SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
Current Report Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): February 9, 1999
-----------------
PLAYERS INTERNATIONAL, INC.
(Exact name of registrant as specified in its charter)
Nevada 0-14897 95-41745832
(State or other (Commission File (I.R.S. Employer
jurisdiction of Number) Identification No.)
incorporation)
1300 Atlantic Avenue, Suite 800
Atlantic City, New Jersey 08402
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (609) 449-7777
(Not applicable)
(Former name or former address, if changed since last report)
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Item 5. Other Events
On February 9, 1999, Players International, Inc. issued a press release a
copy of which is attached as an exhibit hereto and the content of which is
incorporated by reference herein.
Exhibit Index
2.1 Agreement and Plan of Merger dated as of February 8, 1999 among Jackpot
Enterprises, Inc., JEI Merger Corp. and Players International Inc.
99 Press Release
-2-
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SIGNATURE
---------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
PLAYERS INTERNATIONAL, INC.
(Registrant)
By /s/ Peter J. Aranow
--------------------------------
Peter J. Aranow
Executive Vice President Finance
Dated: February 9, 1999
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AGREEMENT AND PLAN OF MERGER
dated as of February 8, 1999
among
Jackpot Enterprises, Inc.
JEI Merger Corp.
and
Players International, Inc.
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TABLE OF CONTENTS
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ARTICLE I.
THE MERGER............................................................................1
Section 1.1. The Merger..............................................................1
Section 1.2. Effective Time of the Merger............................................2
Section 1.3. Closing.................................................................2
Section 1.4. Effect of the Merger....................................................2
Section 1.5. Articles of Incorporation and Bylaws of the Surviving Corporation.......2
Section 1.6 Directors and Officers of the Surviving Corporation.....................2
ARTICLE II.
EFFECT OF THE MERGER ON SECURITIES OF THE CONSTITUENT CORPORATIONS....................3
Section 2.1. Conversion of Securities................................................3
Section 2.2. Exchange of Certificates................................................4
Section 2.3. Acceleration and Payment for Players Options............................6
ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF Players.............................................7
Section 3.1. Organization of Players and its Subsidiaries............................7
Section 3.2. Capitalization..........................................................8
Section 3.3. Authority; No Conflict; Required Filings and Consents...................9
Section 3.4. Public Filings; Financial Statements...................................11
Section 3.5. No Undisclosed Liabilities.............................................11
Section 3.6. Absence of Certain Changes or Events...................................11
Section 3.7. Taxes..................................................................12
Section 3.8. Real Property, Title and Related Matters...............................13
Section 3.9. Title to Personal Property; Liens......................................14
Section 3.10. Intellectual Property..................................................15
Section 3.11. Agreements, Contracts and Commitments..................................15
Section 3.12. Litigation.............................................................16
Section 3.13. Environmental Matters..................................................16
Section 3.14. Employee Benefit Plans.................................................17
Section 3.15. Compliance.............................................................19
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Section 3.16. Labor Matters..........................................................20
Section 3.17. Insurance..............................................................20
Section 3.18. Information in Proxy Statement/Prospectus..............................20
Section 3.19. State Takeover Statute.................................................21
Section 3.20. Voting Requirements....................................................21
Section 3.21. Players Rights Agreement...............................................21
Section 3.22. Year 2000..............................................................21
Section 3.23. Opinion of Financial Advisor...........................................21
Section 3.24. Brokers................................................................22
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF BUYER AND MERGER SUB...............................22
Section 4.1. Organization of Buyer and its Subsidiaries.............................22
Section 4.2. Capitalization.........................................................23
Section 4.3. Authority; No Conflict; Required Filings and Consents..................24
Section 4.4. Public Filings; Financial Statements...................................25
Section 4.5. No Undisclosed Liabilities.............................................26
Section 4.6. Absence of Certain Changes or Events...................................26
Section 4.7. Taxes..................................................................26
Section 4.8. Real Property, Title and Related Matters...............................27
Section 4.9. Title of Personal Property; Liens......................................28
Section 4.10. Intellectual Property..................................................28
Section 4.11. Agreements, Contracts and Commitments..................................28
Section 4.12. Litigation.............................................................29
Section 4.13. Environmental Matters..................................................29
Section 4.14. Employee Benefit Plans.................................................30
Section 4.15. Compliance.............................................................31
Section 4.16. Registration Statement; Joint Proxy Statement/Prospectus...............32
Section 4.17. Labor Matters..........................................................33
Section 4.18. Insurarance............................................................33
Section 4.19. [Intentionally Omitted]................................................33
Section 4.20. Voting Requirements....................................................33
Section 4.21. Year 2000..............................................................34
Section 4.22. Opinion of Financial Advisor...........................................34
Section 4.23. Brokers................................................................34
Section 4.24. No Operations or Liabilities of Merger Sub.............................34
Section 4.25. Ownership of Securities................................................34
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ARTICLE V.
COVENANTS............................................................................35
Section 5.1. Conduct of Business....................................................35
Section 5.2. Cooperation; Notice; Cure..............................................39
Section 5.3. No Solicitation........................................................39
Section 5.4. Joint Proxy Statement/Prospectus; Registration Statement...............40
Section 5.5. Special Meeting........................................................40
Section 5.6. Access to Information..................................................41
Section 5.7. Governmental Approvals.................................................41
Section 5.8. Publicity..............................................................42
Section 5.9. Indemnification........................................................42
Section 5.10. Stockholder Litigation.................................................43
Section 5.11. Employee Benefits......................................................43
Section 5.12. Further Assurances and Actions.........................................44
Section 5.13. Rights Plan............................................................45
Section 5.14. Buyer's Board of Directors.............................................45
ARTICLE VI.
CONDITIONS TO MERGER.................................................................45
Section 6.1. Conditions to Each Party's Obligation to Effect the Merger.............45
Section 6.2. Additional Conditions to Obligations of Players........................46
Section 6.3. Additional Conditions to Obligations of Buyer..........................47
ARTICLE VII.
TERMINATION AND AMENDMENT............................................................47
Section 7.1. Termination............................................................47
Section 7.2. Effect of Termination..................................................49
Section 7.3. Fees and Expenses......................................................49
Section 7.4. Amendment..............................................................51
Section 7.5. Extension; Waiver......................................................51
ARTICLE VIII.
MISCELLANEOUS........................................................................51
Section 8.1. Nonsurvival of Representations, Warranties and Agreements..............51
Section 8.2. Notices................................................................51
Section 8.3. Interpretation.........................................................52
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Section 8.4. Counterparts...........................................................53
Section 8.5. Entire Agreement; No Third Party Beneficiaries.........................53
Section 8.6. Governing Law..........................................................53
Section 8.7. Assignment.............................................................53
Section 8.8. Severability; Enforcement..............................................53
Section 8.9. Specific Performance...................................................53
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TABLE OF DEFINED TERMS
Cross Reference
Terms in Agreement
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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
Average Buyer Common Stock Price Section 2.1(a)
Buyer Preamble
Buyer Balance Sheet Section 4.4(b)
Buyer Common Stock Section 2.1(a)
Buyer Disclosure Schedule Article IV
Buyer Employee Plans Section 4.14(a)
Buyer Gaming Laws Section 4.15(b)
Buyer Material Adverse Effect Section 4.1
Buyer Material Contracts Section 4.11(a)
Buyer Options Section 4.2(a)
Buyer Permits Section 4.15(a)
Buyer Preferred Stock Section 4.2(a)
Buyer Reporting Subsidiaries Section 4.4(a)
Buyer SEC Reports Section 4.4(a)
Buyer Special Meeting Section 5.5
Buyers Stock Option Plans Section 4.2(a)
Buyer Stockholder Approval Section 4.20
Buyer Welfare Plan Section 4.14(g)
Cash Consideration Section 2.1(a)
Certificate Section 2.1(f)
Closing Section 1.3
Closing Date Section 1.3
Code Section 2.2(f)
Confidentiality Agreement Section 5.6
CRC Section 5.1(b)
CRC Transaction Section 5.1(b)
DLJ Section 3.23
Encumbrances Section 3.8(b)
Effective Time Section 1.2
Employment Agreements Section 5.11(d)
Environmental Law Section 3.13(b)
ERISA Section 3.14(a)
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Cross Reference
Terms in Agreement
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ERISA Affiliate Section 3.14(a)
Exchange Act Section 3.3(c)
Exchange Agent Section 2.2(a)
Exchange Fund Section 2.2(a)
Exchange Ratio Section 2.1(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)
Joint Proxy Statement/Prospectus Section 5.4(a)
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(c)
Merrill Lynch Section 4.22
Multiemployer Plan Section 3.14(e)
Notifying Party Section 5.7(a)
NRS Section 1.1
NYSE Section 2.1(a)
Offer Documents Section 5.12(c)
Offer to Purchase Section 5.12(c)
Outside Date Section 7.1(b)
Owned Real Property Section 3.8(b)
PBGC Section 3.14(f)
Permitted Encumbrances Section 3.8(b)
Per Share Amount Section 2.1(a)
Perskie Option Section 2.3
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)
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Cross Reference
Terms in Agreement
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Players Gaming Laws Section 3.15(b)
Players, Inc. Section 1.5
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 Rights Plan Section 3.2(b)
Players SAR Section 2.3
Players SEC Reports Section 3.4(a)
Players Special Meeting Section 5.5
Players Stockholder Approval Section 3.20
Players Stock Option Plans Section 2.3
Players Welfare Plan Section 3.14(g)
Reduced Amount Section 5.11(d)
Registration Statement Section 5.4(a)
Rights Agreement Section 3.21
SEC Section 3.3(c)
Securities Act Section 3.4(a)
Senior Notes Section 5.12(c)
Software Section 3.22
Stock Consideration Section 2.1(a)
Stockholder Support Agreements Preamble
Stock Option Plan for Non-Employee Directors Section 2.3
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)
Warrant Agreement Section 2.3
1985 Plan Section 2.3
1990 Plan Section 2.3
1993 Plan Section 2.3
1994 Plan Section 2.3
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER (the "Agreement"), dated as of February 8,
1999, by and among JACKPOT ENTERPRISES, INC., a Nevada corporation ("Buyer"),
JEI MERGER CORP., 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 Players', Buyer's and Merger Sub's
willingness to enter into this Agreement, certain stockholders of Players and of
Buyer have entered into Stockholder Support Agreements with Buyer and Players,
respectively, 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 or Buyer, as the case may be, beneficially owned by them in favor of
approval of the transactions contemplated by this 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 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").
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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").
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 International, Inc."), 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.
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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) and 2.1(f), into the right to
receive from the Surviving Corporation (i) a net amount of $6.75 in cash,
without interest and subject to adjustment in accordance with the next sentence
(the "Cash Consideration") and (ii) a fraction (the "Exchange Ratio") of a share
of common stock, par value $.01 per share of Buyer ("Buyer Common Stock") equal
to the quotient (calculated to the nearest 0.0001) of $1.50 divided by the
Average Buyer Common Stock Price (as defined herein); provided that the Exchange
Ratio shall not exceed 0.30 (the "Stock Consideration" and together with the
Cash Consideration, the "Merger Consideration"). If but for the proviso in the
preceding sentence the Exchange Ratio would have exceeded 0.30, Buyer may
increase the Cash Consideration amount specified in clause (i) above by the
amount necessary so that at the Effective Time the sum of (a) the Cash
Consideration (as so increased) and (b) the Average Buyer Common Stock Price
multiplied by the Exchange Ratio is equal to $8.25. If Buyer fails to increase
the Merger Consideration to the amount set forth in the preceding sentence,
Players may terminate this Agreement.
For purposes of this Agreement, "Average Buyer Common Stock Price"
shall mean the average regular way closing price per share of Buyer Common Stock
on the New York Stock Exchange (the "NYSE") as reported on the NYSE Composite
Tape during the thirty (30) consecutive NYSE trading days immediately preceding
the second NYSE trading day prior to the Closing Date.
All shares of Buyer Common Stock issued as Merger Consideration
shall be validly issued, fully-paid and non-assessable. 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.
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(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 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 or Buyer Common Stock
occurring after the date hereof and prior to the Effective Time.
(f) Fractional Shares. No certificates or scrip representing
fractional shares of Buyer Common Stock shall be issued in connection with the
Merger, and fractional share interests will not entitle the owner thereof to
vote or to any other rights as a stockholder of Buyer. In lieu of any such
fractional shares, each holder of a certificate evidencing Players Common Stock
(a "Certificate") upon surrender of such Certificate for exchange shall be paid
an amount in cash (without interest), rounded up to the nearest cent, determined
by multiplying (i) the Average Buyer Common Stock Price, by (ii) the fractional
interest to which such holder would otherwise be entitled (after taking into
account all shares of Players Common Stock then held of record by such holder).
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, (i) certificates evidencing the shares
of Buyer Common Stock sufficient to pay the Stock Consideration and (ii) cash in
an aggregate amount sufficient to pay the Cash Consideration and for fractional
shares pursuant to Section 2.1(f) (the shares and cash so deposited being
hereinafter referred to collectively 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)
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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 without interest. 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
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
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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.
(h) Distributions with Respect to Unsurrendered Certificates. No
dividends or other distributions declared or made after the Effective Time with
respect to Buyer Common Stock with a record date after the Effective Time shall
be paid to the holder of any unsurrendered Certificate with respect to the
shares of Buyer Common Stock the holder thereof is entitled to receive upon
surrender thereof, and no cash payment in lieu of any fractional shares shall be
paid to any such holder pursuant to Section 2.1(f), until the holder of such
Certificate shall surrender such Certificate. Subject to the effect of escheat,
tax or other applicable laws, following surrender of any such Certificate, there
shall be paid to the holder of Certificates representing whole shares of Buyer
Common Stock issued in exchange therefor, without interest, (i) promptly, the
amount of any cash payable with respect to a fractional share of Buyer Common
Stock to which such holder is entitled pursuant to Section 2.1(f) and the amount
of dividends or other distributions with a record date after the Effective Time
and theretofore paid with respect to such whole shares of Buyer Common Stock,
and (ii) at the appropriate payment date, the amount of dividends or other
distributions, with a record date after the Effective Time but prior to
surrender and a payment date occurring after surrender, payable with respect to
such whole shares of Buyer Common Stock. After the Effective Time, each
outstanding Certificate which theretofore represented shares of Players Common
Stock shall, until surrendered for exchange in accordance with this Section 2.2,
be deemed for all purposes to evidence ownership of the number of shares of
Buyer Common Stock and cash into which the shares of Players Common Stock
(which, prior to the Effective Time, were represented thereby) shall have been
so converted.
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
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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"), (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") and
(vii) the Warrant Agreement dated as of June 16, 1994 between Players and Gem
Gaming, Inc. (the "Warrant Agreement") 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 and Warrant Agreement, 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.
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"), or as otherwise expressly contemplated by this Agreement. 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
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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(18) to the Players Annual Report on Form 10-K for the
year ended March 31, 1998, 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) 32,024,737 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 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
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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 "Players Rights Plan"), 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'
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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.
(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 Joint Proxy Statement/Prospectus (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.
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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 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
December 31, 1998, were not or are not expected to be material in amount. The
audited balance sheet of Players as of March 31, 1998 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 accrued,
contingent or otherwise, 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
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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 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. s.s. 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 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
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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. 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. s.s. 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. 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)(1)(c), 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 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 such leased property or any
ownership therein. 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:
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"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 or by Buyer or a Subsidiary of Buyer
as tenant and listed on Section 4.8 of the Buyer Disclosure Schedule, as
applicable, together with, to the extent leased by Players or Buyer, as
applicable, all buildings and other structures, facilities or improvements
currently or hereafter located thereon, all fixtures, systems, equipment and
personal property of Players or Buyer 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 or by Buyer or any of Buyer's Subsidiaries and listed on
Section 4.8 of the Buyer Disclosure Schedule, as applicable, 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 or Section 4.8 of the Buyer Disclosure Schedule, as
applicable, 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 or Buyer or its Subsidiaries, and would not prevent the
Surviving Corporation, from conducting Players' or Buyer's business as
applicable as currently conducted and which would not have a Players Material
Adverse Effect or a Buyer 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 $250,000.00 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
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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 or in the aggregate, would 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.
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(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
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.
Section 3.12. Litigation. Except as disclosed in the Players SEC Reports
or in Section 3.12 of the Players Disclosure Schedule, 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.
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 in 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
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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 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
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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.
(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").
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(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.
(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,
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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/Prospectus. The Joint Proxy
Statement/Prospectus, 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/Prospectus. The Proxy
Statement/Prospectus
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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 4.25
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 Players Rights Agreement dated
as of January 27, 1997 (the "Rights Agreement") has been amended as of February
8, 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
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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 III are true and correct except as set forth herein
and in the disclosure schedule delivered by 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 its Subsidiaries. Each of Buyer 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 Buyer 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 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. Except as set forth on the Buyer
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 Buyer, free and
clear of all 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 Section 4.1 of the Buyer Disclosure
Schedule, neither Buyer nor any of its Subsidiaries directly or indirectly owns
(other than ownership interests in Buyer 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.
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Section 4.2. Capitalization.
(a) The authorized capital stock of Buyer consists of 30,000,000
shares of Buyer Common Stock, $.01 par value per share, and 1,000,000 shares of
preferred stock, with $1.00 par value per share ("Buyer Preferred Stock"). As of
the date hereof, (i) 8,616,680 shares of Buyer Common Stock were issued and
outstanding, all of which are validly issued, fully paid and nonassessable, (ii)
1,243,572 shares of Buyer Common Stock were held in the treasury of Buyer or by
Subsidiaries of Buyer, and (iii) no shares of Buyer Preferred Stock are issued
and outstanding. Section 4.2(a)(i) of the Buyer Disclosure Schedule sets forth
the number of shares of Buyer Common Stock reserved for future issuance upon
exercise of options to acquire shares of Buyer Common Stock ("Buyer Options")
granted and outstanding as of the date hereof and under Buyer's stock option
plans ("Buyer Stock Option Plans"). Section 4.2(a)(i) of the Buyer Disclosure
Schedule also sets forth as of the date hereof, for each Buyer Stock Option
Plan, the dates on which Options and Buyer SARs which are still outstanding
under such plan were granted, the number of outstanding Options and Buyer SARs
granted on each such date and the exercise price thereof. Except as disclosed in
Section 4.2(a)(i) of the Buyer Disclosure Schedule, since December 31, 1998
through the date of this Agreement, Buyer has not made any grants under any of
the Buyer Stock Option Plans. Except as disclosed in Section 4.2(a)(i) of the
Buyer Disclosure Schedule, as of the date of this Agreement, Buyer has not
granted any contractual rights the value of which is derived from the financial
performance of Buyer or from the value of shares of Buyer Common Stock. Except
as disclosed in Section 4.2(a)(ii) of the Buyer Disclosure Schedule, there are
no obligations contingent or otherwise, of Buyer or any of its Subsidiaries to
repurchase, redeem or otherwise acquire any shares of Buyer 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 Buyer's Subsidiaries are duly
authorized, validly issued, fully paid and nonassessable and, except as
disclosed in Section 4.2(a)(iii) of the Buyer Disclosure Schedule and except as
required by gaming industry regulation, all such shares and ownership interests
are owned by Buyer or another Subsidiary of Buyer free and clear of all security
interests, liens, claims, pledges, agreements, limitations on Buyer's voting
rights, charges or other encumbrances or restrictions on transfer of any nature.
(b) There is no Voting Debt of Buyer or any of its Subsidiaries
issued and outstanding. Except as set forth in Section 4.2(a) or in this Section
4.2(b) or as reserved for future grants of options or restricted stock under the
Buyer Stock Option Plans as of the date hereof, (i) there are no shares of
capital stock of any class of Buyer, or any security exchangeable into or
exercisable for such equity securities, issued, reserved for issuance or
outstanding; (ii) except as set forth in Section 4.2(b) of the Buyer Disclosure
Schedule there are no options, warrants, equity securities, calls, rights,
commitments or agreements of any character to which Buyer or any of its
Subsidiaries is a party or by which it is bound obligating Buyer 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
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ownership interests (including Voting Debt) of Buyer or any of its Subsidiaries
or obligating Buyer 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 Buyer. All shares of Buyer Common Stock subject to issuance as specified in
this Section 4.2(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.
(c) 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, subject only to the Buyer Stockholder Approval specified in
Section 4.20 hereof and the review by Buyer's Compliance Committee, as required
by Buyer's internal reporting system, of this Agreement, the transactions
identified herein, and the persons designated by Players to serve on Buyer's
Board of Directors, such review to be completed no later than 60 days after the
date of this Agreement. 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
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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.
(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) the filing of
any Joint Proxy Statement/Prospectus (as such term is defined in Section 5.4(a)
(below) with the SEC in accordance with 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 or the
transactions contemplated by this Agreement, and (vii) 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, or that
file, forms, reports or other documents with the SEC (the "Buyer Reporting
Subsidiaries") have filed and made available to Players all forms, reports and
documents required to be filed by Buyer and the Buyer Reporting Subsidiaries
with the SEC since January 1, 1995 (the "Buyer SEC Reports"). The Buyer 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, 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) Except as set forth in Section 4.4(a), 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 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 Buyer and its consolidated Subsidiaries as of the dates
and the consolidated results of its operations and cash flows for the periods
indicated,
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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.
The audited balance sheet of Buyer as of June 30, 1998 is referred to herein as
the "Buyer Balance Sheet."
Section 4.5. No Undisclosed Liabilities. Except as disclosed in the Buyer
SEC Reports or in Section 4.5 of the Buyer Disclosure Schedule, and except for
liabilities and obligations incurred since the date of the Buyer Balance Sheet
in the ordinary course of business consistent with past practices, Buyer and its
consolidated Subsidiaries do not have indebtedness, obligations, or liabilities
of any kind, whether accrued, contingent or otherwise, 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 Buyer Material Adverse Effect.
Section 4.6. Absence of Certain Changes or Events. Except as disclosed in
the Buyer SEC Reports or in Section 4.6 of the Buyer Disclosure Schedule, since
the date of the Buyer Balance Sheet, Buyer and its Subsidiaries have conducted
their respective businesses only in the ordinary course and in a manner
consistent with past practice, and there has not been (i) any Buyer 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 Buyer's capital stock, (iii) any split, combination or reclassification of
any of its capital stock or any issuance or the authorization of any issuance of
any other securities in respect of, in lieu of or in substitution for shares of
its capital stock, (iv) (w) any granting by Buyer or any of its Subsidiaries to
any director or officer of Buyer 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 Buyer SEC Reports, (x)
any granting by Buyer 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 Buyer SEC
Reports, (y) any granting by Buyer 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 Buyer SEC
Reports or (z) any entry by Buyer 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 Buyer, 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 Buyer Material
Adverse Effect, or (vii) any settlement of pending or threatened litigation
involving Buyer 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 Buyer Material Adverse Effect.
Section 4.7. Taxes.
(a) Buyer and each of its Subsidiaries 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
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(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
4.7(a) of the Buyer Disclosure Schedule, neither the IRS nor any other taxing
authority has asserted any claim for Taxes, or to the actual knowledge of the
executive officers of Buyer, is threatening to assert any claims for Taxes.
Buyer 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 Buyer 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 Buyer 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).
(b) Neither Buyer 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 Buyer or any
Subsidiary of Buyer.
(c) Neither Buyer 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. s.s. 1.1502-6 or
comparable provisions of state, local or foreign tax law) and including any
liability for Taxes of any predecessor entity.
Section 4.8. Real Property, Title and Related Matters. Section 4.8 of the
Buyer 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.
Buyer or a Subsidiary of Buyer, as the case may be, has, except as set forth in
Section 4.8 of the Buyer Disclosure Schedule, (A) the right to quiet enjoyment
of the Leased Real Property for the full term of the leases, and (B) good and
marketable title to all Owned Real Property and to all fixtures thereon, free
and clear of any Encumbrances, except for Permitted Encumbrances. Each lease or
other contract referred to in Section 4.8 of the Buyer Disclosure Schedule is a
valid contract or agreement enforceable against Buyer or its Subsidiary, as the
case may be, in accordance with its terms and, to the knowledge of Buyer,
against the other parties thereto. To the knowledge of Buyer, there are no
rights or options of any third party to acquire such leased property or any
ownership therein. Neither Buyer 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 4.8 of the Buyer Disclosure Schedule. To the knowledge of
Buyer, no other party to any such leases, ground leases, licenses, options or
other agreements is in default thereunder.
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Section 4.9. Title to Personal Property; Liens. To the best knowledge of
Buyer, Buyer 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 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 Buyer
Material Adverse Effect. Except as disclosed in Section 4.9 of the Buyer
Disclosure Schedule, such material tangible personal assets and properties are
sufficiently free of liens to allow each of Buyer and its Subsidiaries to
conduct, and continue to conduct, its business as currently conducted and to the
best knowledge of Buyer, the consummation of the transactions contemplated by
this Agreement will not alter or impair such ability in any respect which,
individually or in the aggregate, would be reasonably likely to have a Buyer
Material Adverse Effect.
Section 4.10. Intellectual Property. Section 4.10 of the Buyer Disclosure
Schedule lists all (i) trademark and service mark registrations and applications
owned by Buyer or any of its Subsidiaries and (ii) trademark, service mark and
trade name license agreements to which Buyer or any of its Subsidiaries is a
party. Except as disclosed in Section 4.10 of the Buyer 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 Buyer 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 Buyer 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 Buyer Material Adverse Effect.
Section 4.11. Agreements, Contracts and Commitments.
(a) Except as disclosed in the Buyer SEC Reports or as disclosed in
Section 4.11(a) of the Buyer Disclosure Schedule, as of the date of this
Agreement, neither Buyer nor any of its Subsidiaries is a party to any oral or
written (i) agreement, contract, indenture or other instrument relating to
Indebtedness 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 Buyer 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 Astrategic
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 Buyer 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 Buyer 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 Buyer or any of
its Subsidiaries were a party to such contract, agreement or other instrument or
(viii) any other material contract requiring annual
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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 "Buyer Material
Contracts").
(b) Except as disclosed in the Buyer SEC Reports filed prior to the
date of this Agreement or as disclosed in Section 4.11(b) of the Buyer
Disclosure Schedule, as of the date of this Agreement, (i) each of the Buyer
Material Contracts is valid and binding upon Buyer or any of its Subsidiaries
(and, to Buyer's 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 Buyer or any of its Subsidiaries under any of the
Buyer Material Contracts, whether or not such breach, violation or default has
been waived, and (iii) no event has occurred with respect to Buyer 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 Buyer Material Contracts, which 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 Buyer Material Adverse Effect.
Section 4.12. Litigation. Except as disclosed in the Buyer SEC Reports or
in Section 4.12 of the Buyer Disclosure Schedule, there is no action, suit or
proceeding, claim, arbitration or investigation against or affecting Buyer or
any of its Subsidiaries pending, or as to which Buyer or any of its Subsidiaries
has received any written notice of assertion against or affecting, Buyer or any
of its Subsidiaries or any property or asset of Buyer 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 Buyer Material Adverse
Effect or (ii) prevent or materially delay the consummation of the transactions
contemplated by this Agreement.
Section 4.13. Environmental Matters. Except as disclosed in Section 4.13
of the Buyer Disclosure Schedule, the Buyer SEC Reports and as would not be
reasonably likely to have a Buyer Material Adverse Effect: (i) Buyer 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 Buyer and
its Subsidiaries (including soils, groundwater, surface water, buildings or
other structures) are not contaminated with any Hazardous Substances (as defined
in Section 3.13(c)); (iii) neither Buyer nor its Subsidiaries are subject to
liability for any Hazardous Substance disposal or contamination on any third
party property; (iv) neither Buyer nor any of its Subsidiaries has been
associated with any release or threat of release of any Hazardous Substance; (v)
neither Buyer nor any of its Subsidiaries has received any notice, demand,
letter, claim or request for information alleging that Buyer or any of its
Subsidiaries may be in violation of or liable under any Environmental Law; (vi)
neither Buyer 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 Buyer or any of its Subsidiaries
that could reasonably be expected to result in any claims, liability,
investigations,
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costs or restrictions on the ownership, use or transfer of any property of Buyer
or any of its Subsidiaries pursuant to any Environmental Law.
Section 4.14 Employee Benefit Plans.
(a) Section 4.14(a) of the Buyer Disclosure Schedule contains a true
and complete list of all employee benefit plans (as defined in Section 3(3) of
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 Buyer
or any of its Subsidiaries or any ERISA Affiliate, or to which Buyer, 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 Buyer or any
of its Subsidiaries (together, the "Buyer Employee Plans").
(b) Buyer has delivered or made available to Players all material
documents related to the Buyer Employee Plans, including, without limitation:
(i) true and complete copies of all Buyer Employee Plan documents and any
summary plan descriptions, summary annual reports and insurance contracts
relating thereto, (ii) detailed summaries of all unwritten Buyer Employee Plans,
(iii) true and complete copies of the most recent financial statements and
actuarial reports with respect to all Buyer 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 Buyer
Employee Plan, and (v) true and complete copies of any filing with or report to
any Governmental Entity with respect to any Buyer Employee Plan made by Buyer or
any of its Subsidiaries during the twenty-four months prior to the date of this
Agreement, including, without limitation, annual reports for Buyer Employee
Plans, and a copy of any correspondence to Buyer or any of its Subsidiaries from
any Governmental Entity with respect to any such Buyer Employee Plan during such
period.
(c) All Buyer 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 4.14(c) of the Buyer Disclosure Schedule, there have not been any
Aprohibited transactions," as such term is defined in Section 4975 of the Code
or Section 406 of ERISA, involving any of the Buyer Employee Plans that could
subject Buyer or any of its Subsidiaries to any penalties or taxes imposed under
the Code or ERISA. Section 4.14(c) of the Buyer Disclosure Schedule sets forth a
true and complete list of all outstanding loans from Buyer or any of its
Subsidiaries to any current or former director, officer, employee or consultant.
(d) Except as set forth in Section 4.14(d) of the Buyer Disclosure
Schedule, any Buyer 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 IRS to be so qualified, has received a favorable
determination letter from the IRS covering provisions of the Tax Reform Act
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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 Buyer
Employee Plan. All contributions or other amounts payable by Buyer or any of its
Subsidiaries with respect to each Buyer Employee Plan have been paid or accrued
in accordance with GAAP, ERISA, the Code and the terms of each such plan.
(e) Except as set forth in Section 4.14(e) of the Buyer Disclosure
Schedule, neither Buyer, 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 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 Buyer Employee Plan is subject to Title IV of
ERISA and no Buyer Employee Plan is a Multiemployer Plan.
(f) There are no pending, or to Buyer's knowledge, any threatened or
anticipated claims by or on behalf of any Buyer Employee Plan, or by or on
behalf of any individual participants or beneficiaries of any Buyer Employee
Plan, alleging any breach of fiduciary duty on the part of Buyer or any of its
Subsidiaries or any of the officers, directors or employees of Buyer 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
Buyer or any of its Subsidiaries, the Buyer Employee Plans are not the subject
of any investigation, audit or action by the IRS, the Department of Labor or the
PBGC.
(g) With respect to any Buyer Employee Plan that is an employee
welfare benefit plan (within the meaning of Section 3(l) of ERISA) (a "Buyer
Welfare Plan"), (i) each Buyer 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 Buyer 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 Buyer Welfare Plan.
Section 4.15. Compliance.
(a) Except as disclosed in Section 4.15 of the Buyer Disclosure
Schedule, each of Buyer and its Subsidiaries, and each of their respective
directors (but with respect to non-employee directors, only to Buyer's best
knowledge), officers, persons performing management functions similar to
officers and, to Buyer's best knowledge, partners hold all permits,
registrations, findings of suitability, licenses, variances, exemptions,
certificates of occupancy, orders and
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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 Buyer Gaming
Laws (as defined below)), necessary to conduct the business and operations of
Buyer 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 Buyer Material Adverse Effect (the
"Buyer Permits"). Except as disclosed in the Buyer SEC Reports, as disclosed in
Section 4.15 of the Buyer Disclosure Schedule, or as would not be reasonably
likely to have a Buyer Material Adverse Effect, the businesses of Buyer and its
Subsidiaries are not being conducted in violation of any law, ordinance or
regulation of any Governmental Entity.
(b) The term "Buyer 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 Buyer 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 4.15 of the Buyer Disclosure
Schedule (i) neither Buyer nor any of its Subsidiaries, nor any director (but
with respect to non-employee directors, only to Buyer's best knowledge),
officer, key employee or, to Buyer's best knowledge, partners of Buyer 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 Buyer
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 Buyer, there are no
facts, which if known to the regulators under the Buyer 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 Buyer Gaming Laws; and (iii) neither
Buyer 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 Buyer Gaming Laws.
Section 4.16. Registration Statement; Joint Proxy Statement/Prospectus.
The information supplied by Buyer for inclusion or incorporation by reference in
the Registration Statement shall not at the time the Registration Statement (as
defined in Section 5.4(a) below) is declared effective by the SEC contain any
untrue statement of a material fact or omit to state any material fact required
to be stated in the Registration Statement or necessary in order to make the
statements in the Registration Statement, in light of the circumstances under
which they were made, not misleading. The information supplied by Buyer for
inclusion or incorporation by reference in the Joint Proxy
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Statement/Prospectus (as defined in Section 5.4(a) below) shall not, on the date
the Joint Proxy Statement/Prospectus is first mailed to stockholders of Players
or Buyer, at the time of the Players and the Buyer 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 Joint Proxy
Statement/Prospectus 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 4.17. Labor Matters. Except as disclosed in Section 4.17 of the
Buyer Disclosure Schedule, (i) there are no proceedings pending between Buyer 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 Buyer, there are no
activities or proceedings of any labor union to organize any non-unionized
employees; (iii) neither Buyer nor any of its Subsidiaries has received notice
of any alleged unfair labor practice charges and/or complaints pending against
Buyer 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 Buyer or any of its
Subsidiaries; and (iv) Buyer's 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 Buyer,
threat thereof, by or with respect to any employees of Buyer or any of its
Subsidiaries. Buyer and its Subsidiaries are not parties to any collective
bargaining agreements or other labor union contracts applicable to individuals
employed or previously employed by Buyer or any of its Subsidiaries and, except
as disclosed in Buyer Disclosure Schedule 4.17, no collective bargaining
agreement or labor union contract is being negotiated by Buyer or any such
Subsidiary.
Section 4.18. Insurance. All material fire and casualty, general
liability, business interruption, product liability, and sprinkler and water
damage insurance policies maintained by Buyer or any of its Subsidiaries are
listed on Section 4.18 of the Buyer Disclosure Schedule. At the Effective Time,
all such insurance policies, or replacements thereof, will be outstanding and
duly in force. To Buyer's knowledge, no notice of termination or non-renewal of
any such insurance policy has been received by Buyer.
Section 4.19. [Intentionally Omitted].
Section 4.20. Voting Requirements. The affirmative vote of the holders of
a majority of Buyer Common Stock present at the Buyer Special Meeting (at which
a quorum is present, in favor of the issuance of Buyer Common Stock pursuant to
this Agreement, consistent with the requirements of the NYSE (the "Buyer
Stockholder Approval"), is the only vote of the holders of any class or series
of Buyer's capital stock necessary to approve the transactions contemplated by
this Agreement.
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Section 4.21. Year 2000. Except as disclosed in Section 4.21 of the Buyer
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 4.22 of the Buyer 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. Buyer
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 4.21 of the
Buyer 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 4.22. Opinion of Financial Advisor. Buyer has received the opinion
of Merrill, Lynch, Pierce, Fenner and Smith Incorporated ("Merrill Lynch") dated
the date of this Agreement, to the effect that the Merger Consideration is fair
to the holders of Buyer Common Stock from a financial point of view.
Section 4.23. 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 for any brokerage fees,
commissions, finder's or other fees in connection with the transactions
contemplated by this Agreement, except that Buyer has retained Merrill Lynch as
its financial advisor.
Section 4.24. No Operations or Liabilities of Merger Sub. Other than in
connection with the transactions contemplated by this Agreement, since its date
of incorporation, Merger Sub has not conducted any business, has not owned,
leased or operated any real property and has not incurred, and is not subject
to, any liabilities or obligations of any nature, whether or not accrued,
contingent or otherwise.
Section 4.25. 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.
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ARTICLE V.
COVENANTS
Section 5.1. Conduct of Business.
(a) By Buyer. Except as disclosed in Section 5.1 of the Buyer
Disclosure Schedule or in the Buyer SEC Reports, during the period from the date
of this Agreement and continuing until the earlier of the termination of this
Agreement or the Effective Time, Buyer agrees as to itself and its Subsidiaries
(except to the extent that Players 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, Buyer agrees (except as
otherwise contemplated by this Agreement, or to the extent that Players shall
otherwise consent in writing) as follows:
(i) Governing Documents. Buyer shall not amend its Certificate
of Incorporation, By-laws or other charter or organizational documents.
(ii) No Acquisitions. Buyer 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 material business, including through the acquisition of any interest
in any corporation, partnership, joint venture, association or other
business organization or division thereof nor, in the case of the pending
acquisition (the "CRC Transaction") of CRC Holdings, Inc. ("CRC"), shall
it complete such acquisition on terms and conditions materially less
advantageous to Buyer or Buyer's stockholders than those previously
disclosed to Players; provided, however, that Buyer will be permitted to
acquire for fair value Nevada based route businesses for consideration not
exceeding $20,000,000 in the aggregate.
(iii) No Dispositions. Buyer 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.
(iv) Accounting Matters. Buyer shall not 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.
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(v) Issuance of Securities. Buyer 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 Buyer Common Stock upon the exercise of Buyer
Options outstanding on the date of this Agreement and in accordance with
their present terms, pursuant to this Agreement or the transactions
contemplated herein or in connection with the CRC Transaction; provided,
however, that Buyer will be permitted to issue Buyer Common Stock (or
securities convertible into or exercisable for Buyer Common Stock), at a
per share price not less than the then current market price; not exceeding
$15,000,000 in the aggregate in order to consummate Nevada based route
business acquisitions permitted by clause (ii) above.
(vi) Indebtedness. Buyer 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 Buyer 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, except as
required under this Agreement and the transactions contemplated herein or
in connection with the CRC Transaction; provided, however, that Buyer will
be permitted to incur indebtedness in an aggregate principal amount not
exceeding $15,000,000 in order to consummate Nevada based route business
acquisitions permitted by clause (ii) above.
(vii) Settlement. Buyer shall not and shall cause its Subsidiaries
not to settle any pending or threatened litigation involving Buyer 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 Buyer 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 Buyer or any of its
Subsidiaries.
(viii) General. Buyer shall not and shall cause its Subsidiaries
not to authorize any of, or commit or agree to take any of, the
foregoing actions.
(b) By 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
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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:
(i) 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 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.
(ii) 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 the exercise of Players
Options outstanding on the date of this Agreement and in accordance with
their present terms).
(iii) 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.
(iv) 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.
(v) 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.
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(vi) 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.
(vii) 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 the
Buyer.
(viii) Material Contracts. Players shall not and shall cause its
Subsidiaries not to 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.
(ix) 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.
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(x) 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.
(xi) 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.
(xii) Capital Expenditures. Players together with its Subsidiaries
shall not make capital expenditures in excess of $1,500,000 individually
or $10,000,000 in the aggregate.
(xiii) 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
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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 to be
superior from a financial point of view to the holders of Players Common Stock
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 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. Joint Proxy Statement/ Prospectus; Registration Statement.
(a) As promptly as practicable after the execution of this
Agreement, Players and Buyer shall prepare and file with the SEC, in preliminary
form, a joint proxy statement/prospectus to be sent to the respective
stockholders of each of Players and Buyer in connection with, and to consider
this Agreement and the Merger (the "Joint Proxy Statement/Prospectus") and the
related registration statement in which the Joint Proxy Statement/Prospectus
will be included as a prospectus (the "Registration Statement"), provided that
Players and Buyer may delay the filing of the Registration Statement until
approval of the Joint Proxy Statement/Prospectus by the SEC. Players and Buyer
shall use all reasonable efforts to cause the Registration Statement to become
effective as soon after such filing as practicable.
(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.
(c) Buyer agrees that the Registration Statement shall enable
resales of Buyer Common Stock by former Aaffiliates" (as defined in Rule 405
under the Securities Act) of Players so that such former Players affiliates are
not subject to any volume limitation on resale pursuant to Rule 145(d) under the
Securities Act.
Section 5.5 Special Meeting. Players shall duly call, give notice of,
convene and hold a special meeting of its stockholders for the purpose of voting
upon this Agreement and the Merger (the "Players Special Meeting") and Buyer
shall duly call, give notice of, convene and hold a special meeting of its
stockholders for the purpose of voting upon and approving the transactions
contemplated by this Agreement (the "Buyer Special Meeting"), in each case as
promptly as reasonably practicable after the date hereof. 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. Buyer shall through its Board of Directors, recommend to its
stockholders approval of the transactions contemplated by this Agreement, and
each party shall use all reasonable efforts to solicit from its stockholders
proxies in favor of such matters.
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Section 5.6 Access to Information. Upon reasonable notice, each of Buyer
and Players (and each of their respective Subsidiaries) shall afford to the
other party 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 its personnel, properties, books,
contracts, commitments and records and, during such period, each of Buyer and
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 the other party may
reasonably request. Each party making such requests will hold any such
information furnished to it by the other party in confidence in accordance with
the confidentiality agreement between the parties (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.
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 Approvals"). Each of
the parties hereto and their respective officers, directors and affiliates shall
file within 60 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.
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(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.
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 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
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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 duplicate
benefits to employees of Players and its Subsidiaries.
(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) Players shall obtain and deliver to Buyer prior to the Closing
Date a written resignation letter from each of Howard A. Goldberg, Peter J.
Aranow, John Groom and Patrick Madamba, Jr. (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 each such resignation as a
"Termination Upon a Change of Control" for purposes of the respective Employment
Agreement or 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, the Buyer shall reduce the amounts
required to be paid to each 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
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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 Aparachute 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 ninety days before the
Closing Date, a report (the "Accountant's Report"), setting for 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.
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 10 7/8% Senior Notes due 2005 (the "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
662/3% 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 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
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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.
Section 5.13. Rights Plan. 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 Rights Agreement and (B) none of the holders
of the Rights shall have any rights under the Rights or 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.
Section 5.14. Buyer's Board of Directors. Buyer and Players shall use
their reasonable efforts to agree on two individuals to be appointed as
additional directors to serve on Buyer's Board of Directors commencing the
Effective Time. If, prior to the Effective Time, the CRC Transaction has not
closed, Players and Buyer shall agree on a third additional director to serve on
the Buyer's Board of Directors in the event the CRC Transaction ultimately fails
to close.
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. The Buyer Stockholder Approval
shall have been received in accordance with the requirements of the NYSE.
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(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 either party 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.
(d) Registration Statement. The Registration Statement shall have
been declared effective, and no stop order suspending the effectiveness of the
Registration Statement shall be in effect and no proceedings for such purpose
shall be pending before or threatened by the SEC.
(e) NYSE. The shares of Buyer Common Stock to be issued in the
Merger shall have been authorized for listing on the NYSE, subject to official
notice of issuance.
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.
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(c) Buyer Acquisition. Buyer shall not have completed the CRC
Transaction on terms which are materially less advantageous to Buyer or Buyer's
stockholders than those contained in the form of agreement (including the forms
of agreements referenced therein) previously supplied to Players.
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.
(c) Financing. Buyer shall have obtained financing sufficient to
allow Buyer to complete the transactions contemplated in this Agreement.
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(k), 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 the
stockholders of the parties:
(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 September 30, 1999 (the AOutside Date"); provided that either
Buyer or Players may extend the
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Outside Date to December 31, 1999 by providing written notice thereof to the
other party within five (5) business days prior to and including September 30,
1999 if (i) the Merger shall not have been consummated by such date because the
requisite Governmental Approvals required under Section 6.1(c) have not been
obtained and are still being pursued, (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
September 30, 1999, (iii) it is reasonably probable, based on, among other
things, the status of completed regulatory filings, scheduled regulatory
meetings and the advice of regulatory counsel to such party, that the requisite
Governmental Approvals will be obtained within such extension period; and (iv)
in the event such extension is requested by Buyer, Buyer either (A) has
furnished to Players a letter, dated as of the date Buyer requests such
extension, from Merrill Lynch to the effect that Merrill Lynch is, as of the
date of such letter, highly confident that Merrill Lynch (or another nationally
recognized investment banking firm of comparable stature) will be able to raise
funds sufficient for Buyer to meet all of its financial obligations under this
Agreement, or (B) has permanently waived the condition to closing set forth in
Section 6.3(c); 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, in the case of (i), (ii) and (iii) in accordance
with the proviso in Section 5.3; 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.
(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
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Players Breach is curable by Players through best efforts within 30 days and for
so long as Players continues to exercise such best efforts during such 30 day
period, Buyer may not terminate this Agreement under this Section 7.1(g); 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 60 days after the date of this Agreement, as further set forth
in Section 5.7 hereof; provided, however, that Players shall not be permitted to
terminate this Agreement pursuant to this Section 7.1(i) if Buyer has filed all
such required initial applications and documents;
(j) by either Buyer or Players if, at the Buyer Special Meeting
(including any adjournment or postponement), the requisite vote of the
stockholders of Buyer in favor of the transactions contemplated by this
Agreement shall not have been obtained; or
(k) by Players pursuant to Section 2.1(a).
Neither Players nor Buyer shall have the right to terminate this Agreement based
on any findings of Buyer's Compliance Committee referenced in Section 4.3(a).
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
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include all costs of collection and interest from the date such payment is due
at a rate per annum of 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;
(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).
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 Section 7.3(b), if (i) Buyer or
Players terminates the Agreement pursuant to Section 7.1(d), (ii) Buyer
terminates this Agreement pursuant to Section 7.1(g) 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 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;
provided, further, that Players shall reimburse Buyer and Merger Sub one-half of
all fees (i) incurred by Buyer in respect of Buyer's financing under this
Agreement and (ii) approved in writing by Players prior to the time incurred.
(d) If (i) Players terminates this Agreement pursuant to Section
7.1(i), (ii) Buyer or Players terminates this Agreement pursuant to Section
7.1(j), (iii) Players terminates this Agreement pursuant to Section 7.1(h) 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 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 plus, in the case of (ii) above, a termination fee of
$3,000,000.
(e) If this Agreement is terminated by either Buyer or Players
pursuant to Section 7.1(b), and all conditions to closing other than that
contained in Section 6.3(c) are or would have
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been satisfied (or, with respect to the conditions under Section 6.2, are
capable of being waived by Players) at a closing held on the date of
termination, Buyer shall pay Players a termination fee of $3,000,000 and shall
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 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 8.1.1 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:
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(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
Jackpot Enterprises, Inc.
Attention: Don R. Kornstein
110 Palms Airport Drive
Las Vegas, NV 89119
with a copy to:
Camhy Karlinsky & Stein LLP
Attention: Alan I. Annex, Esq.
1740 Broadway, 16th Floor
New York, NY 10019
Shearman & Sterling
Attention: John A. Marzulli, Jr., Esq.
599 Lexington Avenue
New York, NY 10022
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 "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
February 8, 1999.
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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. Except to the extent that Nevada law applies
to the Merger as a matter of law, this Agreement shall be governed and
construed, and the obligations, rights and remedies of the parties hereunder
shall be determined, in accordance with the laws of the State of New York
without reference to the conflicts of law or choice of law doctrine of such
state.
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 Sections 7.3(b),
the parties hereto agree that the remedy at law for any breach of this Agreement
will be inadequate and that any
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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.
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IN WITNESS WHEREOF, Buyer, Inc., Buyer Sub Corp. and Players
International, Inc. have caused this Agreement to be signed by their respective
duly authorized officers as of the date first written above.
JACKPOT ENTERPRISES, INC.
/s/ Don R. Kornstein
------------------------------------
By: Don R. Kornstein
Its: Chief Executive Officer
JEI MERGER CORP.
/s/ Don R. Kornstein
------------------------------------
By: Don R. Kornstein
Its: Chief Executive Officer
PLAYERS INTERNATIONAL, INC.
/s/ Howard A. Goldberg
------------------------------------
By: Howard A. Goldberg
Its: Chief Executive Officer
PRESS RELEASE
PLAYERS SHAREHOLDERS TO RECEIVE $8.25 PER SHARE IN CASH AND STOCK IN SALE TO
JACKPOT
DATELINE: Atlantic City, New Jersey, February 9, 1999
PLAYERS INTERNATIONAL, INC. (NASDAQ: "PLAY") announced today that it has entered
into an Agreement and Plan of Merger with Jackpot Enterprises Inc. (NYSE: "J")
and a subsidiary of Jackpot, pursuant to which Players would be acquired by
Jackpot, and Players stockholders would receive $8.25 per share, consisting of
$6.75 per share in cash and $1.50 in Jackpot common stock for each share of
Players common stock. The transaction, which was approved yesterday by the
boards of directors of Players and Jackpot, would value Players, including
approximately $160 million of net debt, at approximately $424 million.
Donaldson, Lufkin & Jenrette Securities Corporation is serving as Players=
financial advisor in connection with the Merger.
Closing of the merger is subject to a number of conditions, including approval
by the shareholders of both companies, receipt of all necessary regulatory
approvals, including the approvals of the Illinois, Louisiana, Nevada and
Missouri gaming authorities, and financing of the transaction, as to which
Players has been furnished with a "highly confident" letter from Merrill Lynch &
Co. to Jackpot. The Merger is anticipated to close in the second half of this
year.
Howard Goldberg, Chairman, President and Chief Executive Officer of Players,
said, "This announcement represents the culmination of a process that was
previously announced in November 1998, in which Players' board of directors
instructed its financial advisor, Donaldson, Lufkin & Jenrette, to explore
strategic alternatives designed to maximize shareholder value. We are pleased to
have reached an agreement with Jackpot which recognizes the value that has been
created in the Players' franchise and gives our employees an opportunity to join
forces with a dynamic company that is taking major steps to become a significant
presence in the gaming industry."
Players International, Inc. is a multi-jurisdictional casino and entertainment
gaming company. The Company owns and operates riverboat casino facilities on the
Ohio River in Metropolis, Illinois, in Lake Charles, Louisiana and in Maryland
Heights, Missouri, a suburb of St. Louis.
The information contained in this news release, other than historical data,
contains statements that are forward-looking, such as references to the closing
of the Merger and the satisfaction of conditions to complete the transaction.
Forward-looking information involves important risks and uncertainties that
could significantly affect anticipated future events and, accordingly, such
events may differ from the anticipated events expressed in forward looking
statements made herein.
