of Players ("PLAYERS COMMON STOCK") issued and outstanding
immediately prior to the Effective Time (other than shares to be canceled in
accordance with Section 2.1(b)), together with all rights in respect thereto,
shall be converted, subject to Section 2.1(e), into the right to receive from
the Surviving Corporation a net amount of $8.50 in cash (the "MERGER
CONSIDERATION").
As of the Effective Time, all shares of Players Common Stock upon which the
Merger Consideration is payable pursuant to this Section 2.1(a) shall no longer
be outstanding and shall automatically be canceled and retired and shall cease
to exist, and each holder of a certificate representing any such shares shall
cease to have any ownership or other rights with respect thereto, except the
right to receive the Merger Consideration in exchange for such shares upon the
surrender of such certificate in accordance with Section 2.2.
(b) CANCELLATION OF TREASURY STOCK AND BUYER-OWNED STOCK. All shares
of Players Common Stock that are owned by Players as treasury stock and any
shares of Players Common Stock owned by Buyer or any wholly-owned Subsidiary (as
defined in Section 3.1) of Buyer shall be canceled and retired and shall cease
to exist and no consideration shall be delivered in exchange therefor.
(c) CAPITAL STOCK OF MERGER SUB. Each issued and outstanding share of
the common stock, par value $.01 per share, of Merger Sub shall be converted
into and become one fully paid and nonassessable share of common stock, par
value $.01 per share, of the Surviving Corporation.
(d) PLAYERS DEBT SECURITIES. Except as otherwise repaid, redeemed or
purchased in connection with the transactions contemplated hereby, all notes and
other debt instruments of Players
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that are outstanding at the Effective Time shall continue to be outstanding
subsequent to the Effective Time as debt instruments of the Surviving
Corporation, subject to their respective terms and provisions.
(e) ADJUSTMENTS TO MERGER CONSIDERATION. The Merger Consideration
shall be adjusted to reflect fully the effect of any stock split, reverse split,
stock dividend (including any dividend or distribution of securities convertible
into Players Common Stock, as applicable), reorganization, recapitalization or
any other like change with respect to Players Common Stock occurring after the
date hereof and prior to the Effective Time.
Section 2.2. EXCHANGE OF CERTIFICATES.
(a) EXCHANGE AGENT. At or prior to the Effective Time, Buyer shall
deposit with a bank or trust company designated by Buyer (the "EXCHANGE AGENT"),
for the benefit of the holders of shares of Players Common Stock outstanding
immediately prior to the Effective Time, for exchange in accordance with this
Section 2.2, through the Exchange Agent, cash in an aggregate amount sufficient
to pay the Merger Consideration (the cash so deposited being hereinafter
referred to as the "EXCHANGE FUND"). Any interest, dividends or other income
earned on the investment of cash or other property held in the Exchange Fund
shall be for the account of and payable to Buyer.
(b) EXCHANGE PROCEDURES. Promptly after the Effective Time, Buyer will
instruct the Exchange Agent to mail to each holder of record of Players Common
Stock (i) a letter of transmittal (which shall specify that delivery shall be
effected, and risk of loss and title to a Certificate shall pass, only upon
proper delivery of the Certificate to the Exchange Agent and shall be in such
form and have such other provisions as Buyer may reasonably specify), and (ii)
instructions to effect the surrender of the Certificate in exchange for the
Merger Consideration. Upon surrender of a Certificate for cancellation to the
Exchange Agent together with such letter of transmittal, duly executed, and such
other customary documents as may be required pursuant to such instructions, the
holder of such Certificate shall be entitled to receive in exchange therefor
cash in an amount equal to the Merger Consideration multiplied by the number of
shares represented by such Certificate, and the Certificate so registered shall
forthwith be canceled. In the event of a transfer of ownership of shares of
Players Common Stock which is not registered in the transfer records of Players
as of the Effective Time, the Merger Consideration may be issued and paid in
accordance with this Article II to a transferee if the Certificate evidencing
such shares of Players Common Stock is presented to the Exchange Agent,
accompanied by all documents required to evidence and effect such transfer
pursuant to this Section 2.2(b) and by evidence that any applicable stock
transfer taxes have been paid. Until so surrendered, each outstanding
Certificate that prior to the Effective Time represented shares of Players
Common Stock will be deemed from and after the Effective Time for all corporate
purposes (other than the payment of dividends and subject to Section 2.1(e)), to
evidence the right to receive the Merger Consideration. No interest will be paid
or will accrue on the cash payable upon the surrender of any Certificate.
(c) TRANSFERS OF OWNERSHIP. At the Effective Time, the stock transfer
books of Players shall be closed, and there shall be no further registration of
transfers of Players Common Stock thereafter on the records of Players.
(d) TERMINATION OF EXCHANGE FUND. Any portion of the Exchange Fund
which remains undistributed to the former stockholders of Players as of the date
which is twelve months after the Effective Time shall be delivered to Buyer,
upon demand, and thereafter such former stockholders of Players who have not
theretofore complied with this Section 2.2 shall be entitled to look only to
Buyer for payment of the Merger Consideration to which they are entitled
pursuant hereto.
(e) NO LIABILITY. None of Buyer, Merger Sub, Players or the Exchange
Agent shall be liable to any holder of Players Common Stock for any Merger
Consideration delivered to a public official pursuant to any applicable
abandoned property, escheat or similar law. If any Certificates shall not have
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been surrendered immediately prior to the date on which the Merger Consideration
or any dividends or distributions with respect to Players Common Stock in
respect of such Certificate would otherwise escheat to or become the property of
any Governmental Entity, any such Merger Consideration, 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 on such date
prior to the time such escheat laws become applicable.
(f) WITHHOLDING RIGHTS. Buyer or the Exchange Agent shall be entitled
to deduct and withhold from the Merger Consideration otherwise payable pursuant
to this Agreement to any holder of Certificates which prior to the Effective
Time represented shares of Players Common Stock such amounts as Buyer or the
Exchange Agent is required to deduct and withhold with respect to the making of
such payment under the Internal Revenue Code of 1986, as amended (the "CODE"),
or any provision of state, local, or foreign tax law. To the extent that amounts
are so withheld by Buyer or the Exchange Agent and remitted to the proper
authority, such withheld amounts thereafter shall be treated for all purposes of
this Agreement as having been paid to the holder of the shares of Players Common
Stock in respect of which such deduction and withholding was made by Buyer or
the Exchange Agent.
(g) LOST, STOLEN OR DESTROYED CERTIFICATES. In the event any
Certificates shall have been lost, stolen or destroyed, the Exchange Agent shall
pay in exchange for such lost, stolen or destroyed Certificates, upon the making
of an affidavit of that fact by the holder thereof such Merger Consideration as
may be required pursuant to Section 2.2; PROVIDED, HOWEVER, that Buyer may, in
its discretion, and as a condition precedent to the issuance thereof, require
the owner of such lost, stolen or destroyed Certificates to deliver a bond in
such sum as it may reasonably direct as indemnity against any claim that may be
made against Buyer, the Surviving Corporation or the Exchange Agent with respect
to the Certificates alleged to have been lost, stolen or destroyed.
Section 2.3. ACCELERATION AND PAYMENT FOR PLAYERS OPTIONS. Following the
execution of this Agreement, the Board of Directors of Players (or, if
appropriate, any committee administering the Players Stock Option Plans (as
defined below)) shall adopt such resolutions or use its best efforts to take
such other actions as are required to provide that each then outstanding stock
option to purchase shares of Players Common Stock (a "PLAYERS OPTION")
heretofore granted under any stock option or other stock-based incentive plan,
program or arrangement of Players including (i) the 1985 Incentive Stock Option
Plan ("1985 PLAN"), (ii) the 1990 Incentive Stock Option and Non-Qualified
Option Plan ("1990 PLAN"), (iii) the Amended and Restated 1993 Stock Incentive
Plan ("1993 PLAN"), (iv) the 1994 Directors Stock Incentive Plan ("1994 PLAN"),
(v) the Stock Option Plan for Non-Employee Directors (which consists of
individual option grants in 1993 to outside directors) ("STOCK OPTION PLAN FOR
NON-EMPLOYEE DIRECTORS"), and (vi) the option granted to Steven P. Perskie
pursuant to the Retirement Agreement and General Release, dated September 30,
1996 ("PERSKIE OPTION") (with the plans referred to in clauses (i)-(vi) above
collectively referred to as the "PLAYERS STOCK OPTION PLANS") shall be
accelerated and canceled immediately prior to the Effective Time in exchange for
payment of an amount of cash equal to the product of (x) the number of shares of
Players Common Stock subject to such stock option immediately prior to the
consummation of the Merger and (y) the excess, if any, of the Merger
Consideration over the per share exercise price of such Stock Option; PROVIDED,
HOWEVER, that such excess shall not be less than zero. Notwithstanding anything
in this Section 2.3 to the contrary, any Players Option or stock appreciation
right ("PLAYERS SAR") granted under any stock option or other stock-based
incentive plan, program or arrangement of Players, including, without
limitation, the Players Stock Option Plans, having a per share exercise price
that is greater than the Merger Consideration, whether or not vested and
exercisable, shall be accelerated and, if not exercised before the Effective
Time, shall be canceled as of the Effective Time and shall have no further force
or effect as of the Effective Time, without regard to the fact that the holder
of such Players Option or Players SAR shall have received no payment for the
Players Option or Players SAR.
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ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF PLAYERS
Players represents and warrants to Buyer and Merger Sub that the statements
contained in this Article III are true and correct except as set forth herein
and in the disclosure schedule delivered by Players to Buyer and Merger Sub on
or before the date of this Agreement (the "PLAYERS DISCLOSURE SCHEDULE"). Any
reference in the Merger Agreement to Players' "best knowledge," or "the best of
Players' knowledge," or words of similar import, shall be deemed a reference to
the actual knowledge of any of the corporate officers of Players or any of its
Subsidiaries, for all purposes. The Players Disclosure Schedule has been
prepared based upon the foregoing definition.
Section 3.1. ORGANIZATION OF PLAYERS AND ITS SUBSIDIARIES. Each of Players
and its Subsidiaries (as defined below) is duly organized, validly existing and
in good standing under the laws of the jurisdiction of its organization and has
all requisite corporate, partnership or limited liability company power and
authority to carry on its business as now being conducted and as proposed to be
conducted. Each of Players and its Subsidiaries is duly qualified or licensed to
do business and is in good standing in each jurisdiction in which the property
owned, leased or operated by it or the nature of the business conducted by it
makes such qualification or licensing necessary, except where the failure to be
so qualified, licensed or in good standing would not have a material adverse
effect on the business, properties, condition (financial or otherwise) or
results of operations of Players and its Subsidiaries, taken as a whole (a
"PLAYERS MATERIAL ADVERSE EFFECT"). Players has delivered to Buyer a true and
correct copy of the Articles of Incorporation and Bylaws of Players, in each
case as amended to the date of this Agreement. Assuming regulatory compliance by
Buyer, the respective organizational documents of Players' Subsidiaries do not
contain any provision that would limit or otherwise restrict the ability of
Buyer, following the Effective Time, from owning or operating such Subsidiaries
on the same basis as Players. Except as set forth on the Players Disclosure
Schedule, all the outstanding shares of capital stock of, or other equity
interests in, each such Subsidiary have been validly issued and are fully paid
and nonassessable and are owned directly or indirectly by Players, free and
clear of all pledges, claims, liens, charges, encumbrances and security
interests of any kind or nature whatsoever (collectively, "LIENS") and free of
any other restriction (including any restriction on the right to vote, sell or
otherwise dispose of such capital stock or other ownership interests). Except as
set forth in Exhibit 21 to the Players Annual Report on Form 10-K for the year
ended March 31, 1999, neither Players nor any of its Subsidiaries directly or
indirectly owns (other than ownership interests in Players or in one or more of
its Subsidiaries) any equity or similar interest in, or any interest convertible
into or exchangeable or exercisable for, any corporation, partnership, joint
venture or other business association or entity. As used in this Agreement, the
word "SUBSIDIARY" means, with respect to any party, any corporation or other
organization, whether incorporated or unincorporated, of which (i) such party or
any other Subsidiary of such party is a general partner or (ii) at least a
majority of the securities or other interests having by their terms ordinary
voting power to elect a majority of the Board of Directors or others performing
similar functions with respect to such corporation or other organization is
directly or indirectly owned or controlled by such party or by any one or more
of its Subsidiaries, or by such party and one or more of its Subsidiaries.
Section 3.2. CAPITALIZATION.
(a) The authorized capital stock of Players consists of 90,000,000
shares of Players Common Stock, $0.005 par value per share, and 10,000,000
shares of preferred stock, with no par value per share ("PLAYERS PREFERRED
STOCK"). As of the date hereof, (i) 32,032,737 shares of Players Common Stock
were issued and outstanding, all of which are validly issued, fully paid and
nonassessable, (ii) 672,100 shares of Players Common Stock were held in the
treasury of Players or by Subsidiaries of Players, and (iii) no shares of
Players Preferred Stock are issued and outstanding. Section 3.2(a)(i) of the
Players Disclosure Schedule sets forth the number of shares of Players Common
Stock reserved for future
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issuance upon exercise of Players Options granted and outstanding as of the date
hereof and under the Players Stock Option Plans. Section 3.2(a)(i) of the
Players Disclosure Schedule also sets forth as of the date hereof, for each
Players Stock Option Plan, the dates on which Options and Players SARs which are
still outstanding under such plan were granted, the number of outstanding
Options and Players SARs granted on each such date and the exercise price
thereof. Except as disclosed in Section 3.2(a)(i) of the Players Disclosure
Schedule, since September 30, 1998 through the date of this Agreement, Players
has not made any grants under any of the Players Stock Option Plans. Except as
disclosed in Section 3.2(a)(i) of the Players Disclosure Schedule with respect
to Players SARs, as of the date of this Agreement, Players has not granted any
contractual rights the value of which is derived from the financial performance
of Players or from the value of shares of Players Common Stock. Except as
disclosed in Section 3.2(a)(ii) of the Players Disclosure Schedule, there are no
obligations contingent or otherwise, of Players or any of its Subsidiaries to
repurchase, redeem or otherwise acquire any shares of Players Common Stock or
the capital stock or ownership interests of any Subsidiary or to provide funds
to or make any material investment (in the form of a loan, capital contribution
or otherwise) in any such Subsidiary or any other entity other than guarantees
of bank obligations or indebtedness for borrowed money of Subsidiaries entered
into in the ordinary course of business. All of the outstanding shares of
capital stock (including shares which may be issued upon exercise of outstanding
options) or other ownership interests of each of Players' Subsidiaries are duly
authorized, validly issued, fully paid and nonassessable and, except as
disclosed in Section 3.2(a)(iii) of the Players Disclosure Schedule and except
as required by gaming industry regulation, all such shares and ownership
interests are owned by Players or another Subsidiary of Players free and clear
of all security interests, liens, claims, pledges, agreements, limitations on
Players' voting rights, charges or other encumbrances or restrictions on
transfer of any nature.
(b) There are no bonds, debentures, notes or other indebtedness having
voting rights (or convertible into securities having such rights) ("VOTING
DEBT") of Players or any of its Subsidiaries issued and outstanding. Except as
set forth in Section 3.2(a) or in this Section 3.2(b) or as reserved for future
grants of options under the Players Stock Option Plans and except for the common
stock purchase rights issued and issuable under the Stockholders' Rights Plan
dated as of January 27, 1997 (the "RIGHTS AGREEMENT"), as of the date hereof,
(i) there are no shares of capital stock of any class of Players, or any
security exchangeable into or exercisable for such equity securities, issued,
reserved for issuance or outstanding; (ii) except as set forth in Section 3.2(b)
of the Players Disclosure Schedule, there are no options, warrants, equity
securities, calls, rights, commitments or agreements of any character to which
Players or any of its Subsidiaries is a party or by which it is bound obligating
Players or any of its Subsidiaries to issue, deliver or sell, or cause to be
issued, delivered or sold, additional shares of capital stock or other ownership
interests (including Voting Debt) of Players or any of its Subsidiaries or
obligating Players or any of its Subsidiaries to grant, extend, accelerate the
vesting of or enter into any such option, warrant, equity security, call, right,
commitment or agreement; and (iii) there are no voting trusts, proxies or other
voting agreements or understandings with respect to the shares of capital stock
of Players. All shares of Players Common Stock subject to issuance as specified
in this Section 3.2(b) are duly authorized and, upon issuance on the terms and
conditions specified in the instruments pursuant to which they are issuable,
shall be validly issued, fully paid and nonassessable.
Section 3.3. AUTHORITY; NO CONFLICT; REQUIRED FILINGS AND CONSENTS.
(a) Players has all requisite corporate power and authority to enter
into this Agreement and to consummate the transactions contemplated by this
Agreement. The execution and delivery of this Agreement and the consummation of
the transactions contemplated hereby by Players have been duly authorized by all
necessary corporate action on the part of Players, subject only to the approval
and adoption of this Agreement and the Merger by a majority of Players'
stockholders. This Agreement has been duly executed and delivered by Players and
constitutes the valid and binding obligation of Players, enforceable against
Players in accordance with its terms.
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(b) Other than as disclosed in Section 3.3(b) of the Players Disclosure
Schedule, the execution and delivery of this Agreement by Players does not, and
the consummation of the transactions contemplated hereby will not, (i) conflict
with, or result in any violation or breach of, any provision of the Articles of
Incorporation or Bylaws of Players or the comparable charter or organizational
documents of any of its Subsidiaries, (ii) result in any violation or breach of,
or constitute (with or without notice or lapse of time, or both) a default (or
give rise to a right of termination, cancellation or acceleration of any
obligation or loss of any material benefit) under, or require a consent or
waiver under, any of the terms, conditions or provisions of any note, bond,
mortgage, indenture, lease, contract or other agreement, instrument or
obligation to which Players or any of its Subsidiaries is a party or by which
any of them or any of their properties or assets may be bound, or (iii) subject
to the governmental filings and other matters referred to in Section 3.3(c),
conflict with or violate any permit, concession, franchise, license, judgment,
order, decree, statute, law, ordinance, rule or regulation applicable to Players
or any of its Subsidiaries or any of its or their properties or assets, except
in the case of clauses (ii) and (iii) for any such conflicts, violations,
defaults, terminations, cancellations or accelerations which (x) are not,
individually or in the aggregate, reasonably likely to have a Players Material
Adverse Effect or (y) would not prevent or materially delay the consummation of
the Merger.
(c) Except as disclosed in Section 3.3(c) of the Players Disclosure
Schedule, no consent, approval, order or authorization of, or registration,
declaration or filing with, any court, administrative agency, commission, gaming
authority or other governmental authority or instrumentality ("GOVERNMENTAL
ENTITY") is required by or with respect to Players or any of its Subsidiaries in
connection with the execution and delivery of this Agreement or the consummation
of the transactions contemplated hereby, except for (i) the filing of the
pre-merger notification report under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended ("HSR ACT"), (ii) the filing of the
Articles of Merger with respect to the Merger with the Secretary of State of the
State of Nevada, (iii) the filing of any Proxy Statement (as such term is
defined in Section 5.4(a) below) with the Securities and Exchange Commission
(the "SEC") in accordance with the Securities Exchange Act of 1934, as amended
(the "EXCHANGE ACT"), (iv) any approvals and filing of notices required under
any applicable gaming industry regulation, (v) such consents, approvals, orders,
authorizations, permits, filings or registrations related to, or arising out of,
compliance with statutes, rules or regulations regulating the consumption, sale
or serving of alcoholic beverages, (vi) such immaterial filings and consents as
may be required under any environmental, health or safety law or regulation
pertaining to any notification, disclosure or required approval triggered by the
Merger, and (vii) such other filings, consents, approvals, orders, registrations
and declarations as may be required under the laws of any jurisdiction in which
Players or any of its Subsidiaries conducts any business or owns any assets the
failure of which to obtain would not have a Players Material Adverse Effect.
(d) The Agreement and Plan of Merger dated as of February 8, 1999 among
Jackpot, JEI Merger Corp. and Players has been duly terminated.
Section 3.4. PUBLIC FILINGS; FINANCIAL STATEMENTS.
(a) None of Players' Subsidiaries is required to file forms, reports and
documents with the SEC. Players has filed with the SEC all reports, schedules,
forms, statements and other documents required to be filed by the Securities Act
and the Exchange Act since March 31, 1998. Except as set forth in Section 3.4(a)
of the Players Disclosure Schedule and except for matters otherwise corrected by
the subsequent filing with the SEC of an appropriate amendment prior to the date
of this Agreement, the reports, forms, documents filed by Players with the SEC
prior to the date of this Agreement (the "PLAYERS SEC REPORTS") (including any
financial statements filed as a part thereof or incorporated by reference
therein) (i) at the time filed, complied in all material respects with the
applicable requirements of the Securities Act of 1933, as amended (the
"SECURITIES ACT"), and the Exchange Act, as the case may be, and (ii) did not,
at the time they were filed (or if amended or superseded by a filing prior to
the date of this Agreement, then on the date of such filing), contain any untrue
statement of a
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material fact or omit to state a material fact required to be stated in such
Players SEC Reports or necessary in order to make the statements in such Players
SEC Reports, in the light of the circumstances under which they were made, not
misleading.
(b) Except as set forth in Section 3.4(a), each of the consolidated
financial statements (including, in each case, any related notes) of Players
contained in the Players SEC Reports complied as to form in all material
respects with the applicable published rules and regulations of the SEC with
respect thereto, was prepared in accordance with generally accepted accounting
principles ("GAAP") applied on a consistent basis throughout the periods
involved (except as may be indicated in the notes to such financial statements
or, in the case of unaudited statements, as permitted by Form 10-Q under the
Exchange Act) and fairly presented the consolidated financial position of
Players and its consolidated Subsidiaries as of the dates and the consolidated
results of its operations and cash flows for the periods indicated, except that
the unaudited interim financial statements were or are subject to normal and
recurring year-end adjustments which, with respect to interim periods since
March 31, 1999, were not or are not expected to be material in amount. The
audited balance sheet of Players as of March 31, 1999 is referred to herein as
the "PLAYERS BALANCE SHEET."
Section 3.5. NO UNDISCLOSED LIABILITIES. Except as disclosed in the
Players SEC Reports or in Section 3.5 of the Players Disclosure Schedule, and
except for liabilities and obligations incurred since the date of the Players
Balance Sheet in the ordinary course of business consistent with past practices,
Players and its consolidated Subsidiaries do not have any liabilities of any
kind, whether accrued, contingent or otherwise (whether or not of the type
required to be reflected in financial statements, including the notes thereto,
in accordance with GAAP), and whether due or to become due, which would be
reasonably likely to have a Players Material Adverse Effect.
Section 3.6. ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as disclosed in
the Players SEC Reports or in Section 3.6 of the Players Disclosure Schedule
since the date of the Players Balance Sheet, Players and its Subsidiaries have
conducted their respective businesses only in the ordinary course consistent
with past practice, and there has not been (i) any Players Material Adverse
Effect, (ii) any declaration, setting aside or payment of any dividend or other
distribution (whether in cash, stock or property) with respect to any of
Players' capital stock, (iii) any split, combination or reclassification of any
of its capital stock or any issuance or the authorization of any issuance of any
other securities in respect of, in lieu of or in substitution for shares of its
capital stock, (iv) (w) any granting by Players or any of its Subsidiaries to
any director or officer of Players or its Subsidiaries of any increase in
compensation, except in the ordinary course of business consistent with prior
practice or as was required under employment agreements in effect as of the date
of the most recent financial statements included in the Players SEC Reports, (x)
any granting by Players or any of its Subsidiaries to any director or officer of
any stock options, except as was required under employment agreements in effect
as of the date of the most recent financial statements included in the Players
SEC Reports, (y) any granting by Players or any of its Subsidiaries to any
officer of any increase in severance or termination pay, except as was required
under any employment, severance or termination agreements, plans or arrangements
in effect as of the date of the most recent financial statements included in the
Players SEC Reports or (z) any entry by Players or any of its Subsidiaries into
any employment, severance or termination agreement with any officer, (v) any
change in accounting methods, principles or practices having a material adverse
effect on Players, except insofar as may have been required by a change in GAAP,
(vi) any tax election that individually or in the aggregate would have a Players
Material Adverse Effect or (vii) any settlement of pending or threatened
litigation involving Players or any of its Subsidiaries (whether brought by a
private party or a Governmental Entity) other than any settlement which is not
reasonably likely to have a Players Material Adverse Effect.
Section 3.7. TAXES.
(a) For the purposes of this Agreement, a "TAX" or, collectively,
"TAXES," means any and all federal, state, local and foreign taxes, assessments
and other governmental charges, duties, impositions
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and liabilities, including taxes based upon or measured by gross receipts,
income, profits, sales, use and occupation, and value added, ad valorem,
transfer, gains, franchise, withholding, payroll, recapture, employment, excise,
unemployment insurance, social security, business license, occupation, business
organization, stamp, environmental and property taxes, together with all
interest, penalties and additions imposed with respect to such amounts. For
purposes of this Agreement, "TAXES" also includes any obligations under any
agreements or arrangements with any other person with respect to Taxes of such
other person (including pursuant to Treas. Reg. Section 1.1502-6 or comparable
provisions of state, local or foreign tax law) and including any liability for
Taxes of any predecessor entity.
(b) Players and each of its Subsidiaries (separately or as members of an
affiliated, consolidated, unitary or combined group) have (i) filed all federal,
state, local and foreign Tax returns and reports required to be filed by them
prior to the date of this Agreement (taking into account all applicable
extensions) and such Tax returns and reports (taking into account all amendments
thereto) are true, correct and complete in all material respects, (ii) paid or
accrued all Taxes due and payable, and (iii) paid or accrued all Taxes for which
a notice of assessment or collection has been received (other than amounts being
contested in good faith by appropriate proceedings with the relevant taxing
authority and for which adequate reserves in accordance with GAAP are being
maintained). Except as set forth in Section 3.7(b) of the Players Disclosure
Schedule, neither the Internal Revenue Service (the "IRS") nor any other taxing
authority has asserted any claim for Taxes, or to the actual knowledge of the
executive officers of Players, is threatening to assert any claims for Taxes.
Except as set forth in Section 3.7(b) of the Players Disclosure Schedule,
neither Players nor any of its Subsidiaries has waived any statute of
limitations with respect to Taxes or agreed to any extension of time with
respect to any Tax assessment or deficiency, and no such waivers or extensions
are pending. Players and its Subsidiaries have withheld or collected and paid
over to the appropriate governmental authorities (or are properly holding for
such payment) all Taxes required by law to be withheld or collected. Neither
Players nor any of its Subsidiaries has made an election under Section 341(f) of
the Code. There are no liens for Taxes upon the assets of Players or any of its
Subsidiaries (other than liens for Taxes that are not yet due or delinquent or
that are being contested in good faith by appropriate proceedings, with the
relevant taxing authority and for which adequate reserves in accordance with
GAAP are being maintained).
(c) Neither Players nor any of its Subsidiaries is or has been a member
of an affiliated group of corporations filing a consolidated federal income tax
return (or a group of corporations filing a consolidated, combined or unitary
income tax return under comparable provisions of state, local or foreign tax
law) other than a group the common parent of which is or was Players or any
Subsidiary of Players.
(d) Neither Players nor any of its Subsidiaries has any obligation under
any agreement or arrangement with any other person with respect to Taxes of such
other person (including pursuant to Treas. Reg. Section 1.1502-6 or comparable
provisions of state, local or foreign tax law) and including any liability for
Taxes of any predecessor entity.
Section 3.8. REAL PROPERTY, TITLE AND RELATED MATTERS.
(a) REAL PROPERTY. Section 3.8 (a) of the Players Disclosure Schedule
sets forth a true and complete list as of the date of this Agreement of (i) all
contracts or agreements relating to the Leased Real Property, and (ii) a brief
description of each piece of Owned Real Property currently used by Players and
its Subsidiaries in their respective businesses. Players or a Subsidiary of
Players, as the case may be, has (A) good and marketable title to all Owned Real
Property and to all fixtures thereon, free and clear of any Encumbrances, except
for Permitted Encumbrances, and (B) except as set forth in Section 3.8(a) of the
Players Disclosure Schedule, Item (I), a valid leasehold interest in and the
right to quiet enjoyment of the Leased Real Property for the full term of the
leases. Each lease or other contract referred to in Section 3.8(a) of the
Players Disclosure Schedule is a valid contract or
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agreement enforceable against Players or its Subsidiary, as the case may be, in
accordance with its terms and, to the knowledge of Players, against the other
parties thereto. To the knowledge of Players, there are no rights or options of
any third party to acquire any ownership interest in such Leased Real Property
or Owned Real Property. Neither Players nor any of its Subsidiaries are in
default, nor have received any written notice alleging that it or they are in
default, under the leases, ground leases, subleases, licenses, options or other
agreements set forth in Section 3.8(a) of the Players Disclosure Schedule. To
the knowledge of Players, no other party to any such leases, ground leases,
licenses, options or other agreements is in default thereunder.
(b) DEFINITIONS. As used in this Section 3.8, the following terms
shall have the following meanings:
"ENCUMBRANCES" means all leases, mortgages, liens, pledges, charges,
options, encumbrances or defects of any kind or character.
"LEASED REAL PROPERTY" means all of the real property leased or subleased by
Players or a Subsidiary of Players as tenant and listed on Section 3.8(a) of the
Players Disclosure Schedule, together with, to the extent leased by Players, all
buildings and other structures, facilities or improvements currently or
hereafter located thereon, all fixtures, systems, equipment and personal
property of Players attached or appurtenant thereto, and all easements,
licenses, rights and appurtenances related to the foregoing.
"OWNED REAL PROPERTY" means all of the real property owned by Players or any
of its Subsidiaries and listed on Section 3.8(a) of the Players Disclosure
Schedule, together with all buildings and other structures, facilities or
improvements currently or hereafter located thereon, all fixtures, systems,
equipment and personal property attached or appurtenant thereto and all
easements, licenses, rights and appurtenances relating to the foregoing.
"PERMITTED ENCUMBRANCES" means such of the following as to which no
enforcement, collection, execution, levy or foreclosure proceeding shall have
been commenced: (i) Encumbrances that are disclosed in Section 3.8(a) of the
Players Disclosure Schedule, except for (A) any Encumbrance which would prevent
the use of the subject property for its current use, or (B) any Encumbrance
which secures any indebtedness (other than indebtedness that is otherwise
permitted by this Agreement), (ii) liens for taxes, assessments, fees, and other
governmental charges or levies which are not yet due, payable or delinquent,
(iii) such survey exceptions or reciprocal easement agreements that do not
prevent Players or its Subsidiaries, and would not prevent the Surviving
Corporation, from conducting Players' business as currently conducted and which
would not have a Players Material Adverse Effect, (iv) the provisions of any
federal, state or local law, ordinance or regulation, PROVIDED the same are not
violated by the current use of the property, (v) Encumbrances imposed by law,
such as materialmen's, mechanics', carriers', workmen's and repairmen's liens
and other similar liens arising in the ordinary course of business securing
obligations that are not in excess of $250,000 in the aggregate at any time, and
(vi) pledges or deposits to secure obligations under workers' compensation laws
or similar legislation or to secure public or statutory obligations.
Section 3.9. TITLE TO PERSONAL PROPERTY; LIENS. To the best knowledge of
Players, Players and each of its Subsidiaries has sufficiently good and valid
title to, or an adequate leasehold interest in, its material tangible personal
properties and assets (including all riverboats operated by Players and its
Subsidiaries) in order to allow it to conduct, and continue to conduct, its
business as and where currently conducted, except for such matters which,
individually or in the aggregate, would not be reasonably likely to have a
Players Material Adverse Effect. Except as disclosed in Section 3.9 of the
Players Disclosure Schedule, such material tangible personal assets and
properties are sufficiently free of liens to allow each of Players and its
Subsidiaries to conduct, and continue to conduct, its business as currently
conducted and to the best knowledge of Players, the consummation of the
transactions contemplated by this Agreement will not alter or impair such
ability in any respect which, individually
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or in the aggregate, would be reasonably likely to have a Players Material
Adverse Effect. There are no defects in the physical condition or operability of
such material tangible personal properties and assets which would impair the use
of such properties and assets as such properties and assets are currently used,
except for such defects which, individually or in the aggregate, would not be
reasonably likely to have a Players Material Adverse Effect.
Section 3.10. INTELLECTUAL PROPERTY. Section 3.10 of the Players
Disclosure Schedule lists all (i) trademark and service mark registrations and
applications owned by Players or any of its Subsidiaries and (ii) trademark,
service mark and trade name license agreements to which Players or any of its
Subsidiaries is a party. Except as disclosed in Section 3.10 of the Players
Disclosure Schedule, all material trademarks, trademark applications, trade
names, service marks, trade secrets (including customer lists and customer
databases), copyrights, patents, licenses, know-how and other proprietary
intellectual property rights used in connection with the businesses of Players
and its Subsidiaries as currently conducted are without material restrictions or
material conditions on use, and there is no conflict with the intellectual
property rights of Players and its Subsidiaries therein or any conflict by them
with the intellectual property rights of others therein which, individually or
in the aggregate, would be reasonably likely to have a Players Material Adverse
Effect.
Section 3.11. AGREEMENTS, CONTRACTS AND COMMITMENTS.
(a) Except as disclosed in the Players SEC Reports or as disclosed in
Section 3.11(a) of the Players Disclosure Schedule, as of the date of this
Agreement, neither Players nor any of its Subsidiaries is a party to any oral or
written (i) agreement, contract, indenture or other instrument relating to
Indebtedness (as defined below) in an amount exceeding $1,000,000, (ii)
partnership, joint venture or limited liability or management agreement with any
person, (iii) agreement, contract, or other instrument relating to any merger,
consolidation, business combination, share exchange, business acquisition, or
for the purchase, acquisition, sale or disposition of any material assets of
Players or any of its Subsidiaries outside the ordinary course of business, (iv)
other contract, agreement or commitment to be performed after the date hereof
which would be a material contract (as defined in Item 601(b)(10) of Regulation
S-K of the SEC), (v) agreement, contract, or other instrument relating to any
"strategic alliances" (i.e., cross-marketing, affinity relationship, etc.), (vi)
contract, agreement or commitment which materially restricts (geographically or
otherwise) the conduct of any line of business by Players or any of its
Subsidiaries, (vii) any contract, agreement or other instrument having as a
party a partnership, joint venture or limited liability company in which Players
or any of its Subsidiaries is a partner, joint venture party or member which
would otherwise satisfy the criteria in clauses (i), (iii), (iv), (v) or (vi) if
Players or any of its Subsidiaries were a party to such contract, agreement or
other instrument or (viii) any other material contract requiring annual or
remaining payments in excess of $250,000 after the date hereof and which is not
cancelable on less than 30 days' notice (collectively, the "PLAYERS MATERIAL
CONTRACTS"). "INDEBTEDNESS" means any liability in respect of (A) borrowed
money, (B) capitalized lease obligations, (C) the deferred purchase price of
property or services (other than trade payables in the ordinary course of
business) and (D) guarantees of any of the foregoing incurred by any other
person other than Players or any of its Subsidiaries.
(b) Except as disclosed in the Players SEC Reports filed prior to the
date of this Agreement or as disclosed in Section 3.11(b) of the Players
Disclosure Schedule, as of the date of this Agreement, (i) each of the Players
Material Contracts is valid and binding upon Players or any of its Subsidiaries
(and, to Players' best knowledge, on all other parties thereto) in accordance
with its terms and is in full force and effect, (ii) there is no material breach
or violation of or default by Players or any of its Subsidiaries under any of
the Players Material Contracts, whether or not such breach, violation or default
has been waived, and (iii) no event has occurred with respect to Players or any
of its Subsidiaries which, with the notice or lapse of time or both, would
constitute a material breach, violation or default, or give rise to a right of
termination, modification, cancellation, foreclosure, imposition of a lien,
prepayment or acceleration under any of the Players Material Contracts, which
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breach, violation or default referred to in clauses (ii) or (iii), alone or in
the aggregate with other such breaches, violations or defaults referred to in
clauses (ii) or (iii), would be reasonably likely to have a Players Material
Adverse Effect.
(c) Except as disclosed in Section 3.11(c) of the Players Disclosure
Schedule and except for liabilities or obligations which, individually or in the
aggregate, would not be reasonably likely to have a Players Material Adverse
Effect, Players and its Subsidiaries have terminated, and have no continuing
liabilities or obligations under, any agreement, contract or arrangement with
any person or entity relating to the Players Island Resort Casino Spa in
Mesquite, Nevada. Any and all rights of the buyer of the Players Island Resort
Casino Spa to indemnity by Players or any of its Subsidiaries have terminated,
except for claims specifically disclosed in Section 3.11(c) of the Players
Disclosure Schedule.
Section 3.12. LITIGATION. Except as disclosed in the Players SEC Reports
or in Section 3.12 of the Players Disclosure Schedule, (a) there is no action,
suit or proceeding, claim, arbitration or investigation against or affecting
Players or any of its Subsidiaries pending, or as to which Players or any of its
Subsidiaries has received any written notice of assertion against or affecting,
Players or any of its Subsidiaries or any property or asset of Players or any of
its Subsidiaries, before any court, arbitrator, or administrative, governmental
or regulatory authority or body, domestic or foreign that individually or in the
aggregate could reasonably be expected to (i) have a Players Material Adverse
Effect or (ii) prevent or materially delay the consummation of the transactions
contemplated by this Agreement; and (b) there is no judgment, order, injunction
or decree of any Governmental Entity outstanding against Players or any of its
Subsidiaries that could reasonably be expected to have any effect referred to in
clauses (i) or (ii) above.
Section 3.13. ENVIRONMENTAL MATTERS.
(a) Except as disclosed in Section 3.13 of the Players Disclosure
Schedule, the Players SEC Reports and as would not be reasonably likely to have
a Players Material Adverse Effect: (i) Players and its Subsidiaries have
complied with all applicable Environmental Laws (as defined in Section 3.13(b));
(ii) the properties currently owned or operated by Players and its Subsidiaries
(including soils, groundwater, surface water, buildings or other structures) are
not contaminated with any Hazardous Substances (as defined Section
3.13(c));(iii) neither Players nor its Subsidiaries are subject to liability for
any Hazardous Substance disposal or contamination on any third party property;
(iv) neither Players nor any of its Subsidiaries has been associated with any
release or threat of release of any Hazardous Substance; (v) neither Players nor
any of its Subsidiaries has received any notice, demand, letter, claim or
request for information alleging that Players or any of its Subsidiaries may be
in violation of or liable under any Environmental Law; (vi) neither Players nor
any of its Subsidiaries is subject to any orders, decrees, injunctions or other
arrangements with any Governmental Entity or is subject to any indemnity or
other agreement with any third party relating to liability under any
Environmental Law or relating to Hazardous Substances; and (vii) there are no
circumstances or conditions involving Players or any of its Subsidiaries that
could reasonably be expected to result in any claims, liability, investigations,
costs or restrictions on the ownership, use or transfer of any property of
Players or any of its Subsidiaries pursuant to any Environmental Law.
(b) For purposes of this Agreement, the term "ENVIRONMENTAL LAW" means
any federal, state, local or foreign law, regulation, order, decree, permit,
authorization, opinion, common law or agency requirement relating to: (A) the
protection, investigation or restoration of the environment, health and safety,
or natural resources, (B) the handling, use, presence, disposal, release or
threatened release of any Hazardous Substance or (C) noise, odor, wetlands,
pollution, contamination or any injury or threat of injury to persons or
property.
(c) For purposes of this Agreement, the term "HAZARDOUS SUBSTANCE" means
any substance that is: (A) listed, classified or regulated pursuant to any
Environmental Law; (B) any petroleum
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product or by-product, asbestos-containing material, lead-containing paint or
plumbing, polychlorinated biphenyls, radioactive materials or radon; or (C) any
other substance which is the subject of regulatory action by any Governmental
Entity pursuant to any Environmental Law.
Section 3.14. EMPLOYEE BENEFIT PLANS.
(a) Section 3.14(a) of the Players Disclosure Schedule contains a true
and complete list of all employee benefit plans (as defined in Section 3(3) of
the Employee Retirement Income Security Act of 1974, as amended ("ERISA")), all
employment, retention, change of control and severance agreements, and all
bonus, stock option, stock purchase, incentive, deferred compensation,
supplemental retirement, severance and other similar employee benefit plans,
programs, policies and agreements, written or otherwise, in each case that is
sponsored, maintained, contributed to or required to be contributed to by
Players or any of its Subsidiaries or any trade or business (whether or not
incorporated) which, together with Players or any of its Subsidiaries, would be
deemed a "single employer" under Section 4001(b) of ERISA (an "ERISA
AFFILIATE"), or to which Players, any of its Subsidiaries or any ERISA Affiliate
is a party for the benefit of any current or former employee, consultant,
director or independent contractor of Players or any of its Subsidiaries
(together, the "PLAYERS EMPLOYEE PLANS").
(b) Players has delivered or made available to Buyer all material
documents related to the Players Employee Plans, including, without limitation:
(i) true and complete copies of all Players Employee Plan documents and any
summary plan descriptions, summary annual reports and insurance contracts
relating thereto, (ii) detailed summaries of all unwritten Players Employee
Plans, (iii) true and complete copies of the most recent financial statements
and actuarial reports with respect to all Players Employee Plans for which
financial statements or actuarial reports are required or have been prepared;
(iv) the most recent determination letter from the IRS (if applicable) for any
such Players Employee Plan, and (v) true and complete copies of any filing with
or report to any Governmental Entity with respect to any Players Employee Plan
made by Players or any of its Subsidiaries during the twenty-four months prior
to the date of this Agreement, including, without limitation, annual reports for
Players Employee Plans, and a copy of any correspondence to Players or any of
its Subsidiaries from any Governmental Entity with respect to any such Players
Employee Plan during such period.
(c) All Players Employee Plans conform in all material respects to, and
are being administered and operated in all material respects in compliance with,
the requirements of ERISA, the Code and all other applicable laws, including
applicable laws of foreign jurisdictions. Except as set forth in Section 3.14(c)
of the Players Disclosure Schedule, there have not been any "prohibited
transactions," as such term is defined in Section 4975 of the Code or Section
406 of ERISA, involving any of the Players Employee Plans that could subject
Players or any of its Subsidiaries to any penalties or taxes imposed under the
Code or ERISA. Section 3.14(c) of the Players Disclosure Schedule sets forth a
true and complete list of all outstanding loans from Players or any of its
Subsidiaries to any current or former director, officer, employee or consultant.
(d) Except as set forth in Section 3.14(d) of the Players Disclosure
Schedule, any Players Employee Plan that is intended to be qualified under
Section 401 (a) of the Code and exempt from tax under Section 501 (a) of the
Code has been determined by the Internal Revenue Service to be so qualified, has
received a favorable determination letter from the IRS covering provisions of
the Tax Reform Act of 1986, and such determination remains in effect and has not
been revoked. Nothing has occurred since the date of any such determination that
is reasonably likely to affect adversely such qualification or exemption in any
material respect, or result in the imposition of material excise taxes or income
taxes on unrelated business income under the Code or ERISA with respect to any
Players Employee Plan. All contributions or other amounts payable by Players or
any of its Subsidiaries with respect to each Players Employee Plan have been
paid or accrued in accordance with GAAP, ERISA, the Code and the terms of each
such plan.
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(e) Except as set forth in Section 3.14(e) of the Players Disclosure
Schedule, neither Players, any of its Subsidiaries nor any ERISA Affiliate (i)
at any time in the past has had a current or contingent obligation to contribute
to any multiemployer plan (as defined in Section 3(37) of ERISA) ("MULTIEMPLOYER
PLAN") or (ii) at any time in the past has had any liability, contingent or
otherwise, under Title IV of ERISA or Section 412 of the Code. As of the date of
this Agreement, no Players Employee Plan is subject to Title IV of ERISA and no
Players Employee Plan is a Multiemployer Plan.
(f) There are no pending, or to Players' knowledge, any threatened or
anticipated claims by or on behalf of any Players Employee Plan, or by or on
behalf of any individual participants or beneficiaries of any Players Employee
Plan, alleging any breach of fiduciary duty on the part of Players or any of its
Subsidiaries or any of the officers, directors or employees of Players or any of
its Subsidiaries under ERISA or any other applicable Regulations, or claiming
benefit payments other than those made in the ordinary operation of such plans,
or alleging any violation of any other applicable Laws. To the knowledge of
Players or any of its Subsidiaries, the Players Employee Plans are not the
subject of any investigation, audit or action by the Internal Revenue Service,
the Department of Labor or the Pension Benefit Guaranty Corporation ("PBGC").
(g) With respect to any Players Employee Plan that is an employee
welfare benefit plan (within the meaning of Section 3(l) of ERISA) (a "PLAYERS
WELFARE PLAN"), (i) each Players Welfare Plan for which contributions are
claimed as deductions under any provision of the Code is in compliance in all
material respects with all applicable requirements pertaining to such deduction
and (ii) any Players Employee Plan that is a group health plan (within the
meaning of Section 4980B(g)(2) of the Code) complies, and in each and every case
has complied in all material respects, with all of the requirements of ERISA and
Section 4980B of the Code. No welfare benefit fund (within the meaning of
Section 419(e)(1) of the Code) or voluntary employees' beneficiary association
(within the meaning of 501 (c)(9) of the Code) has been established or
maintained in connection with a Players Welfare Plan.
Section 3.15. COMPLIANCE.
(a) Except as disclosed in Section 3.15 of the Players Disclosure
Schedule, each of Players and its Subsidiaries, and each of their respective
directors (but with respect to non-employee directors, only to Players' best
knowledge), officers, persons performing management functions similar to
officers and, to Players' best knowledge, partners hold all permits,
registrations, findings of suitability, licenses, variances, exemptions,
certificates of occupancy, orders and approvals of all Governmental Entities
(including all authorizations under Environmental Laws, the Merchant Marine Act
of 1920 and the Shipping Act of 1916, Certificates of Inspection issued by the
US Coast Guard and permits and approvals issued by the United States Army Corps
of Engineers and Players Gaming Laws (as defined below)), necessary to conduct
the business and operations of Players and each of its Subsidiaries as currently
conducted, each of which is in full force and effect in all material respects
and no notice of revocation has been received in respect thereof, except where
the failure to hold such permits, registrations, findings of suitability,
licenses, variances, exemptions, certificates of occupancy, orders and approvals
would not, individually or in the aggregate, be reasonably likely to have a
Players Material Adverse Effect (the "PLAYERS PERMITS"). Except as disclosed in
the Players SEC Reports, as disclosed in Section 3.15 of the Players Disclosure
Schedule, or as would not be reasonably likely to have a Players Material
Adverse Effect, the businesses of Players and its Subsidiaries are not being
conducted in violation of any law, ordinance or regulation of any Governmental
Entity. Except as disclosed in Schedule 3.15 of the Players Disclosure Schedule,
to Players' best knowledge, no investigation or review by any Governmental
Entity with respect to Players or any of its Subsidiaries is pending or
threatened, nor has any Governmental Entity indicated any intention to conduct
the same, other than those the outcome of which would not, individually or in
the aggregate, be reasonably likely to have a Players Material Adverse Effect.
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(b) The term "PLAYERS GAMING LAWS" means any Federal, state, local or
foreign statute, ordinance, rule, regulation, permit, consent, registration,
finding of suitability, approval, license, judgment, order, decree, injunction
or other authorization, including any condition or limitation placed thereon,
governing or relating to the current or contemplated casino and gaming
activities and operations of Players or any of its Subsidiaries, including any
applicable state gaming law and any federal or state laws relating to currency
transactions.
(c) Except as disclosed in Section 3.15 of the Players Disclosure
Schedule (i) neither Players nor any of its Subsidiaries, nor any director (but
with respect to non-employee directors, only to Players' best knowledge),
officer, key employee or, to Players' best knowledge, partners of Players or any
of its Subsidiaries has received any written claim, demand notice, complaint,
court order or administrative order from any Governmental Entity in the past
three years under, or relating to any violation or possible violation of any
Players Gaming Laws which did or would be reasonably likely to result in fines
or penalties of $250,000 or more; (ii) to the best knowledge of Players, there
are no facts, which if known to the regulators under the Players Gaming Laws
could reasonably be expected to result in the revocation, limitation or
suspension of a license, finding of suitability, registration, permit or
approval of it or them, or any officer, director, other person performing
management functions similar to an officer or partner, under any Players Gaming
Laws; and (iii) neither Players nor any of its Subsidiaries has suffered a
suspension or revocation of any material license, finding of suitability,
registration, permit or approval held under the Players Gaming Laws.
Section 3.16. LABOR MATTERS. Except as disclosed in Section 3.16 of the
Players Disclosure Schedule, (i) there are no proceedings pending between
Players or any of its Subsidiaries and any of their respective employees before
the Equal Employment Opportunity Commission, Department of Labor, or any other
Governmental Entity; (ii) to the best knowledge of Players, there are no
activities or proceedings of any labor union to organize any non-unionized
employees; (iii) neither Players nor any of its Subsidiaries has received notice
of any alleged unfair labor practice charges and/or complaints pending against
Players or any of its Subsidiaries or any of their respective representatives or
employees before the National Labor Relations Board or any current union
representation questions involving employees of Players or any of its
Subsidiaries; and (iv) Players' employment policies and practices comply in all
material respects with applicable law; and (v) there is no strike, slowdown,
work stoppage, labor dispute or lockout, or, to the best knowledge of Players,
threat thereof, by or with respect to any employees of Players or any of its
Subsidiaries. Players and its Subsidiaries are not parties to any collective
bargaining agreements or other labor union contracts applicable to individuals
employed or previously employed by Players or any of its Subsidiaries and,
except as disclosed in Players Disclosure Schedule 3.16, no collective
bargaining agreement or labor union contract is being negotiated by Players or
any such Subsidiary.
Section 3.17. INSURANCE. All material fire and casualty, general
liability, business interruption, product liability, and sprinkler and water
damage insurance policies maintained by Players or any of its Subsidiaries are
listed on Section 3.17 of the Players Disclosure Schedule. At the Effective
Time, all such insurance policies, or replacements thereof, will be outstanding
and duly in force. To Players' knowledge, no notice of termination or
non-renewal of any such insurance policy has been received by Players.
Section 3.18. INFORMATION IN PROXY STATEMENT. The Proxy Statement, as such
term is defined in Section 5.4(a) below (or any amendment thereof or supplement
thereto), at the date mailed to Players' stockholders and at the time of the
Players Special Meeting, will not contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they are made, not misleading; PROVIDED, HOWEVER, that no
representation is made by Players with respect to statements made therein based
on information supplied by Buyer or Merger Sub for inclusion in the Proxy
Statement. The Proxy
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Statement will comply in all material respects with the provisions of the
Exchange Act and the rules and regulations thereunder.
Section 3.19. STATE TAKEOVER STATUTE. The Board of Directors of Players
has approved the Merger, this Agreement and the Stockholder Support Agreements
and, assuming the accuracy of the representations contained in Section 4.7
hereof (without giving effect to the knowledge qualification therein), such
approval is sufficient to render inapplicable to the Merger, this Agreement and
the Stockholder Support Agreements and the transactions contemplated hereby and
thereby the provisions of Section 78.378 through 78.3793 of the NRS to the
extent, if any, such Sections are applicable to the Merger, this Agreement and
the Stockholder Support Agreements and the transactions contemplated hereby and
thereby.
Section 3.20. VOTING REQUIREMENTS. The affirmative vote of the holders of
a majority of the outstanding shares of Players Common Stock entitled to vote
thereon at the Players Special Meeting with respect to the approval of the
Merger (the "PLAYERS STOCKHOLDER APPROVAL") is the only vote of the holders of
any class or series of Players' capital stock necessary to approve and adopt
this Agreement and the transactions contemplated by this Agreement.
Section 3.21. PLAYERS RIGHTS AGREEMENT. The Rights Agreement has been
amended as of August 19, 1999, in the form attached hereto as Exhibit B, so as
to provide that (i) no "Distribution Date," "Stock Acquisition Date," or
"Trigger Event" thereunder shall be deemed to have occurred, (ii) none of Buyer
or any of its Subsidiaries will be an "Acquiring Person" thereunder and (iii) no
holder of rights issued thereunder shall be entitled to exercise such rights
under, or be entitled to any rights or benefits pursuant to, the Rights
Agreement, in each case solely by reason of the approval and execution of this
Agreement or the execution of the Stockholder Support Agreements, or the
consummation of the transactions contemplated hereby or thereby.
Section 3.22. YEAR 2000. Except as disclosed in Section 3.22 of the
Players Disclosure Schedule, as of the date hereof, all computer software
necessary for the conduct of its business (the "SOFTWARE") is (or will be, prior
to December 31, 1999, as provided in Section 3.22 of the Players Disclosure
Schedule) designed to be used prior to, during, and after December 31, 1999, and
the Software will operate during each such time period without error relating to
the year 2000, specifically including any error relating to, or the product of,
date data which represents or references different centuries or more than one
century. Players further represents and warrants that as of the date hereof, the
Software either does or will, prior to December 31, 1999 as provided in Section
3.22 of the Players Disclosure Schedule accept, calculate, sort, extract and
otherwise process date inputs and date values, and return and display date
values, in a consistent manner regardless of the dates used, whether before, on,
or after January 1, 2000.
Section 3.23. OPINION OF FINANCIAL ADVISOR. Players has received the oral
opinion of Donaldson, Lufkin & Jenrette Securities Corporation ("DLJ") as of the
date of this Agreement, to the effect that the Merger Consideration is fair to
the holders of Players Common Stock from a financial point of view.
Section 3.24. BROKERS. None of Players, any of its Subsidiaries, or any of
their respective officers, directors or employees have employed any broker,
financial advisor or finder or incurred any liability for any brokerage fees,
commissions, finder's or other fees in connection with the transactions
contemplated by this Agreement, except that Players has retained DLJ as its
financial advisor.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF BUYER AND MERGER SUB
Buyer and Merger Sub represent and warrant to Players that the statements
contained in this Article IV are true and correct except as set forth herein and
in the disclosure schedule delivered by
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Buyer and Merger Sub to Players on or before the date of this Agreement (the
"BUYER DISCLOSURE SCHEDULE"), or as otherwise expressly contemplated by this
Agreement. Any reference in the Merger Agreement to Buyer's "best knowledge," or
"the best of Buyer's knowledge," or words of similar import, shall be deemed a
reference to the actual knowledge of any of the corporate officers of Buyer or
any of its Subsidiaries, for all purposes. The Buyer Disclosure Schedule has
been prepared based upon the foregoing definition.
Section 4.1. ORGANIZATION OF BUYER AND MERGER SUB. Each of Buyer and
Merger Sub is duly organized, validly existing and in good standing under the
laws of the jurisdiction of its organization and has all requisite corporate,
partnership or limited liability company power and authority to carry on its
business as now being conducted and as proposed to be conducted. Each of Buyer
and Merger Sub is duly qualified or licensed to do business and is in good
standing in each jurisdiction in which the property owned, leased or operated by
it or the nature of the business conducted by it makes such qualification or
licensing necessary, except where the failure to be so qualified, licensed or in
good standing would not have a material adverse effect on the business,
properties, condition (financial or otherwise) or results of operations of Buyer
and its Subsidiaries, taken as a whole (a "BUYER MATERIAL ADVERSE EFFECT").
Buyer has delivered to Players a true and correct copy of the Certificate of
Incorporation and Bylaws of Buyer, in each case as amended to the date of this
Agreement.
Section 4.2. CAPITALIZATION OF MERGER SUB.
The authorized capital stock of Merger Sub consists of 2,500 shares of
common stock, par value $.01 per share ("MERGER SUB COMMON STOCK"), of which
1,000 shares are issued and outstanding. Buyer owns directly all the outstanding
shares of Merger Sub Common Stock. The outstanding shares of Merger Sub Common
Stock are duly authorized, validly issued, fully paid and assessable and free of
any preemptive rights.
Section 4.3. AUTHORITY; NO CONFLICT; REQUIRED FILINGS AND CONSENTS.
(a) Buyer and Merger Sub have all requisite corporate power and
authority to enter into this Agreement and to consummate the transactions
contemplated by this Agreement. The execution and delivery of this Agreement and
the consummation of the transactions contemplated hereby by Buyer and Merger Sub
have been duly authorized by all necessary corporate action on the part of Buyer
and Merger Sub. This Agreement has been duly executed and delivered by Buyer and
Merger Sub and constitutes the valid and binding obligation of Buyer and Merger
Sub, enforceable against each of them in accordance with its terms.
(b) Other than as disclosed in Section 4.3(b) of the Buyer Disclosure
Schedule, the execution and delivery of this Agreement by Buyer and Merger Sub
does not, and the consummation of the transactions contemplated hereby will not,
(i) conflict with, or result in any violation or breach of, any provision of the
Certificate of Incorporation or Bylaws of Buyer or the comparable charter or
organizational documents of any of its Subsidiaries, (ii) result in any
violation or breach of, or constitute (with or without notice or lapse of time,
or both) a default (or give rise to a right of termination, cancellation or
acceleration of any obligation or loss of any material benefit) under, or
require a consent or waiver under, any of the terms, conditions or provisions of
any note, bond, mortgage, indenture, lease, contract or other agreement,
instrument or obligation to which Buyer or any of its Subsidiaries is a party or
by which any of them or any of their properties or assets may be bound, or (iii)
subject to the governmental filings and other matters referred to in Section
4.3(c), conflict with or violate any permit, concession, franchise, license,
judgment, order, decree, statute, law, ordinance, rule or regulation applicable
to Buyer or any of its Subsidiaries or any of its or their properties or assets,
except in the case of clauses (ii) and (iii) for any such conflicts, violations,
defaults, terminations, cancellations or accelerations which (x) are not,
individually or in the aggregate, reasonably likely to have a Buyer Material
Adverse Effect or (y) would not impair or materially delay the consummation of
the Merger.
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(c) Except as disclosed in Section 4.3(c) of the Buyer Disclosure
Schedule, no consent, approval, order or authorization of, or registration,
declaration or filing with, any Governmental Entity is required by or with
respect to Buyer or any of its Subsidiaries in connection with the execution and
delivery of this Agreement or the consummation of the transactions contemplated
hereby, other than (i) the filing of the pre-merger notification report under
the HSR Act, (ii) the filing of the Articles of Merger with respect to the
Merger with the Secretary of State of the State of Nevada, (iii) any approvals
and filing of notices required under any applicable gaming industry regulation,
(iv) such consents, approvals, orders, authorizations, permits, filings or
registrations related to, or arising out of, compliance with statutes, rules or
regulations regulating the consumption, sale or serving of alcoholic beverages,
(v) such immaterial filings and consents as may be required under any
environmental, health or safety law or regulation pertaining to any
notification, disclosure or required approval triggered by the Merger or the
transactions contemplated by this Agreement, and (vi) such other filings,
consents, approvals, orders, registrations and declarations as may be required
under the laws of any jurisdiction in which Buyer or any of its Subsidiaries
conducts any business or owns any assets the failure of which to obtain would
not have a Buyer Material Adverse Effect.
Section 4.4. PUBLIC FILINGS; FINANCIAL STATEMENTS.
(a) Buyer and its Subsidiaries that are required to file forms, reports
or other document with the SEC (the "BUYER REPORTING SUBSIDIARIES") have filed
and made available to Buyer all forms, reports and documents required to be
filed by Buyer and the Buyer Reporting Subsidiaries with the SEC since January
1, 1995 (collectively, the "BUYER SEC REPORTS"). The Buyer SEC Reports
(including any financial statements filed as part thereof or incorporated by
reference therein) (i) at the time filed, complied in all material respects with
the applicable requirements of the Securities Act and the Exchange Act, as the
case may be, and (ii) did not, at the time they were filed (or if amended or
superseded by a filing prior to the date of this Agreement, then on the date of
such filing), contain any untrue statement of a material fact or omit to state a
material fact required to be stated in such Buyer SEC Reports or necessary in
order to make the statements in such Buyer SEC Reports, in the light of the
circumstances under which they were made, not misleading.
(b) Each of the consolidated financial statements (including, in each
case, any related notes) of Buyer contained in the Buyer SEC Reports complied as
to form in all material respects with the applicable published rules and
regulations of the SEC with respect thereto, was prepared in accordance with
GAAP applied on a consistent basis throughout the period involved (except as may
be indicated in the notes to such financial statements or, in the case of
unaudited statements, as permitted by Form 10-Q under the Exchange Act) and
fairly presented the consolidated financial position of Buyer and its
consolidated Subsidiaries as of the dates and the consolidated results of its
operations and cash flows for the periods indicated, except that the unaudited
interim financial statements were or are subject to normal and recurring
year-end adjustments which, with respect to interim periods since December 31,
1998, were not or are not expected to be material in amount.
Section 4.5. PROXY STATEMENT. The information supplied by Buyer for
inclusion or incorporation by reference in the Proxy Statement (as defined in
Section 5.4(a) below) shall not, on the date the Proxy Statement is first mailed
to stockholders of Players, at the time of the Players Special Meeting (as
provided for in Section 5.5) and at the Effective Time, contain any statement
which, at such time and in light of the circumstances under which it shall be
made, is false or misleading with respect to any material fact, omit to state
any material fact necessary in order to make the statements made in the Proxy
Statement not false or misleading, or omit to state any material fact necessary
to correct any statement in any earlier communication with respect to the
solicitation of proxies for the Players Special Meeting which has become false
or misleading.
Section 4.6. BROKERS. None of Buyer, any of its Subsidiaries, or any of
their respective officers, directors or employees have employed any broker,
financial advisor or finder or incurred any liability
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for any brokerage fees, commissions, finder's or other fees in connection with
the transactions contemplated by this Agreement, except that Buyer has retained
Deutsche Bank Alex. Brown and Morgan Stanley & Co. as Buyer's financial
advisors.
Section 4.7. OWNERSHIP OF SECURITIES. As of the date hereof, neither Buyer
nor, to Buyer's knowledge, any of its affiliates or associates (as such terms
are defined under the Exchange Act), (i) beneficially owns, directly or
indirectly, or (ii) is party to an agreement, arrangement or understanding
(other than this Agreement) for the purpose of acquiring, holding or disposing
of, in each case, shares of Players Common Stock representing at least 20% of
the total number of outstanding shares of Players Common Stock.
Section 4.8. FINANCING. Buyer and its Subsidiaries will have available, to
the extent required as of the Closing Date, sufficient funds to enable Buyer and
its Subsidiaries to (i) pay the Merger Consideration, (ii) purchase any of
Players' outstanding 10 7/8% Senior Notes due 2005 (the "SENIOR NOTES") required
to be purchased pursuant to the change of control provisions contained in the
indenture governing such indebtedness and (iii) consummate any tender offer
and/or consent solicitation for the Senior Notes required to be consummated
pursuant to 5.12(c).
ARTICLE V.
COVENANTS
Section 5.1. CONDUCT OF BUSINESS OF PLAYERS.
Except as disclosed in Section 5.1 of the Players Disclosure Schedule during
the period from the date of this Agreement and continuing until the earlier of
the termination of this Agreement or the Effective Time, Players agrees as to
itself and its respective Subsidiaries (except to the extent that Buyer shall
otherwise consent in writing) to carry on its business in the usual, regular and
ordinary course in substantially the same manner as previously conducted, to pay
its debts and taxes when due subject to good faith disputes over such debts or
taxes, to pay or perform its other obligations when due, and, to the extent
consistent with such business, use all commercially reasonable efforts
consistent with past practices and policies to preserve intact its present
business organization, keep available the services of its present officers and
key employees and preserve its relationships with customers, suppliers,
distributors, and others having business dealings with it. Without limiting the
generality of the foregoing, during the period from the date of this Agreement
until the Effective Time, Players agrees (except as otherwise contemplated by
this Agreement or to the extent that Buyer shall otherwise consent in writing)
as follows:
(a) DIVIDENDS; CHANGES IN STOCK. Players shall not and shall cause its
Subsidiaries not to, other than dividends and distributions by a direct or
indirect wholly owned Subsidiary of Players to its parent (x) declare, set aside
or pay any dividends on, or make any other distributions (whether in cash, stock
or property), in respect of, any of its capital stock, (y) split, combine,
subdivide or reclassify any of its capital stock or issue or authorize the
issuance of any other securities in respect of, in lieu of or in substitution
for shares of its capital stock (other than the issuance of shares of Players
Common Stock upon the exercise of Players Options outstanding on the date of
this Agreement and in accordance with their present terms) or (z) purchase,
redeem or otherwise acquire any shares of capital stock of Players or any of its
Subsidiaries or any other securities thereof or any rights, warrants or options
to acquire any such shares or other securities.
(b) ISSUANCE OF SECURITIES. Players shall not and shall cause its
Subsidiaries not to issue, deliver, sell, pledge or otherwise encumber any
shares of its capital stock, any other voting securities or any securities
convertible into, or any rights, warrants or options to acquire, any such
shares, voting securities or convertible securities (other than the issuance of
shares of Players Common Stock upon
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the exercise of Players Options outstanding on the date of this Agreement and in
accordance with their present terms).
(c) GOVERNING DOCUMENTS. Players shall not and shall cause its
Subsidiaries not to amend its Certificate of Incorporation, By-Laws or other
comparable charter or organizational documents.
(d) NO ACQUISITIONS. Players shall not and shall cause its
Subsidiaries not to acquire or agree to acquire (including, without limitation,
by merger, consolidation or acquisition of stock or assets) any business,
including through the acquisition of any interest in any corporation,
partnership, joint venture, association or other business organization or
division thereof.
(e) NO DISPOSITIONS. Players shall not and shall cause its
Subsidiaries not to sell, lease, license, mortgage or otherwise encumber or
otherwise dispose of any of its material properties or assets, other than in the
ordinary course of business consistent with past practice.
(f) INDEBTEDNESS. Players shall not and shall cause its Subsidiaries
not to (y) 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 Players or any of its
Subsidiaries, or guarantee any debt securities of another person, other than
short-term bank financing in the ordinary course of business consistent with
past practice or (z) make any loans, advances or capital contributions to, or
investments in, any other person, other than in the ordinary course of business
consistent with past practice.
(g) EMPLOYEE BENEFITS. Players shall not and shall cause its
Subsidiaries not to, except as required by applicable law or, with respect to
the limitations contained in subclauses (C) and (G) of this Section 5.1(b)(vii),
agreements, plans or arrangements existing on the date hereof, (A) adopt, enter
into, terminate or amend any employment, severance, retention or similar
agreement or contract; (B) negotiate or enter into any collective bargaining
agreement or labor union contract; (C) increase, in any manner, the compensation
or fringe benefits of, or pay any bonus to, any director, officer or employee
(except for normal increases of cash compensation or cash bonuses in the
ordinary course of business consistent with past practice); (D) adopt or
establish any new benefit plan; or amend any existing benefit plan, including,
without limitation, the Players Employee Plans and the Players Welfare Plan,
except as required by law; or pay any benefit not provided for under any Players
Employee Plan or Players Welfare Plan; (E) adopt, establish or amend any
severance pay plan; or increase in any manner the severance or termination pay
of any officer or employee; (F) modify the provisions of any Players Stock
Option Plan; or adjust or modify the terms of any outstanding Players Options;
or take any action to accelerate the vesting of, or cash out rights associated
with, any Players Option or Players SAR, except as contemplated by the
Employment Agreements; or remove existing restrictions in any Players Stock
Option Plan or other plan or arrangement; (G) grant any new awards under any
Players Stock Option Plan or other bonus, incentive, performance or compensation
plan or arrangement, including the grant of Players Options, Players SARs,
stock-based or stock-related awards, performance units or restricted stock; (H)
take any action to fund or, in any other way secure, the payment of compensation
or benefits under any Players Employee Plan, Players Welfare Plan or other
employee plan, agreement, contract or arrangement; or (i) hire any individual as
an employee, independent contractor or consultant who will be paid an annual
base salary that equals or exceeds $100,000, without the prior written consent
of Buyer.
(h) MATERIAL CONTRACTS. Players shall not and shall cause its
Subsidiaries not to (a) enter into any agreement of a nature that would be
required to be filed as an exhibit to Form 10-K under the Exchange Act or (b)
modify, amend or terminate any existing agreement of such type or waive, release
or assign any material rights or claims contained therein, except in the
ordinary course of business consistent with past practice.
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(i) ACCOUNTING MATTERS. Players shall not and shall cause its
Subsidiaries not to make any material change in accounting methods, principles
or practices except as required by GAAP, or the applicable regulations under the
Securities Act and the Exchange Act.
(j) TAX MATTERS. Players shall not and shall cause its Subsidiaries
not to make any material tax election or enter into any settlement or compromise
with respect to any material income tax liability.
(k) SETTLEMENT. Players shall not and shall cause its Subsidiaries not
to settle any pending or threatened litigation involving Players or any of its
Subsidiaries (whether brought by a private party or a Government Entity), except
for settlements that, in the aggregate, involve payments, not covered by
insurance, by Players or any Subsidiaries of less than $250,000 and which settle
entire claims or causes of action arising out of the same or similar facts and
circumstances or do not impose any material restrictions on the business or
operations of Players or any of its Subsidiaries.
(l) CAPITAL EXPENDITURES. Players together with its Subsidiaries shall
not make capital expenditures in excess of $250,000 individually or $1,000,000
in the aggregate.
(m) GENERAL. Players shall not and shall cause its Subsidiaries not to
authorize any of, or commit or agree to take any of, the foregoing actions.
Section 5.2. COOPERATION; NOTICE; CURE. Subject to compliance with
applicable law, from the date hereof until the Effective Time, each of Buyer and
Players shall confer on a regular and frequent basis with one or more
representatives of the other party to report on the general status of ongoing
operations. Each of Players and Buyer shall promptly notify the other in writing
of, and will use all commercially reasonable efforts to cure before the Closing
Date, any event, transaction or circumstance, as soon as practical after it
becomes known to such party, that causes or will cause any covenant or agreement
of Players or Buyer under this Agreement to be breached in any material respect
or that renders or will render untrue in any material respect any representation
or warranty of Players or Buyer contained in this Agreement.
Section 5.3. NO SOLICITATION. From and after the date hereof, Players
shall not, directly or indirectly, through any officer, director, employee,
financial advisor, representative or agent of such party (i) solicit, initiate,
or encourage (including by way of furnishing information) or take any other
action to facilitate knowingly any inquiries or proposals that constitute, or
could reasonably be expected to lead to, a proposal or offer for a merger,
consolidation, business combination, sale of substantial assets, sale of shares
of capital stock (including without limitation by way of a tender or exchange
offer) or similar transaction involving Players or any of its Subsidiaries,
other than the transactions contemplated by this Agreement (any of the foregoing
inquiries or proposals being referred to in this Agreement as an "ACQUISITION
PROPOSAL"), (ii) engage in negotiations or discussions with any person (or group
of persons) other than Buyer or its respective affiliates (a "THIRD PARTY")
concerning, or provide any non-public information to any person or entity
relating to, any Acquisition Proposal, or (iii) agree to or recommend any
Acquisition Proposal; PROVIDED, HOWEVER, that until approval of the Merger at
the Players Special Meeting (as defined below), nothing contained in this
Agreement shall prevent Players or its Board of Directors, from furnishing
non-public information to, or entering into discussions or negotiations with,
any person or entity in connection with an unsolicited bona fide written
Acquisition Proposal by such person or entity or modifying or withdrawing its
recommendation with respect to the transactions contemplated hereby or
recommending an unsolicited bona fide written Acquisition Proposal to the
stockholders of Players, if the Board of Directors of Players reasonably
believes in good faith that (i) such Acquisition Proposal, after consultation
with and receipt of advice from DLJ, is reasonably capable of being completed on
substantially the terms proposed and is superior from a financial point of view
to the holders of Players Common Stock than the transactions contemplated by
this Agreement and (ii) after receipt of advice to such effect from outside
legal counsel (who may be Players' regularly engaged outside legal counsel),
determines in good faith that such action is required
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for the Board of Directors of Players to comply with its duties to holders of
Players Common Stock imposed by applicable law (a "SUPERIOR PROPOSAL").
Section 5.4. PROXY STATEMENT.
(a) As promptly as practicable after the execution of this Agreement,
Players shall either (i) prepare and file with the SEC an amendment to the proxy
statement of Players dated July 22, 1999 that Players mailed to its
stockholders, in connection with the proposed merger of a subsidiary of Jackpot
Enterprises, Inc. with and into Players, which amendment will modify such proxy
statement so that it can be used to send to Players' stockholders in connection
with, and for their consideration of, this Agreement and the Merger or (ii)
prepare and file with the SEC, in preliminary form, a new proxy statement to be
sent to Players' stockholders in connection with, and for their consideration
of, this Agreement and the Merger (in either case, the "PROXY STATEMENT").
(b) Players and Buyer shall make all necessary filings with respect to
the Merger under the Securities Act, the Exchange Act, applicable state blue sky
laws and the rules and regulations thereunder.
Section 5.5. SPECIAL MEETING. Players shall either (i) duly adjourn the
stockholder meeting it called for September 14, 1999 to such other date that is
the first practicable date on which Players can reasonably hold such stockholder
meeting for the purpose of allowing such stockholders to vote upon this
Agreement and the Merger, or (ii) cancel the stockholder meeting currently
scheduled for September 14, 1999 and instead duly call, give notice of, convene
and hold a new special meeting of its stockholders for the purpose of voting
upon this Agreement and the Merger to be held as promptly as reasonably
practicable after the date hereof (in either case, the "PLAYERS SPECIAL
MEETING"). Except as expressly otherwise PROVIDED in Section 5.3 hereof, Players
shall, through its Board of Directors, recommend to its stockholders adoption
and approval of this Agreement and the Merger.
Section 5.6. ACCESS TO INFORMATION. Upon reasonable notice, Players (and
each of their respective Subsidiaries) shall afford to Buyer and its officers,
employees, accountants, counsel and other representatives, reasonable access,
during normal business hours during the period prior to the Effective Time, to
all of Players' personnel, properties, books, contracts, commitments and records
and, during such period, Players shall, and shall cause each of its respective
Subsidiaries to, furnish promptly to the other (a) copies of monthly financial
reports and development reports, (b) a copy of each report, schedule,
registration statement and other documents filed or received by it during such
period pursuant to the requirements of federal or state securities laws and (c)
all other information concerning its business, properties and personnel as Buyer
may reasonably request. Buyer will hold any such information furnished to it by
Players in confidence in accordance with the confidentiality agreements between
the parties (collectively, the "CONFIDENTIALITY AGREEMENT"). No information or
knowledge obtained in any investigation pursuant to this Section 5.6 shall
affect or be deemed to modify any representation or warranty contained in this
Agreement or the conditions to the obligations of the parties to consummate the
Merger. Paragraphs 5 and 6 of the Confidentiality Agreement binding Buyer shall
be terminated and be without effect upon any termination of this Agreement
pursuant to Sections 7.1(e) or 7.1(f).
Section 5.7. GOVERNMENTAL APPROVALS.
(a) The parties hereto shall cooperate with each other and use all
commercially reasonable efforts to promptly prepare and file all necessary
documentation, to effect all applications, notices, petitions and filings, to
obtain as promptly as practicable without conditions, restrictions or
limitations that are more restrictive than those conditions, restrictions and
limitations applicable to Players on the date hereof, all permits,
registrations, licenses, findings of suitability, consents, variances,
exemptions, orders, approvals and authorizations of all third parties and
Governmental Entities which are necessary or advisable to consummate the
transactions contemplated by this Agreement ("GOVERNMENTAL
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APPROVALS"). Each of the parties hereto and their respective officers, directors
and affiliates shall file within thirty (30) days after the date hereof, all
required initial applications and documents in connection with obtaining the
Governmental Approvals and shall act reasonably and promptly thereafter in
responding to additional requests in connection therewith. Players and Buyer
shall have the right to review in advance, and to the extent practicable each
will consult the other on, in each case subject to applicable laws relating to
the exchange of information, all the information relating to Players or to
Buyer, as the case may be, and any of their respective Subsidiaries, directors,
officers and stockholders which appear in any filing made with, or written
materials submitted to, any third party or any Governmental Entity in connection
with the transactions contemplated by this Agreement. Without limiting the
foregoing, each of Players and Buyer (the "NOTIFYING PARTY") will notify the
other reasonably promptly of the receipt of material comments or requests from
Governmental Entities relating to Governmental Approvals, and will supply the
other party with copies of all material correspondence between the Notifying
Party or any of its representatives and Governmental Entities with respect to
Governmental Approvals; PROVIDED, HOWEVER, that it shall not be required to
supply the other party with copies of correspondence relating to the personal
applications of individual applicants except for evidence of filing.
(b) Players and Buyer shall promptly advise each other upon receiving
any communication from any Governmental Entity whose consent or approval is
required for consummation of the transactions contemplated by this Agreement
which causes such party to believe that there is a reasonable likelihood that
any approval needed from a Governmental Entity will not be obtained or that the
receipt of any such approval will be materially delayed. Players and Buyer shall
take any and all actions reasonably necessary to vigorously defend, lift,
mitigate and rescind the effect of any litigation or administrative proceeding
adversely affecting this Agreement or the transactions contemplated hereby or
thereby, including, limitation, promptly appealing any adverse court or
administrative order or injunction to the extent reasonably necessary for the
foregoing purposes.
(c) Notwithstanding any other provision of this Agreement (but without
limiting the obligations set forth in Sections 5.7(a) and (b)), Buyer shall have
no obligation or affirmative duty under this Section 5.7 to cease or refrain
from the ownership of any assets or properties (including any of the assets and
properties to be acquired from Players) or the association with any person or
entity which association is material to the operations of Buyer, whether on the
date hereof or at any time in the future.
Section 5.8. PUBLICITY. Players and Buyer shall agree on the form and
content of the initial press release regarding the transactions contemplated
hereby and thereafter shall consult with each other before issuing, and use all
reasonable efforts to agree upon, any press release or other public statement
with respect to any of the transactions contemplated hereby and shall not issue
any such press release or make any such public statement prior to such
consultation, except as may be required by law.
Section 5.9. INDEMNIFICATION.
(a) From and after the Effective Time, Buyer agrees that it will, and
will cause the Surviving Corporation to, indemnify and hold harmless each
present and former director and officer of Players (the "INDEMNIFIED PARTIES"),
against any costs or expenses (including attorneys' fees), judgments, fines,
losses, claims, damages, liabilities or amounts paid in settlement incurred in
connection with any claim, action, suit, proceeding or investigation, whether
civil, criminal, administrative or investigative, arising out of or pertaining
to matters existing or occurring at or prior to the Effective Time, whether
asserted or claimed prior to, at or after the Effective Time, to the fullest
extent that Players would have been permitted under Nevada law and its Articles
of Incorporation or Bylaws in effect on the date hereof to indemnify such
Indemnified Party.
(b) For a period of three years after the Effective Time, Buyer shall
maintain or shall cause the Surviving Corporation to maintain in effect a
directors' and officers' liability insurance policy
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covering those persons who are currently covered by Players' directors' and
officers' liability insurance policy (copies of which have been heretofore
delivered by Players to Buyer) with coverage in amount and scope at least as
favorable as Players' existing coverage; PROVIDED that in no event shall Buyer
or the Surviving Corporation be required to expend in the aggregate in excess of
200% of the annual premium currently paid by Players for such coverage; and if
such premium would at any time exceed 200% of the such amount, then Buyer or the
Surviving Corporation shall maintain insurance policies which provide the
maximum and best coverage available at an annual premium equal to 200% of such
amount.
(c) The provisions of this Section 5.9 are intended to be an addition to
the rights otherwise available to the current officers and directors of Players
by law, charter, statute, bylaw or agreement, and shall operate for the benefit
of, and shall be enforceable by, each of the Indemnified Parties, their heirs
and their representatives.
Section 5.10. STOCKHOLDER LITIGATION. Players shall give Buyer the
reasonable opportunity to participate in the defense or settlement of any
stockholder litigation against Players and its directors relating to the
transactions contemplated hereby, PROVIDED, HOWEVER, that no such settlement
shall be agreed to without Buyer's consent.
Section 5.11. EMPLOYEE BENEFITS.
(a) Buyer shall cause the Surviving Corporation to honor all written
employment, severance and termination agreements (including change in control
provisions) of the employees of Players and its Subsidiaries provided to Buyer
on or prior to the date of this Agreement and which are identified on Players
Disclosure Schedule 3.14(a).
(b) For purposes of determining eligibility for participation and
vesting under any employee benefit plan or arrangement of Buyer or the Surviving
Corporation, employees of Players and its Subsidiaries as of the Effective Time
shall receive service credit for service with Players and any of its
Subsidiaries to the same extent such service was granted under the Employee
Plans but not for purposes of determining benefit accruals. This Section 5.11
shall not obligate the Buyer or Surviving Corporation to provide benefits to
employees of Players and its Subsidiaries that are comparable to the benefits
provided under any Players Employee Plan under which any such employee may
previously have been covered.
(c) Nothing in this Agreement is intended to create any right of
employment for any person or to create any obligation for Buyer or the Surviving
Corporation to continue any Plan of Players following the Effective Time.
(d) Buyer acknowledges that Howard A. Goldberg, Peter J. Aranow and
Patrick Madamba, Jr. have terminated employment with Players prior to the date
hereof. Players shall obtain and deliver to Buyer prior to the Closing Date a
written resignation letter from John Groom (together with Howard A. Goldberg,
Peter J. Aranow and Patrick Madamba, Jr. hereinafter collectively referred to as
the "EXECUTIVES") which shall be effective as of the Effective Time, and Buyer
agrees that it will, and will cause the Surviving Corporation to, (i) treat the
Merger as a "Change of Control" and each Executive's termination of employment
as a "Termination Upon a Change of Control" for purposes of each Executive's
employment agreement, change of control agreement or other termination agreement
with Players governing the terms of each Executive's employment and severance
from employment with Players, and for purposes of all related option and other
agreements affecting the terms and conditions of such Executive's employment
(collectively, the "EMPLOYMENT AGREEMENTS"), and (ii) pay at Closing the
amounts, and provide the benefits, required to be paid or provided to each such
Executive upon a Termination Upon a Change of Control under the applicable
Employment Agreement, in each case, without the need for any further action by
any Executive. To the extent permitted by and in accordance with the Employment
Agreements, Buyer shall reduce the amounts required to be paid to each
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Executive due to a Termination Upon Change of Control or otherwise (the "REDUCED
AMOUNT") to the extent necessary to avoid any limitation of the Buyer's federal
income tax deduction under Section 280G of the Code and the rulings and
regulations thereunder. The Reduced Amount shall represent the maximum severance
payment that an Executive may receive without causing such payment to be subject
to an excise tax and the limitations on deductions under Section 280G of the
Code. To the extent necessary to avoid any limitation on the Buyer's deductions
under Section 280G of the Code, after determination of the Reduced Amount, the
Buyer may also cause an Executive's "parachute payments" (within the meaning of
Code Section 280G) to be reduced to the Reduced Amount, after consulting with
each affected Executive to determine which payments shall be reduced. At least
sixty days before the Closing Date, a report (the "ACCOUNTANT'S REPORT"),
setting forth the Reduced Amount, as described in Section 5.11(d) hereof, for
each Executive, prepared by Ernst & Young (the "ACCOUNTANT") shall be delivered
to Buyer for its review.
(e) Buyer agrees that employees of Players who are employees on the
Closing Date shall be entitled to receive the bonus that they would otherwise
receive in accordance with Players' bonus compensation programs consistent with
prior practice as in effect on the date of this Agreement, pro rated from April
1, 1999 to the Closing Date. For purposes of this Subsection (e), Howard A.
Goldberg, Peter J. Aranow and Patrick Madamba, Jr. shall not be treated as
employees on the Closing Date, any provision in Subsection (d) hereof to the
contrary notwithstanding.
(f) Players shall, prior to the Closing Date, take all corporate actions
to terminate Players' 401(k) plan effective immediately prior to the Effective
Time in conformity with the requirements of the Internal Revenue Code and ERISA.
Section 5.12. FURTHER ASSURANCES AND ACTIONS.
(a) Subject to the terms and conditions herein, each of the parties
hereto agrees to use its reasonable best efforts to take, or cause to be taken,
all appropriate action, and to do, or cause to be done, all things necessary,
proper or advisable under applicable laws and regulations to consummate and make
effective the transactions contemplated by this Agreement, including, without
limitation, (i) using their respective reasonable best efforts to obtain all
licenses, permits, consents, approvals, authorizations, qualifications and
orders of Governmental Entities and parties to contracts with each party hereto
as are necessary for consummation of the transactions contemplated by this
Agreement, and (ii) to fulfill all conditions precedent applicable to such party
pursuant to this Agreement.
(b) In case at any time after the Effective Date any further action is
necessary or desirable to carry out the purposes of this Agreement or to vest
the Surviving Corporation with full title to all properties, assets, rights,
approvals, immunities, franchises of any of the parties to the Merger, the
proper officers and/or directors of Buyer, Players and the Surviving Corporation
shall take all such necessary action.
(c) Notwithstanding the foregoing, if Buyer reasonably determines that
it is necessary or desirable to consummate the Merger or any of the other
transactions contemplated by this Agreement, Buyer (or any Subsidiary of Buyer)
or, at Buyer's request, Players shall commence an offer (the "TENDER OFFER") to
purchase all of the outstanding Senior Notes and a solicitation of consents to
eliminate substantially all of the restrictive covenants contained in the
indenture governing the Senior Notes (collectively, the "TENDER OFFER AND
CONSENT SOLICITATION"), which Tender Offer and Consent Solicitation shall be
commenced in sufficient time in advance of the Closing Date so that the Tender
Offer can be consummated on the Closing Date and shall be on such terms as are
reasonably designed to result in the acceptance of such offer and consent by the
holder of the Senior Notes representing at least 66 2/3% of the aggregate
principal amount of Senior Notes outstanding at the time the Tender Offer and
Consent Solicitation is consummated. If Players commences the Tender Offer and
Consent Solicitation, Players shall prepare, subject to advice and comments of
Buyer, an offer to purchase and consent solicitation for the Senior Notes and
forms of related letters of transmittal (collectively, the "OFFER TO
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PURCHASE") and summary advertisement, as well as all other information and
exhibits (collectively, the "OFFER DOCUMENTS"). All mailings to the holder of
the Senior Notes in connection with the Tender Offer and Consent Solicitation
shall be subject to prior review, comment and approval of Buyer. Players will
use commercially reasonable efforts to cause the Offer Documents to be mailed to
the holders of the Senior Notes as promptly as practicable following receipt of
the request from Buyer to do so. Players agrees to promptly correct any
information in the Offer Documents that shall or have become false or misleading
in any material respect. Players shall waive any of the conditions to the Tender
Offer and Consent Solicitation and make any other changes in the terms and
conditions of the Tender Offer and Consent Solicitation as may be reasonably
requested by Buyer; PROVIDED that the Tender Offer and Consent Solicitation are
not required to be consummated unless the Merger is consummated. If Players
commences the Tender Offer and Consent Solicitation at Buyer's request pursuant
to this Section 5.12(c) and this Agreement is subsequently terminated under
circumstances in which Buyer is entitled to neither the Termination Fee pursuant
to Section 7.3(b) nor reimbursement of expenses pursuant to Section 7.3(c), then
Buyer shall reimburse Players for all its expenses related thereto.
(d) If necessary to cause the Merger not to violate the covenants
contained in the indenture governing the Senior Notes, the parties shall, at
Buyer's option, amend this Agreement to the extent necessary to provide that
Players will merge with and into a direct or indirect wholly-owned subsidiary of
Buyer with such subsidiary as the surviving corporation.
Section 5.13. RIGHTS AGREEMENT. Prior to the Effective Date and at Buyer's
request, Players shall take all necessary action (i) to redeem, for .005 per
Right (as defined in the Rights Agreement), all of the outstanding Rights under
the Rights Agreement, effective immediately prior to the Effective Time, and to
ensure that after such redemption (A) neither Buyer nor Merger Sub shall have
any obligations under the Rights or the Rights Agreement and (B) none of the
holders of the Rights shall have any rights under the Rights Agreement or (ii)
to amend the Rights Agreement to provide that the Rights expire without any
payment in respect thereof immediately prior to the Effective Time.
ARTICLE VI.
CONDITIONS TO MERGER
Section 6.1. CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE
MERGER. The respective obligations of each party to this Agreement to effect
the Merger shall be subject to the satisfaction or waiver by each party prior to
the Effective Time of the following conditions:
(a) STOCKHOLDER APPROVAL. This Agreement and the Merger shall have
been approved by the stockholders of Players in the manner required under the
NRS and the Articles of Incorporation of Players.
(b) NO INJUNCTIONS. No Governmental Entity shall have enacted, issued,
promulgated, enforced or entered any order, executive order, stay, decree,
judgment or injunction or statute, rule, regulation which is in effect and which
has the effect of making the Merger illegal or otherwise prohibiting
consummation of the Merger.
(c) GOVERNMENTAL APPROVALS. All Governmental Approvals required to
consummate the transactions contemplated by this Agreement shall have been
obtained, all such approvals shall remain in full force and effect, all
statutory waiting periods in respect thereof (including, without limitation,
under the HSR Act) shall have expired and no such approval shall contain any
conditions, limitations or restrictions which Buyer reasonably determines in
good faith will have or would reasonably be expected to have a Players Material
Adverse Effect or a Buyer Material Adverse Effect. Without limiting the
generality of the foregoing, Players shall have obtained the issuance or renewal
by the Louisiana Gaming Control Board of licenses or permits for Players to
operate its Lake Charles casino riverboats for the statutory maximum period
without (i) any conditions, limitations or restrictions which
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Buyer reasonably determines in good faith will or would reasonably be expected
to materially interfere with or impede Players' ability to operate its Lake
Charles casino riverboats and (ii) imposition of any fines, penalties or other
payments by one or more gaming regulatory authorities against Players and/or any
of its current or former directors, officers, employees, agents or
representatives (to the extent that Players is responsible for any such fines,
penalties or other payments and such fines, penalties or other payments are not
covered by insurance policies of Players) relating to the actions of Players
and/or its current or former officers, directors, agents or representatives
relative to the allegations of impropriety by Rick Shetler and former Louisiana
Governor Edwards in an aggregate amount that would reasonably be expected to
have a material adverse effect on the business of Players' Lake Charles casino
(with materiality determined with respect to the enterprise value of such
business).
Section 6.2. ADDITIONAL CONDITIONS TO OBLIGATIONS OF PLAYERS. The
obligation of Players to effect the Merger is subject to the satisfaction of
each of the following conditions prior to the Effective Time, any of which may
be waived in writing exclusively by Players:
(a) REPRESENTATIONS AND WARRANTIES. The representations and warranties
of Buyer and Merger Sub set forth in this Agreement shall be true and correct in
all material respects (except for those qualified as to materiality or a Buyer
Material Adverse Effect, which shall be true and correct) as of the date of this
Agreement and, except to the extent such representations speak as of an earlier
date, as of the Closing Date as though made on and as of the Closing Date,
except for changes contemplated by this Agreement; PROVIDED that,
notwithstanding anything contained herein, no condition involving the accuracy
of representations and warranties made by Buyer shall be deemed not fulfilled if
the respects in which the representations and warranties are inaccurate, in the
aggregate, are not materially adverse to the business, financial condition or
results of operations of Buyer and its Subsidiaries, taken as a whole. Players
shall have received a certificate signed on behalf of Buyer by the Chief
Executive Officer and the Chief Financial Officer of Buyer to such effect.
(b) PERFORMANCE OF OBLIGATIONS OF BUYER. Buyer 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 Players shall have
received a certificate signed on behalf of Buyer by the Chief Executive Officer
and the Chief Financial Officer of Buyer to such effect.
Section 6.3. ADDITIONAL CONDITIONS TO OBLIGATIONS OF BUYER. The
obligations of Buyer and Merger Sub to effect the Merger are subject to the
satisfaction of each of the following conditions prior to the Effective Time,
any of which may be waived in writing exclusively by Buyer:
(a) REPRESENTATIONS AND WARRANTIES. The representations and warranties
of Players set forth in this Agreement shall be true and correct in all material
respects (except for those qualified as to materiality or a Players Material
Adverse Effect, which shall be true and correct) as of the date of this
Agreement and, except to the extent such representations and warranties speak as
of an earlier date, as of the Closing Date as though made on and as of the
Closing Date, except for changes contemplated by this Agreement; PROVIDED that,
notwithstanding anything contained herein, no condition involving the accuracy
of representations and warranties made by Players shall be deemed not fulfilled
if the respects in which the representations and warranties are inaccurate, in
the aggregate, are not materially adverse to the business, financial condition
or results of operations of Players and its Subsidiaries, taken as a whole.
Buyer shall have received a certificate signed on behalf of Players by the Chief
Executive Officer and the Chief Financial Officer of Players to such effect.
(b) PERFORMANCE OF OBLIGATIONS OF PLAYERS. Players 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. Buyer
shall have received a certificate signed on behalf of Players by the Chief
Executive Officer and the Chief Financial Officer of Players to each such
effect.
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(c) NO TRIGGER OF RIGHTS AGREEMENT. No event shall have occurred that
has or would result in the triggering of any right or entitlement of
stockholders of Players under the Rights Agreement, or will occur as a result of
the consummation of the Merger, or Players shall have redeemed all of the Rights
issued under the Rights Agreement or amended such agreement to provide for the
expiration of such rights, in each case in the manner contemplated in Section
5.13.
ARTICLE VII.
TERMINATION AND AMENDMENT
Section 7.1. TERMINATION. This Agreement may be terminated at any time
prior to the Effective Time (with respect to Sections 7.1(b) through 7.1(j), by
written notice by the terminating party to the other party), whether before or
after approval of the matters presented in connection with the Merger by
Players' stockholders:
(a) by mutual written consent of Players and Buyer; or
(b) by either Buyer or Players if the Merger shall not have been
consummated by October 31, 1999 (the "OUTSIDE DATE"); PROVIDED that either Buyer
or Players may extend the Outside Date to January 31, 2000 by providing written
notice thereof to the other party within five (5) business days prior to and
including October 31, 1999 if (i) the Merger shall not have been consummated by
such date because one or more of the conditions set forth in Article VI have not
been satisfied and such party continues to use its reasonable best efforts to
cause such conditions to be satisfied, (ii) the party requesting such extension
has not violated any of its obligations under this Agreement in a manner that
was the cause of or resulted in the failure of the Merger to occur on or before
October 31, 1999, and (iii) it is reasonably probable, that the unsatisfied
conditions can be satisfied during such extension period; PROVIDED FURTHER that
the right to terminate this Agreement under this Section 7.1(b) shall not be
available to any party whose failure to fulfill any obligation under this
Agreement has been the cause or resulted in the failure of the Merger to occur
on or before such date; or
(c) by either Buyer or Players if a court of competent jurisdiction or
other Governmental Entity shall have issued an order, decree or ruling or taken
any other final action not subject to appeal, in each case having the effect of
permanently restraining, enjoining or otherwise prohibiting the Merger; or
(d) by either Buyer or Players, if, at the Players Special Meeting
(including any adjournment or postponement), the requisite vote of the
stockholders of Players in favor of the approval and adoption of this Agreement
and the Merger shall not have been obtained; or
(e) by Buyer, if the Board of Directors of Players shall have (i)
withdrawn or modified its recommendation of this Agreement or the Merger, (ii)
recommended an Acquisition Proposal to the stockholders of Players, or (iii)
failed to reaffirm its recommendation of this Agreement and the Merger upon the
request of Buyer at any time; or
(f) by Players, in accordance with Section 5.3; PROVIDED that no
termination under this Section 7.1(f) shall be effective until (i) the
termination fee required by Section 7.3(b) shall be paid and (ii) at least three
Business Days shall have elapsed after delivery to Buyer of a written notice
from Players providing a complete and accurate description of material terms of
the Superior Proposal, including the identity of all parties thereto; or
(g) by Buyer, upon breach of any material representation, warranty,
covenant or agreement on the part of Players set forth in this Agreement, or if
any representation or warranty of Players shall have become untrue, in either
case such that the conditions set forth in Section 6.3 would not be satisfied
("TERMINATING PLAYERS BREACH"); PROVIDED, HOWEVER, that, if such Terminating
Players Breach is curable by Players through best efforts within 30 days and for
so long as Players continues to exercise
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such best efforts during such 30 day period, Buyer may not terminate this
Agreement under this Section 7.1(g); PROVIDED FURTHER that Buyer shall not be
permitted to terminate this Agreement pursuant to this Section 7.1(g) solely on
account of the continued pendency of any litigation filed by Jackpot or any
stockholders of either Jackpot or Players in connection with the termination of
the Agreement and Plan of Merger dated as of February 8, 1999 among Jackpot, JEI
Merger Corp. and Players; or
(h) by Players, upon breach of any material representation, warranty,
covenant or agreement on the part of Buyer set forth in this Agreement, or if
any representation or warranty of Buyer shall have become untrue, in either case
such that the conditions set forth in Section 6.2 would not be satisfied
("TERMINATING BUYER BREACH"); PROVIDED, HOWEVER, that, if such Terminating Buyer
Breach is curable by Buyer through best efforts within 30 days and for so long
as Buyer continues to exercise such best efforts during such 30 day period,
Players may not terminate this Agreement under this Section 7.1(h); or
(i) by Players, if Buyer has not filed all required initial applications
and documents in connection with obtaining the Governmental Approvals within 30
days after the date of this Agreement, as further set forth in Section 5.7;
PROVIDED, HOWEVER, that Players shall not be permitted to terminate Agreement
pursuant to this Section 7.1(i) if Buyer has filed all such required initial
applications and documents; or
(j) by Buyer, if (A) the Louisiana Gaming Control Board revokes Players'
licenses or permits to operate its Lake Charles casino riverboats or (B) one or
more gaming regulatory authorities imposes fines or penalties against, or
requires other payments by, Players and/or any of its current or former
directors, officers, employees, agents or representatives (to the extent that
Players is responsible for any such fines, penalties or other payments and such
fines, penalties or other payments are not covered by insurance policies of
Players) relating to the actions of Players and/or its current or former
directors, officers, agents or representatives relative to the allegations of
impropriety by Rick Shetler and former Louisiana Governor Edwards in an
aggregate amount that would reasonably be expected to have a material adverse
effect on the business of Players' Lake Charles casino (with materiality
determined with respect to the enterprise value of such business).
Section 7.2. EFFECT OF TERMINATION. In the event of termination of this
Agreement as provided in Section 7.1, this Agreement shall immediately become
void and there shall be no liability or obligation on the part of Buyer, Merger
Sub or Players, or their respective officers, directors, stockholders or
Affiliates, except as set forth in Section 7.3 and except that such termination
shall not limit liability for (i) a willful breach of this Agreement or (ii) a
breach by Buyer or Merger Sub of its obligations pursuant to the second sentence
of Section 5.7(a); PROVIDED that the provisions of this Section 7.2 and Section
7.3 of this Agreement and the Confidentiality Agreement shall remain in full
force and effect and survive any termination of this Agreement.
Section 7.3. FEES AND EXPENSES.
(a) Except as set forth in this Section 7.3 and the last sentence of
Section 5.12(c), all fees and expenses incurred in connection with this
Agreement and the transactions contemplated hereby shall be paid by the party
incurring such expenses, whether or not the Merger is consummated. Fees and
expenses payable under this Section 7.3 to any party hereunder shall include all
costs of collection and interest from the date such payment is due at a rate per
annum of the London Interbank Offered Rate plus 2%.
(b) Players shall pay Buyer a termination fee of $13,500,000 via wire
transfer of same-day funds on the date of the earliest to occur of the following
events:
(i) the termination of this Agreement by Buyer or Players pursuant to
Section 7.1(d), if an Acquisition Proposal involving Players shall have
been publicly announced and be pending at the time of the Special
Meeting;
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(ii) the termination of this Agreement by Buyer pursuant to Section
7.1(e); or
(iii) the termination of this Agreement by Players pursuant to
Section 7.1(f).
Except as provided in Section 7.3(c) below, Players' payment of a
termination fee pursuant to this subsection shall be the sole and exclusive
remedy of Buyer against Players and any of its Subsidiaries and their respective
directors, officers, employees, agents, advisors or other representatives with
respect to the occurrences giving rise to such payment; PROVIDED that this
limitation shall not apply in the event of a willful breach of this Agreement by
Players.
(c) In addition to the provisions of Sections 7.3(b) and (d), (i) if (A)
Buyer or Players terminates this Agreement pursuant to Section 7.1(d), (B) Buyer
terminates this Agreement pursuant to Section 7.1(e), (C) Players terminates
this Agreement pursuant to Section 7.1(f), (D) Buyer terminates this Agreement
pursuant to Section 7.1(g), or (E) Buyer terminates this Agreement pursuant to
Section 7.1(j), Players will pay to Buyer a cash reimbursement payment of
$13,500,000; and (ii) if (A) Players or Buyer terminates this Agreement pursuant
to Section 7.1(b) or (B) Players or Buyer terminates this Agreement pursuant to
Section 7.1(c), Players will pay to Buyer a cash reimbursement payment of
$6,750,000; in each case together with interest thereon, at a rate equal to the
London Interbank Offered Rate plus 1%, from the date hereof to the date such
payment is due pursuant to this Agreement (the "REIMBURSEMENT PAYMENT"),
reflecting reimbursement of the amount paid by Buyer to Jackpot on Players'
behalf on the date hereof to pay the termination fee owed to Jackpot under the
Jackpot Merger Agreement (which amount, in the event of termination of this
Agreement, will be paid only on the terms set forth in this Section 7.3(c)).
(d) In addition to the provisions of Sections 7.3(b) and (c), if (i)
Buyer or Players terminates the Agreement pursuant to Section 7.1(d) (and a
termination fee is not otherwise payable pursuant to Section 7.3(b)(i)), (ii)
Buyer terminates this Agreement pursuant to Section 7.1(g), (iii) Buyer
terminates this Agreement pursuant to Section 7.1(j), or (iv) Players or Buyer
terminates this Agreement pursuant to Section 7.1(b) and the condition specified
in Section 6.1(c) shall not have been satisfied because of facts or
circumstances relating to Players, its employees or operations not previously
disclosed to Buyer by Players, Players shall immediately thereafter reimburse
Buyer and Merger Sub all fees and expenses incurred in connection with this
Agreement and the transactions contemplated hereby up to an amount equal to
$1,000,000 plus, in the case of (i) above, a termination fee of $3,000,000.
(e) If (i) Players terminates this Agreement pursuant to Section 7.1(i),
(ii) Players terminates this Agreement pursuant to Section 7.1(h) or (iii)
Players or Buyer terminates this Agreement pursuant to Section 7.1(b) and the
condition specified in Section 6.1(c) shall not have been satisfied because of
facts or circumstances relating to Buyer, its employees or operations, Buyer
shall immediately thereafter reimburse Players all fees and expenses incurred in
connection with this Agreement and the transactions contemplated hereby up to an
amount equal to $1,000,000.
Section 7.4. AMENDMENT. This Agreement may be amended by the parties
hereto, by action taken or authorized by their respective Boards of Directors,
at any time before or after approval of the matters presented in connection with
the Merger by the stockholders of Players, but, after any such approval, no
amendment shall be made which by law requires further approval by such
stockholders without such further approval. This Agreement may not be amended
except by an instrument in writing signed on behalf of each of the parties
hereto.
Section 7.5. EXTENSION; WAIVER. At any time prior to the Effective Time,
the parties hereto, by action taken or authorized by their respective Boards of
Directors, may, to the extent legally allowed (i) extend the time for the
performance of any of the obligations or other acts of the other parties hereto,
(ii) waive any inaccuracies in the representations and warranties contained
herein or in any document delivered pursuant hereto and (iii) waive compliance
with any of the agreements or
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conditions contained here. Any agreement on the part of a party hereto to any
such extension or waiver shall be valid only if set forth in a written
instrument signed on behalf of such party.
ARTICLE VIII.
MISCELLANEOUS
Section 8.1. NONSURVIVAL OF REPRESENTATIONS, WARRANTIES AND
AGREEMENTS. None of the representations, warranties, covenants and agreements
in this Agreement or in any instrument delivered pursuant to this Agreement
shall survive the Effective Time, except for the agreements contained in
Sections 1.4, 1.5, 1.6, 2.1, 2.2, 2.3, 5.9, and 5.11 and Article VIII. The
Confidentiality Agreement shall survive the execution and delivery of this
Agreement.
Section 8.2. NOTICES. Any and all notices, demands or other communications
required or desired to be given hereunder by any party shall be in writing and
shall be validly given or made to another party if served personally, or by
facsimile or air courier, or deposited in the United States mail, certified or
registered, postage prepaid, return receipt requested. If such notice, demand or
other communications be served personally, or by facsimile or air courier,
service shall be conclusively deemed made at the time of such service. If such
notice, demand or other communications be given by mail, it shall be
conclusively deemed given three (3) days after the deposit thereof in the United
States mail, addressed to the party to whom such notice, demand or other
communication is to be given as hereinafter set forth:
(a) if to Players, to
Players International, Inc.
Attention: Chief Executive Officer
1300 Atlantic Avenue, Suite 800
Atlantic City, NJ 08401
with a copy to
Morgan, Lewis & Bockius LLP
Attention: Peter P. Wallace, Esq.
300 South Grand Avenue, 22nd Floor
Los Angeles, CA 90071
(b) if to Buyer or Merger Sub, to
Harrah's Entertainment, Inc.
Attention: Colin V. Reed
5100 West Sahara
Las Vegas, NV 89146
with a copy to:
Latham & Watkins
Attention: David M. Hernand
633 W. 5th Street, Suite 4000
Los Angeles, CA 90071
Section 8.3. INTERPRETATION. When a reference is made in this Agreement to
Sections, such reference shall be to a Section of this Agreement unless
otherwise indicated. The table of contents and headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement. Whenever the words "include,"
"includes" or
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"including" are used in this Agreement they shall be deemed to be followed by
the words "without limitation." The phrase "made available" in this Agreement
shall mean that the information referred to has been made available if requested
by the party to whom such information is to be made available. The phrases "the
date of this Agreement," "the date hereof," and terms of similar import, unless
the context otherwise requires, shall be deemed to refer to August 19, 1999.
Section 8.4. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when two or more counterparts have been signed by each of
the parties and delivered to the other parties, it being understood that all
parties need not sign the same counterpart.
Section 8.5. ENTIRE AGREEMENT; NO THIRD PARTY BENEFICIARIES. This
Agreement and all documents and instruments referred to herein (a) constitute
the entire agreement and supersedes all prior agreements and understandings,
both written and oral, among the parties with respect to the subject matter
hereof, and (b) except as provided in Section 5.9, are not intended to confer
upon any person other than the parties hereto any rights or remedies hereunder;
provided that the Confidentiality Agreements shall survive the execution and
delivery of this Agreement. Each party hereto agrees that, except for the
representations and warranties contained in this Agreement, none of Buyer,
Merger Sub or Players makes any other representations or warranties, and each
hereby disclaims any other representations and warranties made by itself or any
of its officers, directors, employees, agents, financial and legal advisors or
other representatives, with respect to the execution and delivery of this
Agreement or the transactions contemplated hereby, notwithstanding the delivery
or disclosure to any of them or their respective representatives of any
documentation or other information with respect to any one or more of the
foregoing.
Section 8.6. GOVERNING LAW. This Agreement shall be governed and construed
in accordance with the laws of the State of Nevada without regard to any
applicable conflicts of law.
Section 8.7. ASSIGNMENT. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any of the parties
hereto (whether by operation of law or otherwise) without the prior written
consent of the other party, except that Merger Sub may assign its rights and
obligations hereunder to any direct or indirect wholly-owned subsidiary of
Buyer; PROVIDED that no such assignment shall relieve Buyer of its obligations
hereunder. Subject to the preceding sentence, this Agreement will be binding
upon, inure to the benefit of and be enforceable by the parties and their
respective successors and assigns.
Section 8.8. SEVERABILITY; ENFORCEMENT. Except to the extent that the
application of this Section 8.8 would have a Buyer Material Adverse Effect with
respect to Buyer or a Players Material Adverse Effect with respect to Players,
the invalidity of any portion hereof shall not affect the validity, force or
effect of the remaining portions hereof. If it is ever held that any covenant
hereunder is too broad to permit enforcement of such covenant to its fullest
extent, each party agrees that a court of competent jurisdiction may enforce
such covenant to the maximum extent permitted by law, and each party hereby
consents and agrees that such scope may be judicially modified accordingly in
any proceeding brought to enforce such covenant.
Section 8.9. SPECIFIC PERFORMANCE. Except as provided in Section 7.3(b),
the parties hereto agree that the remedy at law for any breach of this Agreement
will be inadequate and that any party by whom this Agreement is enforceable
shall be entitled to specific performance in addition to any other appropriate
relief or remedy. Such party may, in its sole discretion, apply to a court of
competent jurisdiction for specific performance or injunctive or such other
relief as such court may deem just and proper in order to enforce this Agreement
or prevent any violation hereof and, to the extent permitted by applicable laws,
each party hereto waives any objection to the imposition of such relief.
SIGNATURES BEGIN NEXT PAGE
A-32
<PAGE>
IN WITNESS WHEREOF, BUYER, MERGER SUB AND PLAYERS HAVE CAUSED THIS AGREEMENT TO
BE SIGNED BY THEIR RESPECTIVE DULY AUTHORIZED OFFICERS AS OF THE DATE FIRST
WRITTEN ABOVE.
<TABLE>
<S> <C> <C>
HARRAH'S ENTERTAINMENT, INC.
/s/ COLIN V. REED
-----------------------------------------
By: Colin V. Reed
Its: Chief Financial Officer
HEI ACQUISITION CORP. II
/s/ COLIN V. REED
-----------------------------------------
By: Colin V. Reed
Its: Chief Financial Officer
PLAYERS INTERNATIONAL, INC.
/s/ JOHN GROOM
-----------------------------------------
By: John Groom
Its: President, Chief Executive Officer
and Chief Operating Officer
</TABLE>
A-33
<PAGE>
PROXY FORM
PLAYERS INTERNATIONAL, INC.
1300 ATLANTIC AVENUE, SUITE 800, ATLANTIC CITY, NEW JERSEY 08401
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned stockholder of PLAYERS INTERNATIONAL, INC. (the "Company")
hereby appoints JOHN GROOM and RAYMOND A. SPERA, JR., and each of them acting
individually, as the attorney and proxy of the undersigned, with the powers the
undersigned would possess if personally present, and with full power of
substitution, to vote all shares of common stock of the Company at the Special
Meeting of Stockholders of the Company to be held on October 21, 1999 at 1:00
p.m. at the Riverport Casino Center, 777 Casino Center Drive, Maryland Heights,
Missouri, and any adjournment or postponement thereof, upon all subjects that
may properly come before the meeting, including the matters described in the
proxy statement furnished herewith, subject to any directions indicated below.
1. Approval and adoption of the Agreement and Plan of Merger dated as of August
19, 1999 (among the Company, Harrah's Entertainment, Inc. and HEI
Acquisition Corp. II) and approval of the merger of HEI Acquisition Corp. II
with and into Players International, Inc. contemplated thereby.
/ / FOR / / AGAINST / / ABSTAIN
2. Approval of the proposal to grant the Players board of directors
discretionary authority to postpone or adjourn the special meeting in order
to solicit additional votes to approve the merger or to approve and adopt
the merger agreement if the Secretary of Players determines that there are
not sufficient votes to approve of such matters.
/ / FOR / / AGAINST / / ABSTAIN
3. In their discretion upon such other matters as may properly come before the
meeting.
<PAGE>
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED BY
THE UNDERSIGNED STOCKHOLDER(S). IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED IN ACCORDANCE WITH THE RECOMMENDATIONS OF THE BOARD OF DIRECTORS AS SET
FORTH WITH RESPECT TO EACH PROPOSAL. THIS PROXY ALSO DELEGATES TO THE PROXIES
NAMED ABOVE DISCRETIONARY AUTHORITY TO VOTE WITH RESPECT TO ANY OTHER BUSINESS
WHICH MAY PROPERLY COME BEFORE THE MEETING OR ANY ADJOURNMENT OR POSTPONEMENT
THEREOF.
THE UNDERSIGNED HEREBY ACKNOWLEDGES RECEIPT OF THE NOTICE OF SPECIAL
MEETING, THE PROXY STATEMENT FURNISHED IN CONNECTION THEREWITH AND HEREBY
RATIFIES ALL THAT THE SAID ATTORNEYS AND PROXIES MAY DO BY VIRTUE HEREOF.
Dated: ______________________, 1999
(Complete Date)
___________________________________
(Stockholder's Signature)
___________________________________
(Stockholder's Signature)
NOTE: Please mark, date and sign
this proxy card and return it in
the enclosed envelope. Please sign
as your name appears below. If
shares are registered in more than
one name, all owners should sign.
If signing in a fiduciary or
representative capacity, please
give full title and attach evidence
of authority. Corporations please
sign with full corporate name by a
duly authorized officer and affix
corporate seal.
