UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. 13)
VIDEO LOTTERY TECHNOLOGIES, INC.
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(Name of Issuer)
Common Stock, $.01 par value
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(Title of Class of Securities)
92656M10
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(CUSIP Number)
William Spier
444 Madison Avenue
38th Floor
New York, New York 10022
(212) 759-3287
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(Name, Address and Telephone Number of
Person Authorized to Receive Notices
and Communications)
- with a copy to -
Peter S. Golden, Esq.
Fried, Frank, Harris, Shriver & Jacobson
One New York Plaza
New York, New York 10004
(212) 820-8000
August 14, 1997
(Date of Event which Requires Filing
of this Statement)
If the filing person has previously filed a statement on
Schedule 13G to report the acquisition which is the subject of
this Schedule 13D, and is filing this schedule because of Rule
13d-1(b)(3) or (4), check the following box / /.
Check the following box if a fee is being paid with the
statement / /.
This Amendment No. 13 amends and supplements the statement
on Schedule 13D filed by William Spier on October 30, 1992 and,
as a result of an amendment thereto, by Video Investment
Partners, L.P., Asgard Ltd., Parkway M&A Capital Corporation,
Alpine Associates, Ltd., Gabriel Capital, L.P., LBN Investment
Associates, L.P., and Homer Noble (the "Schedule 13D") with
respect to Common Stock, par value $.01 per share (the
"Shares"), of Video Lottery Technologies, Inc., a Delaware
corporation (the "Company").
Unless otherwise defined, all capitalized terms used
herein shall have the meaning given such terms in the
Schedule 13D.
Item 4 of the Schedule 13D is hereby amended to add the
following information.
ITEM 4. PURPOSE OF TRANSACTION
In a letter to the Chairman of the Board of Directors of
the Company, William Spier advised the Company that, in his
capacity as a director, he would continue to insist upon
corporate governance procedures assuring fair and conflict-free
decision-making, including an independent and functioning
Compensation Committee, despite continuing opposition from the
Company's management. Mr. Spier also objected to numerous
false and misleading statements in the Chairman's public
response to the resignation of a director in protest over the
Board's policies of entrenchment and self-enrichment. A copy
of Mr. Spier's letter is included as an Exhibit to this filing.
Item 7 of the Schedule 13D is hereby amended to add the
following information.
ITEM 7. MATERIALS TO BE FILED AS EXHIBITS
Letter to the Chairman of the Board of Directors of the
Company dated August 14, 1997.
SIGNATURE
After reasonable inquiry and to the best of my knowledge
and belief, I certify that the information set forth in this
statement is true, complete and correct.
ALPINE ASSOCIATES, LTD.
/S/WILLIAM SPIER By: /S/WILLIAM SPIER
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William Spier William Spier
Pursuant to Power of
Attorney
VIDEO INVESTMENT PARTNERS, L.P. GABRIEL CAPITAL, L.P.
BY: /S/WILLIAM SPIER By: /S/WILLIAM SPIER
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William Spier William Spier
Managing General Partner Pursuant to Power of
Attorney
ASGARD LTD. LBN INVESTMENT ASSOCIATES, L.P.
BY: /S/WILLIAM SPIER By: /S/WILLIAM SPIER
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William Spier William Spier
Pursuant to Power of Attorney Pursuant to Power of
Attorney
PARKWAY M&A CAPITAL HOMER NOBLE
CORPORATION
BY: /S/WILLIAM SPIER By: /S/WILLIAM SPIER
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William Spier William Spier
Pursuant to Power of Attorney Pursuant to Power of
Attorney
Date: August 14, 1997
EXHIBIT
August 14, 1997
Mr. Richard Burt
Chairman
Video Lottery Technologies, Inc.
c/o International Equity Partners
1101 Connecticut Avenue, N.W.
Washington, DC 20036
Dear Mr. Burt:
Your letter to William Lyons responding to his resignation
as a director of Video Lottery contained numerous incorrect facts
and unfounded allegations relating to Mr. Lyons and myself.
I am not surprised that you have reacted in this fashion.
You have consistently maligned those seeking to exercise the
responsibility of outside directors - independent supervision of
management performance and conduct - and denied any need for any
reform of questionable practices at VLT. Every director and
stockholder of any public company has a right to demand that
corporate conduct conforms to certain standards and that every
effort is made to avoid conflicts of interest. Management should
not only respect this imperative, but also cooperate fully in
meeting this requirement. Unfortunately, VLT responds to efforts
to implement responsible corporate governance with extreme
hostility and attacks those who are fulfilling their fiduciary
duty. Contrary to your assertions, it is those directors who
passively accept management's conduct who are breaching their
fiduciary responsibility and not those who question and review
insider behavior. For your own benefit, you have characterized
independence as disruptive and divisive.
There are certain facts relating to VLT which cannot be
disputed and which are either ignored or misstated in your letter
(and in your previous actions as Chairman):
- UNAUTHORIZED PAYMENTS TO IEP - Payments were made by VLT to
your consulting firm for a period of ten months after your
consulting agreement expired. During this period, VLT's internal
financial controls failed to identify payments being made to an
insider without adequate corporate review. Mr. Lyons and I
objected to a process in which only management would authorize
payments to an affiliate of the Chairman of VLT. You termed the
continuance of payments as an "oversight." In addition, we
believed that any extension of the consulting arrangement should
be based upon a business review of the benefits produced for VLT.
In that regard, it is fair to ask what opportunities IEP has
identified for VLT internationally and has VLT received any
corporate benefits from its relationship with IEP. To my
knowledge, you have not been able to cite any positive results
from your firm's consulting services. In light of this lack of
performance as well as VLT's shift from an international
strategy, a reasonable businessman and any director independent
of IEP might well conclude that the consulting arrangement does
not make business sense and should not be continued, and would
certainly conclude that the determination of whether to continue
the arrangement should be made by independent directors who are
not beholden to you.
- MR. HARDESTY - Mr. Hardesty's appointment as a director to
VLT occurred with undue haste, on two days' notice to the outside
directors (at least to Mr. Lyons and me). We were given only a
brief resume and no opportunity to meet with Mr. Hardesty.
Mr. Lyons and I objected to Mr. Hardesty's appointment because we
did not believe we were given an opportunity to make an informed
decision as to his qualifications. In addition, I strongly
objected to the violation of my investor agreement which would
occur if another director were to be appointed. My objection was
subsequently confirmed in writing. (It is beyond belief that you
can contend that I did not seriously claim that a violation
occurred; my position was expressly set forth in the dissent
included in the Company's proxy statement. You might make claims
frivolously; I do not.) Once again, the process employed by VLT
did not permit a deliberate and informed decision-making process
free from potential conflicts. Instead, it added to the Board a
management crony who would not question management's compensation
policies and would soon find a way to improperly enrich himself.
- MR. HARDESTY'S TRADING ACTIVITIES - Mr. Hardesty purchased
over 52,000 shares of VLT stock shortly before VLT issued its
earnings release, during VLT's review of various corporate
opportunities, and in anticipation of the Nevada Gaming
Commission's action on VLT's licensing application. Mr. Hardesty
took no steps to ensure that his purchases were in compliance
with corporate policy and law and chose not to clear these trades
in advance with Company counsel despite the Company's policy
requiring such clearance. For whatever reason, Mr. Hardesty did
not clear these trades in advance with Company counsel. (Advance
clearance is a practice required at almost every public company.)
Moreover, in a highly regulated company such as VLT, where even
the appearance of impropriety should be avoided, Mr. Hardesty's
judgment and lack of sensitivity in the timing of his trading is
cause for concern. In your letter, you state that Mr. Hardesty
brings talent and distinction to the VLT Board. Unfortunately,
it appears the distinction he brings is the dubious one of
director enrichment and self-dealing at the public's expense and
his talents do not include compliance with VLT's trading
policies. Moreover, your unwarranted assertion that the Board
requested and then "carefully reviewed" reports by Board member
Becker and independent counsel does not provide any real comfort
to those interested in the truth. You already have Mr. Lyons'
and my view of special counsel's manifestly inadequate opinion
letter. As for Ms. Becker's so-called report, since you continue
to withhold it from us, despite repeated requests, it is
impossible for us even to comment on it. Of course, it also is
important to note again, that the Board renominated Mr. Hardesty
as a director in the face of these trading activities and before
any such report was even prepared or "carefully reviewed."
- THE OBLIGATION TO RAISE THESE ISSUES - Recent Delaware cases
confirm what most outside directors already knew - that they have
an obligation to ensure that corporate reporting and oversight
processes are in place to permit directors to reach informed
judgments concerning the corporation's compliance with law and
its business performance. Directors must be proactive in seeking
to prevent misconduct and self-dealing and must respond
decisively to any possible wrongdoing. Mr. Lyons and I have
acted in compliance with our fiduciary duties. The only reason
we have continued to raise these issues is because management's
conduct continues to depart from acceptable substantive and
procedural norms. If the Company has suffered or has potential
difficulties with regulators, it is because of this deficient
conduct and not our efforts to protect the Company against it.
Obviously, if we were to join in the cover-ups and whitewashing,
we would violate our duties as directors and jeopardize VLT's
longer-term prospects.
- MY DEALINGS WITH THE COMPANY -
- MY OFFER TO BECOME AN UNPAID, INTERIM CEO - After VLT's last
CEO, Stephen Vanderwoude left VLT, management was directionless.
Mr. Haddrill had only recently joined the Company as CFO and had
little or no experience as an operating officer. I thought it
would be in the best interests of VLT if we found an experienced
CEO. I offered to serve without pay as a temporary CEO until the
executive search was completed, presumably within three or four
months. As you know, I have extensive CEO and operating
experience with businesses of various types and had a great
familiarity with VLT's operations. To suggest that I wanted a
permanent position or would reap financial benefit from my offer
is completely and knowingly false. I still believe the Company
needs an experienced and disciplined CEO.
- THE EDS TRANSACTION - It appears that you have not even
attempted to educate yourself about the events in 1994 resulting
in VLT's strategic alliance with EDS and VLT's transaction with
my investor group. Nevertheless, you attack Mr. Lyons' integrity
and, implicitly, the judgment of our fellow director, Jim Davey,
who approved these transactions. If you had made even a minimal
effort to learn about events which occurred before you and
Mr. Haddrill joined the Company instead of engaging in an unfair
and misleading effort at revising history, you would be aware
that my investment in VLT in 1992 resolved major regulatory
difficulties for VLT and, in all likelihood, saved the Company.
In 1994, during the time the Company was seeking a strategic
alliance to strengthen its technological and competitive
position, I was approached by EDS regarding their interest in
purchasing the stock owned by my investor group and to become the
information technology supplier to AWI. Recognizing that this
was a corporate opportunity, I immediately advised the entire VLT
Board, consisting of three other directors who had no interest in
my investor group, that they would decide whether any sale of
securities to EDS would occur, on what terms, and who would sell
the securities - VLT or the investor group. These three
directors formed a Special Committee, retained one of the leading
practitioners of law in Delaware (whose firm had represented a
party adverse to me in a litigation), and an independent
investment banking firm. At approximately the same time, VLT had
been advised by a regulatory body before which a major contract
proposal was pending that the contract would not be awarded to
VLT unless the voting trust and option arrangement established in
1992 to insulate VLT's founder from VLT was eliminated and the
underlying stock purchased from the founder.
After much deliberation, the Board concluded that the
alliance with EDS was desirable and should create
significant corporate opportunities. The Special
Committee, acting in consultation with the independent
investment banking firm, concluded that it was
desirable for EDS to have a major investment in VLT and
to be AWI's IT provider and that a repurchase of stock
from my investor group was in the best interests of
VLT. At the time of these decisions, VLT stock was
trading between $21 and $24 per share. (Therefore,
substantially all of the profit you object to was
attributable to the appreciation in the market price of
VLT stock. Our efforts from 1992 to 1994 had increased
the stock price from $9 to over $20. I wish current
management could boast of similar value creation.)
After arms' length negotiations with the Special
Committee, assisted by the same investment bankers, the
terms of the repurchase from my investor group were
agreed upon. The EDS and repurchase transactions
resulted in a net inflow of funds to VLT and created
significant corporate possibilities while eliminating
regulatory issues. The repurchase of shares was so
critical to the regulators that they sent
representatives to the closing of the transaction. The
major contract was awarded to VLT shortly after the
closing.
Unlike current management's dealings with VLT, three
disinterested directors negotiated and unanimously
approved my transaction after they were provided with
complete information and sufficient time to reach an
informed decision with the assistance of independent
legal and financial advisors. (Mr. Lyons, although
involved in the complex and time-consuming process, in
no way dominated deliberations and, in any event, had
no personal interest in my transaction. Mr. Lyons, as
the only outside member of the Special Committee,
received a fair fee for the time and expertise he
devoted to this entire matter pursuant to arrangements
approved in advance by the full Board.) Mr. Davey was
an active participant in this process and
enthusiastically supported both VLT's partnership with
EDS and the stock repurchase.
At the time, there was no question the strategic
alliance with EDS was beneficial to the Company and
presented a great opportunity. The difficulties which
subsequently arose were largely attributable to
unforeseen problems and events which occurred in 1995
and 1996.
I would hope that you take great care in the future to
understand the facts and to refrain from reflexive hostile
reactions to anyone who raises legitimate questions regarding
corporate affairs and management conduct.
In conclusion, I want to assure the Board that I am
committed to taking all action necessary to ensure the growth and
profitability of VLT. As part of my efforts, I will continue to
insist upon corporate governance procedures assuring fair and
conflict-free decision-making, including an independent and
functioning Compensation Committee. It is my obligation to act
in furtherance of what I believe in good faith to be in the
interests of VLT and its stockholders and not solely the personal
interests of certain directors or members of management.
Sincerely,
William Spier
