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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): March 12, 1999 (March 9, 1999)
Powerhouse Technologies, Inc.
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(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C> <C>
DELAWARE 0-19322 81-0470853
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
</TABLE>
115 Perimeter Center Place, Suite 911, Atlanta, GA 30346
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(Address of principal executive offices) (Zip Code)
(770) 481-1800
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(Registrant's telephone number, including area code)
NOT APPLICABLE
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(Former name or former address, if changed since last report)
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ITEM 5. OTHER EVENTS
On March 10, 1999, Powerhouse Technologies, Inc. (the "Company"),
Anchor Gaming ("Parent") and Olive AP Acquisition Corporation, a wholly-owned
subsidiary of Parent ("Merger Sub") announced that they had entered into a
definitive Agreement and Plan of Merger (the "Merger Agreement") providing for,
among other things, the merger of the Merger Sub with and into the Company, with
the Company thereupon becoming a wholly-owned subsidiary of Parent (the
"Merger"). The Merger has been approved by the Boards of Directors of the
Company, Parent and Merger Sub.
Pursuant to the Merger Agreement, each outstanding share of common
stock, par value of $.01 per share, of the Company will be converted into the
right to receive cash in the amount of $19.50.
The transaction is expected to the completed in the second half of
calendar year 1999. It is subject to customary conditions, including clearance
under the Hart-Scott-Rodino Antitrust Improvements Act, approval of the Nevada
Gaming Control Board, other non-lottery regulatory approvals and consents from
certain state lottery authorities. The Merger is also subject to the approval by
the Company's stockholders.
In connection with the Merger Agreement, directors and executive
officers of the Company have entered into or agreed to enter into voting
agreements with Parent (each a "Voting Agreement") pursuant to which such
directors and officers, among other things, have agreed to vote an aggregate of
approximately 4.4% of the Company's outstanding shares in favor of the Merger.
Copies of the Merger Agreement, the form of Voting Agreement and the
press release issued by the Company and Parent announcing the transaction have
been filed as exhibits hereto and are incorporated herein by reference.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(c) EXHIBITS
2.1 Agreement and Plan of Merger dated as of
March 9, 1999 among Anchor Gaming, Olive AP
Acquisition Corporation and Powerhouse
Technologies, Inc.
99.1 Press Release of the Company and Parent
dated March 10, 1999
99.2 Form of Voting Agreement
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SIGNATURES
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 thereunto duly authorized.
POWERHOUSE TECHNOLOGIES, INC.
By: /s/ RICHARD M. HADDRILL
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Name: RICHARD M. HADDRILL
Title: PRESIDENT, CHIEF EXECUTIVE OFFICER
Dated: March 12, 1999
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EXHIBIT INDEX
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EXHIBIT NO. DESCRIPTION PAGE NO.
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<S> <C> <C>
2.1 Agreement and Plan of Merger dated as of March 9,
1999 among Anchor Gaming, Olive AP Acquisition
Corporation and Powerhouse
Technologies, Inc.
99.1 Press Release of the Company and Parent dated
March 10, 1999
99.2 Form of Voting Agreement
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of March 9, 1999, among ANCHOR
GAMING, a Nevada corporation ("Parent"), OLIVE AP ACQUISITION CORPORATION, a
Delaware corporation and a direct wholly-owned subsidiary of Parent ("Merger
Sub"), and POWERHOUSE TECHNOLOGIES, INC., a Delaware corporation (the
"Company").
PRELIMINARY STATEMENTS
A. The respective Boards of Directors of Parent, Merger Sub and the
Company have approved the merger of Merger Sub with and into the Company (the
"Merger"), upon the terms and subject to the conditions set forth in this
Agreement and in accordance with the Delaware General Corporation Law (the
"DGCL"), whereby the issued and outstanding shares of common stock of the
Company, $.01 par value per share (the "Company Common Stock"), will be
converted into the right to receive cash consideration of $19.50 per share (the
"Per Share Amount").
B. The Merger requires the approval of the holders of a majority of the
outstanding shares of the Company Common Stock (the "Company Stockholder
Approval").
C. Concurrently with the execution and delivery of this Agreement and
as a condition and inducement to each of Parent's and Merger Sub's willingness
to enter into this Agreement, certain stockholders of the Company named on
Exhibit A-1 have entered into or agreed to enter into Voting Agreements (the
"Voting Agreements") with Parent, substantially in the form of Exhibit A-2,
pursuant to which such stockholders have agreed, among other things, to vote all
shares of Company Common Stock beneficially owned by such stockholders, or for
which such stockholders exercise voting power pursuant to an irrevocable proxy,
in favor of approval and adoption of this Agreement and the Merger.
D. Parent, Merger Sub and the Company desire to make certain
representations, warranties, covenants and agreements in connection with the
Merger and also to prescribe various conditions to the Merger.
In consideration of the representations, warranties, covenants and
agreements contained in this Agreement, and other good and valuable
consideration, the receipt and sufficiency of which all parties hereby
acknowledge, the parties agree as follows:
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ARTICLE I
THE MERGER
SECTION 1.1 The Merger. Upon the terms and subject to the conditions
set forth in this Agreement, and in accordance with the DGCL, Merger Sub will be
merged with and into the Company at the Effective Time (as defined in Section
1.3). Following the Merger, the separate corporate existence of Merger Sub will
cease and the Company will continue as the surviving corporation (the "Surviving
Corporation") and will succeed to and assume all the rights and obligations of
the Company and of Merger Sub in accordance with the DGCL. At the election of
Parent or Merger Sub, any one or more direct or indirect wholly-owned
subsidiaries of Parent incorporated under the laws of the State of Delaware may
be substituted for Merger Sub as a constituent corporation in the Merger. As
used in this Agreement, the term "Merger Sub" refers to any such substituted
corporation.
SECTION 1.2 Closing. The closing of the Merger will take place at 10:00
a.m. on a date to be specified by the parties, which will be no later than the
second business day after satisfaction or waiver of the conditions set forth in
Article VI (the "Closing Date"), at the offices of Parent, unless another time,
date or place is agreed to in writing by the parties to this Agreement.
SECTION 1.3 Effective Time. Subject to the provisions of this
Agreement, as soon as practicable on or after the Closing Date, the parties will
prepare, execute and acknowledge and thereafter file a certificate of merger in
such form as is required by the DGCL and will make all other filings or
recordings required under the DGCL. The Merger will become effective at such
time as such filings are made with the Delaware Secretary of State, or at such
other time as Merger Sub and the Company agree should be specified in such
filings (the date and time of such filing, or such later date or time as may be
set forth therein, being the "Effective Time").
SECTION 1.4 Effects of the Merger. The Merger will have the effects set
forth in Section 259 of the DGCL and all other effects specified in the
applicable provisions of the DGCL. Without limiting the foregoing, at the
Effective Time, all properties, rights, privileges, powers, and franchises of
the Company and Merger Sub will vest in the Surviving Corporation and all debts,
liabilities, obligations, and duties of the Company and Merger Sub will become
the debts, liabilities, obligations, and duties of the Surviving Corporation.
SECTION 1.5 Certificate of Incorporation and Bylaws. At the Effective
Time, the certificate of incorporation and bylaws of the Surviving Corporation
will be amended to be in the form of Exhibits B and C, respectively (except that
the name of the Surviving Corporation will be changed to Powerhouse
Technologies, Inc.).
SECTION 1.6 Directors. The directors of Merger Sub at the Effective
Time will continue as the directors of the Surviving Corporation, until the
earlier of their resignation or removal or until their respective successors are
duly elected and qualified, as the case may be.
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SECTION 1.7 Officers. The officers of the Company immediately prior to
the Effective Time will be the initial officers of the Surviving Corporation and
will hold office until the earlier of their death, resignation or removal.
SECTION 1.8 Additional Actions. If, at any time after the Effective
Time, the Surviving Corporation considers or is advised that any deeds, bills of
sale, assignments, assurances or any other actions or things are necessary or
desirable to vest, perfect or confirm of record or otherwise in the Surviving
Corporation its right, title or interest in, to or under any of the rights,
properties or assets of Merger Sub or the Company or otherwise to carry out this
Agreement, the officers and directors of the Surviving Corporation will be
authorized to execute and deliver, in the name and on behalf of Merger Sub or
the Company, all such deeds, bills of sale, assignments and assurances and to
take and do, in the name and on behalf of Merger Sub or the Company, all such
other actions and things as may be necessary or desirable to vest, perfect or
confirm any and all right, title and interest in, to and under such rights,
properties or assets in the Surviving Corporation or otherwise to carry out this
Agreement.
ARTICLE II
EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE
CONSTITUENT CORPORATIONS; MERGER CONSIDERATION
SECTION 2.1 Effect on Capital Stock. At the Effective Time, by virtue
of the Merger and without any action on the part of Parent, Merger Sub, the
Company or the holders of any shares of capital stock of the Company or any
shares of capital stock of Merger Sub:
(a) Each share of the capital stock of Merger Sub issued and
outstanding immediately prior to the Effective Time will be converted into and
exchanged for one fully paid and nonassessable share of common stock of the
Surviving Corporation.
(b) Each share of Company Common Stock that is owned by the Company or
by any subsidiary of the Company and each share of Company Common Stock that is
owned by Parent, Merger Sub or any other subsidiary of Parent immediately prior
to the Effective Time will automatically be canceled and retired without any
conversion thereof and no consideration will be delivered with respect thereto.
(c) (i) Except for shares to be canceled in accordance with Section
2.1(b), each share of the Company Common Stock issued and outstanding as of the
Effective Time (the "Shares") will be automatically canceled and extinguished
and converted into the right to receive in cash the Per Share Amount (the
"Merger Consideration") without interest, less any required withholding taxes,
upon surrender of the certificate formerly representing such Shares in
accordance with Section 2.3.
(ii) As of the Effective Time, all such Shares will no longer
be outstanding and will automatically be canceled and retired and will cease to
exist, and each certificate
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previously representing any such Shares will thereafter represent the right to
receive the Merger Consideration. The holders of such certificates previously
evidencing such Shares outstanding immediately prior to the Effective Time will
cease to have any rights with respect to such Shares as of the Effective Time,
except as otherwise provided in this Agreement or by law. Such certificates
previously representing Shares will be exchanged for the Merger Consideration
upon the surrender of such certificates in accordance with the provisions of
Section 2.3, without interest.
SECTION 2.2. Appraisal Rights.
(a) Notwithstanding anything in this Agreement to the contrary, Shares
that are issued and outstanding immediately prior to the Effective Time and that
are held by stockholders that have complied in all respects with the
requirements of the DGCL concerning the right of a stockholder of the Company to
dissent from the Merger and to require an appraisal of such Shares in the manner
provided in the DGCL, if applicable, and that, as of the Effective Time, have
not effectively withdrawn or lost such right to appraisal (the "Dissenting
Shares") will not be converted into or represent a right to receive the Merger
Consideration, but the holders of such Dissenting Shares will be entitled only
to such rights as are granted under Section 262 of the DGCL. Each holder of
Dissenting Shares that becomes entitled to payment for such Shares pursuant to
such section of the DGCL will receive payment for such Dissenting Shares from
the Surviving Corporation in accordance with the DGCL; provided, however, that
to the extent that any holder or holders of Shares have failed to establish the
entitlement to appraisal rights as provided in Section 262 of the DGCL, such
holder or holders (as the case may be) will forfeit the right to appraisal of
such Shares and each such Share will thereupon be deemed to have been converted,
as of the Effective Time, into and represent the right to receive payment from
the Surviving Corporation of the Merger Consideration, without interest.
(b) The Company will give the Parent and the Purchaser (i) prompt
notice of any written demands for appraisal, withdrawals of demands for
appraisal, and any other instrument served pursuant to Section 262 of the DGCL
received by the Company and (ii) the opportunity to direct all negotiations and
proceedings with respect to demands for appraisal under Section 262 of the DGCL.
The Company will not, except with the express written consent of the Parent,
voluntarily make any payment with respect to any demands for appraisal or settle
or offer to settle any such demands.
SECTION 2.3. Payment for Shares.
(a) Prior to the Effective Time, Merger Sub will appoint a bank or
trust company reasonably acceptable to the Company as agent for the holders of
Shares (the "Paying Agent") to receive and disburse the Merger Consideration to
which holders of Shares become entitled pursuant to Section 2.1(c). At the
Effective Time, Merger Sub or Parent will provide the Paying Agent with
sufficient cash to allow the Merger Consideration to be paid by the Paying Agent
for each Share then entitled to receive the Merger Consideration (the "Payment
Fund").
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(b) Promptly after the Effective Time, Merger Sub or Parent will cause
the Paying Agent to mail to each record holder of an outstanding certificate or
certificates representing Shares that as of the Effective Time represent the
right to receive the Merger Consideration (the "Certificates"), a form of letter
of transmittal (which will specify that delivery will be effected, and risk of
loss and title to the Certificates will pass, only upon proper delivery of the
Certificates to the Paying Agent) and instructions for use in effecting the
surrender of the Certificates for payment. Upon surrender to the Paying Agent of
a Certificate, together with such letter of transmittal duly executed and
completed in accordance with its instructions and such other documents as may be
requested, the holder of such Certificate will be entitled to receive in
exchange for such Certificate, subject to any required withholding of taxes, the
Merger Consideration and such Certificate will forthwith be canceled. No
interest will be paid or accrued on the Merger Consideration upon the surrender
of the Certificates. If payment or delivery is to be made to a person other than
the person in whose name the Certificate surrendered is registered, it will be a
condition of payment or delivery that the Certificate so surrendered be properly
endorsed, with signature properly guaranteed, or otherwise be in proper form for
transfer and that the person requesting such payment or delivery pay any
transfer or other taxes required by reason of the payment or delivery to a
person other than the registered holder of the Certificate surrendered or
establish to the satisfaction of the Surviving Corporation that such tax has
been paid or is not applicable. Until surrendered in accordance with the
provisions of this Section 2.3(b), each Certificate (other than Certificates
held by persons referred to in Section 2.1(b)) will represent for all purposes
only the right to receive the Merger Consideration, without interest and subject
to any required withholding of taxes. Notwithstanding the foregoing, neither the
Paying Agent nor any party to this Agreement will be liable to a holder of
Shares for any Merger Consideration delivered to a public official pursuant to
applicable abandoned property, escheat or similar laws.
(c) Promptly following the date that is six months after the Effective
Time, the Paying Agent will return to the Surviving Corporation all cash,
certificates and other property in its possession that constitute any portion of
the Payment Fund, and the duties of the Paying Agent will terminate. Thereafter,
each holder of a Certificate formerly representing a Share may surrender such
Certificate to the Surviving Corporation and (subject to applicable abandoned
property, escheat and similar laws) receive in exchange therefor the Merger
Consideration without any interest. Neither Parent, Merger Sub, nor the
Surviving Corporation will be liable to any holder of Shares for any amount paid
to a public official pursuant to applicable abandoned property, escheat or
similar laws. If Certificates are not surrendered prior to midnight on the
fourth anniversary of the Effective Time, unclaimed amounts of the Payment Fund
will, to the extent permitted under applicable law, become the property of the
Surviving Corporation. Notwithstanding the foregoing, the Surviving Corporation
will be entitled to receive from time to time all interest or other amounts
earned with respect to the Payment Fund as such amounts accrue or become
available.
(d) After the Effective Time there will be no registration of transfers
on the stock transfer books of the Surviving Corporation of the Shares that were
outstanding immediately prior to the Effective Time.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent and Merger Sub as
follows:
SECTION 3.1 Organization and Qualification. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware and has the requisite corporate power and authority and
any necessary governmental authority to own, operate, and lease its properties
and assets and to carry on its business as it is now being conducted, except for
failures to have such power and authority as could not reasonably be expected to
result in a Company Material Adverse Effect (as defined below). The Company is
duly qualified or licensed to do business and is in good standing in each
jurisdiction where the character of its properties owned or leased or the nature
of its activities makes such qualification or licensing necessary, except for
failures to be so qualified or licensed and in good standing as could not,
individually or in the aggregate, reasonably be expected to result in a Company
Material Adverse Effect. Copies of the certificate of incorporation and bylaws
of the Company, including all amendments, have been delivered to Parent and
Merger Sub and such copies are accurate and complete. The certificate of
incorporation and bylaws of the Company are in full force and effect and the
Company is not in default of the performance, observation, or fulfillment of any
provision of its certificate of incorporation or bylaws. For the purposes of
this Agreement, "Company Material Adverse Effect" or "Company Material Adverse
Change" means any change or effect that, individually or when taken together
with all such other changes or effects, could reasonably be expected to be
materially adverse to the condition (financial or other), business, properties,
assets, liabilities, results of operations, or legal or regulatory environment
of the Company and its subsidiaries, taken as a whole.
SECTION 3.2 Subsidiaries. Schedule 3.2 contains a list of each
subsidiary of the Company and its jurisdiction of incorporation or organization.
The Company is, directly or indirectly, the record and beneficial owner of all
the outstanding shares of capital stock of each of its subsidiaries, there are
no proxies or voting agreements with respect to any such shares, and no equity
security of any of its subsidiaries is or may become required to be issued by
reason of any options, warrants, scrip, rights to subscribe to, calls or
commitments of any character whatsoever relating to, or securities or rights
convertible into or exchangeable for, shares of any capital stock of any such
subsidiary, and there are no contracts, commitments, understandings or
arrangements by which any subsidiary is bound to issue additional shares of its
capital stock or securities convertible into or exchangeable for such shares.
All such shares directly or indirectly owned by the Company are owned by the
Company or a wholly-owned subsidiary of the Company, free and clear of any
claim, lien, encumbrance or agreement, except for liens listed on Schedule 3.2.
Each subsidiary of the Company is a corporation duly organized, validly
existing, and in good standing under the laws of its jurisdiction of
incorporation and has the requisite corporate power and authority and any
necessary governmental authority to own, operate, or lease its properties and
assets and to carry on its business as it is now being conducted, except for
failures as could not, individually or in the aggregate, reasonably be expected
to result in a Company Material Adverse Effect. Each subsidiary of the Company
is duly qualified or licensed to do business and
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is in good standing in each jurisdiction where the character of its properties
owned or leased or the nature of its activities makes such qualification or
licensing necessary, except for failures to be so qualified, licensed or in good
standing as could not, individually or in the aggregate, reasonably be expected
to result in a Company Material Adverse Effect. Copies of the charter documents,
bylaws or equivalent organizational documents of each subsidiary of the Company
have been delivered to Parent and are accurate and complete. Neither the Company
nor any subsidiary of the Company (a) beneficially owns any equity interests in
any entities that are not subsidiaries of the Company or (b) is party to any
joint venture, partnership or similar arrangement.
SECTION 3.3 Authorized Capital. As of March 4, 1999, the authorized
capital stock of the Company consists solely of (a) 25,000,000 shares of common
stock, $.01 par value per share, of which 10,622,957 shares are outstanding and
(b) 10,000,000 shares of preferred stock, $.01 par value per share, of which no
shares are outstanding. All of the outstanding shares of capital stock of the
Company have been duly authorized and are validly issued, fully paid,
nonassessable, and free of preemptive rights. Schedule 3.3 lists each
outstanding stock option of the Company (the "Employee Options"), the number of
shares covered by such Employee Options, the exercise prices, and the plan or
agreement pursuant to which such Employee Options were issued. Except as set
forth above or on Schedule 3.3, there are no preemptive rights nor any
outstanding subscriptions, options, warrants, rights, convertible securities or
other agreements or commitments of any character relating to the issued or
unissued capital stock or other securities of the Company or any of its
subsidiaries. There are no voting trusts or other understandings to which the
Company or any of its subsidiaries is a party with respect to the voting capital
stock of the Company or any of its subsidiaries.
SECTION 3.4 Corporate Authorization. The Company has the full corporate
power and authority to execute and deliver this Agreement and, subject to any
necessary stockholder approval of the Merger, to consummate the transactions
contemplated by this Agreement. The execution, delivery and performance by the
Company of this Agreement and the consummation by the Company of the Merger and
of the other transactions contemplated by this Agreement have been duly and
validly authorized by all necessary corporate action and, except for any
required approval of the Merger and any adoption of this Agreement by the
stockholders of the Company in connection with the consummation of the Merger,
no other corporate proceedings on the part of the Company are necessary to
authorize this Agreement or to consummate the transactions contemplated by this
Agreement. This Agreement has been duly and validly executed and delivered by
the Company and constitutes a valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms.
SECTION 3.5 Approvals; No Violations. No filing with, and no permit,
authorization, consent or approval of, any foreign or domestic public body or
authority is necessary for the consummation by the Company of the transactions
contemplated by this Agreement, except (i) the filing of a premerger
notification and report form under the Hart-Scott-Rodino Antitrust Improvements
Act of 1976 (the "HSR Act"), (ii) the filing with the Securities and Exchange
Commission (the "SEC") of (x) the Proxy Statement (as defined in Section 5.2)
and (y) such reports under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), as may be
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required in connection with this Agreement and the transactions contemplated by
this Agreement, (iii) the filing of the certificate of merger with the Delaware
Secretary of State and appropriate documents with the relevant authorities of
other states in which the Company is qualified to do business, and (iv) as set
forth on Schedule 3.5. Except as set forth on Schedule 3.5, the execution and
delivery of this Agreement by the Company, the consummation by the Company of
the transactions contemplated by this Agreement and the compliance by the
Company with any of the provisions of this Agreement will not (a) conflict with
or result in any breach of any provision of the charters, bylaws or equivalent
organizational documents of the Company or any of its subsidiaries; (b) result
in a violation or breach of, or constitute (with or without notice or lapse of
time or both) a default (or give rise to any right of termination, cancellation
or acceleration) under, any of the terms, conditions or provisions of any note,
bond, mortgage, indenture, license, lease, contract, agreement or other
instrument or obligation to which the Company or any of its subsidiaries is a
party or by which any of them or any of their properties or assets may be bound;
or (c) violate any order, writ, injunction, decree, statute, rule or regulation
applicable to the Company, any of its subsidiaries or any of their properties or
assets, except such violations, conflicts, breaches, defaults, terminations or
accelerations referred to in this Section 3.5 as could not, individually or in
the aggregate, reasonably be expected to result in a Company Material Adverse
Effect or adversely affect the ability of any party to perform its obligations
under this Agreement.
SECTION 3.6 SEC Filings; Financial Statements. At least since December
31, 1995, the Company has timely filed with the SEC all forms, reports,
statements, and documents required to be filed by it pursuant to the Securities
Act of 1933 and the rules and regulations promulgated thereunder (the
"Securities Act"), and the Exchange Act, and the rules and regulations
promulgated thereunder, together with all amendments thereto and will file all
such forms, reports, statements and documents required to be filed by it prior
to the Effective Time (collectively, the "Company Reports"), and has otherwise
complied in all material respects with the requirements of the Securities Act
and the Exchange Act. The Company has made available to Merger Sub accurate and
complete copies of all Company Reports and will promptly deliver to Merger Sub
any Company Report filed by the Company after the date of this Agreement. As of
their respective dates, the Company Reports did not and (in the case of Company
Reports filed after the date of this Agreement) will not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements made therein, in light of the
circumstances under which they were or (in the case of Company Reports filed
after the date of this Agreement) will be made, not misleading. Each of the
historical consolidated balance sheets included in or incorporated by reference
into the Company Reports as of its date and each of the historical consolidated
statements of income and earnings, stockholders' equity and cash flows included
in or incorporated by reference into the Company Reports (including any related
notes and schedules) fairly presents or will (in the case of Company Reports
filed after the date of this Agreement) fairly present the consolidated
financial condition, results of operations, stockholders' equity and cash flows,
as the case may be, of the Company and its subsidiaries for the periods set
forth (subject, in the case of unaudited statements, to normal year-end audit
adjustments), in each case in accordance with generally accepted accounting
principles consistently applied during the periods involved. The Company
maintains a system of internal accounting controls sufficient to provide that
transactions are
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executed in accordance with management's general or specific authorization,
transactions are recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting principles and to
maintain accountability for assets, access to assets is permitted only in
accordance with management's general or specific authorization and the recorded
accountability for assets is compared with existing assets at reasonable
intervals and appropriate action is taken with respect to any differences.
SECTION 3.7 Absence of Certain Liabilities and Changes. Except as set
forth on Schedule 3.7, in the audited financial statements of the Company for
the period ended and as of December 31, 1998 (a copy of which has been delivered
to Parent), or in the Company Reports, neither the Company nor any of its
subsidiaries has any liabilities or obligations of any nature, whether or not
accrued, contingent, or otherwise that could, individually or in the aggregate,
reasonably be expected to result in a Company Material Adverse Effect. Since
December 31, 1998, the Company and its subsidiaries have conducted their
respective businesses in a manner consistent with past practices, and neither
the Company nor any of its subsidiaries has become subject to any liabilities or
obligations other than liabilities or obligations incurred in the ordinary
course of business consistent with past practices or incurred in connection with
this Agreement, or the Merger and disclosed in the Company Reports or consisting
of legal, printing, accounting and other customary fees (but not including those
of Lehman Brothers, Inc., or in the audited financial statements of the Company
as of and for the period ended December 31, 1998 (a copy of which has been
delivered to Parent) the Company's financial advisor (the "Advisor")) not
exceeding $800,000 in the aggregate and incurred in connection with this
Agreement or the Merger. Except as disclosed on Schedule 3.7, in the Company
Reports filed prior to the date of this Agreement and publicly available, since
September 30, 1998, the Company has conducted its business only in the ordinary
course consistent with prior practice, and there has not been (i) any Company
Material Adverse Change, (ii) any declaration, setting aside or payment of any
dividend or other distribution (whether in cash, stock or property) with respect
to any of the Company's capital stock, (iii) any split, combination or
reclassification of any of its capital stock or any issuance or the
authorization of any issuance of any other securities in respect of, in lieu of
or in substitution for shares of its capital stock, (iv) any granting by the
Company or any of its subsidiaries to any officer or employee of the Company or
any of its subsidiaries of (x) any increase in compensation, except in the
ordinary course of business consistent with prior practice or as was required
under employment agreements in effect as of the date of the most recent audited
financial statements included in the Company Reports filed prior to the date of
this Agreement or (y) any right to participate in (by way of bonus or otherwise)
the profits of the Company or any of its subsidiaries except in the ordinary
course of business consistent with past practice, (v) any granting by the
Company or any of its subsidiaries to any such officer or employee of any
increase in severance or termination pay, except as was required under
employment, severance or termination agreements in effect as of the date of the
most recent audited financial statements included in the Company Reports filed
prior to the date of this Agreement and publicly available, (vi) any entry into,
or renewal or modification, by the Company or any of its subsidiaries, of any
employment, consulting, severance or termination agreement with any officer,
director or employee of the Company or any of its subsidiaries, (vii) any
damage, destruction or loss, whether or not covered by insurance, that has or
could reasonably be expected to have a Company Material Adverse Effect, (viii)
any change in
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accounting methods, principles or practices by the Company materially affecting
its assets, liabilities or business, or (ix) any other action taken by the
Company or any of its subsidiaries which, if Section 5.1 had then been in
effect, would have been prohibited by such Article if taken without Parent's
consent (and no agreement, understanding, obligation or commitment to take any
such action exists).
SECTION 3.8 Compliance with Applicable Law.
(a) The Company and each of its subsidiaries currently hold and are in
compliance with the terms of all licenses, permits and authorizations necessary
for the lawful conduct of their respective businesses, and have complied with,
and neither the Company nor any of its subsidiaries is in violation of, or in
default under, the applicable statutes, ordinances, rules, regulations, orders
or decrees of any federal, state, local or foreign governmental bodies, agencies
or authorities having, asserting or claiming jurisdiction over it or over any
part of its operations or assets, except for violations that could not,
individually or in the aggregate reasonably be expected to, result in a Company
Material Adverse Effect. The businesses of the Company and its subsidiaries are
not being and have not been conducted in violation of any law, ordinance or
regulation of any governmental authorities and regulatory agencies except for
violations as could not, individually or in the aggregate, reasonably be
expected to result in a Company Material Adverse Effect. No investigation or
review by any governmental bodies or authorities or regulatory agencies with
respect to the Company or any of its subsidiaries is pending or, to the
knowledge of the Company, threatened, nor, to the knowledge of the Company, have
any governmental bodies or authorities or regulatory agencies indicated in
intention to conduct such an investigation or review (other than routine
investigations and reviews by gaming regulatory authorities to which the Company
is subject in the ordinary course of its business), and no fine has been levied
against, or order entered with respect to, the Company or any subsidiary by any
governmental body or authority or regulatory agency.
(b) The Company and each of its subsidiaries are, and each of their
respective directors, officers and persons performing management functions
similar to officers are, in compliance with all applicable Gaming Laws (as
defined below), except for noncompliance which could not reasonably be expected
to have a Company Material Adverse Effect. None of the Company, any subsidiary
of the Company or any director or officer of the Company or any subsidiary of
the Company has received any written claim, demand, notice, complaint, court
order or administrative order from any governmental entity in the past three
years, asserting that a license of it or them, as applicable, under any Gaming
Laws is being or may be revoked or suspended other than such claims, demands,
notices, complaints, court orders or administrative orders which could not
reasonably be expected to have a Company Material Adverse Effect. The term
"Gaming Laws" means any federal, state, local or foreign statute, ordinance,
rule, regulation, permit, consent, registration, finding of suitability,
approval, license, judgment, order, decree, injunction or other authorization,
including any condition of limitation placed thereon, governing or relating to
the current or contemplated casino and gaming activities and operations of the
Company or any of its subsidiaries.
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SECTION 3.9 Termination, Severance, and Employment Agreements. Set
forth on Schedule 3.9 is a complete and accurate list of each (a) employment,
severance or collective bargaining agreement not terminable without liability or
obligation on 60 days' or less notice; (b) agreement with any director,
executive officer or other key employee, agent or contractor of the Company or
any subsidiary of the Company (i) the benefits of which are contingent, or the
terms of which are materially altered, on the occurrence of a transaction
involving the Company or any subsidiary of the Company of the nature of any of
the transactions contemplated by this Agreement or relating to an actual or
potential change in control of the Company or any of its subsidiaries or (ii)
providing any term of employment or other compensation guarantee or extending
severance benefits or other benefits after termination not comparable to
benefits available to employees, agents, or contractors generally; (c)
agreement, plan or arrangement under which any person may receive payments that
may be subject to the tax imposed by Section 4999 of the Internal Revenue Code
of 1986 (the "Code") or included in the determination of such person's
"parachute payment" under Section 280G of the Code; and (d) agreement or plan,
including any stock option plan, stock appreciation right plan, restricted stock
plan or stock purchase plan, any of the benefits of which will be increased, or
the vesting of the benefits of which will be accelerated, by the occurrence of
any of the transactions contemplated by this Agreement or the value of any of
the benefits of which will be calculated on the basis of any of the transactions
contemplated by this Agreement. Except as disclosed on Schedule 3.9, since
September 30, 1998, neither the Company nor any of its subsidiaries has entered
into or amended any employment or severance agreement with any director, officer
or key employee or, granted any severance or termination pay to any officer,
director or key employee of the Company or any of its subsidiaries.
SECTION 3.10 Employee Benefits.
(a) Set forth in Schedule 3.10 is a complete and correct list of all
"Employee Benefit Plans" (as defined in Section 3(3) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA")), all plans or policies
providing for "fringe benefits" (including but not limited to vacation, paid
holidays, personal leave, employee discounts, educational benefits or similar
programs), and each other bonus, incentive compensation, deferred compensation,
profit sharing, stock, severance, retirement, health, life, disability, group
insurance, employment, stock option, stock purchase, stock appreciation right,
supplemental unemployment, layoff or any other similar plan, agreement, policy
or understanding (whether written or oral, qualified or nonqualified, currently
effective or terminated), and any trust, escrow or other agreement related
thereto, which (i) is or has been established, maintained or contributed to by
the Company or any ERISA Affiliate or with respect to which the Company or any
ERISA Affiliate has any liability, or (ii) provides benefits, or describes
compensation or benefit policies or procedures applicable, to any officer,
employee, director, former officer, former employee or former director of the
Company or any ERISA Affiliate, or any dependent thereof, regardless of whether
funded (each, an "Employee Plan," and collectively, the "Employee Plans"). The
term "ERISA Affiliate" shall mean any corporation, trade or business the
employees of which, together with the employees of the Company, are required to
be treated as employed by a single employer under the provisions of ERISA or
Code Section 414.
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(b) Neither the Company nor any ERISA Affiliate has at any time
maintained any plan subject to the provisions of Title IV of ERISA or
contributed, or been obligated to contribute, to any "multiemployer plan" within
the meaning of ERISA Section 4001(a)(3).
(c) With respect to each Employee Benefit Plan that is a "pension plan"
within the meaning of ERISA Section 3(2), no "accumulated funding deficiency"
within the meaning of ERISA Section 302 or Code Section 412 has occurred and all
contributions required under any such plan have been timely made. With respect
to each such plan which is intended to constitute a qualified plan under Code
Section 401(a):
(i) such plan has satisfied in form the requirements of such
exception except to the extent amendments are not required by law to be made
until after the Closing Date;
(ii) the Internal Revenue Service has issued a favorable
determination letter as to the qualified status of the plan;
(iii) there has been no termination or partial termination of
the plan; and
(iv) the plan has been operated and administered in material
compliance with its terms and applicable laws.
(d) Each Employee Benefit Plan has been operated in material compliance
with ERISA, the Code, and other applicable law.
(e) With respect to each Employee Benefit Plan, the Company has
furnished to Merger Sub true, correct and complete copies of (i) the plan
documents (including amendments and summary plan descriptions); (ii) the most
recent determination letter received from the Internal Revenue Service; (iii)
the annual reports (Form 5500) required to be filed for the three most recent
plan years of each such Employee Benefit Plan; and (iv) all related trust
agreements, insurance contracts or other funding agreements which implement such
Employee Benefit Plan;
(f) Except as set forth on Schedule 3.10 and to the extent of coverage
required under Code Section 4980B, no written or oral representations have been
made to any employee or officer or former employee or officer of the Company
promising or guaranteeing any coverage under any employee welfare benefit plan
(as defined in ERISA Section 3(1)) for an period of time beyond the end of the
current plan year.
(g) Except as set forth on Schedule 3.10, the consummation of the
transactions contemplated by this Agreement will not (i) accelerate the time of
payment or vesting, or increase the amount of compensation (including amounts
due under an Employee Benefit Plan) due to any employee, officer, former
employee or former officer of Merger Sub; or (ii) require the Company to make a
larger contribution to, or pay greater benefits or provide owner rights under,
any Employee Benefit Plan than it otherwise would.
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(h) No condition exists that would subject Merger Sub, any ERISA
Affiliate or the Company to any excise tax, penalty tax or fine related to any
Employee Benefit Plan, including, but not limited to a violation of Section
406(a) or (b) of ERISA or any "prohibited transaction" (as defined in Code
Section 4975(c)(1)).
(i) Other than routine claims for benefits, there are no actions,
suits, claims, audits or investigations pending or, to the Company's Knowledge,
threatened against, or with respect to, any of the Employee Benefit Plans or
their assets; and all contributions required to be made to the Employee Benefit
Plans have been made timely.
SECTION 3.11 Taxes. The Company and its subsidiaries have timely filed
all federal income tax returns and reports and other material returns and
reports relating to federal, state, local and foreign taxes required to be
filed. Such reports and returns are true, correct and complete, except for such
failures to be true, correct and complete as could not, individually or in the
aggregate, reasonably be expected to result in a Company Material Adverse
Effect. The Company and its subsidiaries have paid or made adequate provision
for all taxes owed except taxes that if not so paid or provided for could not
reasonably be expected to result in a Company Material Adverse Effect, and,
except as disclosed in Schedule 3.11, no unpaid deficiencies in taxes or other
governmental charges for any period have been proposed or assessed by any
government taxing authority and, to the knowledge of the Company, no government
tax authority is threatening to propose or assess against the Company or any of
its subsidiaries any such deficiency or charge that could, individually or in
the aggregate, reasonably be expected to result in a Company Material Adverse
Effect. The Company and its subsidiaries have withheld or collected and paid
over to the appropriate governmental authorities or are properly holding for
such payment all taxes required by law to be withheld or collected, except for
such failures to have so withheld or collected and paid over, or to be so
holding for payment as could not, individually or in the aggregate, reasonably
be expected to result in a Company Material Adverse Effect. There are no
material liens for taxes upon the assets of the Company or its subsidiaries,
other than liens for current taxes not yet due and payable and liens for taxes
that are being contested in good faith by appropriate proceedings diligently
prosecuted and listed on Schedule 3.11. Neither the Company nor any of its
subsidiaries has agreed to or is required to make any adjustment under Section
481(a) of the Code. Neither the Company nor any of its subsidiaries has made any
election under Section 341(f) of the Code. There are no outstanding agreements,
waivers or arrangements extending the statutory period of limitation applicable
to any claim for, or the period for the collection or assessment of, taxes due
from or with respect to the Company or any of its subsidiaries for any taxable
period. No claim has been made by a taxing authority in a jurisdiction in which
the Company does not file tax returns that the Company is required to file tax
returns in such jurisdiction, and, to the Company's knowledge, no taxing
authority could reasonably make such a claim. The Company has not been a member
of an affiliated group as defined in Section 1504 of the Code (or any analogous
combined, consolidated or unitary group as defined under state, local or foreign
income tax law) other than one of which the Company was the common parent. The
Company has no obligation or liability for the payment of taxes of any other
person arising as a result of any obligation to indemnify another person or as a
result of the Company assuming or succeeding to the tax liability of any other
person as a successor, transferee or otherwise. The Company will not be required
to include any amount in taxable
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income for any taxable period (or portion thereof) ending after the Effective
Time as a result of (A) a change in method of accounting for a taxable period
ending prior to the Effective Time, (B) any "closing agreement" as described in
Section 7121 of the Code (or corresponding provision of state, local or foreign
income tax laws) entered into prior to the Effective Time, (C) any sale reported
on the installment method that occurred prior to the Effective Time or (D) any
prepaid amount received prior to the Effective Time. All taxes accrued but not
yet due and all contingent liabilities for taxes are adequately reflected in the
reserves for taxes in the financial statements contained in the Company Reports.
Except as set forth on Schedule 3.11, there has been no "ownership change" as
described in Section 382 of the Code that has resulted in any limitation on the
Company's ability to offset pre-change losses against its taxable income.
SECTION 3.12 Litigation. Except as set forth on Schedule 3.12, there is
no suit, claim, action, proceeding or investigation pending or, to the knowledge
of the Company, threatened against the Company or any of its subsidiaries or any
of their respective properties or assets before any court, regulatory agency or
tribunal that, individually or in the aggregate, if adversely determined, could
reasonably be expected to result in a Company Material Adverse Effect. Neither
the Company nor any of its subsidiaries is subject to any outstanding order,
writ, injunction or decree that, individually or in the aggregate, could
reasonably be expected to result in a Company Material Adverse Effect or would
prevent or delay the consummation of the transactions contemplated by this
Agreement.
SECTION 3.13 Environmental Matters.
(a) Except for matters disclosed in Schedule 3.13 and except for
matters that are not reasonably expected to result, individually or in the
aggregate with all other such matters, in liability to the Company or any of its
subsidiaries in excess of $1,000,000, (i) the properties, operations and
activities of the Company and its subsidiaries are in compliance with all
applicable Environmental Laws (as defined below); (ii) the Company and its
subsidiaries and the properties and operations of the Company and its
subsidiaries are not subject to any existing, pending or, to the knowledge of
the Company, threatened action, suit, claim, investigation, inquiry or
proceeding by or before any governmental authority under any Environmental Laws;
(iii) all notices, permits, licenses, or similar authorizations, if any,
required to be obtained or filed by the Company or any of its subsidiaries under
any Environmental Laws in connection with any aspect of the business of the
Company or its subsidiaries, including, without limitation, those relating to
the treatment, storage, disposal or release of a hazardous or otherwise
regulated substance, have been duly obtained or filed and will remain valid and
in effect after the Merger, and the Company and its subsidiaries are in
compliance with the terms and conditions of all such notices, permits, licenses
and similar authorizations; (iv) the Company and its subsidiaries have satisfied
and are currently in compliance with all financial responsibility requirements
applicable to their operations and imposed by any governmental authority under
any Environmental Laws, and the Company and its subsidiaries have not received
any notice of noncompliance with any such financial responsibility requirements;
(v) to the Company's knowledge, there are no physical or environmental
conditions existing on any property of the Company or its subsidiaries or
resulting from the Company's or such subsidiaries' operations or activities,
past or present, at any location, that would give rise to any on-site or
off-site remedial obligations imposed on the
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Company or any of its subsidiaries under any Environmental Laws or that would
effect the soil, groundwater or surface water or human health (to the extent of
exposure to hazardous substances); (vi) to the Company's knowledge, since the
effective date of the relevant requirements of applicable Environmental Laws and
the extent required by such applicable Environmental Laws, all hazardous or
otherwise regulated substances generated by the Company and its subsidiaries
have been transported only by carriers authorized under Environmental Laws to
transport such substances and wastes, and disposed of only treatment, storage,
and disposable facilities authorized under Environmental Laws to treat, store or
dispose of such substances and wastes; (vii) there has been no exposure of any
person or property to hazardous substances or any pollutant or contaminant, nor
has there by any release of hazardous substances, or any pollutant or
contaminant into the environment by the Company or its subsidiaries or in
connection with their properties or operations that could reasonably be expected
to give rise to any claim against the Company or any of its subsidiaries for
damages or compensation; and (viii) the Company and its subsidiaries have made
available to Parent all internal and external environmental audits and studies
and all correspondence on substantial environmental matters in the possession of
the Company or its subsidiaries relating to any of the current or former
properties or operations of the Company and its subsidiaries.
(b) For purposes of this Agreement, the term "Environmental Laws" will
mean any and all laws, statutes, ordinances, rules, regulations or orders of any
Governmental Entity pertaining to health (to the extent of exposure to hazardous
substances) the environment currently in effect in any and all jurisdictions in
which the Company and its subsidiaries own property or conduct business,
including, without limitation, the Clean Air Act, as amended, the Comprehensive
Environmental, Response, Compensation, and Liability Act of 1980 ("CERCLA"), as
amended, the Federal Water Pollution Control Act, as amended, the Occupational
Safety and Health Act of 1970, as amended, the Resource Conservation and
Recovery Act of 1976 ("RCRA"), as amended, the Safe Drinking Water Act, as
amended, the Toxic Substances Control Act, as amended, the Hazardous & Solid
Waste Amendments Act of 1984, as amended, the Superfund Amendments and
Reauthorization Act of 1986, as amended, the Hazardous Materials Transportation
Act, as amended, the Oil Pollution Act of 1990, any state laws implementing the
foregoing federal laws and all other environmental conservation or protection
laws. For purposes of this Agreement, the terms "hazardous substance" and
"release" have the meanings specified in CERCLA and RCRA and will include
petroleum and petroleum products, radon and PCB's and the term "disposal" has
the meaning specified in RCRA; provided, however, that to the extent the laws of
the state in which the property is located establish a meaning for "hazardous
substance," "release" or "disposal" that is broader than that specified in
either CERCLA or RCRA, such broader meaning will apply.
SECTION 3.14 Voting Requirements. The Board of Directors of Company at
a meeting duly called and held: (i) determined that the Merger is advisable and
fair and in the best interests of the Company and its stockholders; (ii)
approved the Merger and this Agreement and the transactions contemplated by this
Agreement; (iii) recommended approval of this Agreement and the Merger by the
Company's stockholders and directed that the Merger be submitted for
consideration by the Company's stockholders; and (iv) adopted a resolution
having the effect of causing the Merger not to be subject to Sections 203 of the
DGCL. The affirmative vote of the
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holders of a majority of the outstanding shares of Company Common Stock
entitled to vote is the only vote of the holders of any class or series of the
Company's capital stock necessary to approve the Merger, this Agreement and the
transactions contemplated by this Agreement.
SECTION 3.15 Finders and Investment Bankers; Transaction Expenses.
Neither the Company nor any of its officers or directors has employed any
investment banker, business consultant, financial advisor, broker or finder in
connection with the transactions contemplated by this Agreement, except for the
Advisor, or incurred any liability for any investment banking, business
consultancy, financial advisory, brokerage or finders' fees or commissions in
connection with the transactions contemplated hereby, except for fees payable to
the Advisor (as reflected in agreements between such firm and the Company,
copies of which have been delivered to Parent).
SECTION 3.16. Insurance. The Company and each of its subsidiaries are
currently insured, and during each of the past five calendar years have been
insured, for reasonable amounts against such risks as companies engaged in a
similar business and similarly situated would, in accordance with good business
practice, customarily be insured.
SECTION 3.17. Title to Properties; Entire Business. The Company and its
subsidiaries have good title or a valid and subsisting leasehold interest in and
to or a valid and enforceable license to use all material assets, properties and
rights owned, used or held for use by them in the conduct of their respective
businesses, in each case, free and clear of any liens, claims or encumbrances
other than (a) as set forth on Schedule 3.12 or (b) Permitted Liens (as defined
below). The Company and its subsidiaries own or have sufficient right to use all
assets and properties necessary to conduct their businesses in the manner in
which they are currently conducted. As used in this Agreement, a "Permitted
Lien" means: (a) a lien of a landlord, carrier, warehouseman, mechanic,
materialman or any other statutory lien arising in the ordinary course of
business; (b) a lien for taxes not yet due or being contested in good faith; (c)
with respect to the right of the Company or its subsidiaries to use any property
leased to the Company or its subsidiaries, a lien that arises by the terms of
the applicable lease; (d) a purchase money security interest arising in the
ordinary course of business; or (e) a lien that does not materially detract from
the value of the encumbered property or assets or does not materially detract
from or interfere with the use of the encumbered property or assets in the
ordinary course of business.
SECTION 3.18. Intellectual Property Rights. There are no registered
patents, trademarks, service marks, trade names or copyrights, or applications
for or licenses (to or from the Company or any of its subsidiaries) with respect
to any of the foregoing that are material to the Company and its subsidiaries
taken as a whole, that (a) are owned by the Company or any of its subsidiaries,
or with respect to which the Company or any of its subsidiaries has any rights,
or (b) are used, whether directly or indirectly, by the Company or any of its
subsidiaries, other than as set forth on Schedule 3.18. Except as set forth in
Schedule 3.18, the Company and its subsidiaries have the right to use the
trademarks and trade names set forth on such Schedule 3.18 and any other
computer software and software licenses, intellectual property, proprietary
information, trade secrets, trademarks, trade names, copyrights, material and
manufacturing specifications, drawings and designs used by the Company or any of
its subsidiaries (collectively, "Intellectual Property"), without infringing on
or otherwise acting adversely to the
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rights or claimed rights or any person, except to the extent such infringement
or actions adverse to another's rights or claimed rights could not reasonably be
expected to have a Company Material Adverse Effect. Except as set forth on such
Schedule 3.18, neither the Company nor any of its subsidiaries is obligated to
pay any royalty or other consideration material to the Company and its
subsidiaries taken as a whole to any person in connection with the use of any
Intellectual Property. Except as set forth in such Schedule 3.18 and as could
not reasonably be expected to have a Company Material Adverse Effect, to the
Company's knowledge, no other person is infringing on the rights of the Company
and its subsidiaries in any of their Intellectual Property.
SECTION 3.19 Major Customers. The Company has made available to Parent
a list of the ten largest customers by dollar volume of the Company and its
subsidiaries (the "Major Customers"), with the amount of revenues attributable
to each such customer, for each fiscal years ending December 31, 1997 and 1998.
Except as set forth on Schedule 3.19, none of the Major Customers has terminated
or materially altered its relationship with the Company since January 1, 1997
or, to the Company's knowledge, threatened to do so or otherwise notified the
Company of its intention to do so, and there has been no material dispute with
any of the Major Customers since January 1, 1997.
SECTION 3.20. Year 2000 Compliance. The disclosures in the Company's
Quarterly Report on Form 10-Q for the period ending September 30, 1998 regarding
the "status of Year 2000 Compliance" are true, complete and correct in all
material respects as if made on the date of this Agreement.
SECTION 3.21. Certain Material Contracts. Except as disclosed on
Schedule 3.21, there is no contract or agreement that is material to the
business, financial condition or results of operations of the Company and its
subsidiaries taken as a whole. Each material contract disclosed on Schedule 3.21
is, to the extent it purports to be, a valid and legally binding obligation of
the Company or its subsidiaries, as applicable, and is in full force and effect.
Neither the Company nor any of its subsidiaries is in violation of or in default
under (nor does there exist any condition which upon the passage of time or the
giving of notice, or both, would cause such a violation or default under) any
loan or credit agreement, note, bond, mortgage, indenture, lease or any other
contract, agreement, arrangement or understanding to which it is a party or by
which it or any of its properties or assets is bound, except for violations or
defaults that could not reasonably be expected to have a Company Material
Adverse Effect.
SECTION 3.22. Insider Interests. Except as set forth on Schedule 3.22,
no person that beneficially owns in excess of 5% of the outstanding Company
Common Stock nor any executive officer or director of the Company or any of its
subsidiaries or any affiliate of any officer or director of the Company or any
of its subsidiaries (as the term "affiliate" is defined in Rule 12b-2 under the
Exchange Act) (a) has any interest in any assets or property (whether real or
personal, tangible or intangible) of or used in the business of the Company or
any subsidiary of the Company (other than as an owner of outstanding securities
of the Company); (b) (except for any person that beneficially owns in excess of
5% of the outstanding Company Common Stock) has any direct or indirect interest
of any nature whatsoever in any person or business
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which competes with, conducts any business similar to, has any arrangement or
agreement (including arrangements regarding the shared use of personnel or
facilities) with (whether as a customer or supplier or otherwise), or is
involved in any way with, the Company or any subsidiary of the Company; or (c)
is indebted or otherwise obligated to the Company. The Company is not indebted
or otherwise obligated to any such person, except for amounts due under normal
arrangements applicable to all employees generally as to salary or reimbursement
of ordinary business expenses not unusual in amount or significance. As of the
date of this Agreement, except for claims and proceedings listed on Schedule
3.22, there are no losses, claims, damages, costs, expenses, liabilities or
judgments which would entitle any director, officer or employee of the Company
or any of its subsidiaries to indemnification by the Company or its subsidiaries
under applicable law, the certificate of incorporation or bylaws of the Company
or any of its subsidiaries or any insurance policy maintained by the Company or
any of its subsidiaries.
SECTION 3.23 Noncompetition. The Company and its subsidiaries are not,
and after the Effective Time neither the Surviving Corporation nor Parent will
be (by reason of any agreement to which the Company is a party), subject to any
noncompetition or similar restriction on their respective businesses.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
Parent and Merger Sub represent and warrant to the Company as follows:
SECTION 4.1 Organization and Qualification. Each of Parent and Merger
Sub is a corporation duly organized, validly existing, and in good standing
under the laws of its jurisdiction of incorporation and has all requisite
corporate power and authority and any necessary governmental authority to carry
on its business as now conducted. Each of Parent and Merger Sub is duly
qualified or licensed to do business, and is in good standing, in each
jurisdiction where the character of its properties owned or leased or the nature
of its activities makes such qualification or licensing necessary, except for
failures to be so duly qualified or licensed and in good standing as could not,
individually or in the aggregate, reasonably be expected to result in a Parent
Material Adverse Effect. For the purposes of this Agreement, "Parent Material
Adverse Effect" or "Parent Material Adverse Change" means any change or effect
that, individually or when taken together with all such other changes or
effects, could reasonably be expected to be materially adverse to the condition
(financial or other), business, properties, assets, liabilities, results of
operations or legal or regulatory environment of Parent and its subsidiaries,
taken as a whole.
SECTION 4.2 Corporate Authorization. Each of Parent and Merger Sub has
the full corporate power and authority to execute and deliver this Agreement and
to consummate the transactions contemplated by this Agreement. The execution,
delivery and performance by each of Parent and Merger Sub of this Agreement and
the consummation by Parent and Merger Sub of the Merger and of the other
transactions necessary for such consummation have been duly and
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validly authorized by Parent as sole stockholder of Merger Sub and by the Board
of Directors of each of Parent and Merger Sub and no other corporate proceedings
on the part of Parent or Merger Sub are necessary to authorize this Agreement or
to consummate the transactions contemplated by this Agreement. This Agreement
has been duly and validly executed and delivered by each of Parent and Merger
Sub and constitutes a valid and binding obligation of each of Parent and Merger
Sub, enforceable in accordance with its terms.
SECTION 4.3 Approvals; No Violations. No filing with, and no permit,
authorization, consent or approval of any foreign or domestic public body or
authority is necessary for the consummation by Parent and Merger Sub of the
transactions contemplated by this Agreement, except (i) the filing of a
premerger notification and report form under the HSR Act, (ii) the filing with
the SEC of such reports under the Exchange Act as may be required in connection
with this Agreement and the transactions contemplated by this Agreement, (iii)
the filing of the certificate of merger with the Delaware Secretary of State and
appropriate documents with the relevant authorities of other states in which the
Company is qualified to do business, and (iv) as set forth on Schedule 4.3.
Except as set forth on Schedule 4.3, the execution and delivery of this
Agreement by Parent and Merger Sub, the consummation by Parent and Merger Sub of
the transactions contemplated by this Agreement and the compliance by them with
any of the provisions of this Agreement will not (a) conflict with or result in
any breach of any provision of the organizational documents or bylaws of Parent
or Merger Sub; (b) result in a violation or breach of, or constitute (with or
without due notice or lapse of time or both) a default (or give rise to any
right of termination, cancellation, or acceleration under), any of the terms,
conditions, or provisions of any note, bond, mortgage, indenture, license,
lease, contract, agreement, or other instrument or obligation to which Parent or
Merger Sub is a party or by which either of them or any of their respective
properties or assets may be bound; or (c) violate any order, writ, injunction,
decree, statute, rule, or regulation applicable to Parent or Merger Sub or any
of their respective properties or assets, except such violations, conflicts,
breaches, defaults, terminations, or accelerations referred to in this Section
4.3 as could not, individually or in the aggregate, reasonably be expected to
result in a Parent Material Adverse Effect.
SECTION 4.4 No Prior Activities. Except for obligations or liabilities
incurred in connection with its incorporation or organization, or the
negotiation and consummation of this Agreement and the transactions contemplated
by this Agreement, Merger Sub has not incurred any obligations or liabilities,
nor has it engaged in any business or activities of any type or kind whatsoever
or entered into any agreements or arrangements with any person.
SECTION 4.5 Information Supplied. None of the information supplied or
to be supplied by Parent or Merger Sub for inclusion or incorporation by
reference in the Proxy Statement (as defined in Section 5.2) will, at the date
the Proxy Statement is first mailed to the stockholders of the Company or at the
time of the meeting of the stockholders of the Company held to vote on approval
and adoption of this Agreement and the Merger, contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading.
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SECTION 4.6 Financing. Purchaser will use its commercially reasonable
best efforts to secure sufficient funds on the Closing Date to satisfy its
obligations under this Agreement, including, without limitation, preserving its
right to borrow pursuant to the terms of a letter dated March 9, 1999 from Bank
of America National Trust and Savings Association and NationsBanc Montgomery
Securities LLC by securing an extension of such commitment or by executing
definitive loan agreements as contemplated by such letter.
ARTICLE V
COVENANTS
SECTION 5.1 Conduct of Business of the Company.
(a) Except as expressly contemplated by this Agreement during the
period from the date of this Agreement to the Effective Time:
(i) Each of the Company and its subsidiaries will conduct its
business solely in the ordinary course consistent with past practices.
(ii) Neither the Company nor any of its subsidiaries will
intentionally take or willfully omit to take any actions that is intended to or
could reasonably be expected to result in, a Company Material Adverse Effect.
(iii) The Company will use its reasonable best efforts to
preserve intact the business organization of the Company and each of its
subsidiaries, to keep available the services of its and their present officers
and key employees and consultants and to maintain satisfactory relationships
with customers, agents, reinsurers, suppliers and other persons having business
relationships with the Company or its subsidiaries.
(b) Without limiting the provisions of Section 5.1(a) or as otherwise
expressly provided in this Agreement, neither the Company nor any of its
subsidiaries will:
(i) issue, sell or dispose of additional shares of capital
stock of any class (including shares of Company Common Stock) of the Company or
any of its subsidiaries, or securities convertible into or exchangeable for any
such shares or securities, or any rights, warrants or options to acquire any
such shares or securities, other than shares of Company Common Stock issued upon
exercise of the options disclosed in Schedule 3.3, in each case as disclosed on
Schedule 3.3;
(ii) redeem, purchase or otherwise acquire, or propose to
redeem, purchase or otherwise acquire, any of its outstanding capital stock, or
other securities of the Company or any of its subsidiaries;
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(iii) split, combine, subdivide or reclassify any of its
capital stock or declare, set aside, make or pay any dividend or distribution on
any shares of its capital stock except for dividends or distributions to the
Company and its subsidiaries from their respective subsidiaries;
(iv) sell, pledge, dispose of or encumber any of its assets,
except for sales, pledges, dispositions or encumbrances in the ordinary course
of business consistent with past practices or between the Company and its
subsidiaries;
(v) incur or modify any indebtedness or issue or sell any debt
securities, or assume, guarantee, endorse or otherwise as an accommodation
become absolutely or contingently responsible for obligations of any other
person, or make any loans or advances, other than in the ordinary course of
business consistent with past practices;
(vi) adopt or amend any bonus, profit sharing, compensation,
severance, termination, stock option, pension, retirement, deferred
compensation, employment or other employee benefit agreements, trusts, plans,
funds or other arrangements for the benefit or welfare of any director, officer
or employee, or (except for normal increases in the ordinary course of business
that are consistent with past practices and that, in the aggregate, do not
result in a material increase in benefits or compensation expense to the
Company) increase in any manner the compensation or fringe benefits of any
director, officer or employee or pay any benefit not required by any existing
plan or arrangement (including, without limitation, the granting or vesting of
stock options or stock appreciation rights) or take any action or grant any
benefit not expressly required under the terms of any existing agreements,
trusts, plans, funds or other such arrangements or enter into any contract,
agreement, commitment or arrangement to do any of the foregoing, or make or
agree to make any payments to any directors, officers, agents, contractors or
employees relating to a change or potential change in control of the Company;
(vii) acquire by merger, consolidation or acquisition of stock
or assets any corporation, partnership or other business organization or
division or make any investment either by purchase of stock or securities,
contributions to capital (other than to wholly-owned subsidiaries), property
transfer or purchase of any material amount of property or assets, in any other
person;
(viii) amend its certificate of incorporation, bylaws or other
comparable charter or organizational documents, or alter through merger,
liquidation, reorganization, restructuring or in any other fashion the corporate
structure or ownership of any material subsidiary of the Company;
(ix) take any action other than in the ordinary course of
business and consistent with past practices, to pay, discharge, settle or
satisfy any claim, liability or obligation (absolute or contingent, accrued or
unaccrued, asserted or unasserted, or otherwise);
(x) change any method of accounting or accounting practice
used by the Company or any of its subsidiaries, except for any change required
by reason of a concurrent change in generally accepted accounting principles;
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(xi) revalue in any respect any of its assets, including,
without limitation, writing off notes or accounts receivable other than in the
ordinary course of business consistent with past practices;
(xii) authorize any new capital expenditure or expenditures
(A) that, when aggregated with all other capital expenditures, exceeds the
Company's 1999 capital budget, or (B) that departs from such capital budget with
respect to any item of such capital budget by an aggregate amount exceeding
$5,000,000 without prior consultation with Parent;
(xiii) except in the ordinary course of business consistent
with past practice, make any tax election, settle or compromise any federal,
state or local tax liability or consent to the extension of time for the
assessment or collection of any federal, state or local tax;
(xiv) authorize, recommend, propose or announce an intention
to adopt a plan of complete or partial liquidation or dissolution of the
Company;
(xv) enter into any collective bargaining agreement;
(xvi) engage in any transaction with, or enter into any
agreement, arrangement or understanding with, directly or indirectly, any of the
Company's affiliates other than pursuant to such agreements existing on the date
of this Agreement and disclosed on Schedules to this Agreement; or
(xvii) voluntarily take any action or willfully omit to take
any action that could make any representation or warranty in Article III untrue
or incorrect in any material respect at any time, including as of the date of
this Agreement and as of the Effective Time, as if made as of such time.
SECTION 5.2 Proxy Statement. Promptly after the execution of this
Agreement, the Company and Parent will cooperate with each other and use all
reasonable efforts to prepare, and the Company and Parent will file with the
SEC, as soon as is reasonably practicable, a proxy statement, together with a
form of proxy, or information statement, with respect to the Special Meeting (as
defined in Section 5.3). For the purposes of this Agreement, the term "Proxy
Statement" means such proxy or information statement filed in final form with
the SEC at the time it initially is mailed to the stockholders of the Company
and all amendments or supplements thereto, if any, similarly filed and mailed.
The parties will use all reasonable efforts to have the Proxy Statement cleared
by the SEC as promptly as practicable after filing and, as promptly as
practicable after the Proxy Statement has been so cleared, will mail the Proxy
Statement to the stockholders of the Company as of the record date for the
Special Meeting. The Company represents that none of the information provided or
to be provided by it, and Parent and Merger Sub represent that none of the
information provided or to be provided by them, for use in the Proxy Statement
will, on the date the Proxy Statement is first mailed to the stockholders of the
Company and on the date of the Special Meeting, be false or misleading with
respect to any material fact or omit to state any material fact required to be
stated therein or necessary in order
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to make the statements therein, in light of the circumstances under which they
are made, not misleading, and Parent, the Company, and Merger Sub each agrees to
correct any information provided by it for use in the Proxy Statement that has
become false or misleading in any material respect and file such amendments and
supplements as are necessary. The Company agrees that the Proxy Statement will
comply as to form in all material respects with all applicable requirements of
federal securities laws and applicable state laws.
SECTION 5.3 Action of Stockholders of the Company; Voting.
(a) The Company will take all action necessary in accordance with the
DGCL and the certificate of incorporation and bylaws of the Company, to call, as
soon as is practicable, a meeting of its stockholders (the "Special Meeting") at
which the stockholders of the Company will consider and vote upon the Merger and
this Agreement. Unless the fiduciary duties of the Board of Directors under
applicable law require otherwise, the Proxy Statement will contain the unanimous
recommendation of the Board of Directors of the Company that the stockholders of
the Company vote to adopt and approve the Merger and this Agreement. The Company
will, at the request of Parent, use all reasonable efforts to obtain from its
stockholders proxies in favor of such adoption and approval and to take all
other action necessary, or, in the reasonable judgment of the Company and
Parent, helpful to secure the vote or consent of stockholders required by the
DGCL to effect the Merger.
(b) At the Special Meeting, Parent, Merger Sub and their subsidiaries
will vote, or cause to be voted, all of the shares of Company Common Stock then
owned by any of them in favor of the Merger.
SECTION 5.4 Additional Agreements. Subject to the terms and conditions
of this Agreement and to the fiduciary obligations of the Board of Directors of
the Company under applicable law, each of the parties agrees to use their
respective best efforts to take, or cause to be taken, all actions to do, or
cause to be done, all things necessary, proper or advisable to consummate and
make effective as promptly as practicable the transactions contemplated by this
Agreement (including consummation of the Merger and the financing of the
transaction contemplated by this Agreement) and to cooperate with each other in
connection with the foregoing, including, without limitation, using their
respective best efforts (a) to obtain all necessary waivers, consents and
approvals from other parties to loan agreements, leases and other contracts, (b)
to obtain all necessary consents, approvals and authorizations as are required
to be obtained under any federal, state or foreign law or regulations, (c) to
lift or rescind any injunction or restraining order or other order adversely
affecting the ability of the parties to consummate the transactions contemplated
by this Agreement, (d) to prepare and effect all necessary registrations and
filings, and (e) to fulfill all conditions to and covenants contained in this
Agreement. If, after the Effective Time, any action is necessary to effect the
purposes of this Agreement, the proper officers and directors of each party will
take all such necessary action.
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SECTION 5.5 Gaming Approvals.
(a) Upon the terms and subject to the conditions set forth in this
Agreement, each of the Company, Parent and Merger Sub agrees to promptly prepare
and file all necessary documentation, to effect all applications, notices,
petitions and filings, to obtain as promptly as practicable all permits,
registrations, licenses, findings of suitability, consents, variances,
exemptions, orders, approvals and authorizations of all governmental entities
which are necessary in connection with the consummation of the transactions
contemplated by this Agreement (whether required to be made or obtained prior to
or after the Effective Time) (all of the foregoing, collectively "Gaming
Approvals") and to comply with the terms and conditions of all such Gaming
Approvals. Each of the Company, Parent and Merger Sub (i) will use commercially
reasonable best efforts to, and to cause their respective officers, directors
and affiliates to, file within 30 days after the date of this Agreement, and in
all events will file within 60 days after the date of this Agreement, all
required initial applications and documents in connection with obtaining the
Gaming Approvals; (ii) will act reasonably and promptly thereafter in responding
to additional requests in connection therewith; and (iii) will use commercially
reasonable best efforts to secure all requisite Gaming Approvals. Parent and the
Company will have the right to review in advance, and to the extent practicable,
each will consult with the other on, in each case subject to applicable laws
relating to the exchange of information, all the information relating to the
Company or Parent, as the case may be, and any of their respective subsidiaries,
directors, officers and stockholders, which appear in any filing made with, or
written materials submitted to, any governmental entity in connection with the
Gaming Approvals. The Company and Parent agree to promptly advise each other
upon receiving any communication from any governmental entity which causes such
party to believe that there is a reasonable likelihood that any Gaming Approval
required from such governmental entity will not be obtained or that the receipt
of any such approval will be materially delayed.
(b) If any person becomes an Ineligible Person (as defined below) prior
to the Effective Time, then (i) each Ineligible Person will, and the Company
will cause each Ineligible Person to, immediately and permanently, resign from
any position, including as director or officer, in the Company or any subsidiary
of the Company, and each Ineligible Person will have no further management role
in the Company or any such subsidiary; (ii) if required to do so by any
governmental entity as a condition to licensure, each Ineligible Person will,
and the Company will cause each Ineligible Person to, dispose of all of its
securities or other ownership interests in the Company; and (iii) each
Ineligible Person will, and the Company will cause each Ineligible Person to,
cooperate with the Company in their efforts to obtain and retain in full force
and effect the Gaming Approvals. "Ineligible Person" means any officer, director
or other person who owns any capital stock or other interest in the Company (i)
who is denied a Gaming Approval, disqualified from eligibility for a Gaming
Approval or found unsuitable by any governmental entity before the Effective
Time; (ii) whose continued involvement in the business of the Company as an
employee, director, officer or otherwise, may, in Parent's reasonable opinion
after consultation with counsel, have a material adverse effect on the
likelihood that any governmental entity will issue a Gaming Approval to the
Company or the Surviving Corporation; or (iii) is expressly precluded from
having any continuing interest in the Company or the Surviving Corporation in
any Gaming Approval granted by a governmental entity as a
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condition to the issuance or continued validity of any Gaming Approval by any
governmental entity.
SECTION 5.6 Notification of Certain Matters. The Company will give
prompt notice to Parent and Merger Sub, and Parent and Merger Sub will give
prompt notice to the Company, of (a) the occurrence, or failure to occur, of any
event, which occurrence or failure could cause any representation or warranty
contained in this Agreement to be untrue or inaccurate in any material respect
at any time, (b) any material failure of the Company, Parent, or Merger Sub, as
the case may be, or of any officer, director, employee or agent of the Company,
Parent or Merger Sub, as the case may be, to comply with or satisfy any
covenant, condition or agreement to be complied with or satisfied by it under
this Agreement, (c) any act, omission to act, event or occurrence that, with
notice, the passage of time or otherwise, could result in a Company Material
Adverse Effect or a Parent Material Adverse Effect, as the case may be, and (d)
any contingent liability of the Company for which it reasonably believes it
will, with the passage of time or otherwise, become liable. No such notification
will affect the representations or warranties of the parties or the conditions
to the obligations of the parties under this Agreement.
SECTION 5.7 Access to Information.
(a) From the date of this Agreement to the Effective Time, the Company
will, and will cause its subsidiaries, officers, directors, employees and agents
upon reasonable notice to, afford to officers, employees, and agents of Parent,
Merger Sub and their affiliates and the banks, other financial institutions, and
investment bankers working with Parent or Merger Sub, and their respective
officers, employees and agents, complete access at all reasonable times to its
officers, employees, agents, properties, books, records and contracts, and will
furnish Parent, Merger Sub and their affiliates and the banks, other financial
institutions and investments bankers working with Parent or Merger Sub, all
financial, operating and other data and information as they reasonably request.
(b) Each of Parent and Merger Sub will hold and will cause its
directors, officers, agents, employees, consultants and advisors to hold in
confidence, unless compelled to disclose by judicial or administrative process
or, in the written opinion of its legal counsel, by other requirements of law,
all documents and information concerning the Company and its subsidiaries
furnished to such persons in connection with the transactions contemplated by
this Agreement (except to the extent that such information can be shown to have
been (i) previously known by such persons from sources other than the Company,
or its directors, officers, representatives or affiliates; (ii) in the public
domain through no fault of such persons; or (iii) later lawfully acquired by
such persons on a non-confidential basis from other sources who are not known by
Parent or Merger Sub to be bound by a confidentiality agreement or otherwise
prohibited from transmitting the information to Parent or Merger Sub by a
contractual, legal or fiduciary obligation) and will not release or disclose
such information to any other person, except its directors, officers, agents,
employees, consultants and advisors, in connection with this Agreement who need
to know such information. If the transactions contemplated by this Agreement are
not consummated, such confidence shall be maintained and, if requested by or on
behalf of the Company, Parent and Merger Sub will, and will use all reasonable
efforts to cause
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their auditors, attorneys, financial advisors and other consultants, agents and
representatives to, return to the Company or destroy all copies of written
information furnished by the Company to Parent and Merger Sub or their agents,
representatives or advisors. It is understood that Parent and Merger Sub will be
deemed to have satisfied their obligation to hold such information confidential
if they exercise the same care as they take to preserve confidentiality for
their own similar information.
(c) No investigation pursuant to this Section 5.7 will affect any
representations or warranties of the parties in this Agreement or the conditions
to the obligations of the parties to this Agreement.
SECTION 5.8 Public Announcements. Parent and Merger Sub, on the one
hand, and the Company, on the other hand, will consult with each other before
issuing any press release or otherwise making any public statements with respect
to this Agreement, or the other transactions contemplated by this Agreement, and
will not issue any such press release or make any such public statement prior to
such consultation, except as may be required by law or the listing requirements
of any securities exchange.
SECTION 5.9 Officers' and Directors' Indemnification.
(a) The indemnification obligations set forth in the Company's
certificate of incorporation and bylaws on the date of this Agreement shall
survive the Merger and shall not be amended, repealed or otherwise modified for
a period of six years after the Effective Time in any manner that would
adversely affect the rights thereunder of individuals who on or prior to the
Effective Time were directors, officers, employees or agents of the Company (the
"Indemnified Parties").
(b) Notwithstanding any other provision of this Agreement, the Company
may expend up to $500,000 to purchase a "tail" with a term of not more than 5
years for its current officers and directors liability insurance policy.
(c) In the event Parent, the Surviving Corporation or any of their
successors or assigns (i) consolidates with or merges into any other person and
shall not be the continuing or surviving corporation or entity of such
consolidation or merger or (ii) transfers all or substantially all of its
properties and assets to any person, then and in each such case, proper
provisions shall be made so that the successors and assigns of Parent or the
Surviving Corporation, as the case may be, shall assume the obligations set
forth in this Section 5.9. In the event the Surviving Corporation transfers any
material portion of its assets, in a single transaction or in a series of
transactions, Parent will either guarantee the indemnification obligations
referred to in Section 5.9(a) or take such other action to ensure that the
ability of the Surviving Corporation to satisfy such indemnification obligations
will not be diminished in any material respect.
(d) This Section 5.9 shall survive the consummation of the Merger at
the Effective Time, is intended to benefit the Company, Parent, the Surviving
Corporation and the Indemnified
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Parties, and shall be binding on all successors and assigns of Parent and the
Surviving Corporation.
(e) In the event any action, suit, proceeding or investigation relating
to this Agreement or to the transactions contemplated by this Agreement is
commenced by a third party, whether before or after the Effective Time, the
parties to this Agreement agree, subject to the fiduciary duties of the
respective directors of the Company and Parent, to cooperate and use all
reasonable efforts to defend against and respond to such action, suit,
proceeding or investigation.
(f) As of the Effective Time, Parent shall guaranty the obligations of
the Company under indemnification agreements between the Company and its
directors and executive officers, copies of which have been provided to Parent.
SECTION 5.10 Employee Options. As soon as practicable following the
date of this Agreement, the Company will use its reasonable best efforts to
cause all outstanding Employee Options to be exercised as of the Effective Time
or to take such actions as are required to provide that each stock option to
purchase shares of Company Common Stock outstanding immediately prior to the
consummation of the Merger, whether or not then exercisable, will be canceled
immediately prior to the consummation of the Merger in exchange for an amount in
cash payable at the time of such cancellation equal to the product of (a) the
number of shares of Company Common Stock subject to such stock option and
unexercised immediately prior to the consummation of the Merger and (b) the
excess of the Merger Consideration over the per share exercise price pursuant to
such stock option.
SECTION 5.11 Other Actions by the Company. If any "fair price,"
"moratorium," "control share acquisition" or other form of antitakeover statute,
regulation, charter provision or contract is or becomes applicable to the
transactions contemplated by this Agreement, the Company and the members of the
Board of Directors of the Company will use their best efforts to grant such
approvals and take such actions as are necessary under such laws, provisions or
contracts so that the transactions contemplated by this Agreement may be
consummated as promptly as practicable on the terms contemplated by this
Agreement and otherwise act to eliminate or minimize the effects of such
statute, regulation, provision or contract on the transactions contemplated by
this Agreement.
SECTION 5.12 Available Funds. Parent and Merger Sub will use their
commercially reasonable best efforts to pursue and obtain the financing
sufficient to allow consummation of the transactions contemplated by this
Agreement from recognized national financial institutions as soon as
practicable, including, without limitation, preserving its right to borrow
pursuant to the terms of a letter dated March 9, 1999 from Bank of America
National Trust and Savings Association and NationsBanc Montgomery Securities LLC
by securing an extension of such commitment or by executing definitive loan
agreements as contemplated by such letter.
SECTION 5.13 Letters of Accountants. The Company shall use its
commercially reasonable best efforts to cause to be delivered to Parent
"comfort" letters of KPMG L.L.P., the Company's independent public accountants,
dated and delivered on the date on which the Proxy
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Statement is mailed to the Company's stockholders and on the Closing Date, each
addressed to Parent, in form and substance reasonably satisfactory to Parent and
reasonably customary in scope and substance for letters delivered by independent
public accountants in connection with transactions such as those contemplated by
this Agreement.
SECTION 5.14 Employees; Transition After the Effective Time, Anchor
will expand its board of directors and offer seats thereon to Richard R. Burt
and Richard M. Haddrill. Promptly after the Closing, Parent will grant to
employees of the Company as of the date of this Agreement that are still
employed by Parent or its affiliates on the 60th day after the Effective Time
options to purchase an aggregate of 350,000 shares of common stock, par value
$.01 per share, of Parent, which options will have reasonable vesting and other
terms approved by a committee comprising Michael D. Rumbolz, Richard R. Burt and
Richard M. Haddrill. For 12 months after the Effective Time, Parent will not
require any senior executive of the Company to relocate without a relocation
exepense plan approved of by Richard R. Burt and Richard M. Haddrill.
ARTICLE VI
CONDITIONS TO CONSUMMATION OF THE MERGER
SECTION 6.1 Mutual Conditions. The respective obligations of each party
to effect the Merger are subject to the satisfaction prior to the Effective Time
of the following conditions:
(a) This Agreement will have been adopted and approved by the
affirmative vote of the stockholders of the Company in accordance with the
certificate of incorporation and bylaws of the Company and with applicable law.
(b) No federal or state statute, rule, regulation, injunction, decree
or order will be enacted, promulgated, entered or enforced that would prohibit
consummation of the Merger or of the other transactions contemplated by this
Agreement; provided that the parties to this Agreement agree to use their
respective commercially reasonable best efforts to have any such injunction,
decree or order lifted.
(c) The waiting period applicable to the consummation of the Merger
under the HSR Act will have expired or been terminated.
SECTION 6.2 Additional Conditions to Obligations of Parent and Merger
Sub. The obligations of Parent and Merger Sub to effect the Merger are also
subject to the following conditions:
(a) Each of the representations and warranties of the Company contained
in this Agreement will be true and correct in all material respects (except that
where any statement in a representation or warranty expressly includes a
standard of materiality, such statement will be true and correct in all respects
giving effect to such standard) as of the Closing Date as though made on and as
of the Closing Date, provided that those representations and warranties which
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address matters only as of a particular date will remain true and correct in all
material respects (except that where any statement in a representation or
warranty expressly includes a standard of materiality, such statement will be
true and correct in all respects giving effect to such standard) as of such
date. Parent will have received a certificate of the Chief Executive Officer and
Chief Financial Officer of the Company to such effect.
(b) The Company will have performed or complied in all material
respects with all agreements and covenants required by this Agreement to be
performed or complied with by it on or prior to the Closing Date. Parent will
have received a certificate of the Chief Executive Officer and Chief Financial
Officer of the Company to that effect.
(c) The stockholders of the Company party to the Voting Agreements will
have performed all of their obligations thereunder at or prior to the Closing
Date.
(d) The Company will have delivered, or caused to be delivered, to
Parent (i) a certificate of good standing from the Delaware Secretary of State
and of comparable authority in other jurisdictions in which the Company and its
subsidiaries are incorporated or qualified to do business stating that each is a
validly existing corporation in good standing; (ii) duly adopted resolutions of
the Board of Directors and stockholders of the Company approving the execution,
delivery and performance of this Agreement and the instruments contemplated
hereby, certified by the Secretary of the Company; and (iii) a true and complete
copy of the certificate of incorporation or comparable governing instruments, as
amended, of the Company and its subsidiaries certified by the Secretary of State
of the state of incorporation or comparable authority in other jurisdictions,
and a true and complete copy of the bylaws or comparable governing instruments,
as amended, of the Company and its subsidiaries certified by the Secretary of
the Company and its subsidiaries, as applicable.
(e) Parent will have received "comfort" letters from KPMG L.L.P. on the
date the Proxy Statement is mailed to the Company's stockholders and on the
Closing Date.
(f) From and including the date of this Agreement, there will not have
occurred a Company Material Adverse Change.
(g) Parent will have received evidence, in form and substance
reasonably satisfactory to it, that such licenses, permits, consents, approvals,
waivers, findings of suitability, authorizations, qualifications and orders of,
and declarations, registrations and filings (including without limitation all
Gaming Approvals) (collectively, "Consents and Filings") required to be made or
obtained by the Company, Merger Sub or Parent from all governmental entities as
are required before consummation of the Merger and the transactions contemplated
hereby, have been obtained or made, as applicable, by the Company, Merger Sub or
Parent, as the case may be, without the imposition of any limitations,
prohibitions or requirements that could reasonably be expected to result in a
Company Material Adverse Effect of a Parent Material Adverse Effect, and are in
full force and effect, other than those Consents and Filings (i) that, if not
obtained or made, could not reasonably be expected to have a Parent Material
Adverse Effect or Company Material Adverse Effect before or immediately after
the Effective Time; (ii) from those
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jurisdictions designated on Schedule 6.2(g) ; or (iii) the failure to receive
which is primarily the result of regulatory concerns regarding Parent or its
affiliates or as a result of a breach by Parent or Merger Sub of Section 5.5(a).
(h) Parent will have received evidence, in form and substance
reasonably satisfactory to it, that all consents, approvals and waivers,
required under the terms of any contract or agreement required to be listed on
Schedule 3.21 (other than the agreements with respect to funded indebtedness
listed on Schedule 3.21) have been obtained or made, as applicable, by the
Company, Merger Sub or Parent, as the case may be, without the imposition of any
limitations, prohibitions or requirements that could reasonably be expected to
result in a Company Material Adverse Effect of a Parent Material Adverse Effect,
and are in full force and effect, other than those that, if not obtained or
made, could not reasonably be expected to have a Parent Material Adverse Effect
or Company Material Adverse Effect before or immediately after the Effective
Time. Without prejudice to any other rights of any Party to this Agreement,
should Parent and the Company disagree as to whether the terms of any such
agreement or contract require consent, approval or waiver by the other party
thereto prior to the Merger or in order to effect the transactions contemplated
by this Agreement, the Parent may by written notice delivered not more than 30
days after the date of this Agreement require that the Company provide an
opinion of independent counsel addressed to the Parent as to whether it is
reasonably likely that such consent, approval or waiver is required; provided
that such right may be exercised by Parent with respect to no more than two such
contracts or agreements. Unless such counsel concludes, without unreasonable
qualification, that such consent, waiver or approval is reasonably likely to be
required under the terms of such contract or agreement, then the condition set
forth in this Section 6.2(g) will be deemed satisfied with respect to such
contract or agreement. Otherwise, the terms of this Section 6.2(g) will apply to
such contract or agreement.
(i) Parent shall have received an opinion of counsel to the Company,
Rogers & Hardin LLP with respect to the matters set forth in Sections 3.1, 3.2,
3.3, 3.4, 3.5, 3.8 and 3.12. In rendering such opinion, such counsel may rely on
opinions of local counsel to the extent such counsel deems it reasonable to do
so. Such counsel will also state that the Proxy Statement complied as to form in
all material respects with the requirements of the Exchange Act and the rules
thereunder. In addition, such counsel will state that it has participated in the
preparation of the Proxy Statement, and that, although such counsel is not
assuming responsibility for the matters stated in the Proxy Statement, such
counsel has no reason to believe that the Proxy Statement on the date the Proxy
Statement was first mailed to the stockholders of the Company and on the date of
the Special Meeting or the Closing Date, contained a false or misleading
statement of any material fact or omitted to state any material fact required to
be stated therein or necessary in order to make the statements therein, in light
of the circumstances under which they are made, not misleading.
SECTION 6.3 Additional Conditions to Obligations of the Company. The
obligations of the Company to effect the Merger are also subject to the
following conditions:
(a) Each of the representations of Parent and Merger Sub contained in
this Agreement will be true and correct in all material respects (except that
where any statement in a
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<PAGE> 31
representation or warranty expressly includes a standard of materiality, such
statement will be true and correct in all respects giving effect to such
standard) as of the Closing Date as though made on and as of the Closing Date,
provided that those representations and warranties which address matters only as
of a particular date will remain true and correct in all material respects
(except that where any statement in a representation or warranty expressly
includes a standard of materiality, such statement will be true and correct in
all respects giving effect to such standard) as of such date. The Company will
have received a certificate of the Chief Executive Officer and Chief Financial
Officer of Parent to such effect.
(b) Parent will have performed or complied in all material respects
with all agreements and covenants required by this Agreement to be performed or
complied with by it on or prior to the Closing Date. The Company will have
received a certificate of the Chief Executive Officer and Chief Financial
Officer of Parent to such effect.
(c) Parent will have delivered to the Company (i) a certificate of
existence from the Nevada Secretary of State stating that Parent is a validly
existing corporation together with a certificate of good standing from the
Nevada Secretary of State stating that Merger Sub is a validly existing
corporation in good standing; (ii) duly adopted resolutions of the Board of
Directors of each of Parent and Merger Sub approving the execution, delivery and
performance of this Agreement and the instruments contemplated hereby, each
certified by the Secretary or the Assistant Secretary of the Company; and (iii)
a true and complete copy of the certificates of incorporation, as amended, of
Parent and Merger Sub certified by the Secretary of State of the state of each
of their incorporation, and a true and complete copy of the bylaws, as amended,
of Parent and Merger Sub certified by the Secretary or Assistant Secretary of
Parent and Merger Sub, as applicable.
ARTICLE VII
TERMINATION; AMENDMENT; WAIVER
SECTION 7.1 Termination. This Agreement may be terminated and the
Merger may be abandoned at any time prior to the Effective Time (notwithstanding
approval of the Merger by the Company's stockholders):
(a) by mutual written consent of Parent, Merger Sub, and the Company;
(b) by Parent and Merger Sub, on the one hand, or the Company, on the
other hand, if any court of competent jurisdiction or other governmental body
has issued a final order, decree or ruling or taken any other final action
restraining, enjoining or otherwise prohibiting the Merger and such order,
decree, ruling or other action is or has become nonappealable;
(c) by the Company if a person or group has made a bona fide offer (i)
that the Board of Directors of the Company by a majority vote determines in its
good faith judgment and in the exercise of its fiduciary duties, after
consultation with its legal and financial advisors would result in a transaction
more favorable to the Company's stockholders than the transaction
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<PAGE> 32
contemplated by this Agreement (any Acquisition Proposal meeting such criteria
being a "Superior Proposal"); and (ii) as a result of which the Board of
Directors of the Company determines that it would be inconsistent with its
fiduciary duties under applicable law not to terminate this Agreement, provided
that such termination under this clause (c) will not be effective until payment
of the fee required by Section 7.3(b);
(d) by Parent and Merger Sub, if (i) there has been a breach (which
breach is not cured or not capable of being cured prior to 10 days following
notice to the Company by Parent of such breach) of any representation or
warranty on the part of the Company having a Company Material Adverse Effect or
materially adversely affecting the ability of Parent or Merger Sub to consummate
the Merger (including the Financing); (ii) there has been a breach (which breach
is not cured or not capable of being cured prior to 10 days following notice to
the Company by Parent of such breach) of any covenant or agreement on the part
of the Company resulting in a Company Material Adverse Effect or materially
adversely affecting or delaying the ability of Parent or Merger Sub to
consummate the Merger (including the Financing); (iii) the Company engages in
negotiations with any person or group (other than Parent or Merger Sub) that has
proposed a Third Party Acquisition (as defined in Section 7.3(c)) except to the
extent permitted by Section 8.8; (iv) the Company enters into an agreement,
letter of intent or arrangement with respect to a Third Party Acquisition; or
(v) the Board has withdrawn or modified in a manner adverse to Parent or Merger
Sub its approval or recommendation of this Agreement, or the Merger or has
recommended another transaction, or has adopted any resolution to effect any of
the foregoing;
(e) by the Company if (i) there has been a breach (which breach is not
cured or not capable of being cured prior to 10 days following notice to Parent
of such breach) of any representation or warranty on the part of Parent or
Merger Sub that materially adversely affects (or materially delays) the
consummation of the Merger or (ii) there has been a material breach (which
breach is not cured or not capable of being cured prior to 10 days following
notice to Parent of such breach) of any covenant or agreement on the part of
Parent or Merger Sub that materially adversely affects (or materially delays)
the consummation of the Merger;
(f) by the Company, if the Merger has not occurred by September 30,
1999, unless (i) the failure to consummate the Merger is the result of a breach
of covenant set forth in this Agreement or a material breach of any
representation or warranty set forth in this Agreement by the Company (in which
case such date will be extended by the number of days attributable to such
breach) or (ii) the failure to consummate the Merger is the result of the
failure to be fulfilled of the condition set forth in Section 6.2(g), in which
case such date will be October 31, 1999, provided that Parent shall have
diligently pursued fulfillment of such condition prior to September 30, 1999; or
by Parent, if the Merger has not occurred by November 30, 1999, unless the
failure to consummate the Merger is the result of a breach of covenant set forth
in this Agreement or a material breach of any representation or warranty set
forth in this Agreement by Parent (in which case such date will be extended by
the number of days attributable to such breach);
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<PAGE> 33
(g) by either Parent or the Company (provided that the terminating
party is not in material breach of any of its representations, warranties, or
obligations under this Agreement), if the approval of the stockholders of the
Company required for the consummation of the Merger shall not have been obtained
by reason of the failure to obtain the required vote at a duly held meeting of
the Company's stockholders or at any adjournment or postponement thereof
(h) by Parent if the First District Court of Appeal of the State of
Florida in the matter of GTech Corporation v. State of Florida Department of
Lottery and Automated Wagering International, Inc., Case No. 98-1155 (Fla. 1st
DCA), on or before July 15, 1999 shall have reversed or rendered an adverse
decision with respect to the Final Order entered by the State of Florida
Department of Lottery on March 23, 1998; provided, however, that if such Court
shall have so reversed or rendered an adverse decision with respect to such
Final Order on or before such date, then the parties agree to negotiate in good
faith for a period of two weeks from the date of such reversal or adverse
determination to reach a mutually satisfactory amendment to this Agreement to
eliminate any adverse effect to the Parent or Merger Sub that could result from
such reversal or adverse determination before Parent will be entitled to
exercise its right of termination under this Section 7.1(h); or
(i) by the Company (provided that Parent does not have the right to
terminate this Agreement) if the Merger is not effected because Parent has
failed to secure sufficient funds to satisfy its obligations under this
Agreement on or before November 30, 1999 (and all other conditions to the
obligations of the Company to close under this Agreement have been fulfilled or
waived).
SECTION 7.2 Effect of Termination. In the event of the termination and
abandonment of this Agreement pursuant to Section 7.1, this Agreement will
become void and have no effect, without any liability on the part of any party
to this Agreement or its affiliates, directors, officers or stockholders, other
than the provisions of this Section 7.2 and Sections 5.7(b), 5.8 and 7.3.
Nothing contained in this Section 7.2 will relieve any party from liability for
any willful breach of this Agreement.
SECTION 7.3 Fees and Expenses. (a) In the event Parent and Merger Sub
terminate this Agreement pursuant to Section 7.1(d) or the Company terminates
this Agreement pursuant to Section 7.1(c), the Company will reimburse Parent,
Merger Sub and their affiliates (not later than three business days after
submission of statements together with reasonable documentation therefor) for
all out-of-pocket fees and expenses actually incurred by any of them or on their
behalf in connection with the Merger, the Financing and the proposed
consummation of all transactions contemplated by this Agreement, including,
without limitation, filing fees and fees payable to legal counsel, financing
sources, investment bankers, counsel to any of the foregoing and accountants
(the "Parent Expenses") in an amount not to exceed $2,500,000 in the aggregate.
(b) If (i) (A) Parent and Merger Sub terminate this Agreement pursuant
to Section 7.1(d)(iii) or (iv) or in circumstances that would permit Parent and
Merger Sub to terminate this Agreement pursuant to Sections 7.1(d)(iii) or (iv)
or (B) if the Company terminates this Agreement pursuant to Section 7.1(c) and,
within 270 days after a termination pursuant to clause
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<PAGE> 34
(A) or clause (B), the Company enters into an agreement, letter of intent or
arrangement with respect to a Third Party Acquisition, or a Third Party
Acquisition occurs, then in either case the Company will pay to Parent, within
one business day following the execution and delivery of such agreement or
letter of intent or the entering into of such an arrangement or the occurrence
of such Third Party Acquisition, as the case may be, or simultaneously with such
termination, a fee, in cash, of $9,000,000 and reimburse Parent for all Parent
Expenses not to exceed $2,500,000 in the aggregate. For the purposes of this
Agreement, "Third Party Acquisition" means the occurrence of any of the
following events (i) the acquisition of the Company by merger or otherwise by
any person or group other than Parent, Merger Sub or any affiliate of Parent or
Merger Sub (a "Third Party"); (ii) the acquisition by a Third Party of more than
19.9% of the total assets of the Company and its subsidiaries, taken as a whole;
(iii) the acquisition by a Third Party of 19.9% or more of the outstanding
shares of Company Common Stock from the Company or in a transaction or series of
related transactions that results in a change of control of the Company; (iv)
the adoption by the Company of a plan of liquidation or the declaration or
payment of an extraordinary dividend; or (v) the acquisition by the Company or
any of its subsidiaries of more than 19.9% of the outstanding shares of Company
Common Stock.
(c) If the Company terminates this Agreement pursuant to Section
7.1(e), then Parent will reimburse the Company (not later than three business
days after such termination and submission of statements together with
reasonable documentation therefor) for all out-of-pocket fees and expenses
actually incurred by the Company or on its behalf in connection with the Merger
and the proposed consummation of all transactions contemplated by this Agreement
(including, without limitation, filing fees and fees payable to legal counsel,
investment bankers, counsel to any of the foregoing and accountants), in an
amount not to exceed an aggregate of $2,500,000.
(d) If the Company terminates this Agreement pursuant to Section
7.1(i), Parent will pay to the Company promptly upon demand a fee, in cash, of
$9,000,000 and reimburse the Company (not later than three business days after
such termination and submission of statements together with reasonable
documentation therefor) for all out-of-pocket fees and expenses actually
incurred by the Company or on its behalf in connection with the Merger and the
proposed consummation of all transactions contemplated by this Agreement
(including, without limitation, filing fees and fees payable to legal counsel,
investment bankers, counsel to any of the foregoing and accountants), in an
amount not to exceed an aggregate of $2,500,000.
(e) Except as specifically provided in this Section 7.3 each party will
bear its own expenses in connection with this Agreement and the transactions
contemplated by this Agreement.
SECTION 7.4 Amendment. This Agreement may not be amended except in an
instrument in writing signed on behalf of all of the parties to this Agreement;
provided, however, that after approval of the Merger by the stockholders of the
Company, no amendment that would either decrease the Merger Consideration or
change any other term or condition of this Agreement, if any such change, alone
or in the aggregate, would materially and adversely affect the stockholders of
the Company, may be made without the further approval of the stockholders
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<PAGE> 35
of the Company; provided, further, that, after the Merger, no amendment may be
made to Section 5.9 without the consent of the Indemnified Parties.
SECTION 7.5 Waiver. At any time prior to the Effective Time, whether
before or after the Special Meeting, any party to this Agreement may (a) subject
to the second proviso in Section 7.4, extend the time for the performance of any
of the obligations or other acts of any other party or parties to this
Agreement, (b) subject to the provisos contained in Section 7.4, waive any
inaccuracies in the representations and warranties contained in this Agreement
by any other applicable party or in any documents, certificate, or writing
delivered pursuant to this Agreement by any other applicable party, or (c)
subject to the provisos contained in Section 7.4, waive compliance with any of
the agreements of any other party or with any conditions to its own obligations.
Any agreement on the part of a party to this Agreement to any such extension or
waiver will be valid only if set forth in an instrument in writing signed on
behalf of such party by a duly authorized officer.
ARTICLE VIII
MISCELLANEOUS
SECTION 8.1 Survival of Representations, Warranties, and Agreements.
The representations and warranties made in this Agreement will not survive
beyond the Effective Time or the termination of this Agreement, as the case may
be. No investigation made, or information received by, any party to this
Agreement will affect any representation or warranty made by any other party to
this Agreement. The covenants and agreements of the parties to this Agreement
will survive in accordance with their terms.
SECTION 8.2 Brokerage Fees and Commissions. The Company hereby
represents and warrants to Parent with respect to the Company and any of its
subsidiaries, that except for the Advisor, and Parent and Merger Sub hereby
represent and warrant to the Company with respect to Parent or any of its
subsidiaries that, except for Merrill Lynch & Co., Inc., no person is entitled
to receive from the Company, Parent, Merger Sub or any of their subsidiaries,
respectively, any investment banking, brokerage or finder's fee or fees in
connection with this Agreement or any of the transactions contemplated by this
Agreement.
SECTION 8.3 Entire Agreement; Assignment. This Agreement, together with
all the Schedules and Annexes, (a) constitutes the entire agreement between the
parties with respect to the subject matter of this Agreement and supersedes all
other prior written agreements and understandings and all prior and
contemporaneous oral agreements and understandings between the parties to this
Agreement or any of them with respect to the subject matter of this Agreement
and (b) will not be assigned by operation of law or otherwise, provided that
Parent may assign its rights under this Agreement, or those of Merger Sub,
including, without limitation, the right to substitute in place of Merger Sub a
subsidiary as one of the constituent corporations to the Merger as provided in
Section 2.1 to any direct or indirect subsidiary of Parent, but no such
assignment will relieve the assigning party of its obligations under this
Agreement. Any purported assignment of this Agreement not made in accordance
with this Section 8.3 will be
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null, void, and of no effect. No party to this Agreement has relied upon any
representation or warranty, oral or written, of any other party to this
Agreement or any of their officers, directors or stockholders except for the
representations and warranties contained in this Agreement.
SECTION 8.4 Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of law
or public policy, all other terms and provisions of this Agreement will
nevertheless remain in full force and effect. Upon any final judicial
determination that any term or other provision is invalid, illegal or incapable
of being enforced, the parties to this Agreement will negotiate in good faith to
modify this Agreement so as to effect the original intent of the parties as
closely as possible in an acceptable manner to the end that the transactions
contemplated by this Agreement be consummated to the extent possible.
SECTION 8.5 Notices. All notices, requests, claims, demands and other
communications under this Agreement will be in writing and will be deemed to
have been duly given when delivered in person, by cable, telegram or telex,
facsimile or by registered or certified mail (postage prepaid, return receipt
requested) to the respective parties as follows:
(a) if to Parent or Merger Sub, to:
Anchor Gaming
815 Pilot Road, Suite G
Las Vegas, Nevada 89119
Attention: Michael Rumbolz
Fax: (702) 896-6221
and
Olive AP Acquisition Corporation
815 Pilot Road, Suite G
Las Vegas, Nevada 89119
Attention: Michael Rumbolz
Fax: (702) 896-6221
with a copy to:
Hughes & Luce, L.L.P.
1717 Main Street, Suite 2800
Dallas, Texas 75201
Attention: Glen J. Hettinger
Fax: (214) 939-6100
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(b) if to the Company, to:
Powerhouse Technologies, Inc.
115 Perimeter Place, Suite 911
Atlanta, Georgia 30346
Attention: Richard M. Haddrill
Alan A. Rassaby
Fax: (770) 481-1899
with a copy to:
Rogers & Hardin LLP
2700 International Tower
229 Peachtree Street, N.E.
Atlanta, Georgia 30303
Attention: Edward J. Hardin
Fax: (404) 525-2224
or to such other address as the person to whom notice is given may have
previously furnished to the others in writing in the manner set forth above
(provided that notice of any change of address will be effective only upon
receipt).
SECTION 8.6 GOVERNING LAW. THIS AGREEMENT WILL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, REGARDLESS OF
THE LAWS THAT MIGHT OTHERWISE GOVERN UNDER APPLICABLE PRINCIPLES OF CONFLICT OF
LAWS.
SECTION 8.7 Specific Performance. Each of the parties to this Agreement
acknowledges and agrees that the other parties to this Agreement would be
irreparably damaged in the event any of the provisions of this Agreement were
not performed in accordance with their specific terms or were otherwise
breached. Accordingly, each of the parties to this Agreement agrees that each of
them will be entitled to an injunction or injunctions to prevent breaches of the
provisions of this Agreement and to enforce specifically this Agreement and the
terms and provisions of this Agreement in any action instituted in any court of
the United States or any state having subject matter jurisdiction, in addition
to any other remedy to which such party may be entitled, at law or in equity.
SECTION 8.8 Other Potential Bidders.
(a) The Company shall not, directly or indirectly, through any officer,
director, employee, representative or agent of the Company or any of its
subsidiaries, solicit, facilitate or encourage (including by way of furnishing
information) the initiation of any inquires or proposals regarding a Third Party
Acquisition (any of the foregoing inquiries or proposals being referred to in
this Agreement as an "Acquisition Proposal"). Provided that the Company and the
Board shall have complied with the first sentence of this Section 8.8(a),
nothing contained in this Section 8.8(a) or any other provision of this
Agreement shall prevent the Board if it determines
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in good faith, after consultation with, and the receipt of advice from, outside
counsel, that not to do so would be inconsistent with its fiduciary duties under
applicable law, from considering, negotiating, approving and recommending to the
stockholders of the Company an unsolicited bona fide written Acquisition
Proposal that the Board of Directors of the Company determines to be a Superior
Proposal. Nothing in this Section 8.8 shall prohibit the Company from complying
with Rules 14d-9 and 14e-2 under the Exchange Act with respect to any Superior
Proposal that takes the form of a tender offer.
(b) The Company shall promptly, but in no event later than 24 hours,
notify Parent after receipt of any Acquisition Proposal or any request for
nonpublic information relating to the Company or any of its subsidiaries in
connection with an Acquisition Proposal or for access to the properties, books
or records of the Company or any subsidiary by any person that informs the Board
that it is considering making, or has made, an Acquisition Proposal. Such notice
to Parent shall be made orally and in writing and shall indicate in reasonable
detail the identity of the offeror and the terms and conditions of such
proposal, inquiry or contact.
(c) If the Board receives a request for material nonpublic information
by a person that makes an unsolicited bona fide Acquisition Proposal and the
Board determines that such proposal, if consummated pursuant to its terms would
be a Superior Proposal, then, and only in such case, the Company may, subject to
the execution of a confidentiality agreement substantially identical to that
then in effect between the Company and Parent, provide such party with access to
information regarding the Company.
(d) The Company shall immediately cease and cause to be terminated any
existing discussions or negotiations with any parties (other than Parent and
Merger Sub) conducted heretofore with respect to any of the foregoing. The
Company agrees not to release any third party from any confidentiality or
standstill agreement to which the Company is a party.
(e) The Company shall ensure that the officers, directors and employees
of the Company and its subsidiaries and any investment banker or other advisor
or representative retained by the Company are aware of the restrictions
described in this Section 8.8; and shall be responsible for any breach of this
Section 8.8 by such bankers, advisors and representatives.
SECTION 8.9 Descriptive Headings; References. The descriptive headings
in this Agreement are inserted for convenience of reference only and are not
intended to be part of or to affect the meaning or interpretation of this
Agreement. References in this Agreement to Sections, Annexes and Schedules are
references to the Sections, Annexes and Schedules of this Agreement unless the
context indicates otherwise.
SECTION 8.10 Parties in Interest. This Agreement will be binding upon
and inure solely to the benefit of each party to this Agreement, and, except as
provided in Sections 5.9 and 8.11, nothing in this Agreement, express or
implied, is intended to confer upon any other person any rights or remedies of
any nature whatsoever under or by reason of this Agreement.
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SECTION 8.11 Beneficiaries. Parent hereby acknowledges that Section 5.9
is intended to benefit the Indemnified Parties referred to in Section 5.9, any
of whom will be entitled to enforce Section 5.9 against the Surviving
Corporation or the Company, as the case may be.
SECTION 8.12 Counterparts. This Agreement may be executed in any number
of counterparts, each of which will be deemed to be an original, but all of
which will constitute one and the same agreement.
SECTION 8.13 Obligations. Parent will perform or cause Merger Sub to
perform all of the obligations of Merger Sub under this Agreement, including
consummation of the Merger, in accordance with the terms of this Agreement.
SECTION 8.14 Certain Definitions. For the purposes of this Agreement:
(a) the term "subsidiary" means each person in which a person owns or controls,
directly or through one or more subsidiaries, 50 percent or more of the stock or
other interests having general voting power in the election of directors or
persons performing similar functions or more than 50% of the equity interests;
(b) the term "person" will be broadly construed to include any individual,
corporation, company, partnership, trust, joint stock company, association or
other private or governmental entity; (c) the term "group" has the meaning given
in Section 13(d)(3) of the Exchange Act; (d) the term "affiliate" has the
meaning given in Rule 144(a)(1) under the Securities Act; and (e) the term
"business day" has the meaning given in Rule 14d-1(c)(6) under the Exchange Act.
[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, Parent, Merger Sub and the Company have caused this
Agreement to be signed by their respective officers thereunto duly authorized,
all as of the date first written above.
PARENT:
ANCHOR GAMING, a Nevada corporation
By: /s/ Stanley E. Fulton
-----------------------------------------
Name: Stanley E. Fulton
---------------------------------------
Title: Chairman of the Board
--------------------------------------
MERGER SUB:
OLIVE AP ACQUISITION CORPORATION,
a Delaware corporation
By: /s/ Michael D. Rumbolz
-----------------------------------------
Name: Michael D. Rumbolz
---------------------------------------
Title: Chief Executive Officer
--------------------------------------
COMPANY:
POWERHOUSE TECHNOLOGIES, INC.,
a Delaware corporation
By: /s/ Richard M. Haddrill
-----------------------------------------
Name: Richard M. Haddrill
---------------------------------------
Title: President and Chief Executive Officer
--------------------------------------
40
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EXHIBIT A-1
Each director and executive officer of the Company within the meaning
of Section 16 under the Exchange Act.
<PAGE> 42
EXHIBIT A-2
FORM OF VOTING AGREEMENT
VOTING AGREEMENT
March ___, 1999
Anchor Gaming
815 Pilot Road, Suite G
Las Vegas, Nevada 89119
Re: Agreement of Stockholders Concerning Transfer and Voting of
Shares of Powerhouse Technologies, Inc.
I understand that you and Powerhouse Technologies, Inc. (the
"Company"), of which the undersigned is a stockholder, are prepared to enter
into an agreement for the merger of a wholly-owned subsidiary of Parent ("Merger
Sub") into the Company (the "Merger"), but that you have conditioned your
willingness to proceed with such agreement (the "Agreement") upon your receipt
from me of assurances satisfactory to you of my support of and commitment to the
Merger. I am familiar with the Agreement and the terms and conditions of the
Merger. Terms used but not otherwise defined in this letter will have the same
meanings as are given them in the Agreement. In order to evidence such
commitment and to induce you to enter into the Agreement, I hereby represent and
warrant to you and agree with you as follows:
1. Voting. I will vote or cause to be voted all shares of capital
stock of the Company owned of record or beneficially owned or held in any
capacity by me or under my control, by proxy or otherwise (the "Shares"), in
favor of the Merger and other transactions provided for in or contemplated by
the Agreement and against any inconsistent proposals or transactions. I hereby
revoke any other proxy granted by me and irrevocably appoint you, during the
term of this letter agreement, as proxy for and on behalf of me to vote
(including, without limitation, the taking of action by written consent) such
shares, for me and in my name, place and stead for the matters and in the manner
contemplated by this Section 1.
2. Restriction on Transfer. I will not sell, transfer, pledge or
otherwise dispose of any of the Shares or any interest therein (including the
granting of a proxy to any person) or agree to sell, transfer, pledge or
otherwise dispose of any of the Shares or any interest therein, unless, as a
condition to receipt of such Shares, the transferee agrees to be bound by the
terms of this letter.
<PAGE> 43
3. No Solicitation. From the date of this letter until the
termination of this letter, I will not, directly or indirectly, engage in any
activity that if attributed to the Company would be prohibited under Section 8.8
of the Merger Agreement, or otherwise assist, facilitate or encourage, any
person (other than Parent and Merger Sub) that may be considering making, or has
made, an Acquisition Proposal. I will promptly notify Merger Sub after receipt
of any Acquisition Proposal or any indication that any such third party is
considering making an Acquisition Proposal or any request for nonpublic
information relating to the Company or any subsidiary of the Company or for
access to the properties, books or records of the Company or any such subsidiary
by any such third party that may be considering making, or has made, an
Acquisition Proposal and will keep Parent fully informed of the status and
details of any such Acquisition Proposal, indication or request. The foregoing
provisions of this Section 3 will not be construed to limit actions taken, or to
require actions to be taken, by me that are required or restricted by my
fiduciary duties or my employment duties, or permitted by the Agreement, and
that, in each case, are undertaken solely in my capacity as a director or
officer of the Company.
4. Effective Date; Succession; Remedies; Termination. Upon your
acceptance and execution of the Agreement, this letter agreement will mutually
bind and benefit you and me, any of our heirs, successors and assigns and any of
your successors. You will not assign the benefit of this letter agreement other
than to a wholly-owned subsidiary. We agree that in light of the inadequacy of
damages as a remedy, specific performance will be available to you, in addition
to any other remedies you may have for the violation of this letter agreement.
This letter agreement will terminate on the termination of the Agreement.
5. Nature of Holdings; Shares. All references in this letter to
our holdings of the Shares will be deemed to include Shares held or controlled
by the undersigned, individually, jointly, or in any other capacity, and will
extend to any securities issued to the undersigned in respect of the Shares.
--------------------------------------------
Name:
---------------------------------------
<PAGE> 44
EXHIBIT B
CERTIFICATE OF INCORPORATION
OF
OLIVE AP ACQUISITION CORPORATION
ARTICLE I
The name of the Corporation is Olive AP Acquisition Corporation.
ARTICLE II
The name of the Corporation's registered agent and the address of its
registered office in the State of Delaware is Corporation Service Company, 1013
Centre Road, Wilmington, New Castle County, Delaware 19805-1297.
ARTICLE III
The purpose of the Corporation is to engage in any lawful act or
activity for which corporations may be organized under the General Corporation
Law of the State of Delaware.
ARTICLE IV
The total number of shares of capital stock which the Corporation shall
have the authority to issue is One Thousand (1,000) shares of Common Stock,
$0.01 par value.
ARTICLE V
In furtherance and not limitation of the powers conferred by the laws
of the State of Delaware, the Board of Directors is expressly authorized to
alter, amend or repeal the bylaws of the Corporation or to adopt new bylaws.
ARTICLE VI
The incorporator is Kevin R. Shook, whose mailing address is 1717 Main
Street, Suite 2800, Dallas, Texas 75201.
ARTICLE VII
The number of directors constituting the initial Board of Directors is
one (1), and the name and address of the person who are to serve as directors
until the first annual meeting of the stockholders or until their respective
successors are elected and qualified are:
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Name Address
Scott M. Wilson 1717 Main Street, Suite 2800
Dallas, Texas 75201
ARTICLE VIII
A director of the Corporation shall not be personally liable to the
Corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director, except for liability (i) for any breach of the director's
duty of loyalty to the Corporation or its stockholders, (ii) for acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violation of law, (iii) under Section 174 of the Delaware General Corporation
Law, or (iv) for any transaction from which the director derived any improper
personal benefit. If the Delaware General Corporation Law is amended after the
filing of this Certificate of Incorporation to authorize corporate action
further eliminating or limiting the personal liability of directors, then the
liability of a director of the Corporation shall be eliminated or limited to the
fullest extent permitted by the Delaware General Corporation Law, as so amended.
Any repeal or modification of the foregoing paragraph by the
stockholders of the Corporation shall not adversely affect any right or
protection of a director of the Corporation existing at the time of such repeal
or modification.
ARTICLE IX
A. Right to Indemnification. Each person who was or is made a party or
is threatened to be made a party to or is otherwise involved in any action, suit
or proceeding, whether civil, criminal, administrative or investigative
(hereinafter a "proceeding"), by reason of the fact that he or she, or a person
of whom he or she is the legal representative, is or was a director or officer
of the Corporation or is or was serving at the request of the Corporation as a
director or officer of another corporation or of a partnership, joint venture,
trust or other enterprise, including service with respect to an employee benefit
plan (hereinafter an "indemnitee"), whether the basis of such proceeding is
alleged action in an official capacity as a director or officer or in any other
capacity while serving as a director or officer, shall be indemnified and held
harmless by the Corporation to the fullest extent authorized by the Delaware
General Corporation Law, as the same exists or may hereafter be amended (but, in
the case of any such amendment, only to the extent that such amendment permits
the Corporation to provide broader indemnification rights than permitted prior
thereto), against all expense, liability and loss (including, without
limitation, attorneys' fees, judgments, fines, excise taxes or penalties and
amounts paid or to be paid in settlement) incurred or suffered by such
indemnitee in connection therewith and such indemnification shall continue with
respect to an indemnitee who has ceased to be a director or officer and shall
inure to the benefit of the indemnitee's heirs, executors and administrators;
provided, however, that, except as provided in
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paragraph (B) hereof with respect to proceedings to enforce rights to
indemnification, the Corporation shall indemnify any such indemnitee in
connection with a proceeding initiated by such indemnitee only if such
proceeding was authorized by the Board of Directors of the Corporation. The
right to indemnification conferred in this Article IX shall be a contract right
and shall include the right to be paid by the Corporation the expenses incurred
in defending any such proceeding in advance of its final disposition
(hereinafter an "advancement of expenses"); provided, however, that, if the
Delaware General Corporation Law requires, an advancement of expenses incurred
by an indemnitee shall be made only upon delivery to the Corporation of an
undertaking (hereinafter an "undertaking"), by or on behalf of such indemnitee,
to repay all amounts so advanced if it shall ultimately be determined by final
judicial decision from which there is no further right to appeal (hereinafter a
"final adjudication") that such indemnitee is not entitled to be indemnified for
such expenses under this Article or otherwise.
B. Right of Indemnitee to Bring Suit. If a claim under paragraph (A) of
this Article is not paid in full by the Corporation within sixty days after a
written claim has been received by the Corporation (except in the case of a
claim for an advancement of expenses, in which case the applicable period shall
be twenty days), the indemnitee may at any time thereafter bring suit against
the Corporation to recover the unpaid amount of the claim. If successful in
whole or in part in any such suit, the indemnitee shall also be entitled to be
paid the expense of prosecuting or defending such suit. In (i) any suit brought
by the indemnitee to enforce a right to indemnification hereunder (but not in a
suit brought by the indemnitee to enforce a right to an advancement of expenses)
it shall be a defense that, and (ii) in any suit by the Corporation to recover
an advancement of expenses pursuant to the terms of an undertaking, the
Corporation shall be entitled to recover such expenses upon a final adjudication
that, the indemnitee has not met the applicable standard of conduct set forth in
the Delaware General Corporation Law. Neither the failure of the Corporation
(including its Board of Directors, independent legal counsel or its
stockholders) to have made a determination prior to the commencement of such
suit that indemnification of the indemnitee is proper in the circumstances
because the indemnitee has met the applicable standard of conduct set forth in
the Delaware General Corporation Law, nor an actual determination by the
Corporation (including its Board of Directors, independent legal counsel, or its
stockholders) that the indemnitee has not met such applicable standard of
conduct, shall create a presumption that the indemnitee has not met the
applicable standard of conduct or, in the case of such a suit brought by the
indemnitee, be a defense to such suit. In any suit brought by the indemnitee to
enforce a right to indemnification or to an advancement of expenses hereunder or
by the Corporation to recover an advancement of expenses pursuant to the terms
of an undertaking, the burden of proving that the indemnitee is not entitled
under this Article or otherwise to be indemnified, or to such advancement of
expenses, shall be on the Corporation.
C. Non-Exclusivity of Rights. The rights to indemnification and to the
advancement of expenses conferred in this Article IX shall not be exclusive of
any other right which any person may have or hereafter acquire under this
Certificate of Incorporation or any bylaw, agreement, vote of stockholders or
disinterested directors or otherwise.
D. Insurance. The Corporation may maintain insurance, at its expense,
to protect itself and any indemnitee against any expense, liability or loss,
whether or not the Corporation would
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have the power to indemnify such person against such expense, liability or loss
under the Delaware General Corporation Law.
E. Indemnity of Employees and Agents of the Corporation. The
Corporation may, to the extent authorized from time to time by the Board of
Directors, grant rights to indemnification and to the advancement of expenses to
any employee or agent of the Corporation to the fullest extent of the provisions
of this Article IX or as otherwise permitted under the Delaware General
Corporation Law with respect to the indemnification and advancement of expenses
of directors and officers of the Corporation.
ARTICLE X
No stockholder of the Corporation shall by reason of his holding shares
of any class of its capital stock have any preemptive or preferential right to
purchase or subscribe for any shares of any class of the Corporation, now or
hereafter to be authorized, or any notes, debentures, bonds or other securities
convertible into or carrying warrants, rights or options to purchase shares of
any class or any other security, now or hereafter to be authorized, whether or
not the issuance of any such shares or such notes, debentures, bonds or other
securities would adversely affect the dividend, voting or any other rights of
such stockholder; and the Board of Directors may issue shares of any class of
the Corporation, or any notes, debentures, bonds or other securities convertible
into or carrying warrants, rights or options to purchase shares of any class,
without offering any such shares of any class, either in whole or in part, to
the existing holders of any class of stock of the Corporation.
ARTICLE XI
Cumulative voting for the election of Directors shall not be permitted.
IN WITNESS WHEREOF, the undersigned incorporator of the Corporation
hereby certifies that the facts herein stated are true, and accordingly has
signed this instrument this 1st day of March, 1999.
--------------------------------------------
Kevin R. Shook
Incorporator
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EXHIBIT C
BYLAWS
OF
OLIVE AP ACQUISISTION CORPORATION
ARTICLE I
OFFICES
Section 1. Registered Office. The registered office of the corporation
shall be in the City of Wilmington, County of New Castle, State of Delaware.
Section 2. Other Offices. The corporation may also have offices at such
other places, both within and without the State of Delaware, as the Board of
Directors may from time to time determine or as the business of the corporation
may require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
Section 1. Place of Meetings. Meetings of stockholders may be held at
such time and place, within or without the State of Delaware, as shall be stated
in the notice of the meeting or in a duly executed waiver of notice thereof.
Section 2. Annual Meetings. An annual meeting of stockholders shall be
held on such day in each fiscal year of the corporation and at such time and
place as may be fixed by the Board of Directors, at which meeting the
stockholders shall elect a Board of Directors and transact such other business
as may properly be brought before the meeting.
Section 3. Notice of Annual Meeting. Written or printed notice of the
annual meeting, stating the place, day and hour thereof, shall be given to each
stockholder entitled to vote thereat at such address as appears on the books of
the corporation, not less than ten days nor more than sixty days before the date
of the meeting.
Section 4. Special Meetings. Special meetings of the stockholders, for
any purpose or purposes, unless otherwise prescribed by statute or the
certificate of incorporation, may be called by the President, and shall be
called by the President or the Secretary at the request in writing of a majority
of the Board of Directors, or at the request in writing of stockholders of
record owning at least one-tenth (1/10) of all shares issued and outstanding and
entitled to vote at such meeting. Such request shall state the purpose or
purposes of the proposed meeting.
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Section 5. Notice of Special Meetings. Written or printed notice of a
special meeting of stockholders, stating the place, day and hour and purpose or
purposes thereof, shall be given to each stockholder entitled to vote thereat at
such address as appears on the books of the corporation, not less than ten days
nor more than sixty days before the date of the meeting.
Section 6. Business at Special Meetings. Business transacted at all
special meetings of stockholders shall be confined to the purpose or purposes
stated in the notice thereof.
Section 7. Stockholder List. At least ten days before each meeting of
stockholders, a complete list of the stockholders entitled to vote at such
meeting or any adjournment thereof, arranged in alphabetical order, with the
address of and the number of voting shares held by each, shall be prepared by
the Secretary. Such list shall be open to the examination of any stockholder,
for any purpose germane to the meeting, during ordinary business hours, for such
ten day period, either at a place within the city where the meeting is to be
held, which place shall be specified in the notice of the meeting, or, if not so
specified, at the place where the meeting is to be held. Such list shall also be
produced and kept open at the time and place of the meeting and shall be subject
to the inspection of any stockholder during the meeting.
Section 8. Quorum. The holders of a majority of the votes attributed to
the shares of capital stock issued and outstanding and entitled to vote thereat,
represented in person or by proxy, shall constitute a quorum at all meetings of
the stockholders for the transaction of business except as otherwise provided by
statute, the certificate of incorporation or these bylaws. The stockholders
present may adjourn the meeting despite the absence of a quorum. When a meeting
is adjourned for less than thirty days in any one adjournment and a new record
date is not fixed for the adjourned meeting, it shall not be necessary to give
any notice of the adjourned meeting if the time and place to which the meeting
is adjourned are announced at the meeting at which the adjournment is taken, and
at the adjourned meeting any business may be transacted that might have been
transacted on the original date of the meeting. When a meeting is adjourned for
thirty days or more, or when after the adjournment a new record date is fixed
for the adjourned meeting, notice of the adjourned meeting shall be given as in
the case of an original meeting.
Section 9. Majority Vote. When a quorum is present at any meeting, the
vote of the holders of a majority of the shares having voting power represented
in person or by proxy shall decide any question brought before such meeting,
unless the question is one upon which, by express provision of statute, the
certificate of incorporation or these bylaws, a different vote is required, in
which case such express provision shall govern and control the decision of such
question.
Section 10. Proxies. (a) Each stockholder entitled to vote at a meeting
of stockholders or to express consent or dissent to corporate action in writing
without a meeting may authorize another person or persons to act for him by
proxy, but no such proxy shall be voted or acted upon after three years from its
date, unless the proxy provides for a longer period.
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(b) Without limiting the manner in which a stockholder may
authorize another person or persons to act for him as proxy pursuant to
subsection (a) of this Section, the following shall constitute a valid means by
which a stockholder may grant such authority:
(i) A stockholder may execute a writing authorizing another person or persons to
act for him as proxy. Execution may be accomplished by the stockholder or his
authorized officer, director, employee or agent signing such writing or causing
his or her signature to be affixed to such writing by any reasonable means
including, but not limited to, by facsimile signature.
(ii) A stockholder may authorize another person or persons to act for him as
proxy by transmitting or authorizing the transmission of a telegram, cablegram,
or other means of electronic transmission to the person who will be the holder
of the proxy or to a proxy solicitation firm, proxy support service organization
or like agent duly authorized by the person who will be the holder of the proxy
to receive such transmission, provided that any such telegram, cablegram or
other means of electronic transmission must either set forth or be submitted
with information from which it can be determined that the telegram, cablegram or
other electronic transmission was authorized by the stockholder. If it is
determined that such telegrams, cablegrams or other electronic transmissions are
valid, the inspectors or, if there are no inspectors, such other persons making
that determination shall specify the information upon which they relied.
(c) Any copy, facsimile telecommunication or other reliable
reproduction of the writing or transmission created pursuant to subsection (b)
of this Section may be substituted or used in lieu of the original writing or
transmission for any and all purposes for which the original writing or
transmission could be used, provided that such copy, facsimile telecommunication
or other reproduction shall be a complete reproduction of the entire original
writing or transmission.
(d) Any copy, facsimile telecommunication or other reliable
reproduction of the writing or transmission created pursuant to subsection (b)
of this Section may be substituted or used in lieu of the original writing or
transmission for any and all purposes for which the original writing or
transmission could be used, provided that such copy, facsimile telecommunication
or other reproduction shall be a complete reproduction of the entire original
writing or transmission.
Section 11. Voting. Unless otherwise provided by statute or the
certificate of incorporation, each stockholder shall have one vote for each
share of stock having voting power, registered in his name on the books of the
corporation.
Section 12. Consent of Stockholders in Lieu of Meeting. Any action
required to be taken at any annual or special meeting of stockholders, or any
action which may be taken at any annual or special meeting of stockholders, may
be taken without a meeting, without prior notice and without a vote, if a
consent or consents in writing, setting forth the action so taken, shall be
signed by the holders of outstanding stock having not less than the minimum
number of votes that would be necessary to authorize or take such action at a
meeting at which all shares entitled
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to vote thereon were present and voted and such consent or consents are
delivered to the corporation. Every written consent shall bear the date of
signatures of each stockholder and no written consent shall be effective to take
the corporate action referred to therein unless, within sixty days of the
earliest dated consent, written consents signed by a sufficient number of
holders to take action are delivered to the corporation. Prompt notice of the
taking of the corporate action without a meeting by less than unanimous written
consent shall be given to those stockholders who have not consented in writing.
Section 13. Inspectors. (a) The corporation may, in advance of any
meeting of stockholders, appoint one or more inspectors to act at the meeting
and make a written report thereof. The corporation may designate one or more
persons as alternate inspectors to replace any inspector who fails to act. If no
inspector or alternate is able to act at a meeting of stockholders, the chairman
of the meeting shall appoint one or more inspectors to act at the meeting. Each
inspector, before entering upon the discharge of his duties, shall take and sign
an oath faithfully to execute the duties of inspector with strict impartiality
and according to the best of his ability.
(b) The inspectors shall (i) ascertain the number of shares
outstanding and the voting power of each, (ii) determine the shares represented
at a meeting and the validity of proxies and ballots, (iii) count all votes and
ballots, (iv) determine and retain for a reasonable period a record of the
disposition of any challenges made to any determination by the inspectors, and
(v) certify their determination of the number of shares represented at the
meeting, and their count of all votes and ballots. The inspectors may appoint or
retain other persons or entities to assist the inspectors in the performance of
the duties of the inspectors.
(c) The date and time of the opening and the closing of the
polls for each matter upon which the stockholders will vote at a meeting shall
be announced at the meeting. No ballot, proxies or votes, nor any revocations
thereof or changes thereto, shall be accepted by the inspectors after the
closing of the polls unless the Delaware Court of Chancery, upon application by
a stockholder, shall determine otherwise.
(d) In determining the validity and counting of proxies and
ballots, the inspectors shall be limited to an examination of the proxies, any
envelopes submitted with those proxies, any information provided in accordance
with Article II, Section 10(b)(ii), ballots and the regular books and records of
the corporation, except that the inspectors may consider other reliable
information for the limited purpose of reconciling proxies and ballots submitted
by or on behalf of banks, brokers, their nominees or similar persons that
represent more votes than the holder of a proxy is authorized by the record
owner to cast, or more votes than the stockholder holds of record. If the
inspectors consider other reliable information for the limited purpose permitted
herein, the inspectors at the time they make their certification pursuant to
subsection (b)(v) of this Section shall specify the precise information
considered by them including the person or persons from whom they obtained the
information, when the information was obtained, the means by which the
information was obtained and the basis for the inspector's belief that such
information is accurate and reliable.
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ARTICLE III
BOARD OF DIRECTORS
Section 1. Powers. The business and affairs of the corporation shall be
managed by a Board of Directors. The Board may exercise all such powers of the
corporation and do all such lawful acts and things as are not by statute, by the
certificate of incorporation or these bylaws directed or required to be
exercised or done by the stockholders.
Section 2. Number of Directors. The number of directors which shall
constitute the whole Board shall be fixed from time to time by resolution of the
Board of Directors, provided that such number shall not be less than
( ) nor more than ( ).
Section 3. Election and Term. Except as provided in Section 4 of this
Article III, directors shall be elected at the annual meeting of the
stockholders, and each director shall be elected to serve until the next annual
meeting and until his successor shall have been elected and shall qualify, or
until his death, resignation or removal from office. Directors need not be
stockholders of the corporation.
Section 4. Vacancies and Newly Created Directorships. If the office of
any director or directors becomes vacant by reason of death, resignation,
retirement, disqualification, removal from office, or otherwise, or the number
of directors constituting the whole Board shall be increased, a majority of the
remaining or existing directors, though less than a quorum, may choose a
successor or successors, or the director or directors to fill the new
directorship or directorships, who shall hold office for the unexpired term in
respect to which such vacancy occurred or, in the case of a new directorship or
directorships, until the next annual meeting of the stockholders.
Section 5. Removal. The stockholders may remove a director either for
or without cause at any meeting of stockholders, provided notice of the
intention to act upon such matter shall have been given in the notice calling
such meeting.
ARTICLE IV
MEETINGS OF THE BOARD
Section 1. First Meeting. The first meeting of each newly elected Board
of Directors shall be held at the location of and immediately following the
annual meeting of stockholders, and no notice of such meeting shall be necessary
to the newly elected directors in order legally to constitute the meeting,
provided a quorum shall be present; or the Board may meet at such place and time
as shall be fixed by the consent in writing of all the directors. All meetings
of the Board of Directors may be held at such place, either within or without
the State of Delaware, as from time to time shall be determined by the Board of
Directors.
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Section 2. Regular Meetings. Regular meetings of the Board may be held
at such time and place and on such notice, if any, as shall be determined from
time to time by the Board.
Section 3. Special Meetings. Special meetings of the Board may be
called by the President or the Chairman of the Board on twenty-four hours'
notice to each director, delivered either personally or by mail or by telegram
or telecopier. Special meetings shall be called by the President or the
Secretary in like manner and on like notice on the written request of one
director.
Section 4. Quorum and Voting. At all meetings of the Board, a majority
of the directors at the time in office shall be necessary and sufficient to
constitute a quorum for the transaction of business; and the act of a majority
of the directors present at any meeting at which there is a quorum shall be the
act of the Board of Directors, except as may be otherwise specifically provided
by statute, the certificate of incorporation or these bylaws. If a quorum shall
not be present at any meeting of directors, the directors present thereat may
adjourn the meeting from time to time, without notice other than announcement at
the meeting, until a quorum shall be present.
Section 5. Telephone Meetings. Directors may attend any meeting of the
Board or any committee thereof by conference telephone, radio, television or
similar means of communication by means of which all persons participating in
the meeting can hear each other, and all members so attending shall be deemed
present at the meeting for all purposes including the determination of whether a
quorum is present.
Section 6. Action by Written Consent. Any action required or permitted
to be taken by the Board or any committee thereof, under the applicable
provisions of any statute, the certificate of incorporation, or these bylaws,
may be taken without a meeting if a consent in writing, setting forth the action
so taken, is signed by all the members of the Board or committee, as the case
may be.
ARTICLE V
COMMITTEES
Section 1. Executive Committee. The Board of Directors, by resolution
adopted by a majority of the whole Board, may designate one or more directors to
constitute an Executive Committee, which Committee, to the extent provided in
such resolution, shall have and may exercise all of the authority of the Board
of Directors in the business and affairs of the corporation except where action
by the Board of Directors is expressly required by statute. The Executive
Committee shall keep regular minutes of its proceedings and report the same to
the Board when required.
Section 2. Other Committees. The Board of Directors may similarly
create other committees for such terms and with such powers and duties as the
Board deems appropriate.
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Section 3. Committee Rules; Quorum. Each committee may adopt rules
governing the method of calling and time and place of holding its meetings.
Unless otherwise provided by the Board of Directors, a majority of any committee
shall constitute a quorum for the transaction of business, and the act of a
majority of the members of such committee present at a meeting at which a quorum
is present shall be the act of such committee.
ARTICLE VI
COMPENSATION OF DIRECTORS
The Board of Directors shall have authority to determine, from time to
time, the amount of compensation, if any, which shall be paid to its members for
their services as directors and as members of committees. The Board shall also
have power in its discretion to provide for and to pay to directors rendering
services to the corporation not ordinarily rendered by directors as such,
special compensation appropriate to the value of such services as determined by
the Board from time to time. Nothing herein contained shall be construed to
preclude any director from serving the corporation in any other capacity and
receiving compensation therefor.
ARTICLE VII
NOTICES
Section 1. Methods of Notice. Whenever any notice is required to be
given to any stockholder, director or committee member under the provisions of
any statute, the certificate of incorporation or these bylaws, such notice shall
be delivered personally or shall be given in writing by mail addressed to such
stockholder, director or committee member at such address as appears on the
books of the corporation, and such notice shall be deemed to be given at the
time when the same shall be deposited in the United States mail with postage
thereon prepaid. Notice to directors and committee members may also be given by
telegram, which notice shall be deemed to be given at the time it is delivered
to the telegraph office, or by telecopy, which notice shall be deemed to be
given at the time it is transmitted or in person, which notice shall be deemed
to be given when received.
Section 2. Waiver of Notice. Whenever any notice is required to be
given to any stockholder, director or committee member under the provisions of
any statute, the certificate of incorporation or these bylaws, a waiver thereof
in writing signed by the person or persons entitled to said notice, whether
before or after the time stated therein, shall be deemed equivalent to the
giving of such notice. Attendance at any meeting shall constitute a waiver of
notice thereof except as otherwise provided by statute.
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ARTICLE VIII
OFFICERS
Section 1. Executive Officers. The executive officers of the
corporation shall consist of at least a President and a Secretary, each of whom
shall be elected by the Board of Directors. The Board of Directors may also
elect as officers of the corporation a Chairman of the Board, one or more Vice
Presidents, one or more of whom may be designated Executive or Senior Vice
Presidents and may also have such descriptive titles as the Board shall deem
appropriate, and a Treasurer. Any two or more offices may be held by the same
person.
Section 2. Election and Qualification. The Board of Directors at its
first meeting after each annual meeting of stockholders shall elect the officers
of the corporation.
Section 3. Other Officers and Agents. The Board may elect or appoint
Assistant Vice Presidents, Assistant Secretaries and Assistant Treasurers, and
such other officers and agents as it shall deem necessary, who shall hold their
offices for such terms and shall exercise such powers and perform such duties as
shall be determined from time to time by the Board of Directors.
Section 4. Salaries. The salaries of all officers of the corporation
shall be fixed by the Board of Directors except as otherwise directed by the
Board.
Section 5. Term, Removal and Vacancies. The officers of the corporation
shall hold office until their successors are chosen and qualify. Any officer or
agent of the corporation may be removed at any time by the affirmative vote of a
majority of the Board of Directors, or by the President. Any vacancy occurring
in any office of the corporation may be filled by the Board of Directors or
otherwise as provided in this Article.
Section 6. Execution of Instruments. The Chairman of the Board and the
President (and such other officers as are authorized thereunto by resolution of
the Board of Directors) may execute in the name of the corporation bonds, notes,
debentures and other evidences of indebtedness, stock certificates, deeds,
mortgages, deeds of trust, indentures, contracts, leases, agreements and other
instruments, requiring a seal under the seal of the corporation, and may execute
such documents where not requiring a seal, except where such documents are
required by law to be otherwise signed and executed, and except where the
signing and execution thereof shall be exclusively delegated to some other
officer or agent of the corporation.
Section 7. Duties of Officers. The duties and powers of the officers of
the corporation shall be as provided in these bylaws, or as provided for
pursuant to these bylaws, or (except to the extent inconsistent with these
bylaws or with any provision made pursuant hereto) shall be those customarily
exercised by corporate officers holding such offices.
Section 8. Chairman of the Board. The Chairman of the Board shall
preside when present at all meetings of the Board of Directors. He shall advise
and counsel the other officers of the corporation and shall exercise such powers
and perform such duties as shall be assigned to
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or required of him from time to time by the Board of Directors. The Chairman of
the Board may, if so designated by the Board of Directors, be the Chief
Executive Officer of the corporation; in such event he shall have all of the
powers granted by the bylaws to the President and from time to time may delegate
all, or any, of his powers and duties to the President.
Section 9. President. The President shall preside at all meetings of
the stockholders and shall be ex-officio a member of all standing committees,
have general powers of oversight, supervision and management of the business and
affairs of the corporation, and see that all orders and resolutions of the Board
of Directors are carried into effect.
In the event another executive officer has been designated Chief
Executive Officer of the corporation by the Board of Directors, then (i) such
other executive officer shall have all of the powers granted by the bylaws to
the President; and (ii) the President shall, subject to the powers of
supervision and control thereby conferred upon the Chief Executive Officer, be
the chief operating officer of the corporation and shall have all necessary
powers to discharge such responsibility including general supervision of the
affairs of the corporation and general and active control of all of its
business.
The President shall perform all the duties and have all the powers of
the Chairman of the Board in the absence of the Chairman of the Board.
Section 10. Vice Presidents. The Vice Presidents in the order
determined by the Board of Directors shall, in the absence or disability of the
President, perform the duties and exercise the powers of the President, and
shall perform such other duties as the Board of Directors, the Chairman of the
Board and the President may prescribe.
Section 11. Secretary. The Secretary shall attend all meetings of the
Board of Directors and all meetings of the stockholders and record all votes and
the minutes of all proceedings in a book to be kept for that purpose and shall
perform like duties for the committees of the Board of Directors when required.
Except as may be otherwise provided in these bylaws, he shall give, or cause to
be given, notice of all meetings of the stockholders and special meetings of the
Board of Directors, and shall perform such other duties as may be prescribed by
the Board of Directors and the President. He shall keep in safe custody the seal
of the corporation, if any, and shall have authority to affix the same to any
instrument requiring it, and when so affixed it may be attested by his
signature. The Board of Directors may give general authority to any other
officer to affix the seal of the corporation and to attest the affixing by his
signature. In the absence of the Treasurer and all Assistant Treasurers, the
Secretary shall perform all the duties and have all the powers of the Treasurer.
Section 12. Assistant Secretaries. The Assistant Secretaries in the
order determined by the Board of Directors shall, in the absence or disability
of the Secretary, perform the duties and exercise the powers of the Secretary
and shall perform such other duties as the Board of Directors, the Chairman of
the Board and President may prescribe. Assistant secretaries may be appointed by
the president without prior approval of the board of directors.
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<PAGE> 57
Section 13. Treasurer. The Treasurer shall have the custody of the
corporate funds and securities and shall keep full and accurate accounts of
receipts and disbursements in books belonging to the corporation and shall
deposit all monies and other valuable effects in the name and to the credit of
the corporation in such depositories as may be designated by the Board of
Directors. He shall disburse the funds of the corporation as may be ordered by
the Board, taking proper vouchers for such disbursements, and shall render to
the Board of Directors, the Chairman of the Board and the President, whenever
they may require it, an account of all of his transactions as Treasurer and of
the financial condition of the corporation.
Section 14. Assistant Treasurers. The Assistant Treasurers in the order
determined by the Board of Directors shall, in the absence or disability of the
Treasurer, perform the duties and exercise the powers of the Treasurer and shall
perform such other duties as the Board of Directors, the Chairman of the Board
and the President may prescribe.
ARTICLE IX
SHARES AND STOCKHOLDERS
Section 1. Certificates Representing Shares. Every holder of stock in
the corporation shall be entitled to have a certificate, signed by, or in the
name of the corporation by, the Chairman or Vice Chairman of the Board of
Directors, or the President or a Vice President and the Treasurer or an
Assistant Treasurer or the Secretary or an Assistant Secretary of the
corporation, certifying the number of shares owned by him in the corporation.
The signature of any such officer may be facsimile. In case any officer who has
signed or whose facsimile signature has been placed upon such certificate shall
have ceased to be such officer before such certificate is issued, it may be
issued by the corporation with the same effect as if he were such officer at the
date of its issuance. If the corporation shall be authorized to issue more than
one class of stock or more than one series of any class, the powers,
designations, preferences and relative, participating, optional or other special
rights of each class of stock or series thereof and the qualifications,
limitations or restrictions of such preferences and/or rights shall be set forth
in full or summarized on the face or back of the certificate which the
corporation shall issue to represent such class or series of stock, provided
that, except as otherwise provided in Section 202 of the General Corporation Law
of the State of Delaware, in lieu of the foregoing requirements, there may be
set forth on the face or back of the certificate which the corporation shall
issue to represent such class or series of stock a statement that the
corporation will furnish without charge to each stockholder who so requests the
designations, preferences and relative, participating, optional or other special
rights of each class or series thereof and the qualifications, limitations or
restrictions of such preferences and/or rights.
Section 2. Transfer of Shares. Subject to valid transfer restrictions
and to stop-transfer orders directed in good faith by the corporation to any
transfer agent to prevent possible violations of federal or state securities
laws, rules or regulations, or for any other lawful purpose, upon surrender to
the corporation of a certificate for shares duly endorsed or accompanied by
proper evidence of succession, assignment or authority to transfer, it shall be
the duty of the
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corporation to issue a new certificate to the person entitled thereto, cancel
the old certificate and record the transaction upon its books.
Section 3. Fixing Record Date.
(a) In order that the corporation may determine the stockholders
entitled to notice of or to vote at any meeting of stockholders or any
adjournment thereof, the Board of Directors may fix a record date, which record
date shall not precede the date upon which the resolution fixing the record date
is adopted by the Board of Directors, and which record date shall not be more
than sixty nor less than ten days before the date of such meeting. If no record
date is fixed by the Board of Directors, the record date for determining
stockholders entitled to notice of or to vote at a meeting of stockholders shall
be at the close of business on the day next preceding the date on which notice
is given, or, if notice is waived, at the close of business on the date next
preceding the day on which the meeting is held. A determination of stockholders
of record entitled to notice of or to vote at a meeting of stockholders shall
apply to any adjournment of the meeting; provided, however, that the Board of
Directors may fix a new record date for the adjourned meeting.
(b) In order that the corporation may determine the stockholders
entitled to consent to corporate action in writing without a meeting, the Board
of Directors may fix a record date, which record date shall not precede the date
upon which the resolution fixing the record date is adopted by the Board of
Directors, and which date shall not be more than ten days after the date upon
which the resolution fixing the record date is adopted by the Board of
Directors. If no record date has been fixed by the Board of Directors, the
record date for determining stockholders entitled to consent to corporate action
in writing without a meeting, when no prior action by the Board of Directors is
required by this Section, shall be the first date on which a signed written
consent setting forth the action taken or proposed to be taken is delivered to
the corporation by delivery to its registered office in the State of Delaware,
its principal place of business, or an officer or agent of the corporation
having custody of the book in which proceedings of meetings of stockholders are
recorded. Delivery made to the corporation's registered office shall be by hand
or by certified or registered mail, return receipt requested. If no record date
has been fixed by the Board of Directors and prior action by the Board of
Directors is required by statute, the record date for determining stockholders
entitled to consent to corporate action in writing without a meeting shall be at
the close of business on the day on which the Board of Directors adopts the
resolution taking such prior action.
(c) In order that the corporation may determine the stockholders
entitled to receive payment of any dividend or other distribution or allotment
of any rights or the stockholders entitled to receive any rights in respect of
any change, conversion or exchange of stock, or for the purpose of any other
lawful action, the Board of Directors may fix a record date, which record date
shall not precede the date upon which the resolution fixing the record date is
adopted, and which record date shall be not more than sixty days prior to such
action. If no record date is fixed, the record date for determining stockholders
for any such purpose shall be at the close of business on the day on which the
Board of Directors adopts the resolution relating thereto.
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Section 4. Registered Stockholders. The corporation shall be entitled
to recognize the exclusive right of a person registered on its books as the
owner of any share or shares to receive dividends, and to vote as such owner,
and for all other purposes as such owner; and the corporation shall not be bound
to recognize any equitable or other claim to or interest in such share or shares
on the part of any other person, whether or not it shall have express or other
notice thereof, except as otherwise provided by the laws of the State of
Delaware.
Section 5. Lost Certificates. The Board of Directors may direct a new
certificate or certificates to be issued in place of any certificate or
certificates theretofore issued by the corporation alleged to have been lost,
stolen or destroyed, upon the making of an affidavit of that fact by the person
claiming the certificate of stock to be lost, stolen or destroyed. When
authorizing such issue of a new certificate or certificates, the Board of
Directors may, in its discretion and as a condition precedent to the issuance
thereof, require the owner of such lost, stolen or destroyed certificate or
certificates, or his legal representative, to advertise the same in such manner
as it shall require and/or give the corporation a bond in such sum as it may
direct as indemnity against any claim that may be made against the corporation
with respect to the certificate alleged to have been lost, stolen or destroyed.
ARTICLE X
INDEMNIFICATION
(a) The corporation shall indemnify any person who was or is a party or
is threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative
(other than an action by or in the right of the corporation) by reason of the
fact that he is or was a director, officer, employee or agent of the
corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by him in connection with such action, suit or proceeding if he acted
in good faith and in a manner he reasonably believed to be in or not opposed to
the best interests of the corporation, and, with respect to any criminal action
or proceeding, had no reasonable cause to believe his conduct was unlawful. The
termination of any action, suit or proceeding by judgment, order, settlement,
conviction, or upon a plea of nolo contendere or its equivalent, shall not, of
itself, create a presumption that the person did not act in good faith and in a
manner which he reasonably believed to be in or not opposed to the best
interests of the corporation, and, with respect to any criminal action or
proceeding, had reasonable cause to believe that his conduct was unlawful.
(b) The corporation shall indemnify any person who was or is a party or
is threatened to be made a party to any threatened, pending or completed action
or suit by or in the right of the corporation to procure a judgment in its favor
by reason of the fact that he is or was a director, officer, employee or agent
of the corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise against expenses (including attorneys' fees)
actually and
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reasonably incurred by him in connection with the defense or settlement of such
action or suit if he acted in good faith and in a manner he reasonably believed
to be in or not opposed to the best interests of the corporation and except that
no indemnification shall be made in respect of any claim, issue or matter as to
which such person shall have been adjudged to be liable to the corporation
unless and only to the extent that the Court of Chancery or the court in which
such action or suit was brought shall determine upon application that, despite
the adjudication of liability but in view of all the circumstances of the case,
such person is fairly and reasonably entitled to indemnity for such expenses
which the Court of Chancery or such other court shall deem proper.
(c) To the extent that a director, officer, employee or agent of the
corporation has been successful on the merits or otherwise in defense of any
action, suit or proceeding referred to in subsections (a) and (b), or in defense
of any claim, issue or matter therein, he shall be indemnified against expenses
(including attorneys' fees) actually and reasonably incurred by him in
connection therewith.
(d) Any indemnification under subsections (a) and (b) (unless ordered
by a court) shall be made by the corporation only as authorized in the specific
case upon a determination that indemnification of the director, officer,
employee or agent is proper in the circumstances because he has met the
applicable standard of conduct set forth in subsections (a) and (b). Such
determination shall be made (1) by the Board of Directors by a majority vote of
a quorum consisting of directors who were not parties to such action, suit, or
proceeding, or (2) if such a quorum is not obtainable, or, even if obtainable a
quorum of disinterested directors so directs, by independent legal counsel in a
written opinion, or (3) by the stockholders.
(e) Expenses (including attorneys' fees) incurred by an officer or
director in defending any civil, criminal, administrative or investigative
action, suit or proceeding shall be paid by the corporation in advance of the
final disposition of such action, suit or proceeding upon receipt of an
undertaking by or on behalf of the director or officer to repay such amount if
it shall ultimately be determined that he is not entitled to be indemnified by
the corporation as authorized in this Article X. Such expenses incurred by other
employees or agents may be so paid upon such terms and conditions, if any, as
the Board of Directors deems appropriate.
(f) The indemnification and advancement of expenses provided by, or
granted pursuant to, the other subsections of this Article X shall not be deemed
exclusive of any other rights to which those seeking indemnification or
advancement of expenses may be entitled under the Certificate of Incorporation,
any agreement or vote of stockholders or disinterested directors or otherwise,
both as to action in his official capacity and as to action in another capacity
while holding such office.
(g) The corporation shall have the power to purchase and maintain
insurance on behalf of any person who is or was a director, officer, employee or
agent of the corporation, or is or was serving at the request of the corporation
as a director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise against any liability asserted against
him and incurred by him in any such capacity, or arising out of his status as
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such, whether or not the corporation would have the power to indemnify him
against such liability under the provisions of this Article X.
(h) For purposes of this Article X, references to "the corporation"
shall include, in addition to the resulting corporation, any constituent
corporation (including any constituent of a constituent) absorbed in a
consolidation or merger which, if its separate existence had continued, would
have had power and authority to indemnify its directors, officers, and employees
or agents, so that any person who is or was a director, officer, employee or
agent of such constituent corporation, or is or was serving at the request of
such constituent corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise,
shall stand in the same position under the provisions of this Article X with
respect to the resulting or surviving corporation as he would have with respect
to such constituent corporation if its separate existence had continued.
(i) For purposes of this Article X, references to "other enterprises"
shall include employee benefit plans; references to "fines" shall include any
excise taxes assessed on a person with respect to any employee benefit plan; and
references to "serving at the request of the corporation" shall include any
service as a director, officer, employee or agent of the corporation which
imposes duties on, or involves services by, such director, officer, employee, or
agent with respect to an employee benefit plan, its participants or
beneficiaries; and a person who acted in good faith and in a manner he
reasonably believed to be in the interest of the participants and beneficiaries
of an employee benefit plan shall be deemed to have acted in a manner "not
opposed to the best interests of the corporation" as referred to in this Article
X.
(j) The indemnification and advancement of expenses provided by, or
granted pursuant to, this Article X shall, unless otherwise provided when
authorized or ratified, continue as to a person who has ceased to be a director,
officer, employee or agent and shall inure to the benefit of the heirs,
executors and administrators of such a person.
ARTICLE XI
GENERAL
Section 1. Dividends. Dividends upon the capital stock of the
corporation, subject to the provisions of the certificate of incorporation, if
any, or of the resolutions, if any, providing for any series of stock, may be
declared by the Board of Directors at any meeting thereof, or by the Executive
Committee at any meeting thereof. Dividends may be paid in cash, in property or
in shares of the capital stock of the corporation, subject to the provisions of
the certificate of incorporation or of the resolutions, if any, providing for
any series of stock.
Section 2. Reserves. Before payment of any dividend, there may be set
aside out of any funds of the corporation available for dividends such sum or
sums as the directors from time to time, in their absolute discretion, deem
proper as a reserve fund to meet contingencies, or for equalizing dividends, or
for repairing or maintaining any property of the corporation, or for such other
purpose or purposes as the directors shall think conducive to the interests of
the
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corporation, and the directors may modify or abolish any such reserve in the
manner in which it was created.
Section 3. Shares of Other Corporations. The Chairman of the Board, the
President and any Vice President is authorized to vote, represent and exercise
on behalf of the corporation all rights incident to any and all shares of any
other corporation or other entity standing in the name of the corporation. The
authority herein granted to said officer may be exercised either by said officer
in person or by any person authorized so to do by proxy or power of attorney
duly executed by said officer. Notwithstanding the above, however, the Board of
Directors, in its discretion, may designate by resolution any additional person
to vote or represent said shares of other corporations and other entities.
Section 4. Checks. All checks, drafts, bills of exchange or demands for
money of the corporation shall be signed by such officer or officers or such
other person or persons as the Board of Directors may from time to time
designate.
Section 5. Corporate Records. The corporation shall keep at its
registered office or principal place of business, or at the office of its
transfer agent or registrar, a record of its stockholders giving the names and
addresses of all stockholders and the number and class and series, if any, of
shares held by each. All other books and records of the corporation may be kept
at such place or places within or without the State of Delaware as the Board of
Directors may from time to time determine.
Section 6. Fiscal Year. The fiscal year of the corporation shall be
fixed by the Board of Directors; if not so fixed, it shall be the calendar year.
ARTICLE XII
AMENDMENTS
These bylaws may be altered, amended or repealed or new bylaws may be
adopted at any annual meeting of the stockholders or at any special meeting of
the stockholders at which a quorum is present or represented, by the affirmative
vote of the holders of a majority of the shares entitled to vote at such meeting
and present or represented thereat, or by the affirmative vote of a majority of
the whole Board of Directors at any regular meeting of the Board or at any
special meeting of the Board, provided notice of the proposed alteration,
amendment or repeal or the adoption of new bylaws is set forth in the notice of
such meeting.
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<PAGE> 1
[POWERHOUSE LOGO]
ANCHOR GAMING AND POWERHOUSE TECHNOLOGIES, INC.
ANNOUNCE DEFINITIVE MERGER AGREEMENT
ANCHOR GAMING PLANS TO CHANGE ITS NAME TO ANCHOR TECHNOLOGIES
FOR IMMEDIATE RELEASE: WEDNESDAY, MARCH 10, 1999
[LAS VEGAS, NV and ATLANTA, GA] - Anchor Gaming ("Anchor") (Nasdaq: SLOT) and
Powerhouse Technologies, Inc. ("Powerhouse") (Nasdaq: PWRH) announced today the
signing of a definitive merger agreement. Anchor will acquire Powerhouse for
$19.50 per share, which represents a 32% premium over yesterday's closing stock
price, in an all cash merger. The merger creates a diversified international
gaming entity with combined revenues of approximately $450 million. The
transaction values Powerhouse at approximately $280 million, consisting of
approximately $220 million of equity value and approximately $60 million of net
debt estimated at closing. The transaction will be accounted for using the
purchase method of accounting and is expected to be neutral to slightly
accretive to Anchor within the first full year after closing.
Anchor's Chairman Stan Fulton stated, "This transaction represents an
outstanding opportunity for Anchor to maximize long-term shareholder value by
strategically transforming our company. With our strong balance sheet, we will
be able to provide the capital necessary to fund the many growth opportunities
inherent in Powerhouse's business segments." President and Chief Executive
Officer Michael Rumbolz added, "The acquisition of Powerhouse provides Anchor
with management depth and increased technological and manufacturing
capabilities. The integration of these capabilities will enhance Anchor's
technological leadership and growth opportunities in our proprietary games
division." The merger expands Anchor's domestic route and casino presence
through the addition of Powerhouse's Montana route operation and the Sunland
Park Racetrack and Casino in New Mexico and also provides an entree for Anchor
into the on-line lottery device and systems business.
"Powerhouse's strong recurring revenue base will enhance the stability
of Anchor's earnings," Rumbolz added. "We feel there is significant growth
opportunity in the on-line lottery business. Powerhouse currently has seven
state lottery contracts representing 18% of the domestic on-line lottery market.
There are more than ten other potential contracts subject to competitive
procurements over the next two years and we expect to maintain or improve our
market share. We are also pleased with the initial
<PAGE> 2
Page 2
results of the casino at the Sunland Park Racetrack and look forward to applying
our extensive expertise in operating slot machines to the facility."
Richard Haddrill, Powerhouse's President and Chief Executive Officer
stated, "This transaction represents an excellent two and one-half year return
to our shareholders. Furthermore, it provides our employees with significant
opportunities going forward and ensures uninterrupted customer service. The
combined company will have both the size and expertise to more effectively
compete in today's consolidating gaming market."
In conjunction with the acquisition, Anchor announced it intends to
seek shareholder approval to change its name from Anchor Gaming to Anchor
Technologies. Anchor will also add two additional members to its Board of
Directors: Richard Burt, current Powerhouse Chairman and former U.S. Ambassador
to the Federal Republic of Germany, and Richard Haddrill.
The transaction is subject to approval by the shareholders of
Powerhouse and the expiration of applicable waiting periods under the Hart-Scott
Rodino Antitrust Improvement Act. The transaction, which will also require
approval of various gaming authorities, is expected to close in the second half
of calendar 1999. Merrill Lynch & Company acted as exclusive financial advisor
to Anchor and rendered a fairness opinion to Anchor's Board of Directors. Lehman
Brothers acted as exclusive financial advisor to Powerhouse and rendered a
fairness opinion to Powerhouse's Board of Directors. The acquisition will be
funded by a combination of cash on hand and a $300 million senior credit
facility provided by a bank syndication group led by Bank of America.
This press release contains certain forward-looking statements within
the meaning of Section 21E of the Securities Exchange Act of 1934, as amended,
and other applicable securities laws. All statements other than statements of
historical fact are "forward-looking statements" for purposes of these
provisions, including any projections of earnings, revenues or other financial
items; any statements of the plans, strategies, and objectives of management for
future operation; any statements concerning proposed new products, services, or
developments; any statements regarding future economic conditions or
performance; statements of belief; and any statement of assumptions underlying
any of the foregoing. Such forward-looking statements are subject to inherent
risks and uncertainties, and actual results could differ materially from those
anticipated by the forward-looking statements. Although the company believes
that the expectations reflected in any of its forward-looking statements will
prove to be correct, actual results could differ materially from those projected
or assumed in the Company's forward-looking
<PAGE> 3
Page 3
statements. These risks and uncertainties include, but are not limited to: risks
of proprietary games such as pressure from competitors, changes in economic
conditions, obsolescence, declining popularity of existing games, failure of new
game ideas or concepts to become popular, duplication by third parties and
changes in interest rates as they relate to the wide area progressive machine
operations within the Company's joint venture with IGT; competition in Black
Hawk, Colorado; dependence on suppliers; changes in gaming regulations and
taxes; dependence upon key personnel; and other factors described from time to
time in the Company's reports filed with the Securities and Exchange Commission,
including the company's form 10-K for the year ended June 30, 1998 and its forms
10-Q for the first two quarters of fiscal 1999. In addition, there are inherent
risks in consummating the transaction described above and executing the strategy
it entails. These risks include the difficulty of integrating two business
organizations, the difficulty of achieving potential operational and business
synergies, the necessity of obtaining regulatory approvals, and the risk
associated with the debt financing of the transaction and future debt service
requirements. Additional risks that should be considered for the combined
entities are described in the reports of Powerhouse Technologies, Inc. filed
with the Securities and Exchange Commission.
Anchor Gaming is a diversified gaming company that capitalizes on its
experience as an operator and developer of gaming machines and casinos by
developing gaming oriented businesses. Anchor Gaming currently develops and
distributes unique proprietary games, operates two casinos in Colorado, and
operates one of the largest gaming machine routes in Nevada.
Powerhouse Technologies, Inc., through its operating units - VLC, AWI
and United Tote - is one of the leading suppliers of system software, equipment,
and related services for on-line lotteries, video lotteries and pari-mutuel
systems throughout the world, and a manufacturer and distributor of gaming
devices for casinos. Presently, the Company's equipment and systems are in
operation in the United States, Canada, Australia, Europe, South America and the
Caribbean. Powerhouse also owns and operates Sunland Racetrack and Casino in New
Mexico.
For information contact :
<TABLE>
<S> <C>
ANCHOR GAMING POWERHOUSE TECHNOLOGIES, INC.
Michael D. Rumbolz, CEO and President, or Susan J. Carstensen, CFO
Geoffrey A. Sage, CFO (406) 585-6746, or
(702) 896-7568 Wayne Brown of Carl Thompson Associates
(800) 959-9677
</TABLE>
<PAGE> 1
FORM OF VOTING AGREEMENT
VOTING AGREEMENT
March___,1999
Anchor Gaming
815 Pilot Road, Suite G
Las Vegas, Nevada 89119
Re: Agreement of Stockholders Concerning Transfer and Voting of Shares
of Powerhouse Technologies, Inc.
I understand that you and Powerhouse Technologies, Inc. (the "Company"), of
which the undersigned is a stockholder, are prepared to enter into an agreement
for the merger of a wholly-owned subsidiary of Parent ("Merger Sub") into the
Company (the "Merger"), but that you have conditioned your willingness to
proceed with such agreement (the "Agreement") upon your receipt from me of
assurances satisfactory to you of my support of and commitment to the Merger. I
am familiar with the Agreement and the terms and conditions of the Merger. Terms
used but not otherwise defined in this letter will have the same meanings as are
given them in the Agreement. In order to evidence such commitment and to induce
you to enter into the Agreement, I hereby represent and warrant to you and agree
with you as follows:
1. Voting. I will vote or cause to be voted all shares of capital stock
of the Company owned of record or beneficially owned or held in any capacity by
me or under my control, by proxy or otherwise (the "Shares"), in favor of the
Merger and other transactions provided for in or contemplated by the Agreement
and against any inconsistent proposals or transactions. I hereby revoke any
other proxy granted by me and irrevocably appoint you, during the term of this
letter agreement, as proxy for and on behalf of me to vote (including, without
limitation, the taking of action by written consent) such shares, for me and in
my name, place and stead for the matters and in the manner contemplated by this
Section 1.
2. Restriction on Transfer. I will not sell, transfer, pledge or
otherwise dispose of any of the Shares or any interest therein (including the
granting of a proxy to any person) or agree to sell, transfer, pledge or
otherwise dispose of any of the Shares or any interest therein, unless, as a
condition to receipt of such Shares, the transferee agrees to be bound by the
terms of this letter.
<PAGE> 2
3. No Solicitation. From the date of this letter until the termination
of this letter, I will not, directly or indirectly, engage in any activity that
if attributed to the Company would be prohibited under Section 8.8 of the Merger
Agreement, or otherwise assist, facilitate of encourage, any person (other than
Parent and Merger Sub) that may be considering making, or has made, an
Acquisition Proposal. I will promptly notify Merger Sub after receipt of any
Acquisition Proposal or any indication that any such third party is considering
making an Acquisition Proposal or any request for nonpublic information relating
to the Company or any subsidiary of the Company or for access to the properties,
books or records of the Company of any such subsidiary by any such third party
that may be considering making, or has made, an Acquisition Proposal and will
keep Parent fully informed of the status and details of any such Acquisition
Proposal, indication or request. The foregoing provisions of this Section 3
will not be construed to limit actions taken, or to require actions to be taken,
by me that are required or restricted by my fiduciary duties or my employment
duties, or permitted by the Agreement, and that, in each case, are undertaken
solely in my capacity as a director or officer of the Company,
4. Effective Date; Succession; Remedies; Termination. Upon your
acceptance and execution of the Agreement, this letter agreement will mutually
bind and benefit you and me, any of our heirs, successors and assigns and any of
your successors. You will not assign the benefit of this letter agreement other
than to a wholly-owned subsidiary. We agree that in light of the inadequacy of
damages as a remedy, specific performance will be available to you, in addition
to any other remedies you may have for the violation of this letter agreement.
This letter agreement will terminate on the termination of the Agreement.
5. Nature of Holdings; Shares. All references in this letter to our
holdings of the Shares will be deemed to include Shares held or controlled by
the undersigned, individually, jointly, or in any other capacity, and will
extend to any securities issued to the undersigned in respect of the Shares.
_____________________________________
Name:________________________________
