<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON , 1997
REGISTRATION NO. 333-
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
VIAD CORP
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C> <C>
DELAWARE 5812 36-1169950
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. IDENTIFICATION)
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NO.)
</TABLE>
------------------------
1850 NORTH CENTRAL AVENUE, SUITE 2212
PHOENIX, ARIZONA 85077-2212
(602) 207-4000
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
------------------------
PETER J. NOVAK, ESQ.
VICE PRESIDENT AND GENERAL COUNSEL
VIAD CORP
1850 NORTH CENTRAL AVENUE, SUITE 2212
PHOENIX, ARIZONA 85077-2212
(602) 207-5913
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
------------------------
Copies to:
<TABLE>
<S> <C>
ERIC O. MADSON, ESQ. FRANK M. PLACENTI, ESQ.
ROBINS, KAPLAN, MILLER & CIRESI L.L.P. BRYAN CAVE LLP
2800 LASALLE PLAZA 2800 NORTH CENTRAL AVENUE
MINNEAPOLIS, MN 55402-2015 PHOENIX, AZ 85004-1098
</TABLE>
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon
as practicable after this Registration Statement becomes effective and certain
other conditions under the Merger Agreement described herein are met or waived.
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. [ ]
------------------------
CALCULATION OF REGISTRATION FEE
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<CAPTION>
==================================================================================================
PROPOSED MAXIMUM PROPOSED MAXIMUM
AMOUNT OFFERING PRICE AGGREGATE AMOUNT OF
TITLE OF EACH CLASS OF TO BE PER OFFERING REGISTRATION
SECURITIES TO BE REGISTERED REGISTERED(1) SHARE(2) PRICE(2) FEE(2)
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, $1.50 par value per
share........................... 2,800,000 $19.91 $55,748,000 $16,893.34
==================================================================================================
</TABLE>
(1) Represents an estimate of the maximum number of shares of the Common Stock
of the Registrant issuable in the Merger described herein, based on the
assumed Exchange Ratio of 0.5667 (calculated based on the average of the
closing sales prices of Viad Corp Common Stock as listed on the NYSE for the
30-trading day period ended October 3, 1997 and the exercise of options for
418,364 shares of Game Common Stock of the total options for 420,836 shares
of Game Common Stock currently issued and unexercised).
(2) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(f)(1) under the Securities Act of 1933, as amended (the
"Securities Act"), and based upon the average of the high and low sales
prices of shares of the Common Stock of Viad Corp on the New York Stock
Exchange on October 3, 1997.
------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
================================================================================
<PAGE> 2
VIAD CORP
------------------------
CROSS REFERENCE SHEET PURSUANT TO REGULATION S-K, ITEM 501(b),
SHOWING THE LOCATION IN THE PROXY STATEMENT/PROSPECTUS
OF THE INFORMATION REQUIRED BY PART I OF FORM S-4
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<CAPTION>
ITEM NUMBER AND HEADING IN
FORM S-4 REGISTRATION STATEMENT LOCATION OR HEADING IN PROSPECTUS
------------------------------------------- -------------------------------------------
<C> <S> <C>
A. INFORMATION ABOUT THE TRANSACTION
1. Forepart of the Registration Statement and
Outside Front Cover page of Prospectus... Facing Page; Cross Reference Sheet and
Outside Front Cover Page of Proxy
Statement/Prospectus
2. Inside Front and Outside Back Cover Pages
of Prospectus............................ Inside Front and Outside Back Cover Pages
of Proxy Statement/Prospectus; Cross
Reference Sheet; Table of Contents;
Available Information
3. Risk Factors; Ratio of Earnings to Fixed
Charges and Other Information............ Summary; Market Prices; Viad Selected
Historical Financial Data; Game Selected
Historical Financial Data; Comparative
Per Share Data; The Merger
4. Terms of the Transaction................... Summary; The Merger; Comparative Rights of
Stockholders
5. Pro Forma Financial Information............ Not Applicable
6. Material Contracts with the Company Being
Acquired................................. Summary; The Merger
7. Additional Information Required for
Reoffering by Persons and Parties Deemed
to Be Underwriters....................... Not Applicable
8. Interests of Named Experts and Counsel..... The Merger; Legal Matters; Experts
9. Disclosure of Commission Position on
Indemnification for Securities Act
Liabilities.............................. Part II
B. INFORMATION ABOUT THE REGISTRANT
10. Information with Respect to S-3
Registrants.............................. Available Information, Incorporation of
Documents by Reference; Summary; The
Merger; Market Prices; Comparative Per
Share Data; Viad Selected Historical
Financial Data; Certain Related
Transactions; Information Regarding Viad;
Description of Viad Capital Stock;
Comparative Rights of Stockholders
11. Incorporation of Certain Information by
Reference................................ Incorporation of Documents by Reference
12. Information with Respect to S-2 or S-3
Registrants.............................. Not Applicable
13. Incorporation of Certain Information by
Reference................................ Not Applicable
14. Information with Respect to Registrants
Other than S-3 or S-2 Registrants........ Not Applicable
C. INFORMATION ABOUT THE COMPANY BEING ACQUIRED
15. Information with Respect to S-3
Companies................................ Not Applicable
</TABLE>
<PAGE> 3
<TABLE>
<CAPTION>
ITEM NUMBER AND HEADING IN
FORM S-4 REGISTRATION STATEMENT LOCATION OR HEADING IN PROSPECTUS
------------------------------------------- -------------------------------------------
<C> <S> <C>
16. Information with Respect to S-2 or S-3
Companies................................ Available Information; Incorporation of
Documents by Reference; Summary; Market
Prices; Comparative Per Share Data; Game
Selected Historical Financial Data; The
Special Meeting; The Merger; Certain
Related Transactions; Information
Regarding Game
17. Information with Respect to Companies Other
than S-3 or S-2 companies................ Not Applicable
D. VOTING AND MANAGEMENT INFORMATION
18. Information if Proxies, Consents or
Authorizations are to be Solicited....... Facing Page; Outside Front Cover Page of
Prospectus; Summary: The Special Meeting;
The Merger; Description of Viad Capital
Stock; Comparative Rights of
Stockholders; Stockholder Proposals
19. Information if Proxies, Consents or
Authorizations are not to be Solicited or
in an Exchange Offer..................... Not Applicable
</TABLE>
<PAGE> 4
[LOGO]
[LETTERHEAD OF GAME FINANCIAL CORPORATION]
Dear Stockholder:
As you may be aware, Game Financial Corporation ("Game") has entered into
an agreement to merge with Game Acquisition Corp. ("Acquisition Sub"), a
wholly-owned subsidiary of Viad Corp ("Viad"). At a Special Meeting of
Stockholders of Game to be held on December [ ], 1997, Game stockholders
will be asked to approve and adopt the Agreement and Plan of Merger, dated as of
September 24, 1997, among Game, Viad, and Acquisition Sub (the "Merger
Agreement"). The accompanying Proxy Statement/Prospectus and the appendices
thereto present the details of this proposed merger (the "Merger").
In the Merger, each share of common stock, par value $.01 per share, of
Game (the "Game Common Stock") will be converted into the right to receive a
fraction of a share of common stock, par value $1.50 per share, of Viad (the
"Viad Common Stock") equal to $10.75 divided by the Viad Price, as defined below
(the "Exchange Ratio"). Game may terminate the Merger Agreement and abandon the
Merger if, among other things, the Viad Price is more than $21.20 per share and
Viad may terminate the Merger Agreement and abandon the Merger if, among other
things, the Viad Price is less than $17.20 per share. The "Viad Price" is
defined under the Merger Agreement as the average of the closing sales prices of
Viad Common Stock as listed on the New York Stock Exchange for the 30-trading
day period ending four trading days prior to the Closing Date.
Based on the number of outstanding shares of Game Common Stock as of the
Record Date and on the average of the closing sales prices of Viad Common Stock
for the 30-trading day period ended October 3, 1997 of $18.9708 per share, the
resulting Exchange Ratio would be 0.5667 (assuming for purposes of illustration
that the Closing Date was October 9, 1997).
The Board of Directors of Game has carefully reviewed the terms and
conditions of the Merger Agreement. In addition, the Board of Directors of Game
has received a written opinion from its financial advisor, Ladenburg Thalmann &
Co. Inc., to the effect that, as of September 23, 1997, and based upon and
subject to various qualifications and assumptions described therein, the
consideration to be paid in the Merger is fair to the holders of Game Common
Stock from a financial point of view.
Game's Board of Directors has unanimously determined that the Merger
Agreement and the transactions contemplated thereby are fair to, and in the best
interests of, Game's stockholders. Accordingly, the Board of Directors of Game
has unanimously approved the Merger Agreement and recommends that you vote FOR
its approval and adoption.
For further information regarding the Merger and the potential benefits of
the Merger, we urge that you read carefully the accompanying Notice of Special
Meeting of Stockholders and Proxy Statement/Prospectus.
An affirmative vote of the holders of a majority of the outstanding shares
of Game Common Stock is necessary for approval and adoption of the Merger
Agreement. The founding stockholder of Game and certain affiliated stockholders,
who collectively hold approximately 62% of the outstanding shares of Game Common
Stock, have granted irrevocable proxies to Viad to vote their shares in favor of
the Merger Agreement. Viad's proxy vote in favor of the Merger will constitute a
sufficient number of shares to approve the Merger. As a result of the
Irrevocable Proxy Agreements and Viad's intention to exercise the proxies
thereby to vote in favor of the Merger, the proposal to approve and adopt the
Merger Agreement will be approved regardless of how or whether other holders of
Game Common Stock vote their shares. See "The Merger -- Irrevocable Proxy
Agreements" in the accompanying Proxy Statement/Prospectus. However, it is a
condition to Closing, which may be waived by Viad, that the number of dissenting
shares shall not exceed five percent (5%) of Game Common Stock outstanding at
the Effective Time. See "The Special Meeting -- Dissenters' Rights," and "The
Merger -- The Merger Agreement -- Viad's Conditions to Closing."
Upon approval of the Merger Agreement and consummation of the Merger, you
will be sent a letter of transmittal with instructions for surrendering your
certificates representing shares of Game Common Stock. Please do not send your
share certificates until you receive these materials.
<PAGE> 5
If you attend the Special Meeting and desire to revoke your proxy in
writing and vote in person, you may do so; in any event, a proxy may be revoked
in writing at any time before it is exercised. Your prompt cooperation will be
appreciated.
Sincerely,
GARY A. DACHIS
Chairman of the Board, President and
Chief Executive Officer
Minneapolis, Minnesota
, 1997
IN ORDER THAT YOUR SHARES MAY BE REPRESENTED AT THE SPECIAL MEETING, YOU
ARE URGED PROMPTLY TO COMPLETE, SIGN, DATE AND RETURN THE ACCOMPANYING PROXY IN
THE ENCLOSED ENVELOPE, WHETHER OR NOT YOU PLAN TO ATTEND THE SPECIAL MEETING. DO
NOT SEND ANY STOCK CERTIFICATES WITH THE ENCLOSED PROXY CARD.
<PAGE> 6
GAME FINANCIAL CORPORATION
13705 FIRST AVENUE NORTH
MINNEAPOLIS, MINNESOTA 55441
------------------------
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD DECEMBER , 1997
------------------------
To the Stockholders of GAME FINANCIAL CORPORATION:
NOTICE IS HEREBY GIVEN that a Special Meeting of Stockholders (the "Special
Meeting") of Game Financial Corporation, a Minnesota corporation ("Game"), will
be held at [address] on December [ ,] 1997, at 10:00 a.m., Central Time, for
the following purposes:
1. To consider and vote upon a proposal to approve and adopt the
Agreement and Plan of Merger dated as of September 24, 1997, by and among
Game, Viad Corp ("Viad") and Game Acquisition Corp. ("Acquisition Sub"), a
wholly-owned subsidiary of Viad (the "Merger Agreement"). Pursuant to the
Merger Agreement, among other things, (a) Acquisition Sub will be merged
with and into Game, with Game to be the surviving corporation of the Merger
(the "Merger"), and (b) each outstanding share of common stock, par value
$.01 per share, of Game (the "Game Common Stock") will be converted into
the right to receive a fraction of a share of common stock, par value $1.50
per share, of Viad (the "Viad Common Stock") equal to $10.75 divided by the
Viad Price, as defined below (the "Exchange Ratio"). The "Viad Price" is
defined under the Merger Agreement as the average of the closing sale
prices of Viad Common Stock as reported on the New York Stock Exchange for
the 30 trading day period ending four trading days prior to the Closing
Date; and
2. To transact such other business as may properly come before the
Special Meeting or any adjournments or postponements thereof, including a
motion to adjourn to a later date to permit further solicitation of proxies
if necessary.
INFORMATION REGARDING THE PROPOSED MERGER, THE MERGER AGREEMENT AND RELATED
MATTERS IS CONTAINED IN THE ACCOMPANYING PROXY STATEMENT/PROSPECTUS AND THE
APPENDICES THERETO, WHICH ARE INCORPORATED BY REFERENCE HEREIN AND FORM A PART
OF THIS NOTICE. A copy of the Merger Agreement is attached as Appendix II to the
accompanying Proxy Statement/Prospectus.
Stockholders of record at the close of business on [DATE], 1997 are
entitled to notice of, and to vote at, the Special Meeting and any adjournment
or postponement of the Special Meeting.
Under the Minnesota Business Corporation Act, stockholders of Game have
certain dissenters' rights in connection with the Merger. See "The Special
Meeting -- Dissenters' Rights" in the accompanying Proxy Statement/Prospectus
and Appendix VIII thereto.
All stockholders are cordially invited to attend the meeting in person.
However, to ensure your representation at the meeting, you are urged to
complete, sign and return the enclosed proxy card as promptly as possible in the
enclosed postage-prepaid envelope.
By Order of the Board of Directors,
GARY A. DACHIS
Chairman of the Board, President and
Chief Executive Officer
Minneapolis, Minnesota
, 1997
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE COMPLETE, SIGN AND
DATE THE ENCLOSED PROXY CARD AND RETURN IT PROMPTLY IN THE ENCLOSED ENVELOPE. DO
NOT SEND ANY STOCK CERTIFICATES WITH THE ENCLOSED PROXY CARD.
<PAGE> 7
GAME FINANCIAL CORPORATION
PROXY STATEMENT FOR
SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON DECEMBER , 1997
------------------------
VIAD CORP
PROSPECTUS
A MAXIMUM OF 2,800,000 SHARES OF COMMON STOCK
------------------------
This Proxy Statement/Prospectus (the "Proxy Statement/Prospectus") is being
furnished to holders of the common stock, par value $.01 per share, (the "Game
Common Stock") of Game Financial Corporation, a Minnesota corporation ("Game"),
in connection with the solicitation of proxies by the Board of Directors of Game
for use at the Special Meeting of Stockholders of Game to be held at [ADDRESS],
Minneapolis, Minnesota, on December [ ], 1997, at 10:00 a.m., Central Time, and
at any adjournments or postponements thereof (the "Special Meeting").
At the Special Meeting, holders of record as of [DATE], 1997 (the "Record
Date") of Game Common Stock will be requested to consider and vote upon a
proposal to approve and adopt the Agreement and Plan of Merger dated as of
September 24, 1997, by and among Game, Viad Corp, a Delaware corporation
("Viad") and Game Acquisition Corp. ("Acquisition Sub"), a wholly-owned
subsidiary of Viad (the "Merger Agreement"). Pursuant to the Merger Agreement,
(i) Acquisition Sub will be merged with and into Game (the "Merger"), with Game
as the surviving corporation of the Merger, and (ii) each share of Game Common
Stock outstanding immediately prior to the effective time of the Merger (the
"Effective Time") will be converted into the right to receive a fraction of a
share of common stock, par value $1.50 per share, of Viad (the "Viad Common
Stock") equal to $10.75 divided by the Viad Price, as defined below (the
"Exchange Ratio"), all as more fully described in this Proxy
Statement/Prospectus and as set forth in the Merger Agreement. No fractional
shares of Viad Common Stock will be issued in the Merger to holders of Game
Common Stock. Holders of Game Common Stock otherwise entitled to a fractional
share of Viad Common Stock will be paid the value of such fractional share in
cash or in stock, at Viad's sole discretion, as described in this Proxy
Statement/Prospectus. A copy of the Merger Agreement and related agreements are
attached as Appendices to this Proxy Statement/Prospectus and are incorporated
herein by reference.
Based on the number of outstanding shares of Game Common Stock as of the
Record Date and on the average of the closing sale prices of Viad Common Stock
for the 30 trading day period ended October 3, 1997 of $18.9708 per share and a
resulting Exchange Ratio of 0.5667(assuming for purposes of illustration that
the Closing Date had been October 9, 1997), the shares of Viad Common Stock to
be issued to Game Stockholders in the Merger and to holders of outstanding
options, warrants and other rights upon the exercise thereof would represent
approximately 3% of the outstanding common stock of Viad after the Merger.
Since the market price of shares of Viad Common Stock can fluctuate, the
Exchange Ratio and the number of shares of Viad Common Stock that the holders of
Game Common Stock will receive in the Merger may increase or decrease prior to
the Effective Time. Game may terminate the Merger Agreement and abandon the
Merger if, among other things, the Viad Price is more than $21.20 per share.
Viad may terminate the Merger Agreement and abandon the Merger if, among other
things, the Viad Price is less than $17.20 per share. The "Viad Price" is
defined under the Merger Agreement as the average of the closing sale prices of
Viad Common Stock as reported on the New York Stock Exchange for the 30 trading
day period ending four trading days prior to the Closing Date. The average of
the closing sale prices of Viad Common Stock for the 30 trading day period ended
October 3, 1997 was $18.9708 per share.
Viad Common Stock is traded on the New York Stock Exchange under the symbol
"VVI" and Game Common Stock is traded on the Nasdaq National Market under the
symbol "GFIN." On [DATE], 1997, the
<PAGE> 8
closing sale price per share of Viad Common Stock on the New York Stock Exchange
was $ , and the last reported sale price per share of Game Common Stock
on the Nasdaq National Market was $ .
The Boards of Directors of Game, Viad and Acquisition Sub, and Viad as the
sole stockholder of the outstanding capital stock of Acquisition Sub, have each
approved the Merger Agreement. THE BOARD OF DIRECTORS OF GAME UNANIMOUSLY
RECOMMENDS THAT HOLDERS OF GAME COMMON STOCK VOTE FOR APPROVAL AND ADOPTION OF
THE MERGER AGREEMENT. See "The Merger -- Recommendation of the Board of
Directors of Game of Directors."
An affirmative vote of the holders of a majority of the outstanding shares
of Game Common Stock is necessary for approval and adoption of the Merger
Agreement. The founding stockholder of Game and certain affiliated stockholders,
who collectively hold approximately 62% of the outstanding shares of Game Common
Stock, have granted irrevocable proxies to Viad to vote their shares in favor of
the Merger Agreement. Viad's proxy vote in favor of the Merger will constitute a
sufficient number of shares to approve the Merger. See "Merger -- Irrevocable
Proxy Agreements." AS A RESULT OF THE IRREVOCABLE PROXY AGREEMENTS AND VIAD'S
INTENTION TO EXERCISE THE PROXIES THEREBY TO VOTE IN FAVOR OF THE MERGER, THE
PROPOSAL TO APPROVE AND ADOPT THE MERGER AGREEMENT WILL BE APPROVED REGARDLESS
OF HOW OR WHETHER OTHER HOLDERS OF GAME COMMON STOCK VOTE THEIR SHARES. However,
it is a condition to Closing, which may be waived by Viad, that the number of
Dissenting Shares shall not exceed five percent (5%) of Game Common Stock
outstanding at the Effective Time. See "The Special Meeting -- Dissenters'
Rights" and "The Merger -- The Merger Agreement -- Viad's Conditions to
Closing."
This Proxy Statement/Prospectus, in addition to constituting Game's Proxy
Statement relating to the Special Meeting, also includes and constitutes the
Prospectus of Viad with respect to Viad Common Stock issuable pursuant to the
Merger Agreement to holders of shares of Game Common Stock. All information
concerning Viad contained (or, as permitted by applicable rules and regulations
of the Commission, incorporated by reference with respect to Viad) in this Proxy
Statement/Prospectus has been furnished or prepared by Viad, and all information
concerning Game contained (or, as permitted by applicable rules and regulations
of the Commission, incorporated by reference with respect to Game) in this Proxy
Statement/Prospectus has been furnished or prepared by Game.
------------------------
THE SECURITIES TO BE ISSUED PURSUANT TO THIS PROXY STATEMENT/PROSPECTUS HAVE NOT
BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY
STATE SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR
ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROXY STATEMENT/PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
------------------------
This Proxy Statement/Prospectus, the Notice of Special Meeting and the
accompanying form of proxy are first being mailed to the stockholders of Game on
or about , 1997.
The date of this Proxy Statement/Prospectus is , 1997.
<PAGE> 9
NO PERSON HAS BEEN AUTHORIZED BY VIAD OR GAME TO GIVE ANY INFORMATION OR TO
MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PROXY STATEMENT/PROSPECTUS AND, IF
GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION SHOULD NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED BY EITHER VIAD OR GAME. THIS PROXY STATEMENT/PROSPECTUS
DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY
SECURITIES, OR THE SOLICITATION OF A PROXY IN ANY JURISDICTION IN WHICH, OR TO
OR FROM ANY PERSON TO WHOM, SUCH AN OFFER OR SOLICITATION WOULD BE UNLAWFUL.
NEITHER THE DELIVERY OF THIS PROXY STATEMENT/PROSPECTUS NOR ANY DISTRIBUTION OF
THE SECURITIES OFFERED HEREBY SHALL, UNDER ANY CIRCUMSTANCES, IMPLY OR CREATE
ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF VIAD OR GAME OR
IN THE INFORMATION SET FORTH OR INCORPORATED BY REFERENCE HEREIN SUBSEQUENT TO
THE DATE HEREOF.
AVAILABLE INFORMATION
Viad and Game are each subject to the informational requirements of the
Exchange Act, and in accordance therewith file reports, proxy statements and
other information with the SEC. Such reports, proxy statements and other
information filed by each of Viad and Game may be inspected and copied at the
public reference facilities maintained by the SEC at Room 1024, Judiciary Plaza,
450 Fifth Street, N.W., Washington, D.C. 20549 and at the SEC's regional offices
located at Northeast Regional Office, Seven World Trade Center, Suite 1300, New
York, New York 10048 and Midwest Regional Office, Citicorp Center, 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of such materials
can also be obtained from the Public Reference Section of the Commission,
Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed
rates. The SEC maintains a Web site that contains reports, proxy and information
statements and other materials that are filed through the SEC's Electronic Data
Gathering, Analysis and Retrieval (EDGAR) system. This Web site can be accessed
at http://www.sec.gov. In addition, materials filed by Viad can be inspected at
offices of the New York Stock Exchange at 20 Broad Street, New York, New York
10005 and materials filed by Game can be inspected at the offices of the
National Association of Securities Dealers, Inc. (the "NASD") at 1735 K Street,
N.W., Washington, DC 20006.
This Proxy Statement/Prospectus constitutes a part of a Registration
Statement on Form S-4 (together with all amendments and exhibits thereto, the
"Registration Statement") filed by Viad under the Securities Act, with respect
to the offering of Viad Common Stock in connection with the Merger. As permitted
by the rules and regulations of the SEC, this Proxy Statement/Prospectus omits
certain information contained or incorporated by reference in the Registration
Statement. Reference is made to the Registration Statement for further
information with respect to Viad, Viad Common Stock, Game, and the Merger.
Statements contained in this Proxy Statement/Prospectus as to the contents of
any contract or other document filed as an exhibit to the Registration Statement
are not necessarily complete, and in each instance reference is made to the copy
of such contract or other document filed as an exhibit to the Registration
Statement. Each such statement is qualified in its entirety by such reference.
For further information, reference is hereby made to the Registration Statement.
As used in this Proxy Statement/Prospectus, the term "Game" means Game
Financial Corporation and its Subsidiaries, and the term "Viad" means Viad Corp
and its Subsidiaries. All information contained or incorporated by reference in
this Proxy Statement/Prospectus relating to Game was provided by the management
and Board of Directors of Game. Viad assumes no responsibility for the accuracy
of such information. All information contained or incorporated by reference in
this Proxy Statement/Prospectus relating to Viad was provided by the management
and Board of Directors of Viad. Game assumes no responsibility for the accuracy
of such information.
The Merger does not constitute a "significant business combination" for
Viad under the SEC's accounting rules. Therefore, other than under "Comparative
Per Share Data" below, pro forma financial information reflecting the effects of
the Merger has not been included in this Proxy Statement/Prospectus.
2
<PAGE> 10
INCORPORATION OF DOCUMENTS BY REFERENCE
The following documents filed with the SEC by Viad (formerly The Dial Corp)
under File No. 001-11015 and by Game under File No. 000-23626 pursuant to the
Exchange Act are incorporated herein by reference:
(a)(1) Viad's Annual Report on Form 10-K for the fiscal year ended December
31, 1996;
(2) Viad's Quarterly Reports on Form 10-Q for the quarters ended March
31, and June 30, 1997;
(3) Viad's Proxy Statement for the 1997 Annual Meeting of Stockholders;
(4) The description of Viad Common Stock contained in Viad's
Registration Statement on Form 8-B filed with the SEC pursuant to
Section 12 of the Exchange Act on February 25, 1992; and
(5) The description of Viad's Rights Plan contained in Viad's
Registration Statement on Form 8-A filed with the SEC pursuant to
Section 12 of the Exchange Act on February 24, 1992.
(b)(1) Game's Annual Report on Form 10-KSB for the year ended December 31,
1996;
(2) Game's Proxy Statement for the 1997 Annual Meeting of Stockholders;
(3) Game's Quarterly Reports on Form 10-QSB for the quarters ended March
31, and June 30, 1997; and
(4) Game's Current Report on Form 8-K filed on October 8, 1997.
All documents filed by Viad and Game with the SEC pursuant to Sections
13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date hereof and
prior to the termination of the offering of any securities offered hereby shall
be deemed to be incorporated by reference in this Proxy Statement/Prospectus and
to be a part hereof from the date of such filing. See "Available Information."
Any statement contained herein, or in a document incorporated or deemed to be
incorporated herein by reference, shall be deemed to be modified or superseded
for purposes of this Proxy Statement/Prospectus to the extent that a statement
contained herein or in any other subsequently filed document incorporated or
deemed to be incorporated herein by reference, modifies or supersedes such
statement. Any such statement so modified or superseded shall not be deemed,
except as so modified or superseded, to constitute a part of this Proxy
Statement/Prospectus.
THIS PROXY STATEMENT/PROSPECTUS INCORPORATES DOCUMENTS BY REFERENCE WHICH
ARE NOT PRESENTED HEREIN OR DELIVERED HEREWITH. COPIES OF THESE DOCUMENTS
(EXCLUDING EXHIBITS UNLESS SUCH EXHIBITS ARE SPECIFICALLY INCORPORATED BY
REFERENCE INTO THE INFORMATION INCORPORATED HEREIN) WILL BE PROVIDED BY FIRST
CLASS MAIL WITHOUT CHARGE TO EACH PERSON TO WHOM THIS PROXY STATEMENT/PROSPECTUS
IS DELIVERED, INCLUDING ANY BENEFICIAL OWNER OF VIAD COMMON STOCK OR GAME COMMON
STOCK, UPON WRITTEN OR ORAL REQUEST BY SUCH PERSON AS FOLLOWS: WITH RESPECT TO
VIAD, TO VIAD CORP, 1850 NORTH CENTRAL AVENUE, SUITE 2402, PHOENIX, ARIZONA
85077-2212, ATTENTION: PUBLIC RELATIONS, (TELEPHONE: (602) 207-4000); AND WITH
RESPECT TO GAME, TO GAME FINANCIAL CORPORATION, 13705 FIRST AVENUE NORTH,
MINNEAPOLIS, MINNESOTA 55441, ATTENTION: JEFFREY L. RINGER, CHIEF FINANCIAL
OFFICER (TELEPHONE: (612) 476-8500). IN ORDER TO ENSURE TIMELY DELIVERY OF THE
DOCUMENTS, ANY REQUEST SHOULD BE MADE BY , 1997.
3
<PAGE> 11
TABLE OF CONTENTS
<TABLE>
<S> <C>
AVAILABLE INFORMATION................................................................... 2
INCORPORATION OF DOCUMENTS BY REFERENCE................................................. 3
CAUTIONARY NOTICE REGARDING FORWARD-LOOKING STATEMENTS.................................. 7
SUMMARY................................................................................. 7
MARKET PRICES........................................................................... 14
COMPARATIVE PER SHARE DATA.............................................................. 16
VIAD SELECTED HISTORICAL FINANCIAL DATA................................................. 18
GAME SELECTED HISTORICAL FINANCIAL DATA................................................. 20
THE SPECIAL MEETING..................................................................... 21
General............................................................................... 21
Matters to be Considered.............................................................. 21
Board of Directors' Recommendation.................................................... 21
Record Date; Voting Rights............................................................ 21
Quorum................................................................................ 21
Required Vote......................................................................... 21
Dissenters' Rights.................................................................... 22
Proxies............................................................................... 24
Solicitation of Proxies............................................................... 25
THE MERGER.............................................................................. 26
General Description of the Merger..................................................... 26
Reasons for and Background of the Merger.............................................. 27
Background of the Merger........................................................... 27
Game's Reasons for the Merger...................................................... 29
Viad's Reasons for the Merger...................................................... 30
Recommendation of the Game Board of Directors......................................... 30
Opinion of Game's Financial Advisor................................................... 31
Information and Materials Considered............................................... 31
Overview of Analyses............................................................... 32
Qualitative Considerations......................................................... 32
Quantitative Analyses.............................................................. 32
Comparison of the Consideration to the Values of Game.............................. 34
Limitations of Analyses............................................................ 34
Management and Operations After the Merger............................................ 35
Terms and Conditions of the Merger.................................................... 35
Surrender of Stock Certificates and Receipt of Merger Consideration................ 35
Fractional Shares.................................................................. 36
Treatment of Game Options.......................................................... 36
The Merger Agreement.................................................................. 36
Mutual Conditions to Closing....................................................... 36
Viad's Conditions to Closing....................................................... 37
Game's Conditions to Closing....................................................... 38
Representations and Warranties..................................................... 38
Conduct of Game Business Prior to the Merger....................................... 39
Agreement Not to Solicit Third Party Offers........................................ 39
Voting of Game Shares; No Transfers................................................ 40
Continuation of Indemnities; No Circular Indemnities............................... 40
Registration Statement; Prospectus/Proxy Statement................................. 40
Agreement to Cooperate............................................................. 40
Confidentiality.................................................................... 40
Tax Treatment...................................................................... 40
Pooling............................................................................ 40
</TABLE>
4
<PAGE> 12
<TABLE>
<S> <C>
Certain Other Covenants............................................................ 40
Indemnification.................................................................... 41
Termination........................................................................ 41
Termination Fees; Expenses......................................................... 42
Dispute Resolution................................................................. 43
Amendment and Waiver............................................................... 43
Survival........................................................................... 43
Selling Shareholder's Agreement....................................................... 43
Escrow of Dachis Shares............................................................ 44
Representations and Warranties..................................................... 44
Agreement to Cooperate............................................................. 44
Confidentiality.................................................................... 44
Tax Treatment; Pooling............................................................. 44
Affiliates Agreements.............................................................. 45
Delivery of Certificate of Adequate Software Documentation......................... 45
Continuation of Indemnities: No Circular Indemnities............................... 45
Termination........................................................................ 45
Indemnification.................................................................... 45
Dispute Resolution................................................................. 46
Survival........................................................................... 46
Stock Option Agreement................................................................ 46
Irrevocable Proxy Agreements.......................................................... 47
Affiliate Agreements.................................................................. 48
Interests of Certain Persons in the Merger............................................ 48
Employment Agreements.............................................................. 48
Automatic Conversion of Game Options............................................... 48
Vesting of Game Options............................................................ 49
Indemnification and Directors' and Officers' Insurance............................. 49
Ownership and Voting of Stock...................................................... 49
Regulatory Filings and Approvals...................................................... 49
Anticipated Accounting Treatment...................................................... 50
Public Trading Market................................................................. 50
Status Under Federal Securities Laws.................................................. 50
Certain United States Federal Income Tax Consequences................................. 51
CERTAIN RELATED TRANSACTIONS............................................................ 53
INFORMATION REGARDING VIAD.............................................................. 53
Business of Viad...................................................................... 53
Airline Catering and Services...................................................... 53
Convention Services................................................................ 53
Travel and Leisure and Payment Services............................................ 53
Recent Developments................................................................... 54
DESCRIPTION OF VIAD CAPITAL STOCK....................................................... 55
Common Stock.......................................................................... 55
Preferred Stock....................................................................... 55
Viad Junior Preferred Stock........................................................ 56
Viad $4.75 Preferred Stock......................................................... 56
Stock Purchase Rights.............................................................. 57
Certain Charter and Bylaw Provisions.................................................. 57
Classification Of Board............................................................ 57
Stockholder Action................................................................. 58
Advance Notice Provisions.......................................................... 58
Merger/Sale Of Assets.............................................................. 58
Delaware General Corporation Law Section 203....................................... 58
</TABLE>
5
<PAGE> 13
<TABLE>
<S> <C>
INFORMATION REGARDING GAME.............................................................. 60
Business of Game...................................................................... 60
GameCash(TM) Services................................................................. 60
Customers............................................................................. 61
Stock Ownership of Management and Certain Beneficial Owners........................... 61
COMPARATIVE RIGHTS OF STOCKHOLDERS...................................................... 62
Election of Directors................................................................. 62
Removal of Directors.................................................................. 63
Action by Written Consent............................................................. 63
Amendments to Charter................................................................. 63
Amendments to Bylaws.................................................................. 64
Special Meetings of Stockholders...................................................... 64
Vote on Extraordinary Corporate Transactions.......................................... 64
Dividends............................................................................. 65
Appraisal Rights of Dissenting Stockholders........................................... 65
Indemnification and Limitation of Liability of Directors and Officers................. 66
Preemptive Rights..................................................................... 67
Business Combination Restrictions..................................................... 67
Advance Notice Requirement for Stockholder Proposals and Director Nominations......... 67
Stockholder Rights Plan............................................................... 67
Stockholder's Right to Examine Books and Records...................................... 67
LEGAL MATTERS........................................................................... 68
EXPERTS................................................................................. 68
</TABLE>
LIST OF APPENDICES
<TABLE>
<S> <C> <C>
APPENDIX I -- LIST OF DEFINED TERMS
APPENDIX II -- AGREEMENT AND PLAN OF MERGER
APPENDIX III -- SELLING SHAREHOLDER'S AGREEMENT
APPENDIX IV -- IRREVOCABLE PROXY AGREEMENT OF DACHIS
APPENDIX V -- IRREVOCABLE PROXY AGREEMENT OF DACHIS TRUST
APPENDIX VI -- STOCK OPTION AGREEMENT
APPENDIX VII -- OPINION OF LADENBURG THALMANN & CO. INC.
APPENDIX VIII -- SECTIONS 302A.471 AND 302A.473 OF MBCA (DISSENTERS' RIGHTS)
</TABLE>
6
<PAGE> 14
CAUTIONARY NOTICE REGARDING FORWARD-LOOKING STATEMENTS
Certain statements contained in "The Merger -- Reasons for and Background
of the Merger," "The Merger -- Recommendation of the Board of Directors of
Game," "The Merger -- Opinion of Game's Financial Advisor" as well as possible
or assumed future results of operations of Viad and Game set forth under "The
Merger -- Opinion of Game's Financial Advisor," including (i) any forecasts,
projections and synergies referred to therein; (ii) and certain statements
incorporated by reference from documents filed with the SEC by Viad and Game,
including any statements contained herein or incorporated by reference herein
regarding the development of Viad's and Game's businesses or possible or assumed
future results of operations, the markets for Viad's and Game's services and
products, anticipated capital expenditures, regulatory reform and the effects of
the Merger; (iii) any statements preceded by, followed by or that include the
words "believes," "expects," "anticipates" or similar expressions; and (iv)
other statements contained or incorporated by reference herein or therein
regarding matters that are not historical facts, are or may constitute
forward-looking statements (as such term is defined in the Private Securities
Litigation Reform Act of 1995). Various factors that could cause actual results
to differ materially from those described in such forward-looking statements
include, but are not limited to, those discussed herein and in each of Viad's
and Game's Annual Report on Form 10-K and Form 10-KSB, respectively, for the
fiscal year ended December 31, 1996 (which are incorporated herein by
reference). All subsequent written and oral forward-looking statements
attributable to Viad or Game or persons acting on its or their behalf are
expressly qualified in their entirety by the cautionary statements in this
paragraph. Game stockholders are cautioned not to place undue reliance on such
statements, which speak only as of the date hereof. Neither Viad nor Game
undertakes any obligation to release publicly any revisions to these
forward-looking statements to reflect events or circumstances after the date
hereof or to reflect the occurrence of unanticipated events.
SUMMARY
The following is a summary of certain important terms of the proposed
Merger and related information discussed elsewhere in this Proxy
Statement/Prospectus. This summary does not purport to be complete and is
qualified in its entirety by reference to the more detailed information included
in this Proxy Statement/Prospectus and the Appendices hereto, including, but not
limited to, the List of Defined Terms and the Merger Agreement, the Selling
Shareholder's Agreement, the Irrevocable Proxy Agreements and the Stock Option
Agreement set forth as Appendix I, Appendix II, Appendix III, Appendix IV,
Appendix V and Appendix VI hereto, respectively. Stockholders of Game are urged
to read this Proxy Statement/Prospectus and the Appendices hereto in their
entirety and to consider carefully the information set forth under the headings
"Cautionary Notice Regarding Forward-Looking Statements."
THE COMPANIES
VIAD CORP.................. Viad is comprised of various operating companies
which conduct diversified service businesses in the
airline catering and services, convention services
and travel and leisure and payment services. Viad
operates nationally and internationally through its
Exhibitgroup/Giltspur division and through its
various subsidiaries which include Dobbs
International Services, Inc., Aircraft Services
International, Inc., GES Exposition Services, Inc.,
Travelers Express Company, Inc. ("Travelers"),
Greyhound Leisure Services, Inc., Brewster
Transport Company Limited and Restaura, Inc. Viad's
executive offices are located at 1850 North Central
Avenue, Phoenix, Arizona 85077-2402, and its
telephone number is (602) 207-4000. See
"Information Regarding Viad."
It is the intention of Viad that, following the
Merger, Game will operate as a wholly-owned
subsidiary of Travelers. Travelers operates within
the payment services business of the Travel and
Leisure and Payment
7
<PAGE> 15
Services segment of Viad. See "The
Merger -- Management and Operations After the
Merger."
GAME FINANCIAL
CORPORATION................ Game, which was incorporated in December 1990,
offers cash access service to casinos and other
gaming establishments. Game's proprietary
GameCash(TM) services allow casino patrons access
to cash through credit card cash advances, check
cashing and ATMs. As of September 30, 1997, Game
provided cash access services at approximately 80
locations within the continental United States.
Game's principal executive offices are located at
13705 First Avenue North, Minneapolis, Minnesota
55441, and its telephone number is (612) 476-8500.
See "Information Regarding Game."
THE SPECIAL MEETING
DATE AND PLACE OF
MEETING.................... The Special Meeting will be held on December [ ],
1997, at 10:00 a.m. Central Time at [location].
STOCKHOLDERS ENTITLED TO
VOTE....................... The Board of Directors of Game has fixed
, 1997 as the Record Date. Stockholders
of record of Game Common Stock at the close of
business on the Record Date are entitled to notice
of and to vote at the Special Meeting. As of the
Record Date, there were 4,522,522 shares of Game
Common Stock outstanding, each of which will be
entitled to one vote on each matter to be acted on
at the Special Meeting. See "The Special
Meeting -- Record Date; Voting Rights" and "The
Merger -- Irrevocable Proxy Agreements."
PURPOSE OF THE SPECIAL
MEETING.................... The purpose of the Special Meeting is to consider
and vote upon the proposal to approve and adopt the
Merger Agreement.
REQUIRED VOTE.............. The approval and adoption of the Merger Agreement
requires the affirmative vote of the holders of a
majority of the shares of Game Common Stock
outstanding on the Record Date. AS A RESULT OF THE
IRREVOCABLE PROXY AGREEMENTS, AND VIAD'S INTENTION
TO EXERCISE THE PROXIES GRANTED THEREBY TO VOTE IN
FAVOR OF THE MERGER, THE MERGER AGREEMENT WILL BE
ADOPTED AT THE SPECIAL MEETING OF GAME STOCKHOLDERS
REGARDLESS OF HOW OR WHETHER OTHER STOCKHOLDERS OF
GAME VOTE THEIR SHARES. See "The Special
Meeting -- Record Date; Voting Rights" and "The
Merger -- Irrevocable Proxy Agreements." However,
it is a condition to Closing, which may be waived
by Viad, that the number of Dissenting Shares shall
not exceed five percent (5%) of Game Common Stock
outstanding at the Effective Time. See "The Special
Meeting -- Dissenters' Rights" and "The
Merger -- The Merger Agreement -- Viad's Conditions
to Closing."
THE MERGER
THE MERGER................. Subject to the satisfaction of the terms and
conditions set forth in the Merger Agreement, which
are described below and elsewhere herein,
Acquisition Sub, a wholly-owned subsidiary of Viad,
will merge with and into Game. Upon consummation of
the Merger, Acquisition Sub's separate existence
will terminate and Game will be the Surviving
Corporation and thereafter conduct business as a
wholly-owned subsidi-
8
<PAGE> 16
ary of Travelers. See "The Merger -- General
Description of the Merger."
CONVERSION OF GAME STOCK... As a result of the Merger, each share of Game
Common Stock will be converted into the right to
receive shares of Viad Common Stock based upon the
Exchange Ratio. See "The Merger -- General
Description of the Merger." No fractional shares of
Viad Common Stock will be issued in the Merger to
holders of Game Common Stock. Holders of Game
Common Stock otherwise entitled to a fractional
share of Viad Common Stock will be paid the value
of such fractional share in cash or in stock, at
Viad's sole discretion, as described in this Proxy
Statement/Prospectus.
THE EXCHANGE RATIO......... The Exchange Ratio will be a fraction equal to
$10.75 divided by the Viad Price. The Viad Price
will be determined as the average of the closing
sales prices of Viad Common Stock as reported on
the New York Stock Exchange for the 30-trading day
period ending four trading days prior to the
Closing Date. Viad has the right to terminate the
Merger Agreement and abandon the Merger if the Viad
Price is below $17.20 per share. Game has the right
to terminate the Merger Agreement and abandon the
Merger if the Viad Price is above $21.20 per share.
See "The Merger -- General Description of the
Merger."
PAYMENT OF MERGER
CONSIDERATION.............. The Merger Consideration will be paid to Game
stockholders in shares of Viad Common Stock.
However, Viad has the option, in its sole
discretion, to pay each Game stockholder the
appropriate amount in cash, based upon the Exchange
Ratio, in lieu of issuing any fractional shares of
Viad Common Stock. See "The Merger -- General
Description of the Merger" and "Description of Viad
Capital Stock."
TREATMENT OF GAME
OPTIONS.................... Pursuant to the terms of grants issued under Game's
1994 Stock Option and Incentive Plan, all issued
and outstanding Game Options vest and become
immediately exercisable upon approval of the
Merger. All Game Options will be automatically
converted at the Effective Time into options to
purchase Viad Common Stock. The number of stock
options and the exercise price of such options will
be adjusted to reflect the Exchange Ratio, and will
otherwise be exercisable on substantially the same
terms and conditions as were applicable to the Game
Options. See "The Merger -- Terms and Conditions of
the Merger -- Treatment of Game Options" and "The
Merger -- Interests of Certain Persons in the
Merger."
FEDERAL INCOME TAX
CONSEQUENCES............... The Merger is intended to qualify as a tax-free
reorganization so that no gain or loss will be
recognized by Viad or Game or the stockholders of
Game for Federal income tax purposes, except with
respect to any cash received in lieu of fractional
shares. Game stockholders are encouraged to consult
their own tax advisors as to the specific Federal,
state, local and foreign tax consequences of the
Merger. It is a condition to the consummation of
the Merger that Game shall have received an opinion
from its independent public accountants to the
effect that there is a reasonable basis to believe
that the Merger will be treated as a tax-free
reorganization under the Internal Revenue Code of
1986, as amended. See "The Merger -- Certain United
States Federal Income Tax Consequences."
9
<PAGE> 17
CONDITIONS TO THE MERGER... The Merger is subject to certain conditions to
closing including (i) approval by the Game
stockholders; (ii) satisfaction of the Hart-
Scott-Rodino Condition; (iii) receipt by Game of an
opinion from its independent public accountants to
the effect that there is a reasonable basis to
believe that the Merger will be treated as a
tax-free reorganization; (iv) Viad's determination
that it has adequate assurance that the Merger
qualifies for pooling of interests accounting
treatment, including receipt of a letter from
Game's independent public accountants that they are
not aware of any fact or circumstance with respect
to Game which could be interpreted as rendering the
Merger ineligible for pooling of interests
accounting treatment;(v) the Viad Price shall not
be less than $17.20 per share or greater than
$21.20 per share; and (vi) the satisfaction of
other conditions customary to transactions of this
nature. Certain of the conditions to the Merger may
be waived by the parties. See "The Merger -- Terms
and Conditions of the Merger."
TERMINATION OF THE
MERGER..................... The Merger Agreement may be terminated at any time
prior to the Effective Time by either Viad or Game
by mutual consent or (i) if the Effective Time has
not occurred on or before January 31, 1998, unless
extended by the mutual agreement of Game and Viad;
or (ii) if the requisite approval of the Game
stockholders is not obtained. The Merger Agreement
may be terminated by Viad, among other things (i)
if the Viad Price is less than $17.20 per share;
(ii) if the Merger does not qualify for pooling of
interests accounting treatment; or (iii) under
certain other circumstances customary for similar
transactions. The Merger Agreement may be
terminated by Game, among other things (i) if the
Merger would not qualify as a tax free
reorganization; (ii) the Viad Price is more than
$21.20 per share; (iii) if Game enters into a
definitive agreement or business combination with a
third party under terms permitted by the Merger
Agreement; or (iv) under certain other
circumstances customary for similar transactions.
See "The Merger -- The Merger
Agreement -- Termination."
TERMINATION FEES........... Game has agreed to pay to Viad an Expense Fee of
$500,000 if the Merger Agreement is terminated or
the transactions contemplated by the Merger
Agreement fail to close, except in certain
circumstances specified in the Merger Agreement.
Game has agreed to pay to Viad a Breakup Fee of
$2,000,000 (with a credit for the Expense Fee, if
paid), as Viad's sole and exclusive remedy if the
Merger Agreement is terminated or the transactions
contemplated therein fail to close (i) as a result
of Game entering into a definitive agreement with a
third party for a Game Acquisition Transaction;
(ii) if Game or any of its affiliates breach the
agreement not to solicit Third Party Offers; (iii)
due to the failure to obtain approval for the
Merger from Game's stockholders; or (iv) if Game or
any of its Subsidiaries enter into an agreement for
a Game Acquisition transaction prior to January 31,
1999 (or one year from the Termination Date if the
Termination Date is extended beyond January 31,
1998).
Viad has agreed to pay to Game a fee of $500,000 as
Game's sole and exclusive remedy if the Merger
Agreement is terminated or the transactions
contemplated by the Merger Agreement fail to close
as a result of Viad intentionally taking any action
or intentionally failing to take any action after
the date of the Merger Agreement that causes the
Merger
10
<PAGE> 18
not to qualify for pooling of interests accounting
treatment. See "The Merger -- The Merger
Agreement -- Termination Fees; Expenses."
STOCK OPTION AGREEMENT..... In connection with the Merger Agreement, Game and
Viad have entered into a Stock Option Agreement, a
copy of which is attached as Appendix VI. Pursuant
to the Stock Option Agreement, Game has granted to
Viad an option to acquire, under certain
circumstances, 1,500,000 shares of Game Common
Stock (the "Stock Option"). The exercise price of
the Stock Option is $10.00 per share, payable in
cash. The Stock Option is subject to termination
under circumstances set forth in the Merger
Agreement. The Stock Option may have the effect of
discouraging third parties from making a
competitive offer to acquire or merge with Game.
See "The Merger -- Stock Option Agreement."
IRREVOCABLE PROXY
AGREEMENTS................. In connection with the Merger Agreement, Viad and
certain stockholders of Game, including the
Significant Game Shareholders, holding, in the
aggregate, 62% of Game's outstanding and issued
Common Stock, have entered into Irrevocable Proxy
Agreements, the forms of which are attached as
Appendix IV and Appendix V. Pursuant to the
Irrevocable Proxy Agreements, each of the
Significant Game Shareholders have granted to Viad
a proxy which will permit Viad to vote all shares
of Game Common Stock held by such stockholder in
favor of the adoption and approval of the Merger
Agreement and the transactions contemplated by it.
AS A RESULT OF THE IRREVOCABLE PROXY AGREEMENTS,
AND VIAD'S INTENTION TO EXERCISE THE PROXIES
GRANTED THEREBY TO VOTE IN FAVOR OF THE MERGER, THE
MERGER AGREEMENT WILL BE ADOPTED AT THE SPECIAL
MEETING OF GAME STOCKHOLDERS REGARDLESS OF HOW OR
WHETHER GAME STOCKHOLDERS VOTE THEIR SHARES. See
"The Merger -- Irrevocable Proxy Agreements."
However, it is a condition to Closing, which may be
waived by Viad, that Dissenting Shares shall not
exceed five percent (5%) of Game Common Stock
outstanding at the Effective Time. See "The Special
Meeting -- Dissenters' Rights" and "The
Merger -- The Merger Agreement -- Viad's Conditions
to Closing."
STOCKHOLDER APPROVAL
REQUIRED................... A majority of the outstanding shares of Game Common
Stock, represented in person or by proxy, will
constitute a quorum at the Special Meeting.
Approval and adoption of the Merger Agreement will
require the affirmative vote at the Special Meeting
of a majority of the outstanding shares of Game
Common Stock. See "The Special Meeting -- Record
Date; Voting Rights," and "The
Merger -- Irrevocable Proxy Agreements."
RECOMMENDATION OF THE BOARD
OF DIRECTORS OF GAME....... The Board of Directors of Game believes that the
terms of the Merger Agreement and the transactions
contemplated thereby are fair to, and in the best
interests of, Game and its stockholders, and has
therefore unanimously approved the Merger Agreement
and the transactions contemplated thereby. THE GAME
BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE
STOCKHOLDERS OF GAME APPROVE AND ADOPT THE MERGER
AGREEMENT. See "The Merger -- Interests of Certain
Persons in The Merger."
11
<PAGE> 19
OPINION OF GAME'S
FINANCIAL ADVISOR.......... On September 23, 1997, Ladenburg Thalmann & Co.
Inc. ("Ladenburg"), financial advisor to Game,
delivered its written opinion to the Board of
Directors of Game that, on and as of the date of
such Fairness Opinion, based upon the procedures
and subject to the assumptions described in such
Fairness Opinion, the consideration to be received
by the stockholders of Game pursuant to the Merger
Agreement is fair to the stockholders of Game from
a financial point of view. A copy of Ladenburg's
opinion is attached as Appendix VII. Holders of
Game Common Stock are urged to read the Fairness
Opinion in its entirety. The Fairness Opinion was
not updated as of the date hereof, nor will it be
updated as of the Closing Date. See "The
Merger -- Opinion of Game's Financial Advisor."
MANAGEMENT OF GAME AFTER
MERGER..................... The officers of Game will generally continue to
serve as the officers of the Surviving Corporation
after the Merger. The Board of Directors of the
Surviving Corporation will be elected by Viad, as
the sole stockholder of the Surviving Corporation
following the Merger. It is contemplated that the
Surviving Corporation will be named "Game Financial
Corporation" and will operate following the Merger
as a wholly-owned subsidiary of Travelers. See "The
Merger -- Management and Operations After the
Merger."
INTERESTS OF CERTAIN
PERSONS IN THE MERGER...... Game has entered into or will be entering into,
certain employment agreements with Gary A. Dachis
and other officers of Game. Members of Game's Board
of Directors and management team will receive Viad
Common Stock in the Merger. In addition, pursuant
to the terms of grants issued under Game's 1994
Stock Option and Incentive Plan, the Game Options
held by members of management and the Board of
Directors of Game which are not currently vested
will become immediately vested and exercisable for
shares of Viad Common Stock upon the effectiveness
of the Merger. See "The Merger -- Interests of
Certain Persons in the Merger."
SHAREHOLDERS' DISSENTING
RIGHTS..................... Holders of Game Common Stock are entitled to
exercise dissenting stockholder's rights pursuant
to the provisions of the MBCA. In accordance with
these provisions, Game stockholders have the right
to dissent from the Merger and to be paid the "fair
value" of their shares of Game Common Stock. The
failure by a Game stockholder to timely and
properly comply with the appropriate procedures in
the MBCA will result in the termination and waiver
of such dissenting rights. In the event that a Game
stockholder attempts to exercise his or her
dissenters' rights, but fails to make an effective
demand for payment or otherwise loses his or her
status as a dissenting stockholder, such Game
stockholder shall be entitled to receive from Viad
the same number of shares of Viad Common Stock (or
cash payments in lieu of fractional shares at the
sole discretion of Viad) that such stockholder
would have received in the Merger as if he or she
had not attempted to exercise dissenter's rights.
See "The Special Meeting -- Dissenters' Rights" and
"The Merger -- Terms and Conditions of the Merger."
12
<PAGE> 20
ACCOUNTING TREATMENT....... The Merger is intended to qualify for pooling of
interests accounting treatment. The obligation of
Viad to consummate the Merger is subject to Viad's
determination that it has adequate assurance that
the Merger qualifies for pooling of interests
accounting treatment, including receipt of a letter
from Game's independent public accountants, to the
effect that they are not aware of any fact or
circumstance with respect to Game which could be
interpreted as rendering the Merger ineligible for
pooling of interests accounting treatment. See "The
Merger -- Anticipated Accounting Treatment."
COMPARISON OF STOCKHOLDERS'
RIGHTS..................... Upon consummation of the Merger and surrender of
their Certificates, holders of Game Common Stock
will become stockholders of Viad. Game is a
Minnesota corporation and Viad is a Delaware
corporation. There are material differences between
the rights of holders of Game Common Stock and the
rights of holders of Viad Common Stock under
applicable corporate law and under the respective
articles and certificates of incorporation and
by-laws of the two corporations. See "Comparative
Rights of Shareholders" for a summary of such
differences.
CONSUMMATION OF THE MERGER
EFFECTIVE TIME OF THE
MERGER..................... The Merger will be consummated upon the filing of
Articles of Merger with the Secretary of State of
the State of Minnesota. The Effective Time will
occur as promptly as practicable after the
requisite approval of Game's stockholders has been
obtained and all other conditions to the Merger
have been satisfied or waived. See "The
Merger -- General Description of the Merger."
EXCHANGE OF SHARE
CERTIFICATES............... After the Effective Time, holders of record of Game
Common Stock at the Effective Time will receive
from the Exchange Agent a letter of transmittal
containing instructions for the exchange of
Certificates evidencing shares of Game Common Stock
for the number of shares of Viad Common Stock which
they are entitled to receive in the Merger based
upon the Exchange Ratio. HOLDERS OF GAME COMMON
STOCK SHOULD NOT SURRENDER THEIR CERTIFICATES UNTIL
THEY RECEIVE SUCH INSTRUCTIONS AND LETTERS OF
TRANSMITTAL. In the event that a Certificate
evidencing shares of Game Common Stock has been
lost, stolen, destroyed, or is not properly
registered, the holder thereof is urged, in order
to avoid delays and additional expense, to notify
Game's transfer agent Norwest Bank Minnesota, N.A.,
of such fact and to arrange for the issuance of
replacement certificates. See "The Merger -- Terms
and Conditions of the Merger -- Surrender of Stock
Certificates and Receipt of Merger Consideration."
REGULATORY FILINGS
AND APPROVALS.............. Consummation of the Merger is contingent upon
satisfaction of the Hart-Scott-Rodino Condition,
which will be satisfied on October 30, 1997. The
consummation of the Merger is also contingent upon
notification to and/or approval by certain other
governmental authorities and Native American Indian
tribes and certain states in which Viad and/or Game
conduct business. See "The Merger -- Regulatory
Filings and Approvals."
13
<PAGE> 21
MARKET PRICES
MARKET PRICE INFORMATION... Viad Common Stock is listed and traded on the New
York Stock Exchange under the symbol "VVI." The
Viad Common Stock is also traded on the Midwest,
Pacific, Philadelphia and Cincinnati stock
exchanges. Game Common Stock was listed on the
Nasdaq Small Cap Market from April 15, 1994 through
June 5, 1995, and has traded on the Nasdaq National
Market since June 6, 1995 under the symbol "GFIN."
The following table sets forth the high and low
sales prices per share of Viad Common Stock as
reported on the New York Stock Exchange for the
periods indicated. The table also sets forth the
range of high and low bid prices per share of Game
Common Stock for the period January 1, 1995 through
June 5, 1995, and the range of high and low sales
prices for the period after June 5, 1995, as
reported by the Nasdaq Stock Market. The following
table also lists the dividends declared per share
of Viad Common Stock for the periods shown. Game
has never paid any cash dividends on its Common
Stock.
<TABLE>
<CAPTION>
GAME COMMON
VIAD COMMON STOCK CASH DIVIDENDS STOCK(1)
-------------------- DECLARED ON VIAD -----------------
HIGH LOW COMMON STOCK HIGH LOW
-------- ------- ---------------- ------- -------
<S> <C> <C> <C> <C> <C>
1995:
First Quarter.......................... $ 26.125 $21.50 $ 0.15 $ 3.68 $ 2.16
Second Quarter......................... 26.375 23.50 0.15 5.44 3.20
Third Quarter.......................... 25.625 20.875 0.16 11.68 4.88
Fourth Quarter......................... 30.375 22.50 0.16 11.30 7.00
1996:
First Quarter.......................... $ 33.25 $27.125 $ 0.16 $10.80 $ 7.40
Second Quarter......................... 30.75 27.50 0.16 15.60 8.20
Third Quarter.......................... 30.25(2) 13.375(2) 0.08(3) 14.00 8.50
Fourth Quarter......................... 17.125 13.875 0.08 11.25 7.25
1997:
First Quarter.......................... $ 18.00 $14.875 $ 0.08 $ 8.125 $ 6.25
Second Quarter......................... 19.50 14.625 0.08 10.25 6.125
Third Quarter.......................... 20.375 17.00 0.08 11.00 8.625
Fourth Quarter (through October 3,
1997)............................... 20.188 18.50 (4) 10.063 9.938
</TABLE>
- ---------------
(1) The quotations represent prices between dealers, do not include retail
mark-ups, mark-downs or commissions, and do not necessarily represent actual
transactions.
(2) On August 15, 1996, the spin-off of Viad's consumer products business, now
conducted under the name of The Dial Corporation, to Viad's stockholders
became effective. The closing price of Viad Common Stock immediately prior
to the spin-off on August 15, 1996 was $26.375. The high and low prices for
the period July 1, 1996 through August 15, 1996 were $30.25 and $25.25,
respectively. The average price of The Dial Corporation common stock was
$13.0625 on the day immediately following the August 15 distribution, and
the average price of Viad Common Stock was $14.3125 on the day immediately
following the distribution. The high and low prices for Viad Common Stock
for the period August 16 through September 30, 1996, were $15.25 and
$13.375, respectively.
(3) Viad's quarterly dividend decreased from $0.16 to $0.08 per share following
the spin-off of The Dial Corporation. The Dial Corporation's initial
quarterly dividend of $0.08 per share after the spin-off maintained the 1995
annual dividend rate for stockholders who retained shares of both companies
following the spin-off.
14
<PAGE> 22
(4) Viad's dividend, if any, for the fourth quarter of 1997 has not been
declared as of the date of this Proxy Statement/Prospectus. There can be
no assurances that any such dividend will be declared or that, if
declared, the amount of such dividend will be consistent with prior
dividend levels.
Viad and Game entered into the Merger Agreement on September 24, 1997. The
following table sets forth the closing prices for a share of Viad Common Stock
and a share of Game Common Stock, as reported by the New York Stock Exchange and
the Nasdaq National Market, respectively, on September 24, 1997, the last
trading day preceding the public announcement of the execution of the Merger
Agreement, and on October 3, 1997, the last practicable trading day before the
printing of this Proxy Statement/Prospectus.
<TABLE>
<CAPTION>
CLOSING PRICE OF VIAD CLOSING PRICE OF GAME
DATE COMMON STOCK COMMON STOCK
- ------------------------------------------------------- --------------------- ---------------------
<S> <C> <C>
September 24, 1997..................................... $19.125 $ 10.25
October 3, 1997........................................ 19.75 10.00
</TABLE>
Based on an assumed Exchange Ratio of 0.5667, the equivalent per share
price of Game Common Stock was $10.84 on September 24, 1997 and was $11.19 on
October 3, 1997.
GAME STOCKHOLDERS ARE URGED TO OBTAIN CURRENT MARKET INFORMATION FOR VIAD
COMMON STOCK AND GAME COMMON STOCK. NO ASSURANCE CAN BE GIVEN AS TO THE MARKET
PRICES OF VIAD COMMON STOCK AT THE EFFECTIVE TIME OF THE MERGER.
15
<PAGE> 23
COMPARATIVE PER SHARE DATA
The following historical, pro forma and equivalent pro forma data are
presented as of and for the six months ended June 30, 1997 and 1996 and as of
and for the years ended December 31, 1996, 1995 and 1994. The data presented are
based upon the historical consolidated financial statements of each of Viad and
Game, which are incorporated by reference in this Proxy Statement/Prospectus.
This information should be read in conjunction with and is qualified in its
entirety by such historical financial statements. See "Incorporation of
Documents by Reference." The pro forma data in the tables are presented for
comparative purposes only and are not necessarily indicative of the combined
financial position or results of operations of the combined companies in the
future or what the combined financial position or results of operations would
have been had the acquisition been consummated during the periods shown or as of
the date for which the tables are presented.
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
--------------- -------------------------
1997 1996 1996 1995 1994
----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C>
VIAD HISTORICAL:
Book value per common share(1).................... $5.06 $6.58 $4.79 (2) (2)
Cash dividends declared per common share(3)....... $0.16 $0.32 $0.48 $0.62 $0.59
Income per common share from continuing
operations(4)................................... $0.39 $0.19 $0.74 $0.79 $0.69
VIAD PRO FORMA:(5)
Book value per common share(1).................... $5.01 $6.46 $4.73 (2) (2)
Cash dividends declared per common share(6)....... $0.16 $0.32 $0.48 $0.62 $0.59
Income per common share from continuing
operations(4)................................... $0.39 $0.19 $0.74 $0.77 $0.68
</TABLE>
- ---------------
(1) Book value per common share is calculated by dividing Viad Common Stock and
other equity by the number of common shares outstanding at the end of the
period, reduced by shares held by Viad's Employee Equity Trust (the
"Trust"). Shares held by the Trust are not considered outstanding for income
per common share and book value per common share calculations until the
shares are released from the Trust. Total shares held by the Trust totaled
5,080,176, 5,677,316 and 5,670,818 at June 30, 1997, June 30, 1996 and
December 31, 1996, respectively. The decline in book value from June 30,
1996 to December 31, 1996 reflects the spin-off of Viad's consumer products
business, now conducted under the name of The Dial Corporation, on August
15, 1996.
(2) Not required.
(3) The declines in dividends declared per common share for the year ended
December 31, 1996, as compared to 1995 and for the first six months of 1997
as compared to the first six months of 1996, reflect the spin-off of The
Dial Corporation on August 15, 1996. Viad's quarterly dividend decreased
from $0.16 per share to $0.08 per share following the spin-off. The Dial
Corporation's initial quarterly dividend of $0.08 per share after the
spin-off maintained the 1995 annual dividend rate for stockholders who
retained shares of both companies following the spin-off.
(4) Includes a nonrecurring gain on the sale of Viad's interest in the Phoenix
Suns of $0.21 per share for the year ended December 31, 1996 but after
deducting nonrecurring spin-off costs and management transition expenses of
$0.32 per share and $0.13 per share for the year ended December 31, 1996,
and the six months ended June 30, 1996, respectively. Also includes a
nonrecurring gain of $0.03 per share due to the curtailment of certain
postretirement medical benefits in 1995.
(5) Gives effect to the pro forma combination of Viad and Game, assuming
2,800,000 shares of Viad Common Stock are issued in the Merger, based on an
assumed Exchange Ratio of 0.5667. The assumed Exchange Ratio is based on the
Game Price of $10.75 divided by the average of the closing sales prices of
Viad Common Stock for the 30-trading day period ended October 3, 1997, or
$18.9708 per share.
(6) Pro forma cash dividends declared represent historical cash dividends
declared by Viad. See also note 3 above.
16
<PAGE> 24
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
--------------- --------------------------
1997 1996 1996 1995 1994
----- ----- ----- ------ ------
<S> <C> <C> <C> <C> <C>
GAME HISTORICAL:
Book value per common share....................... $1.98 $1.55 $1.76 (1) (1)
Income per common share........................... $0.22 $0.14 $0.34 $ 0.25 $ 0.18
GAME EQUIVALENT PRO FORMA:(2)
Book value per common share....................... $2.84 $3.66 $2.68 (1) (1)
Cash dividends declared per common share.......... $0.09 $0.18 $0.27 $ 0.35 $ 0.33
Income per common share from continuing
operations...................................... $0.22 $0.11 $0.42 $ 0.44 $ 0.39
</TABLE>
- ---------------
(1) Not required.
(2) Game equivalent pro forma amounts are computed by multiplying the Viad pro
forma amounts by the assumed Exchange Ratio of 0.5667. The assumed Exchange
Ratio is based on the Game Price of $10.75 divided by the average of the
closing sale prices of Viad Common Stock for the 30-trading day period ended
October 3, 1997, or $18.9708 per share.
17
<PAGE> 25
VIAD SELECTED HISTORICAL FINANCIAL DATA
The table below sets forth selected historical financial data of Viad and
should be read in conjunction with the historical consolidated financial
statements of Viad that are incorporated by reference into this Proxy
Statement/Prospectus. The selected historical financial data as of December 31,
1996, 1995, 1994, 1993 and 1992 and for each of the years then ended are derived
from Viad's audited consolidated financial statements for such years. The
selected historical financial data as of and for the six months ended June 30,
1997 and 1996, are derived from the unaudited consolidated financial statements
of Viad. See "Incorporation of Documents by Reference."
<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE
30, YEAR ENDED DECEMBER 31,
----------------------- --------------------------------------------------------------
1997 1996 1996 1995 1994 1993 1992
---------- ---------- ---------- ---------- ---------- ---------- ----------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Revenues (1)....................... $1,184,671 $1,099,751 $2,263,228 $1,976,745 $1,806,597 $1,337,940 $1,340,745
========== ========== ========== ========== ========== ========== ==========
Operating income(1)(2)............. $ 79,634 $ 70,630 $ 168,251 $ 155,971 $ 140,227 $ 99,772 $ 78,146
========== ========== ========== ========== ========== ========== ==========
Income from continuing
operations(3).................... $ 37,195 $ 17,518 $ 69,071 $ 70,781 $ 61,173 $ 31,975 $ 10,768
Income (loss) from discontinued
operations....................... 21,094 (40,694) (73,465) 79,138 110,111 (69,028)
---------- ---------- ---------- ---------- ---------- ---------- ----------
Income (loss) before extraordinary
charge and cumulative effect of
changes in accounting
principle........................ 37,195 38,612 28,377 (2,684) 140,311 142,086 (58,260)
Extraordinary charge for early
retirement of debt............... (8,458) (21,601)
Cumulative effect of changes in
accounting principle(4).......... (13,875) (23,255)
---------- ---------- ---------- ---------- ---------- ---------- ----------
Net income (loss).................. $ 28,737 $ 38,612 $ 28,377 $ (16,559) $ 140,311 $ 120,485 $ (81,515)
========== ========== ========== ========== ========== ========== ==========
Income (loss) per common share:
Continuing operations(3)......... $ 0.39 $ 0.19 $ 0.74 $ 0.79 $ 0.69 $ 0.36 $ 0.12
Discontinued operations.......... 0.23 (0.44) (0.83) 0.92 1.29 (0.82)
---------- ---------- ---------- ---------- ---------- ---------- ----------
Income (loss) before
extraordinary charge and
cumulative effect of changes in
accounting principle........... 0.39 0.42 0.30 (0.04) 1.61 1.65 (0.70)
Extraordinary charge............. (0.09) (0.25)
Cumulative effect of changes in
accounting principle(4)........ (0.16) (0.28)
---------- ---------- ---------- ---------- ---------- ---------- ----------
Net income (loss) per common
share.......................... $ 0.30 $ 0.42 $ 0.30 $ (0.20) $ 1.61 $ 1.40 $ (0.98)
========== ========== ========== ========== ========== ========== ==========
Cash dividends declared per common
share(5)......................... $ 0.16 $ 0.32 $ 0.48 $ 0.62 $ 0.59 $ 0.56 $ 0.60
========== ========== ========== ========== ========== ========== ==========
Average outstanding common and
equivalent shares................ 93,251 90,847 91,637 88,707 86,646 85,406 84,026
========== ========== ========== ========== ========== ========== ==========
BALANCE SHEET DATA:
Total assets....................... $3,391,259 $3,749,234 $3,453,312 $3,716,548 $3,228,083 $2,699,283 $2,580,540
Long-term debt(5).................. 449,392 900,224 521,127 889,291 741,969 629,829 675,608
$4.75 Redeemable preferred stock... 6,609 6,601 6,604 6,597 6,590 6,586 6,586
Common stock and other equity(5)... 461,993 585,633 432,218 548,169 555,093 469,688 390,395
========== ========== ========== ========== ========== ========== ==========
OTHER DATA:
EBITDA(1)(6)....................... $ 118,167 $ 106,650 $ 240,943 $ 218,737 $ 200,633 $ 152,191 $ 153,372
Depreciation and amortization...... 39,017 36,655 74,444 68,872 62,685 54,321 56,818
========== ========== ========== ========== ========== ========== ==========
</TABLE>
- ---------------
(1) Viad's payment services subsidiary is investing increasing amounts in
tax-exempt securities. On a fully taxable equivalent basis, revenues,
operating income and EBITDA would be higher by $13,937,000 and $9,027,000
for the 1997 and 1996 six month periods, respectively, and by $21,489,000,
$16,000,000, $7,897,000, $3,967,000 and $982,000 for 1996, 1995, 1994, 1993
and 1992, respectively.
18
<PAGE> 26
(2) Includes a nonrecurring gain of $3,477,000 due to the curtailment of certain
postretirement medical benefits in 1995. After deducting restructuring and
other charges of $20,000,000 in 1992.
(3) Includes a nonrecurring gain on the sale of Viad's interest in the Phoenix
Suns of $19,025,000, or $0.21 per share, for the year ended December 31,
1996 but after deducting nonrecurring spin-off costs and management
transition expenses of $28,985,000, or $0.32 per share, and $12,000,000, or
$0.13 per share, for the year ended December 31, 1996, and the six months
ended June 30, 1996, respectively. Also includes a nonrecurring gain of
$2,260,000, or $0.03 per share, due to the curtailment of certain
postretirement medical benefits in 1995. After deducting restructuring and
other charges of $13,200,000, or $0.16 per share, in 1992.
(4) Initial application of SFAS No. 121, "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to Be Disposed Of " in 1995 and
SFAS No. 106, "Employers' Accounting for Postretirement Benefits Other Than
Pensions" in 1992.
(5) The declines in dividends declared per common share, long-term debt and
common stock and other equity in 1997 and 1996 reflect the spin-off of The
Dial Corporation on August 15, 1996. Viad's quarterly dividend decreased
from $0.16 to $0.08 per share following the spin-off. The Dial Corporation's
initial quarterly dividend of $0.08 per share after the spin-off maintained
the 1995 annual dividend rate for stockholders who retained shares of both
companies following the spin-off.
(6) EBITDA is defined as income from continuing operations before interest
expense, income taxes, depreciation and amortization, and nonrecurring
items. EBITDA data are presented as a measure of the ability to service
debt, fund capital expenditures and finance growth. Such data should not be
considered an alternative to net income, operating income, cash flows from
operations or other operating or liquidity performance measures prescribed
by generally accepted accounting principles. Cash expenditures for various
long-term assets, interest expense and income taxes have been, and will be,
incurred which are not reflected in the EBITDA presentations.
19
<PAGE> 27
GAME SELECTED HISTORICAL FINANCIAL DATA
The table below sets forth selected historical financial data of Game and
should be read in conjunction with the historical financial statements of Game
that are incorporated by reference into this Proxy Statement/ Prospectus. The
selected historical financial data as of December 31, 1996, 1995, 1994, 1993 and
1992 and for each of the years then ended are derived from Game's audited
financial statements for such years. The selected historical financial data as
of and for the six months ended June 30, 1997 and 1996, are derived from the
unaudited consolidated financial statements of Game. See "Incorporation of
Documents by Reference."
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30, YEAR ENDED DECEMBER 31,
----------------- --------------------------------------------
1997 1996 1996 1995 1994 1993 1992
------- ------- ------- ------- ------ ------ ------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Revenues......................... $14,408 $ 7,825 $18,951 $ 8,827 $5,005 $2,821 $1,720
Operating income................. 1,686 986 2,764 1,643 827 512 331
Net income (1)................... 1,013 643 1,594 1,143 694 506 324
======= ======= ======= ======= ====== ====== ======
Net income per common
share(1)(2)................... $ 0.22 $ 0.14 $ 0.34 $ 0.25 $ 0.18
======= ======= ======= ======= ====== ====== ======
Average outstanding common and
equivalent shares (2)......... 4,711 4,670 4,685 4,513 3,871
======= ======= ======= ======= ====== ====== ======
BALANCE SHEET DATA:
Total assets..................... $11,720 $ 8,472 $ 9,931 $ 6,631 $5,801 $ 808 $ 362
Long-term debt................... 32 46
Common stock and other
equity(2)..................... 8,950 6,982 7,938 5,806 4,644 512 167
======= ======= ======= ======= ====== ====== ======
OTHER DATA:
EBITDA (3)....................... $ 2,129 $ 1,299 $ 3,455 $ 2,208 $1,120 $ 565 $ 360
Depreciation and amortization.... 414 248 564 384 188 54 29
======= ======= ======= ======= ====== ====== ======
</TABLE>
- ---------------
(1) Game was treated as an S Corporation under the Internal Revenue Code for the
periods ended December 31, 1992 through April 8, 1994, and accordingly no
income tax provision was recorded for such periods.
(2) Game's initial public offering was April 22, 1994. Per share data are not
presented for periods ended prior to that date.
(3) EBITDA is defined as net income before interest expense, income taxes,
depreciation and amortization, and nonrecurring charge of $252,000 in 1996.
EBITDA data are presented as a measure of the ability to service debt, fund
capital expenditures and finance growth. Such data should not be considered
an alternative to net income, operating income, cash flows from operations
or other operating or liquidity performance measures prescribed by generally
accepted accounting principles. Cash expenditures for various long-term
assets, interest expense and income taxes have been, and will be, incurred
which are not reflected in the EBITDA presentations.
20
<PAGE> 28
THE SPECIAL MEETING
GENERAL
This Proxy Statement/Prospectus is being furnished to holders of Game
Common Stock in connection with the solicitation of proxies by the Board of
Directors of Game for use at the Special Meeting to be held at [ADDRESS] on
December [ ], 1997 at 10:00 a.m., Central Time, and any adjournment or
postponement thereof. This Proxy Statement/Prospectus and the accompanying form
of proxy are first being mailed to stockholders of Game on or about November ,
1997.
MATTERS TO BE CONSIDERED
At the Special Meeting, the stockholders of Game will be asked to consider
and vote upon a proposal to approve and adopt the Merger Agreement.
BOARD OF DIRECTORS' RECOMMENDATION
THE BOARD OF DIRECTORS OF GAME HAS UNANIMOUSLY APPROVED THE MERGER
AGREEMENT AND RECOMMENDS THAT THE STOCKHOLDERS OF GAME VOTE FOR APPROVAL AND
ADOPTION OF THE MERGER AGREEMENT.
RECORD DATE; VOTING RIGHTS
The Board of Directors of Game has fixed the close of business on [DATE],
1997 (the "Record Date") as the Record Date for determining holders entitled to
notice of and to vote at the Special Meeting. Accordingly, only holders of
record of shares of Game Common Stock on the Record Date will be entitled to
notice of and to vote at the Special Meeting.
As of the Record Date, there were outstanding and entitled to vote
4,522,522 shares of Game Common Stock held by approximately stockholders of
record. Each share of Game Common Stock is entitled to one vote on each matter
to be voted upon at the Special Meeting, which vote may be cast either in person
or by properly executed proxy.
QUORUM
The presence in person or by properly executed proxy of holders of a
majority of the issued and outstanding shares of Game Common Stock entitled to
vote as of the Record Date is necessary to constitute a quorum at the Special
Meeting. Under the MCBA, abstentions and "broker non-votes" (that is, proxies
from brokers or nominees indicating that such persons have not received
instructions from the beneficial owner or other persons entitled to vote shares
as to a matter with respect to which the brokers or nominees do not have
discretionary power to vote) will be treated as present for purposes of
determining the presence of a quorum at the Special Meeting.
REQUIRED VOTE
The approval and adoption of the Merger Agreement requires the affirmative
vote of the holders of a majority of the outstanding shares of Game Common
Stock. However, if less than a quorum is present at the Special Meeting, a
majority of the shares present may adjourn the Special Meeting.
Since the affirmative vote of the holders of a majority of the outstanding
shares of Game Common Stock is required to approve and adopt the Merger
Agreement, abstentions and broker non-votes will have the effect of a vote
against the approval and adoption of the Merger Agreement.
THE SIGNIFICANT GAME SHAREHOLDERS HAVE GRANTED TO VIAD PROXIES TO VOTE ALL
OF THE SHARES OF GAME COMMON STOCK OWNED BY THEM IN FAVOR OF ADOPTING THE MERGER
AGREEMENT, WHICH NUMBER OF SHARES IS SUFFICIENT TO APPROVE THE MERGER AGREEMENT.
AS A RESULT OF THE IRREVOCABLE PROXY
21
<PAGE> 29
AGREEMENTS AND VIAD'S INTENTION TO EXERCISE THE PROXIES GRANTED THEREBY TO VOTE
IN FAVOR OF THE MERGER, THE MERGER AGREEMENT WILL BE ADOPTED AT THE SPECIAL
MEETING REGARDLESS OF HOW OR WHETHER OTHER STOCKHOLDERS OF GAME COMMON STOCK
VOTE THEIR SHARES. See "The Merger -- Irrevocable Proxy Agreements." However, it
is a condition to Closing, which may be waived by Viad, that Dissenting Shares
shall not exceed five percent (5%) of Game Common Stock outstanding at the
Effective Date. See "The Merger -- The Merger Agreement -- Viad's Conditions to
Closing."
DISSENTERS' RIGHTS
Holders of Game Common Stock are entitled to exercise dissenters' rights
pursuant to the provisions of Sections 302A.471 and 302A.473 of the MBCA. In
accordance with these sections, holders of Game Common Stock have the right to
dissent from the Merger and to receive payment in cash of the "fair value" of
their shares of Game Common Stock in lieu of receiving the consideration
provided under the Merger Agreement. In this context, the term "fair value"
means the value of the shares of Game Common Stock immediately before the
Effective Time.
Under Section 302A.473, if a corporation calls a stockholders meeting at
which a plan of merger is to be voted upon, the notice of the meeting must
inform each stockholder of the right to dissent, and must include a copy of
Sections 302A.471 and 302A.473 and a brief description of the procedures to be
followed under these sections. This Proxy Statement/Prospectus constitutes such
notice to the holders of Game Common Stock, and the following discussion
describes the procedures to be followed by a dissenting stockholder. The
applicable statutory provisions are attached hereto as Appendix VIII.
The following discussion is not a complete statement of the law pertaining
to a dissenting stockholder's rights under Minnesota law and is qualified in its
entirety by the full text of Sections 302A.471 and 302A.473 of the MBCA attached
hereto as Appendix VIII. Any holder of Game Common Stock who wishes to exercise
the right to dissent and demand the fair value of his or her shares, or who
wishes to preserve the right to do so, should carefully review the following
discussion and Appendix VIII, because failure to timely and properly comply with
the procedures will result in the loss of a stockholder's right to dissent under
Minnesota law.
If a holder of Game Common Stock wishes to exercise the right to demand the
fair value of his or her shares, the stockholder must file with Game, before the
vote is taken on the Merger Agreement, a written notice of intent to demand the
fair value of his or her shares and, in addition, he or she must not vote in
favor of approval of the Merger Agreement. Because a proxy that does not contain
voting instructions will, unless revoked, be voted FOR approval of the Merger
Agreement, a Game stockholder who votes by proxy and who wishes to exercise
dissenters' rights must (i) vote AGAINST the approval of the Merger Agreement or
(ii) ABSTAIN from voting on the approval of the Merger Agreement. A vote against
the Merger Agreement, in person or by proxy, will not in and of itself
constitute a written notice of intent to demand the fair value of a
stockholder's shares of Game Common Stock satisfying the requirements of the
MBCA.
A Game stockholder may not assert dissenters' rights as to less than all of
the shares of Game Common Stock registered in the name of such stockholder,
unless the stockholder dissents with respect to all the shares that are
beneficially owned by another person but registered in the name of the
stockholder and discloses the name and address of each beneficial owner on whose
behalf the stockholder dissents. In that event, the rights of the dissenter will
be determined as if the shares as to which the stockholder has dissented and the
other shares were registered in the names of different stockholders.
A beneficial owner of shares who is not the record holder may assert
dissenters' rights with respect to shares held on behalf of such beneficial
owner, and will be treated as a dissenting stockholder under the terms of
Sections 302A.471 and 302A.473, if the beneficial owner submits written consent
of the stockholder holding such beneficial owner's shares to Game at the time of
or before the assertion of dissenters' rights.
22
<PAGE> 30
After the proposed Merger has been approved by the holders of Game Common
Stock, Game must cause to be mailed to each stockholder who has properly
asserted dissenters' rights a notice that contains:
(i) the address to which a demand for payment and stock certificates
must be sent in order to receive payment and the date by which they must be
received;
(ii) a form to be used to certify the date on which the stockholder,
or the beneficial owner on whose behalf the stockholder dissents, acquired
his or her shares of Game Common Stock or an interest in them and to demand
payment; and
(iii) another copy of Sections 302A.471 and 302A.473 of the MBCA,
together with a brief description of the procedures to be followed under
these sections.
To receive the fair value of his or her shares of Game Common Stock, a
dissenting stockholder must demand payment and deposit his or her certificates
within 30 days after the notice described above is given, but the dissenter
retains all other rights of a stockholder until the Merger takes effect.
After the Effective Time, or after Game receives a valid demand for
payment, whichever is later, Game must remit to each dissenting stockholder who
has complied with the dissenters' rights provisions the amount Game estimates to
be the fair value of the shares, plus interest, accompanied by:
(i) Game's closing balance sheet and statement of income for a fiscal
year ending not more than 16 months before the Effective Time, together
with the latest available interim financial statement;
(ii) an estimate by Game of the fair value of the shares and a brief
description of the method used to reach the estimate; and
(iii) another copy of Sections 302A.471 and 302A.473 of the MBCA and a
brief description of the procedure to be followed in demanding supplemental
payment.
Game may withhold the above-described remittance from a person who was not
a stockholder on the date the Merger was first announced to the public or who is
dissenting on behalf of a person who was not a beneficial owner on that date. If
the dissenter has not voted his or her shares in favor of the Merger Agreement
and has filed with Game before the vote on the Merger Agreement a written notice
of intent to demand the fair value of the shares owned by such stockholder, Game
must forward to the dissenter the materials described in the preceding
paragraph, a statement of reason for withholding the remittance, and an offer to
pay to the dissenter the amount listed in the materials if the dissenter agrees
to accept that amount in full satisfaction. The dissenter may decline the offer
and demand payment of the dissenter's own estimate of the fair value of the
shares, plus interest, by written notice to Game. Failure to do so entitles the
dissenter only to the amount offered. If the dissenter makes a demand, the
procedures, costs, fees and expenses described below for petitioning the court
shall apply.
If Game fails to remit payment within 60 days of the deposit of
certificates, Game must return all deposited certificates. However, Game may
again give notice and require deposit at a later time.
If a dissenting Game stockholder believes that the amount remitted by Game
is less than the fair value of his or her shares plus interest, such dissenting
stockholder may give written notice to Game of his or her own estimate of the
fair value for the shares plus interest and demand a supplemental payment for
the difference. Any written demand for supplemental payment must be made within
30 days after Game mailed its original remittance. Otherwise, a dissenter is
entitled only to the amount remitted by Game.
Within 60 days after receiving a demand for supplemental payment, Game must
either pay the amount of the supplemental payment demanded (or agreed to between
the dissenting stockholder and Game) or file a petition in the state courts of
Minnesota requesting that the court determine the fair value of the shares plus
interest. Any petition so filed must name as parties all dissenting stockholders
who have demanded supplemental payments and who have been unable to reach an
agreement with Game concerning the fair value of their shares. The court may
appoint appraisers, with such power and authority as the court deems proper, to
receive evidence on and recommend the amount of fair value of the shares. The
jurisdiction of the court is plenary and exclusive, and the fair value as
determined by the court is binding on all dissenting
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stockholders, wherever located. A dissenting stockholder, if successful, is
entitled to a judgment for the amount by which the fair value of his or her
shares as determined by the court exceeds the amount originally remitted by
Game.
Generally, the costs and expenses associated with a court proceeding to
determine the fair value of the shares of Game Common Stock will be borne by
Game, unless the court finds that a dissenting stockholder has demanded
supplemental payment in a manner that is arbitrary, vexatious or not in good
faith. Similar costs and expenses may also be assessed in instances where Game
has failed to comply with the procedures specified in Section 302A.473 of the
MBCA discussed above. The court may, in its discretion, award attorneys' fees to
an attorney representing dissenting stockholders out of any amount awarded to
such dissenters.
FAILURE TO FOLLOW STRICTLY THE PROCEDURES REQUIRED BY SECTION 302A.473 FOR
ASSERTING DISSENTERS' RIGHTS WILL RESULT IN THE LOSS OF A STOCKHOLDER'S RIGHTS
TO DEMAND A DETERMINATION OF THE FAIR VALUE OF HIS OR HER SHARES OF GAME COMMON
STOCK UNDER THE DISSENTERS' STATUTE. Stockholders considering the exercise of
dissenters' rights should realize that the fair value of their shares, as
determined under Section 302A.473 of the MBCA in the manner outlined above,
could be more than, the same as or less than the amount of value of the shares
of Viad Common Stock they would be entitled to receive as a result of the Merger
if they did not seek appraisal of their shares.
Under Subdivision 4 of Section 302A.471 of the MBCA, a Game stockholder has
no right, at law or in equity, to set aside the approval of the Merger Agreement
or the consummation of the Merger except if such adoption or consummation was
fraudulent with respect to such stockholder or Game.
THE RESPECTIVE OBLIGATIONS OF VIAD AND GAME TO EFFECT THE MERGER ARE
SUBJECT TO THE CONDITION WHICH MAY BE WAIVED BY VIAD, THAT GAME SHALL NOT HAVE
RECEIVED, PRIOR TO THE SPECIAL MEETING, NOTICES OF INTENT TO DEMAND FAIR VALUE
OF SHARES FROM HOLDERS OF MORE THAN 5% OF THE OUTSTANDING SHARES OF GAME COMMON
STOCK. SEE "THE MERGER -- TERMS AND CONDITIONS OF THE MERGER."
PROXIES
The Proxy Statement/Prospectus is being furnished to Game stockholders in
connection with the solicitation of proxies by and on behalf of the Board of
Directors of Game for use at the Special Meeting, and is accompanied by a form
of proxy.
All shares of Game Common Stock which are entitled to vote and are
represented by properly executed proxies will, unless such proxies have been
previously revoked, be voted in accordance with the instructions indicated on
such proxies. IF NO INSTRUCTIONS ARE INDICATED (OTHER THAN IN THE CASE OF BROKER
NON-VOTES), SUCH SHARES OF GAME COMMON STOCK WILL BE VOTED FOR APPROVAL AND
ADOPTION OF THE MERGER AGREEMENT AND, IN THE DISCRETION OF THE PROXIES, WITH
RESPECT TO SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE SPECIAL MEETING
OR ANY ADJOURNMENT OR POSTPONEMENT THEREOF.
Game does not know of any matters other than as described in the Notice of
Special Meeting that are to come before the Special Meeting. If any other matter
or matters are properly presented for action at the Special Meeting, including a
motion to adjourn to a later date to permit further solicitation of proxies if
necessary, the persons named in the enclosed form of proxy and acting thereunder
will have the discretion to vote on such matters in accordance with their best
judgment, unless such authorization is withheld. A stockholder who has given a
proxy may revoke it at any time prior to its exercise by giving written notice
thereof to the Secretary of Game, by signing and returning a later dated proxy,
or by voting in person at the Special Meeting; however, mere attendance at the
Special Meeting will not in and of itself have the effect of revoking the proxy.
Any written notice of revocation or subsequent proxy should be sent to Game
Financial Corporation, 13705 First Avenue North, Minneapolis, Minnesota 55441,
Attention: Secretary, or hand delivered to the Secretary of Game at or before
the taking of the vote at the Special Meeting.
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SOLICITATION OF PROXIES
Game will bear its own cost of solicitation of proxies. In addition to the
use of the mails, proxies may be solicited by the directors, officers and other
selected employees of Game by personal interview, telephone, telegram or e-mail.
Such directors and officers will not receive additional compensation for such
solicitation but may be reimbursed for out-of-pocket expenses incurred in
connection therewith. Arrangements may also be made with brokerage firms and
other custodians, nominees and fiduciaries to forward solicitation materials to
the beneficial owners of shares of Game Common Stock held of record by such
persons, in which case Game will reimburse such brokerage firms, custodians,
nominees and fiduciaries for reasonable out-of-pocket expenses incurred by them
in connection therewith.
THE MATTERS TO BE CONSIDERED AT THE SPECIAL MEETING ARE OF GREAT IMPORTANCE
TO THE STOCKHOLDERS OF GAME. ACCORDINGLY, STOCKHOLDERS OF GAME ARE URGED TO READ
AND CONSIDER CAREFULLY THE INFORMATION PRESENTED IN THIS PROXY
STATEMENT/PROSPECTUS, AND TO COMPLETE, DATE, SIGN AND PROMPTLY RETURN THE
ENCLOSED PROXY IN THE ENCLOSED POSTAGE PAID ENVELOPE.
GAME STOCKHOLDERS SHOULD NOT SEND ANY STOCK CERTIFICATES WITH THEIR PROXY
CARDS.
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THE MERGER
The following is a summary of the material terms and conditions of the
Merger Agreement and related agreements, copies of which are attached as
Appendices to this Proxy Statement/Prospectus and incorporated herein by
reference. The information regarding the Merger in this Proxy
Statement/Prospectus does not purport to be complete and is qualified in its
entirety by reference to the full text of the Merger Agreement and related
agreements. The definitions of certain capitalized terms not defined in the text
below are set forth in Appendix I to this Proxy Statement/Prospectus.
GENERAL DESCRIPTION OF THE MERGER
Pursuant to the Merger Agreement, at the Effective Time, Viad will acquire
Game through the Merger of Acquisition Sub with and into Game. If the Merger
Agreement and the transactions contemplated thereby are approved by the
stockholders of Game, and if the other conditions to the Merger are satisfied or
waived, the Merger will become effective upon the filing by the Surviving
Corporation with the Secretary of State of the State of Minnesota of duly
executed Articles of Merger or at such later time as may be specified in the
Articles of Merger.
It is the intention of the parties that the consummation of the Merger will
result in, among other things, Game conducting business as a wholly-owned
subsidiary of Travelers. As a result of the Merger, each share of Game Common
Stock will be converted into the right to receive shares of Viad Common Stock,
or cash in lieu of fractional shares (at the sole discretion of Viad), based
upon the Exchange Ratio. The Exchange Ratio will be a fraction equal to $10.75
divided by the Viad Price. The Viad Price will be determined as the average of
the closing sale prices of Viad Common Stock as reported on the New York Stock
Exchange for the 30-trading day period ending four trading days prior to the
Closing Date. Viad has the right to terminate the Merger Agreement and abandon
the Merger if the Viad Price is below $17.20 per share. Game has the right to
terminate the Merger Agreement and abandon the Merger if the Viad Price is above
$21.20 per share.
Based on the number of outstanding shares of Game Common Stock as of the
Record Date and on the average of the closing sale prices of Viad Common Stock
for the 30-trading day period ended October 3, 1997 of $18.9708 per share and a
resulting Exchange Ratio of 0.5667, the shares of Viad Common Stock to be issued
to Game stockholders in the Merger and to holders of outstanding options,
warrants and other rights upon the exercise thereof are estimated to represent
approximately 3% of the outstanding Common Stock of Viad after the Merger.
Pursuant to the terms of grants issued under Game's 1994 Stock Option and
Incentive Plan, all issued and Outstanding Game Options vest and become
immediately exercisable upon approval of the Merger. All Game Options will be
automatically converted at the Effective Time into options to purchase Viad
Common Stock. The number of stock options and the exercise price of such options
will be adjusted to reflect the Exchange Ratio, and will otherwise be
exercisable on substantially the same terms and conditions as were applicable to
the Game Options. See "-- Terms and Conditions of the Merger -- Treatment of
Game Options" and "-- Interests of Certain Persons in the Merger."
Holders of record of Game Common Stock at the Effective Time will receive
from the Exchange Agent a letter of transmittal containing instructions for the
exchange of certificates evidencing shares of Game Common Stock for the number
of shares of Viad Common Stock which they are entitled to receive in the Merger
based upon the Exchange Ratio. From and after the Effective Time, the former
Game stockholders will no longer have rights with respect to shares of Game
Common Stock, except as provided in the Merger Agreement or under Applicable
Law. See "-- Terms and Conditions of the Merger -- Surrender of Stock
Certificates and Receipt of Merger Consideration." No fractional shares of Viad
Common Stock will be issued in the Merger. In lieu of any such fractional
shares, each holder of Game Common Stock upon surrender of a Certificate for
exchange shall either be paid an amount in cash, determined by multiplying (i)
the Viad Price by (ii) the fractional interest to which such holder would
otherwise be entitled (after taking into account all shares of Game Common Stock
then held of record by such holder) or be issued a whole share in lieu of any
fractional share larger than or equal to one half share, at the sole discretion
of Viad. See "-- Terms and Conditions of the Merger -- Fractional Shares." The
shares of Viad Common Stock to be issued pursuant to
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the Merger will be freely transferable except by certain stockholders of Game
who are deemed to be "affiliates" of Game. The transferability of shares of Viad
Common Stock issued to such affiliates will be restricted in accordance with
rules and regulations promulgated by the SEC. See "-- Status Under Federal
Securities Laws." Until so surrendered and exchanged after the Effective Time,
each outstanding Certificate formerly representing Game Common Stock will be
deemed for all purposes to evidence the right to receive that number of whole
shares of Viad Common Stock into which the shares of Game Common Stock (other
than shares held by holders exercising dissenters' rights) have been converted
pursuant to the Merger Agreement. See "-- Certain United States Federal Income
Tax Consequences."
As soon as reasonably practicable after the Closing Date, Viad will
instruct the Exchange Agent to mail to each holder of record of Game Common
Stock a letter of transmittal and instructions as to the procedure for the
surrender of Game stock certificates. Each holder of Game Common Stock, upon
surrender of a Certificate or Certificates representing such stock, together
with the transmittal letter provided by the Exchange Agent duly completed and
executed by such holder, will be entitled to receive a stock certificate or
certificates representing the number of the whole shares of Viad Common Stock to
which such holder is entitled. Holders of any unsurrendered Certificates
representing Game Common Stock will not be entitled to vote Viad Common Stock or
exercise other rights of the holders of Viad Common Stock until such
Certificates are exchanged pursuant to the Merger Agreement and no dividends or
distributions with respect to Viad Common Stock will be paid to the holder of an
unsurrendered Certificate of Game Common Stock until the holder surrenders the
Certificate pursuant to the Merger Agreement. The Merger Agreement provides that
neither Game nor Viad will be liable to any holder of Game Common Stock for any
shares of Viad Common Stock (or dividends or distributions with respect thereto)
or cash from the Exchange Fund delivered to a public official pursuant to any
applicable abandoned property, escheat or similar law.
The Exchange Fund established to handle the distributions related to the
Merger will remain in existence for only six months; thereafter, any portion
that remains undistributed will be delivered to the Surviving Corporation, and
any former Game stockholders who have not exchanged their Certificates as
provided in the Merger Agreement may look only to the Surviving Corporation to
obtain the Merger Consideration to which they are entitled.
GAME STOCKHOLDERS SHOULD NOT SEND IN THEIR CERTIFICATES UNTIL THEY RECEIVE
A TRANSMITTAL LETTER FROM THE EXCHANGE AGENT.
Shares of Game Common Stock held by Game stockholders who (i) did not vote
in favor of the Merger, (ii) did not otherwise consent to the Merger in writing,
and (iii) demand appraisal of such shares according to the applicable provisions
of Minnesota law shall not be converted into or represent the right to receive
Viad Common Stock. Instead, these stockholders will be entitled to receive from
Game the fair value of their shares in accordance with MBCA Sections 302A.471
and 302A.473. Notwithstanding the foregoing, shares held by Game stockholders
who fail to strictly comply with MBCA Section 302A.471 and 302A.473 or who
otherwise withdraw or lose their rights shall be deemed to be automatically
converted to the right to receive Viad Common Stock, or cash in lieu of
fractional shares, all as provided in the Merger Agreement. See "The Special
Meeting -- Dissenters' Rights."
REASONS FOR AND BACKGROUND OF THE MERGER
Background of the Merger. For several years, the acquisition of
complementary businesses has been an important element of the overall business
strategy of Viad. Viad continually evaluates potential acquisition opportunities
and considers potential alliances, combinations and other strategic transactions
with other participants in the industries in which Viad competes.
Since Game's inception, senior management of Game has, from time to time,
considered strategic alternatives for the continued expansion of Game's
business, including potential sales of equity securities, potential business
combinations and similar transactions. In September and October 1995, Game had
discussions with a potential business partner regarding a possible business
combination with that corporation. After initial discussions, the parties
mutually agreed to discontinue negotiations. In November, 1996, Game filed a
registration statement for a proposed secondary offering of Game Common Stock.
The registration
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statement was withdrawn in January 1997 after Game determined that the market
price at which the Game Common Stock would be sold in the proposed offering was
unacceptable to Game.
In late 1996, Travelers began evaluating Game as a potential acquisition
candidate based upon an initial determination that Game fit Travelers'
acquisition strategy as a payment services provider with high growth and
differentiated products. Following Game's decision to withdraw its 1996
secondary offering, Travelers' management decided to initiate discussions with
Game regarding a possible business combination with Game.
On February 24, 1997, representatives of Travelers held a meeting with Gary
A. Dachis, Game's Chairman, President and Chief Executive Officer in which they
expressed Viad's interest in evaluating Game as a potential merger candidate.
Mr. Dachis stated that, while Game was not actively seeking a business
combination, Game would be willing to discuss a potential transaction with
Travelers. The meeting terminated with an agreement that the parties would
execute a confidentiality agreement that would allow Viad to begin its
evaluation of Game. On March 11, 1997, Travelers and Game executed a
confidentiality agreement and on March 12, 1997, Travelers requested financial
information and other documents relating to Game.
From early March 1997 through the end of May, 1997, Travelers requested due
diligence materials and financial analyses from Game and met with Game
management on several occasions to review the projections and attempt to
structure a transaction.
In early June 1997, senior management of Game and its counsel met with
representatives of investment banking firms to discuss various strategic
options, including potential strategic initiatives pertaining to Game and the
investment banking services that such firms might provide to Game. Subsequently,
at a meeting of the Board of Directors held on July 3, 1997, representatives of
Ladenburg made their presentation to the Game Board of Directors with respect to
the retention of Ladenburg to serve as Game's financial advisor and provide a
fairness opinion in connection with the proposed Merger. During the week of July
7, 1997, Game agreed to retain Ladenburg in connection with the potential sale
or merger of Game and Ladenburg contacted Travelers to arrange for a meeting
between the representatives of Game and Viad.
On July 15 and 16, 1997, due diligence meetings were held in which
representatives of Travelers, Game and a technical consulting firm retained by
Travelers participated.
From late July through early August 1997, representatives of Game held a
series of meetings and discussions with representatives of Travelers and Viad
regarding the terms of a proposed merger. The parties generally agreed on a
price of $10.75 per share of Game Common Stock, but a number of other key terms
were unresolved.
On August 14, 1997, Viad delivered a draft of a proposed Merger Agreement
and related agreements to Game and its counsel. On August 18, 1997,
representatives of Game and its counsel met to review the principal terms of the
proposed Merger Agreement and identified terms to be negotiated. On August 19,
1997, Viad and Game and their respective counsel met in Minneapolis, Minnesota,
to negotiate the terms of the proposed Merger Agreement. A number of key terms
remained unresolved.
On August 20 and 21, 1997, at a regularly-scheduled meeting, the Executive
Committee and Board of Directors of Viad received presentations from Travelers'
management as to the status of discussions with Game, the results of the due
diligence evaluation of Game, the principal terms of the proposed Merger,
including certain terms that were yet to be resolved. The Viad Board of
Directors approved the transaction, subject to final approval of the transaction
by the Executive Committee of the Board which, pursuant to Delaware law, was not
authorized to approve any change to the Game Price of $10.75 per share and/or
the number of shares of Viad Common Stock to be issued.
From August 22 to September 22, 1997, Viad and Game and their
representatives continued to negotiate the terms of the proposed Merger
Agreement.
On September 23, 1997, at a special meeting of the Game Board of Directors,
the Board established a Special Committee consisting of the two non-employee
directors of Game to review and take action on the proposed Merger. At the
meeting, (i) representatives of Ladenburg and the management of Game reported on
the financial terms proposed by Viad and other business terms of the proposed
Merger, (ii) Game's counsel
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reviewed the proposed terms of the Merger Agreement and the related documents,
and (iii) representatives of Ladenburg provided financial analyses relating to
the proposed Merger and delivered Ladenburg's oral and written opinion to the
effect that, as of such date, the financial terms were fair, from a financial
point of view, to Game's stockholders. See "-- Opinion of Game's Financial
Advisor." At the meeting, the Special Committee and the entire Game Board of
Directors each separately and unanimously approved the Merger Agreement and
related matters and authorized Game's management to proceed with the Merger.
On September 24, 1997, the Executive Committee of the Viad Board of
Directors, after reviewing further information from Viad's management and
counsel, unanimously approved the proposed Merger and related matters and
authorized Viad's management to proceed with the Merger.
On September 24, 1997, Game and Viad finalized the Merger Agreement. The
Merger Agreement was executed and delivered on the afternoon of September 24,
1997 after the closing of trading on the New York Stock Exchange and the Nasdaq
National Market, and the parties issued a joint news release announcing the
proposed Merger.
Game's Reasons for the Merger. The Game Board of Directors has unanimously
determined that the Merger and the Merger Agreement, including the consideration
to be received in the Merger, are fair to, and in the best interests of, Game
and its stockholders. In the course of reaching its determination, the Game
Board of Directors consulted with senior management and Game's legal counsel
with respect to the legal duties of the Board, regulatory matters, the Merger
and the Merger Agreement and issues related thereto, and with its financial
advisor with respect to the financial aspects of the transaction and the
fairness from a financial point of view of the consideration to be received by
Game stockholders. Prior to approving the Merger, the Game Board of Directors
received information regarding the proposed Merger, and analyzed and considered,
without assigning any relative or specific weight or priority to any one factor,
the following:
(i) Game's enhanced future business, operations, financial position
and prospects as a part of Viad, compared with Game's business, operations,
financial position and prospects were it to remain independent. In
particular, the Board considered the increasing capital requirements of
Game's operations, and the difficulties experienced by Game in obtaining
access to such capital. The Board of Directors of Game concluded that
merging with Viad would provide Game with significantly greater capital
resources at lower cost. The Board also considered Game's current customer
concentration, including its dependence on casinos owned or managed by
Grand Casinos, Inc., which accounted for more than 46% of Game's revenues
in 1996. The Board also considered Game's current dependence on key
individuals, and the potential of increased competition from larger
companies for providing cash access services in casinos. The Board of
Directors concluded that Game's ability to continue to compete effectively
would be enhanced by the Merger. The Board of Directors of Game also
considered the various risks inherent in the continued operation of Game as
an independent company, which risks are described in Game's Annual Report
on Form 10-KSB for the year ended December 31, 1996 and Game's Quarterly
Reports on Form 10-QSB for the quarters ended March 31, and June 30, 1997,
which are incorporated herein by reference.
(ii) Compatibility of Game's and Viad's management philosophies and
style. The Game Board of Directors concluded that Viad's and Game's
management philosophies and style are highly compatible.
(iii) Compatibility of Game's and Viad's respective plans for growth
and expansion. The Game Board of Directors also considered Viad's strategic
focus, and concluded that Viad's business and operating strategies, and its
desire to expand its payment services business, were compatible with Game's
business and operating strategies.
(iv) Ladenburg's Fairness Opinion as to the fairness of the Merger to
Game's stockholders from a financial point of view. See "-- Opinion of
Game's Financial Advisor."
(v) The opportunity for Game's stockholders to participate, as holders
of Viad Common Stock, in the anticipated growth of a combined enterprise.
The Game Board of Directors also considered Game's
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smaller market capitalization and limited trading volumes in Game Common
Stock and concluded that Game stockholders would benefit from the greater
liquidity of Viad Common Stock.
(vi) The tax structure of the transaction. The Game Board of Directors
concluded that the tax structure of the transaction is favorable to the
stockholders of Game, allowing them to become stockholders in the combined
enterprise in a tax-free reorganization.
(vii) The terms and conditions of the Merger Agreement. The Game Board
of Directors also considered the structure of the Merger and concluded that
the terms and conditions of the Merger Agreement, including Game's right to
entertain other bona fide offers, are reasonable and fair to Game's
stockholders. See "-- The Merger Agreement -- Termination" and "-- The
Merger Agreement -- Termination Fees; Expenses."
(viii) Other factors. The Game Board of Directors also considered the
level of Viad's interest in consummating the Merger, the lack of a
financing contingency in Viad's proposal, and that the benefits of the
proposed Merger with Viad, coupled with the ability of the Game Board of
Directors to exercise its fiduciary duties if a credible superior offer
were to be made, outweighed the potential benefits to Game of forgoing the
opportunity with Viad in order either to seek other partners or remain
independent.
FOR THE REASONS SET FORTH ABOVE, THE GAME BOARD OF DIRECTORS UNANIMOUSLY
RECOMMENDS THAT GAME STOCKHOLDERS VOTE "FOR" THE APPROVAL AND ADOPTION OF THE
MERGER AGREEMENT AND APPROVAL OF THE MERGER.
Viad's Reasons for the Merger. In reaching its decision to approve the
Merger Agreement, the Viad Board of Directors consulted with and reviewed
reports and presentations prepared by, the members of management, and
independently considered a variety of factors related to the business and
operations of Game. The Viad Board of Directors concluded that the Merger is in
the best interests of Viad and its shareholders. The Merger is anticipated to
(i) be an accretive investment in a high growth segment of the payment services
industry, (ii) add a high growth product to Viad's payment services portfolio,
(iii) offer cost savings through the consolidation of certain administrative
functions and increased economies of scale, and (iv) increase revenue and expand
product line as a result of the ability to offer certain other payment services
to Game customers and Game certain services to Viad's customers. There can be no
assurance that any or all of these anticipated benefits of the Merger will be
realized.
RECOMMENDATION OF THE GAME BOARD OF DIRECTORS
The Game Board of Directors believes that the terms of the Merger Agreement
and the transactions contemplated thereby are fair to and in the best interests
of Game and its stockholders and has unanimously approved the Merger Agreement
and the transactions contemplated thereby. THE GAME BOARD OF DIRECTORS
UNANIMOUSLY RECOMMENDS THAT THE STOCKHOLDERS OF GAME APPROVE AND ADOPT THE
MERGER AGREEMENT. The recommendation of the Game Board of Directors is based on
a number of strategic, operating and financial factors as described in
"-- Reasons for and Background of the Merger." There can be no assurance that
any or all of the anticipated benefits of the Merger discussed therein will be
realized. In considering the recommendation of the Game Board of Directors,
holders of Game Common Stock should be aware that certain members of Game's
management have other interests in the Merger in addition to the interests which
holders of Game Common Stock have in general. The Game Board of Directors was
aware of these other interests and considered them, among other matters, in
approving the Merger Agreement and the transactions contemplated thereby,
including the Merger. See "-- Interests of Certain Persons in the Merger" and
"-- Management and Operations after the Merger."
OPINION OF GAME'S FINANCIAL ADVISOR
On September 23, 1997, Ladenburg delivered its oral and written opinion to
the Game Board of Directors to the effect that, as of such date, the
consideration to be received by Game in the Merger is fair, from a financial
point of view, to the stockholders of Game. A copy of the opinion dated
September 23, 1997 is
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attached hereto as Appendix VII (the "Fairness Opinion"). Game's stockholders
are urged to read the Fairness Opinion in its entirety.
Information and Materials Considered. In connection with rendering the
Fairness Opinion, Ladenburg reviewed such information as it deemed necessary or
appropriate, including, but not limited to, the following: (i) a preliminary
draft of the Merger Agreement dated September 16, 1997; (ii) Game's audited
financial statements for the years ended December 31, 1994, 1995 and 1996; (iii)
Game's unaudited financial statements for the quarters ended March 31, and June
30, 1997; (iv) Game management's projected financial results for Game for the
years ending December 31, 1997, 1998, 1999, 2000 and 2001; (v) Game's common
stock price and volume trading history; (vi) Viad's audited financial statements
for the years ended December 31, 1994, 1995 and 1996; (vii) Viad's unaudited
financial statements for the quarters ended March 31, and June 30, 1997; (viii)
Viad's common stock price and volume trading history; (ix) Viad's dividend
history; (x) available research reports on Viad; and (xi) publicly available
market information regarding the gaming and payment services industries, Game
and its competitors. In addition, Ladenburg met with members of senior
management of Game to discuss the historical and prospective industry
environment and operating results for Game.
In rendering its Fairness Opinion, Ladenburg assumed and relied upon the
accuracy, completeness and fairness, without assuming any responsibility for the
independent verification of, all financial and other information that was
available to it from public sources, that was provided to Ladenburg by Game, or
that was otherwise reviewed by it. With respect to financial projections
supplied to Ladenburg, Ladenburg assumed that they were reasonably prepared
based on Game's then current estimate of results, and Ladenburg has relied upon
such projections and made no independent verification of the bases, assumptions,
calculations or other information contained therein. Ladenburg's Fairness
Opinion relates to the relative value of the Merger. Ladenburg did not express
any opinion as to what the value of the Viad Common Stock actually will be when
issued to Game stockholders or the price at which the Viad Common Stock would
trade subsequent to the closing of the Transaction. Ladenburg has not made or
been provided with an independent evaluation or appraisal of the assets or
liabilities (contingent or otherwise) of Game, and Ladenburg does not assume any
responsibility for verifying any of the information reviewed by it. Ladenburg
was not authorized to, and did not, solicit third party indications of interest
in acquiring all or part of Game, and Ladenburg was not asked to consider, and
Fairness Opinion does not address, the consideration Game might receive from a
third-party purchaser, the relative merits of the Transaction as compared to any
alternative business strategies that might exist for Game or the effect of any
other transaction in which Game might engage. The Fairness Opinion is based upon
information available to Ladenburg, and financial, stock market and other
conditions and circumstances existing and disclosed to Ladenburg, as of the date
of the Fairness Opinion.
The summary of certain financial and comparative analyses set forth below
does not purport to be a complete description of the analyses employed by
Ladenburg in reaching the Fairness Opinion. Ladenburg has expressed its belief
that its analyses must be considered as a whole and that selecting portions of
its analyses and of the factors considered by it without considering all such
analyses and factors could create a misleading view of the processes underlying
the Fairness Opinion. Ladenburg has expressed the view that arriving at a
fairness opinion is a complex process not necessarily susceptible to partial or
summary description.
THE FULL TEXT OF THE WRITTEN FAIRNESS OPINION WHICH SETS FORTH THE
ASSUMPTIONS MADE, MATTERS CONSIDERED AND LIMITATIONS OF THE REVIEW UNDERTAKEN,
IS ATTACHED HERETO AS APPENDIX VII AND IS INCORPORATED HEREIN BY REFERENCE. GAME
STOCKHOLDERS ARE URGED TO READ THE FAIRNESS OPINION CAREFULLY IN ITS ENTIRETY.
THE FAIRNESS OPINION IS DIRECTED ONLY TO THE FAIRNESS TO THE STOCKHOLDERS OF
GAME OF THE CONSIDERATION TO BE RECEIVED IN THE TRANSACTION FROM A FINANCIAL
POINT OF VIEW AND DOES NOT ADDRESS ANY OTHER ASPECT OF THE TRANSACTION. THE
SUMMARY OF THE FAIRNESS OPINION SET FORTH IN THIS PROXY STATEMENT IS BASED UPON
THE TEXT OF THE OPINION AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE
FULL TEXT OF SUCH OPINION.
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Overview of Analyses. Ladenburg used both quantitative and qualitative
assessments to evaluate Game. Ladenburg's determination that the consideration
to be received in the Merger is fair, from a financial point of view, to the
shareholders of Game is based on all the quantitative and qualitative analyses
described in the Fairness Opinion.
Ladenburg conducted a number of valuation analyses to determine a range of
per share equity values for Game. The analyses used to determine per share
equity values for Game included a market multiples analysis, an acquisition
multiples analysis, a discounted cash flow analysis and a takeover premium
analysis. Ladenburg used the median per share equity value from each analysis to
develop a range of values for Game. Ladenburg compared the consideration to be
received in the Merger to the range of derived equity values for Game.
Qualitative Considerations. In addition to the quantitative analyses
discussed below, Ladenburg considered a number of qualitative factors related to
Game. Ladenburg did not apply weightings to any of these qualitative analyses.
Among the qualitative factors relating to Game, Ladenburg noted Game's (i)
dependence on key individuals; (ii) increasing need for capital with difficult
access to financing (as evidenced by Game's unsuccessful secondary offering in
the fourth quarter of 1996); (iii) dependence on one customer, Grand Casinos,
for over 40% of 1996 revenues; and (iv) number two position in a market where
the number one competitor recently purchased the number three competitor.
Quantitative Analyses. Ladenburg evaluated Game, through various methods
described below, to derive implied aggregate equity values and implied per share
equity values for 100% of the value of Game.
(a) Historical and Projected Financial Performance. Ladenburg reviewed
Game's historical financial performance for each of the three fiscal years in
the three-year period ended December 31, 1996 and the quarters ended March 31,
1997 and June 30, 1997, and its projected performance as developed by management
based on assumptions management believed were reasonable for the next five
years.
(b) Historical Market Price Analysis. Ladenburg examined the closing
market prices of Game Common Stock over the 90-day trading period prior to
September 19, 1997 during which time the closing market price ranged from $7.88
to $10.75 and the Game Common Stock had an average high and low trading price of
$9.78 and $9.37, respectively, and a closing price of $10.25 on September 19,
1997, two trading days prior to the date of the Fairness Opinion.
(c) Market Multiples Analysis. Ladenburg conducted a market multiples
analysis for Game which determined the implied public market value based on the
multiples of comparable public companies. Ladenburg derived results based upon
the multiples of a group of public companies that Ladenburg believes are
comparable to Game. In choosing comparable companies for Game, Ladenburg
examined both suppliers of machinery and equipment to the gaming industry and
payment services companies. Ladenburg examined six companies in the gaming
machinery and equipment suppliers industry including: Acres Gaming, Inc.;
Alliance Gaming Corp.; Casino Data Systems; International Game Technology;
Mikohn Gaming Corp.; and Shuffle Master, Inc. (the "Gaming Suppliers") and six
companies in the payment services industry including: Ace Cash Express, Inc.;
Concord EFS, Inc.; Equifax, Inc.; First Data Corporation; Fiserv, Inc.; and
National Data Corporation (the "Payment Services Companies" and together, the
"Comparable Companies").
Ladenburg derived the following median common stock trading multiples for
both the Gaming Suppliers and Payment Services Companies: (i) earnings before
interest, taxes, depreciation and amortization ("EBITDA"); (ii) earnings before
interest and taxes ("EBIT"); (iii) pre-tax income; (iv) net income; (v)
projected net income; and (vi) book value. EBITDA and EBIT multiples are based
on total enterprise value divided by each financial measure, respectively. Total
enterprise value is defined as the market value of common stock, plus total
debt, less cash and cash equivalents. The pre-tax income, net income, projected
net income and book value multiples are derived by dividing the market value of
the common stock in aggregate, or per share stock price as appropriate, by
pre-tax income, net income, projected net income and book value.
The implied equity valuations for Game were calculated based on multiples
for both the Gaming Suppliers and the Payment Services Companies separately.
Ladenburg then averaged the separate valuation ranges produced for each industry
group to develop an implied market multiple valuation for Game. The implied
equity valuations for Game based on EBITDA and EBIT were calculated by
multiplying Game's
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EBITDA and EBIT by the median EBITDA and EBIT multiples, respectively, for both
the Gaming Suppliers and Payment Services Companies, then subtracting debt
outstanding and adding cash, net of cash inventory, as of June 30, 1997. To
arrive at equity valuations based on pre-tax income, net income, projected net
income and book value, Ladenburg multiplied Game's pre-tax income, net income,
projected net income and book value by the median pre-tax income, net income,
projected net income and book value multiples, respectively, for both the Gaming
Suppliers and the Payment Services Companies. The range of implied equity values
based on the Comparable Companies multiples was divided by the total number of
Game's shares outstanding, assuming the exercise of all outstanding options and
the buyback of shares in the market at $10.75, to derive a range of implied
equity values per share.
The median market multiples for the Gaming Suppliers were as follows: (i)
9.0x as a multiple of EBITDA; (ii) 14.3x as a multiple of EBIT; (iii) 12.3x as a
multiple of pre-tax income; (iv) 20.7x as a multiple of net income; (v) 20.5x as
a multiple of the current year's projected net income; (vi) 17.4x as a multiple
of the following year's projected net income; and (vii) 2.5x as a multiple of
book value. The median market multiples for the Payment Services Companies were
as follows: (i) 11.9x as a multiple of EBITDA; (ii) 16.5x as a multiple of EBIT;
(iii) 16.6x as a multiple of pre-tax income; (iv) 27.8x as a multiple of net
income; (v) 23.8x as a multiple of projected net income for year one; (vi) 20.2x
as a multiple of projected net income for year two; and (vii) 3.9x as a multiple
of book value. Ladenburg weighted the implied valuations derived from the Gaming
Suppliers and the Payment Services Companies equally in determining a single
range of per share values for Game. The results of the market multiple analysis
indicated a range of per share equity values of $6.01 to $12.98 and a median per
share equity value of $10.80.
(d) Acquisition Multiples Analysis. Ladenburg conducted an acquisition
multiples analysis which was similar to the market multiples analysis but
instead relied upon multiples from comparable merger and acquisition
transactions. For purposes of this analysis, the purchase price was equal to the
amount paid for the target's equity and the transaction value was equal to the
purchase price, plus the target's outstanding interest-bearing debt, less cash
and cash equivalents, net of cash inventory.
Ladenburg compared multiples from merger and acquisition transactions of
companies in both the gaming machinery and equipment suppliers industry and the
payment services industry. Ladenburg compared multiples from merger and
acquisition transactions of the following target and acquiring companies in the
gaming machinery and equipment suppliers industry, respectively: the acquisition
of Electronic Data Technologies by International Game Technology; the
acquisition of Automated Wagering by Video Lottery Technologies, Inc.; the
acquisition of Global Gaming by Anchor Gaming; and the acquisition of Bally
Gaming International, Inc. by Alliance Gaming Corp. Ladenburg compared multiples
for merger and acquisition transactions of the following target and acquiring
companies in the payment services industry, respectively: the acquisition of
Western Union Financial Services, Inc. by First Financial Management Corp.; the
acquisition of Casino & Credit Services, Inc. by Hospitality Franchise Systems,
Inc.; the acquisition of First Financial Management Corp. by First Data Corp.;
the acquisition of Comdata Holdings Corp. by Ceridian Corp.; the acquisition of
Check Express Inc. by Ace Cash Express Inc.; and the acquisition of Premier
CashLink by Ceridian Corp.
The median multiples for the gaming machinery and equipment supplier
transactions were as follows: (i) 9.6x as a multiple of EBITDA; (ii) 17.0x as a
multiple of EBIT; and (iii) 1.5x as a multiple of book value. There was no
meaningful multiple for net income for this group of transactions. The median
multiples for the payment services company transactions were as follows: (i)
11.6x as a multiple of EBITDA; (ii) 20.6x as a multiple of EBIT; (iii) 29.9x as
a multiple of net income; and (iv) 1.5x as a multiple of book value. Ladenburg
then averaged the separate valuation ranges produced for each industry group to
develop an implied acquisition multiple valuation for Game. The range of implied
equity values derived from the acquisition multiples analysis was divided by the
total number of Game's shares outstanding, assuming the exercise of all
outstanding options and the buyback of shares in the market at $10.75, to derive
a range of implied equity values per share. Ladenburg weighted the implied
valuations derived from the gaming machinery and equipment supplier transactions
and the payment services company transactions equally in determining a single
range of per share values for Game. The results of the acquisition multiple
analysis indicated a range of per share equity values of $2.78 to $13.74 and a
median per share equity value of $10.12.
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(e) Discounted Cash Flow Analysis. Ladenburg conducted a discounted cash
flow analysis which derived implied equity values based on the present value of
future net cash flows, less current total debt, plus current total cash, net of
cash inventory. For purposes of this analysis, annual free cash flow equals
de-levered net income, plus depreciation and amortization, less capital
expenditures, less the change in working capital, less increases in cash
inventory. In the exit year, free cash flow also included proceeds from the sale
of the business, which is typically assumed only for valuation purposes as a
more representative "terminal value" than using cash flows in perpetuity. The
terminal value was determined by applying a range of exit multiples based on the
median EBITDA multiple of the Comparable Companies. Ladenburg applied exit
multiples from 9.0x to 11.0x. The cash flows were discounted using a range of
discount rates based upon the weighted average cost of capital ("WACC") for
Game. Ladenburg determined the WACC for International Game Technology (10.0%)
and First Data Corporation (12.3%) as proxies for the cost of capital for
industry leaders in the Company's line of business. Ladenburg concluded that
given Game's significantly smaller capitalization and difficult historical
access to capital, it would have a WACC at a substantial premium to
International Game Technology and First Data Corporation. Ladenburg therefore
selected a range of 14.0% to 16.0% as Game's appropriate discount rate for the
Discounted Cash Flow Analysis. The derived equity values were divided by the
number of shares of Game's common stock outstanding, assuming the exercise of
all outstanding options and the buyback of shares in the open market at $10.75,
to derive per share values. The results of this analysis indicated a range of
per share equity values of $9.85 to $13.18 and a median per share equity value
of $11.45.
(f) Takeover Premium Analysis. Ladenburg conducted a takeover premium
analysis which derived an implied per share stock price based on the market
value premium typically given to a public company upon the announcement of a
takeover of that company. Ladenburg looked at 100% completed acquisitions of a
public company from January 1, 1997 to September 19, 1997 with transaction
values between $25 million and $100 million. Ladenburg compared the takeover
stock price of the target company to the target company stock price one day and
one week prior to the original announcement date. Ladenburg derived a mean and
median takeover price premium one day and one week prior to the takeover
announcement. Ladenburg then applied the mean and median percentage premiums to
Game's stock price one trading day and one trading week prior to September 19,
1997 to derive a mean and median implied share price, for the one day and one
week periods, respectively. The results of this analysis indicated a range of
per share equity values of $11.24 to $11.91 and a median per share equity value
of $11.50.
Comparison of the Consideration to the Values of Game. Ladenburg concluded
that the consideration to be received in the Merger is fair, from a financial
point of view, to the public stockholders of Game, based on, among other things,
the following considerations: (i) the Viad consideration to be received by Game
stockholders of $10.75 falls within the range of median per share values for
Game of $10.12 to $11.50; and (ii) the value for the Viad consideration to be
received by Game's stockholders represents a premium to Game's closing stock
price as of September 19, 1997 of 4.9% and a premium to Game's average closing
price for the 90 day period ending September 19, 1997 of 12.1%. In addition,
Ladenburg concluded that Viad Common Stock represents fair currency to Game's
stockholders given the fact that Viad is a New York Stock Exchange company with
a market capitalization of approximately $2.0 billion that trades an average of
over 155,000 shares daily.
Limitations of Analyses. Although each analysis employed by Ladenburg in
rendering the Fairness Opinion is summarized above, the summary does not purport
to be a complete description of Ladenburg's analyses and contains those aspects
of Ladenburg's analyses deemed most relevant. In its analyses, Ladenburg made
numerous assumptions with respect to industry performance, general business,
economic, market and financial conditions and other matters, based on, among
other things, information provided by Game to Ladenburg and relied on by it,
many of which are beyond the control of Game. Any estimates contained in
Ladenburg's analyses are not necessarily indicative of actual values, which may
be significantly more or less favorable than as set forth therein. Additionally,
estimates of the value of businesses do not purport to be appraisals or
necessarily to reflect the prices at which businesses actually may be sold.
Because such estimates are inherently subject to uncertainty since the
assumptions upon which such estimates are based may not materialize, neither
Game, Ladenburg nor any other person assumes responsibility for the accuracy of
such
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estimates. Ladenburg's analysis does not reflect, among other things, changes
since the date of the Fairness Opinion for Game's business or prospects, changes
in general business and economic conditions or any other transaction or event
that has occurred or that may occur and that was not anticipated at the time
such materials were prepared.
Ladenburg is an internationally recognized investment banking firm which,
as part of its investment banking business, is continually engaged in the
valuation of businesses and their securities in connection with mergers and
acquisitions, merchant banking, leveraged buyouts, negotiated underwritings,
competitive biddings, secondary distributions of listed and unlisted securities,
private placements and valuations for estate, corporate and other purposes.
Ladenburg was engaged by Game to render the Fairness Opinion and received a
fee in connection therewith of $160,000. In addition, Ladenburg rendered
financial advisory services to Game in connection with the Transaction, for
which it will receive eight tenths of one percent (0.8%) of the aggregate
consideration of the Merger, less any amounts paid or payable with respect to
rendering the Fairness Opinion, upon the closing of the Merger. Game has agreed
to reimburse Ladenburg for its related expenses. Game has also agreed, in a
separate letter agreement, to indemnify Ladenburg, its affiliates and each of
their respective directors, officers, agents, consultants and employees and each
person, if any, controlling Ladenburg or any of its affiliates against certain
liabilities, including liabilities under federal securities laws. In the past 18
months Ladenburg has provided general financial advisory services to Game for
which Ladenburg received compensation of $25,000. In the ordinary course of its
business Ladenburg may trade the securities of Game for its own account and for
the account of its customers, and may at any time hold a long or short position
in such securities.
MANAGEMENT AND OPERATIONS AFTER THE MERGER
After the Merger, the Surviving Corporation is expected to continue to
operate Game's payment services business as a wholly-owned subsidiary of
Travelers. See "-- Interests of Certain Persons in the Merger -- Employment
Agreements."
TERMS AND CONDITIONS OF THE MERGER
Surrender of Stock Certificates and Receipt of Merger Consideration. As
soon as reasonably practicable after the Effective Time, the Surviving
Corporation will instruct the Exchange Agent to promptly mail to each holder of
a Certificate or Certificates which immediately prior to the Effective Time
evidenced outstanding shares of Game Common Stock (other than Dissenting Shares)
(i) a 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 Exchange Agent and will be in such form and
have such other provisions as the Surviving Corporation may reasonably specify)
and (ii) instructions for use in effecting the surrender of the Certificates in
exchange for certificates evidencing shares of Viad Common Stock. Upon surrender
of a Certificate for cancellation to the Exchange Agent, the holder of such
Certificates shall be entitled to receive, and shall instruct the Exchange Agent
to promptly deliver, in exchange therefor (A) certificates evidencing that
number of whole shares of Viad Common Stock which such holder has the right to
receive in respect of the shares of Game Common Stock formerly evidenced by such
Certificate, (B) cash or whole shares (at the sole discretion of Viad) in lieu
of fractional shares of Viad Common Stock to which such holder is entitled
pursuant to the Merger Agreement and (C) any dividends or other distributions to
which such holder is entitled and the Certificate so surrendered shall forthwith
be canceled.
GAME STOCKHOLDERS SHOULD NOT SEND IN THEIR CERTIFICATES UNTIL THEY RECEIVE
A TRANSMITTAL LETTER FROM THE EXCHANGE AGENT.
No dividends or other distributions declared or made after the Effective
Time with a Record Date after the Effective Time with respect to Viad Common
Stock will be paid to the holder of any unsurrendered Certificate with respect
to the shares of Viad Common Stock evidenced thereby, until the holder of such
Certificate surrenders the Certificate as provided in the Merger Agreement. All
shares of Viad Common Stock issued and cash paid upon conversion of the shares
of Game Common Stock in accordance with the terms
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hereof shall be deemed to have been issued or paid in full satisfaction of all
rights pertaining to such shares of Game Common Stock.
Fractional Shares. No fractional shares of Viad Common Stock will be
issued upon the surrender for exchange of Certificates, and such fractional
share interests will not entitle the owner thereof to vote or to any rights of a
stockholder of Viad. In lieu of any such fractional shares, each holder of Game
Common Stock upon surrender of a Certificate for exchange shall either be paid
an amount in cash (without interest), determined by multiplying the Viad Price
by the fractional interest to which such holder would otherwise be entitled
(after taking into account all shares of Game Common Stock then held of record
by such holder) or be issued a whole share in lieu of any fractional share
larger than or equal to one half share, at the sole discretion of Viad.
Treatment of Game Options. At the Effective Time, each issued and outstanding
Game Option shall vest and become immediately exercisable and shall be
automatically converted, without any action by Game Option holders, into an
option to purchase, on the same terms and conditions as were applicable to such
Game Option immediately prior to the Effective Time under the terms of the
option plans of Game existing immediately prior to the Effective Time (which
shall survive the Effective Time and shall be the obligation of the Surviving
Corporation), a number of shares of Viad Common Stock equal to the product of
(i) the number of shares of Game Common Stock subject to such Game Option times
(ii) the Exchange Ratio; at an exercise price per share (rounded upward to the
nearest full cent) equal to a fraction, (A) the numerator of which is equal to
the exercise price of such Game Option, and (B) the denominator of which is the
Exchange Ratio. At the Effective Time, the holders of Game Options shall cease
to have any rights with respect to shares of Game Common Stock and will only
have rights with respect to Viad Common Stock set forth in the Merger Agreement.
Game has agreed to take such actions as are necessary to ensure that from
and after the date of the Merger Agreement none of Game, the Surviving
Corporation or any of their respective subsidiaries is or will be bound by any
Game Options which would entitle any person, other than Viad or its wholly-owned
subsidiaries, to beneficially own, or receive any payments in respect of (other
than as contemplated by the Merger Agreement), any Common Stock of Game or the
Surviving Corporation. (Section 3.4 of Merger Agreement.) See "-- Interests of
Certain Persons in the Merger."
THE MERGER AGREEMENT
Set forth below is a description of the primary terms and conditions of the
Merger Agreement, which description does not purport to be complete and is
qualified in its entirety by reference to the Merger Agreement, a copy of which
is attached hereto as Appendix II and incorporated herein by reference. Unless
otherwise indicated, references under this caption to articles or sections are
references to the Merger Agreement. Whenever particular articles, sections or
defined terms are referred to, it is intended that such sections or defined
terms shall be incorporated herein by reference. Capitalized terms appearing
below that are not otherwise defined herein have the same meanings as are given
to such terms in the Merger Agreement, some of which are set forth in Appendix
II to this Proxy Statement/Prospectus.
Mutual Conditions to Closing. The respective obligations of Viad, Game and
Acquisition Sub to effect the Merger are subject to the satisfaction, at or
prior to the Closing, of the following conditions: (a) the Game stockholders
shall have approved the Merger Agreement and the transactions contemplated
thereby; (b) no preliminary or permanent injunction or other order or decree by
any federal or state court which prevents the consummation of the Merger shall
have been issued and remain in effect; (c) no action shall have been taken, and
no statute, rule or regulation shall have been enacted, by any Governmental
Agency which would prevent the consummation of the Merger; (d) all governmental
consents and approvals legally required for the consummation of the Merger and
the transactions contemplated thereby shall have been obtained and be in effect
at the Effective Time on terms and conditions that would not have a material
adverse effect on the Surviving Corporation; (e) the Hart-Scott-Rodino Condition
shall have been satisfied; (f) the Registration Statement shall have become
effective, and no stop order suspending such effectiveness shall have been
issued and remain in effect and no action, suit, proceeding or investigation for
that purpose shall have been initiated
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or threatened by any Governmental Authority; (g) Viad shall have received all
necessary state securities law authorizations; (h) the shares of Viad Common
Stock issuable in the Merger shall have been authorized for listing on the NYSE;
and (i) Game's Board of Directors shall have received from its financial
advisors, Ladenburg, a written opinion to the effect that the Exchange Ratio is
fair to the holders of Game's Common Stock from a financial point of view.
(Section 8.1 of Merger Agreement.)
Viad's Conditions to Closing. The obligations of Viad (and Acquisition
Sub) to effect the Merger are subject to the satisfaction, at or prior to the
Closing, of the following conditions (any of which may be waived prior to
Closing by Viad): (a) Game and Dachis shall have performed in all material
respects their respective agreements contained in the Merger Agreement, the
Selling Shareholder's Agreement, the Stock Option Agreement and the Irrevocable
Proxy Agreement required to be performed on or prior to the Effective Time; (b)
the representations and warranties of Game contained in the Merger Agreement
shall be true and correct in all respects on and as of the date of the Merger
Agreement and on and as of the Effective Time as if made on and as of such date,
except as contemplated or permitted by the Merger Agreement and except those
which in the aggregate do not result in a Game Material Adverse Effect, and Viad
and Acquisition Sub shall have received a Certificate of the President and the
Chief Financial Officer of Game to that effect; (c) since the date of the Merger
Agreement, no Game Material Adverse Effect shall have occurred; (d) the Viad
Price shall be no less than $17.20 per share; (e) the number of Dissenting
Shares shall not exceed five percent (5%) of Game Common Stock outstanding at
the Effective Time; (f) all material licenses and permits required to conduct
business of Game (other than licenses or permits from any Native American
Authority) shall have been properly transferred or obtained (except to the
extent that such licenses and permits may only be transferred or obtained by the
Surviving Corporation subsequent to the Effective Time) and shall be in full
force and effect as of the Effective Time, and all licenses and permits required
to conduct the business of Game that Viad has requested that Game obtain from
any Native American Authority shall have been properly transferred or obtained
and shall be in full force and effect as of the Effective Time; (g) all third
party consents and approvals necessary for the consummation of the Merger and
the transactions contemplated thereby (other than those consents and approvals
from any Native American Tribes that Viad and Game have agreed not to procure)
shall have been obtained and shall be in full force and effect at the Effective
Time, and all third party consents and approvals of any Native American
Authority that Viad has requested that Game procure shall have been obtained and
be in effect at the Effective Time; (h) all notes and other receivables from any
employees, consultants or other third parties due to Game shall have been fully
paid and satisfied; (i) the Credit Agreement and the Security Agreement between
Game and First Bank System shall have been terminated effective no later than
the Effective Time and all obligations of Game under such agreements shall have
been satisfied; (j) in the event Game or any of its Subsidiaries enters into the
Merchant Member Agreement with First Bank National Association, such Agreement
shall be in form and substance reasonably satisfactory to Viad; (k) Game shall
have in full force and effect the non-Gaming Vendor License from the Wisconsin
Gaming Board; (l) each of the Significant Game Shareholders shall have executed
and delivered a Certificate certifying that as of the Closing Date, the
representations and warranties of Game set forth in the Merger Agreement are
true and correct and do not contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein necessary in order
to make the statements therein, in light of the circumstances under which they
were made, not misleading; (m) Game shall have in force and effect the policy of
director's and officer's liability insurance coverage required by Section 7.12;
(n) Game shall provide evidence of the termination of any 401K Plan or Profit
Sharing Plan of Game; (o) Game shall cause the resignation, termination or other
removal of certain of Game's present directors and officers, effective as of the
Closing Date; (p) Viad's determination that it has adequate assurance that the
Merger qualifies for pooling of interests accounting treatment; including
without limitation, a letter from Ernst & Young LLP (Game's independent public
accountants) that they are not aware of any fact or circumstance with respect to
Game which could be interpreted as rendering the Merger ineligible for pooling
of interests accounting treatment; (q) Game shall have delivered assignments
conveying the Intellectual Property to Viad; (r) Viad and Acquisition Sub shall
have received an opinion from Game's legal counsel with respect to certain
matters; (s) the Selling Shareholder's Agreement shall be in full force and
effect; (t) the Escrow Agreement shall be in full force and effect; (u) the
Employment Agreements, in the forms approved by Viad, between Game, and each of
Gary A. Dachis, Jeffrey L. Ringer, Deanna Frederichs-Moose, Michael Barcelow,
Louis Dachis and
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Jean Williams shall be in full force and effect; (v) each person who is or may
be an "affiliate" of Game within the meaning of the rules and regulations of the
SEC under the Securities Act shall have entered into an Affiliate Agreement; (w)
the Stock Option Agreement shall be in full force and effect; (x) the
Irrevocable Proxy Agreement shall be in full force and effect, and an
irrevocable proxy from each Significant Game Shareholder to vote their shares of
Game Common Stock in favor of the Merger in form and substance reasonably
satisfactory to Viad shall be in full force and effect; (y) Dachis shall have
timely filed any filing required to be filed by him under the HSR Act or shall
have provided the written representations and warranties and the opinion of
counsel described in the Selling Shareholder's Agreement to the effect that no
such filings are necessary; and (z) Game shall have delivered to Viad such other
documents Viad as may reasonably request in order to enable Viad to determine
whether the conditions to its obligations under the Merger Agreement have been
met and otherwise to carry out the provisions of the Merger Agreement. (Section
8.3 of Merger Agreement.)
Game's Conditions to Closing. The obligations of Game to effect the Merger
are subject to satisfaction, at or prior to Closing, of the following conditions
(any of which may be waived prior to closing by Game): (a) Acquisition Sub and
Viad shall have performed in all material respects their agreements contained in
the Merger Agreement required to be performed on or prior to the Effective Time;
(b) the representations and warranties of Acquisition Sub and Viad contained in
the Merger Agreement shall be true and correct in all respects on and as of the
date of the Merger Agreement and on and as of the Effective Time as if made on
and as of such date, except as contemplated or permitted by the Merger Agreement
and except those which in the aggregate do not result in a Viad Material Adverse
Effect, and Game shall have received a certificate of the President or the chief
financial officer of each of Acquisition Sub and Viad to that effect; (c) since
the date of the Merger Agreement, no Viad Material Adverse Effect shall have
occurred; (d) the Viad Price shall be no greater than $21.20 per share; (e) Game
shall have received an opinion from legal counsel to Viad and Acquisition Sub
with respect to certain matters; (f) Game shall have received an opinion from
Ernst & Young LLP to the effect that there is a reasonable basis to believe that
the Merger will be treated for Federal income tax purposes as a tax-free
reorganization; (g) Viad shall have deposited Viad Common Stock and cash into
the Exchange Fund in accordance with the Merger Agreement; and (h) Viad shall
have delivered to Game at or prior to the Effective Time such other documents as
it may reasonably request in order to enable Game to determine whether the
conditions to its obligations under the Merger Agreement have been met and
otherwise to carry out the provisions of the Merger Agreement. (Section 8.2 of
Merger Agreement).
Representations and Warranties. The Merger Agreement contains various
representations and warranties made by each of Game, Viad, and Acquisition Sub.
The representations and warranties given in the Merger Agreement or in any
instrument delivered pursuant thereto will survive the Closing and are the
subject of indemnification as described below under "-- The Merger
Agreement -- Indemnification."
Representations and Warranties Made By Game. Game made representations and
warranties in the Merger Agreement to Viad and Acquisition Sub relating to the
following matters regarding Game and its Subsidiaries: (a) the organization,
existence and good standing of Game; (b) the capitalization of Game; (c) the
organization and existence of Subsidiaries; (d) the authority to enter into
transactions contemplated by the Merger Agreement and the Stock Option
Agreement; (e) the non-contravention of the Charters, By-Laws, or other
agreements of Game or its Subsidiaries; (f) the filings, consents and approvals
necessary to execute, deliver and perform the Merger Agreement; (g) financial
statements and the filing with the SEC of all reports, proxy statements, forms
and other documents required to be filed; (h) the absence of undisclosed
liabilities; (i) the absence of subsequent material adverse changes; (j)
litigation; (k) the accuracy of the Proxy Statement/Prospective, when effective;
(l) compliance with laws; (m) compliance with the organizational documents of
Game and its Subsidiaries; (n) compliance with Minnesota takeover statutes; (o)
the required vote necessary to effect the Merger; (p) intellectual property; (q)
validity of contracts; (r) the existence and relationship of customers and
suppliers; (s) indebtedness to and from officers, directors and others; (t)
required permits, registrations, licenses, franchises, certifications and other
approvals; (u) taxes and returns; (v) ERISA matters; (w) labor and employment
matters; (x) the tax-free reorganization structure of the Merger; (y) the
engagement of advisors and investment bankers; (z) the terms of and absence
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<PAGE> 46
of payments made under an agreement between Game and UnBank Company LLP, an
affiliate of Dachis; and (aa) the completeness of disclosures made by Game and
Dachis. (Article IV of Merger Agreement).
Representations and Warranties Made by Viad and Acquisition Sub. Viad and
Acquisition Sub, jointly and severally, made representations and warranties in
the Merger Agreement to Game regarding the following matters: (a) the
organization, existence and qualification of Viad and Acquisition Sub; (b) the
capitalization of Viad; (c) the power and authority to perform obligations under
the Merger Agreement and related agreements, the non-contravention of charters,
by-laws, or other agreements of Viad and Acquisition Sub, and the required
approvals to enter into agreements; (d) financial statements and the filing with
the SEC of all reports, proxy statements, forms and other documents required to
be filed; (e) the absence of undisclosed liabilities; (f) the absence of certain
changes or events; (g) the accuracy of the Registration Statement; (h)
compliance with laws; (i) litigation; (j) compliance with agreements; (k) taxes
and returns; (l) the engagement of advisors and investment bankers; (m) Viad's
action or failure to take action that would cause the Merger to be ineligible
for pooling of interests accounting treatment; and (n) the completeness of
disclosures made by Viad and Acquisition Sub. (Article V of the Merger
Agreement).
Conduct of Game Business Prior to the Merger. Game has agreed, that,
except as contemplated by the Merger Agreement or with the prior written consent
of Viad, until the earlier of the termination of the Merger Agreement or the
Closing Date, Game shall and shall cause each of its Subsidiaries to conduct
their respective businesses in the ordinary and usual course of business and
consistent with past practice in accordance with the terms of the Merger
Agreement. (Section 6.1 of Merger Agreement).
Agreement Not to Solicit Third Party Offers. Game has agreed not to, and
has agreed not to authorize any of Game's officers, directors, employees or
other agents to, directly or indirectly, (i) take any action to seek, initiate
or encourage any offer or proposal from any person, entity or group (other than
Viad) to acquire any shares of the capital stock, options or other securities of
Game, to acquire any significant portion of Game's assets or for any other
merger, joint venture, recapitalization, consolidation or business combination
(a "Third Party Offer"), or (ii) except as specifically permitted by the Merger
Agreement, engage in negotiations concerning or disclose any confidential or
proprietary trade or business information relating to the business of Game, or
afford access to the properties, books or records of Game (except as required by
Applicable Law), to any third party that may be considering a Third Party Offer.
Game has agreed to notify Viad immediately, of any Third Party Offer from any
person, entity or group (other than from Viad) or of any request for information
with respect to a Third Party Offer or any indication of interest in a Third
Party Offer. (Section 7.2 of Merger Agreement).
Notwithstanding anything contained in the Merger Agreement to the contrary,
Game and its Subsidiaries may furnish information pursuant to an unsolicited
Third Party Offer if Game's Counsel advises the Game Board of Directors that the
failure to take such action or actions might reasonably subject Game's directors
to liability for breach of their fiduciary duties and Game's financial advisors
advise the Board that the consideration to be paid pursuant to said unsolicited
Third Party Offer is greater than that to be received by Game's stockholders
pursuant to this Agreement and said offeror has the necessary financial
capability to effect such transaction. Following receipt of a bona fide Third
Party Offer to consummate a Game Acquisition transaction, (i) Game may take and
disclose to Game's stockholders the position of the Board of Directors of Game
contemplated by Rule 14e-2 under the Exchange Act or otherwise make appropriate
disclosures to its stockholders, (ii) Game may furnish information concerning
its business, properties or assets to a bona fide third party in accordance with
the terms and provisions of the Merger Agreement, and (iii) Game may engage in
discussions or negotiations with a third party concerning a Game Acquisition
transaction, provided, that Game shall promptly notify Viad as to that fact and
shall furnish to Viad the identity of the recipient of information or the
proponent of such Game Acquisition transaction if applicable, and, if a Third
Party Offer has been received, a description of the material terms thereof. Game
may enter into a definitive agreement for a Company Acquisition transaction
meeting the requirements set forth above with the offeror with which it is
permitted to negotiate pursuant to the Merger Agreement, only if its failure to
do so would, in the judgment of Game's Board of Directors based upon the advice
of Game's Counsel, constitute a breach of the fiduciary duties of the Board of
Directors, provided, that at least ten Business Days prior to Game's execution
thereof,
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<PAGE> 47
Game shall have notified Viad in writing indicating Game's intent to enter into
such agreement and describing all of the material terms of such agreement.
(Section 7.2 of Merger Agreement).
Voting of Game Shares; No Transfers. Game has agreed to submit the Merger
Agreement and the transactions contemplated thereby for the approval of its
stockholders at the Special Meeting and, subject to the fiduciary duties of the
Board of Directors of Game under Applicable Laws, to use its best efforts to
obtain stockholder approval of the Merger Agreement and the transactions
contemplated thereby. Subject to Applicable Law, as determined by such directors
in good faith after consultations with and based upon the advice of Game's
Counsel, Game has agreed, through its Board of Directors, to recommend to its
stockholders approval of this Agreement and the transactions contemplated by the
Merger Agreement. (Section 7.4 of Merger Agreement).
Continuation of Indemnities; No Circular Indemnities. The right to
indemnification, if any, from Game of any current or former officer or director
of Game pursuant to Game Charter Documents or under any Applicable Law, shall
survive the Effective Date; but is limited under certain circumstances described
in the Merger Agreement. (Section 7.13 of Merger Agreement).
Registration Statement; Prospectus/Proxy Statement. Viad and Game agreed
to cooperate in the preparation of the Registration Statement and furnish each
other with the necessary information. Viad agreed to file the Registration
Statement and appropriate materials with the SEC and applicable state securities
agencies as promptly as practicable and to cause the Registration Statement to
become effective under the Securities Act and all such state filed materials to
comply with applicable state securities laws. Subject to certain restrictions,
Viad shall also take any action required to be taken under applicable state blue
sky or securities laws in connection with the issuance of Viad Common Stock in
the Merger.
Agreement to Cooperate. Subject to certain conditions, each of Game, Viad
and Acquisition Sub have agreed to use all reasonable efforts to take, or cause
to be taken, all action to do, or cause to be done, all things necessary, proper
or advisable under Applicable Laws to consummate and make effective the
transactions contemplated by the Merger Agreement. Game has agreed to allow Viad
to review each regulatory filing made by Game prior to the filing thereof during
the term of the Merger Agreement. Viad has agreed to allow Game to review each
regulatory filing made by Viad relating to the transactions contemplated in the
Merger Agreement prior to the filing thereof during the term of the Merger
Agreement, unless such filing contains information which Viad in its reasonable
discretion believes constitutes confidential information.
Confidentiality. Subject to certain exceptions, any information or
documents furnished in connection with the Merger Agreement shall be kept
strictly confidential by Game, Viad, Acquisition Sub and their respective
officers, directors, employees and agents and only disclosed in accordance with
the terms of the Merger Agreement.
Tax Treatment. Each of Viad, Acquisition Sub and Game have agreed to use
its reasonable best efforts to cause the Merger to qualify as a tax-free
reorganization under the provisions of Section 368(a)(1)(B) of the Code and Game
has agreed not to knowingly take any action or knowingly fail to take such
action that would be reasonably likely to jeopardize the treatment of the Merger
as a tax-free reorganization.
Pooling. From and after the date of the Merger Agreement, Game, Dachis and
certain other affiliates have agreed not to knowingly take any action, or
knowingly fail to take any action, that would jeopardize the Merger for pooling
of interests accounting treatment.
Certain Other Covenants. The Merger Agreement also contains, among others,
the following additional covenants (i) Viad agreed to use its best efforts to
obtain the listing on the New York Stock Exchange, at or before the Effective
Time, of the additional shares of Viad Common Stock to be issued pursuant to the
Merger; (ii) Dachis agreed to enter into, and Game and Dachis each agreed to use
their respective best efforts to ensure that each person who is or may be an
"affiliate" of Game within the meaning of Rule 145 promulgated under the
Securities Act shall enter into, the Affiliate Agreement; and (iii) Game agreed
to maintain or procure a policy of directors' and officers' insurance from a
reputable insurance company providing not less than $5 million coverage to its
officers and directors (with a retention amount not exceeding $250,000), which
policy shall remain in effect for a period not less than three years from the
Effective Time;
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and (iv) Game has agreed, if requested by Viad, to suspend its policies of
withholding cash drawer shortages from the payroll checks of cashiers.
Indemnification. Game has agreed to indemnify, defend and hold harmless
each Indemnified Party from and against all Indemnified Loss which may be
sustained, suffered or incurred by an Indemnified Party (regardless of any
investigation or inquiry by Viad at any time, provided, that no Indemnified
Person shall be entitled to indemnification under the Merger Agreement with
respect to the breach of any representation or warranty of Game, if Viad had
Actual Knowledge of the existence and scope of such breach) to the extent
resulting or arising in any way from (a) the breach of any obligation of Game
under the Merger Agreement, the Stock Option Agreement or any other agreement or
document delivered pursuant thereto or in connection therewith; (b) the
assertion against any Indemnified Party of any liability or obligation of Game
or its affiliates or in connection with the business of Game or any of its
Subsidiaries conducted prior to the Closing Date; (c) the assertion of any claim
for product or strict liability claims arising from any product or component
thereof or the provision of any service by Game or any Subsidiary prior to the
Closing Date; (d) certain labor matters; (e) certain environmental matters; (f)
certain tax matters; (g) any criminal misconduct by Game or any of its
subsidiaries; (h) any breach of any obligation by Dachis under the Irrevocable
Proxy Agreement, the Selling Shareholder's Agreement or the Escrow Agreement;
and/or (i) any losses arising out of any joint liability due to certain business
arrangements, whether by contract or by operation of law, in which Game or
Dachis participated prior to the Closing Date. (Section 10.4 of Merger
Agreement).
Game has agreed to pay the Indemnified Loss of any Indemnified Party within
ten (10) days of receipt of notice of an Indemnified Loss, unless Game has given
a notice of dispute of the Indemnified Loss to the Indemnified Party and the
Escrow Agent. (Section 10.3 of Merger Agreement).
In order to preserve the pooling of interests accounting treatment for the
Merger as anticipated by the Merger Agreement, all Indemnified Losses are
payable only in the manner set forth in the Merger Agreement which provides
among other things, the order and manner in which shares of Viad Common Stock
held by Game shall be returned to Viad for cancellation. (Section 10.4 of Merger
Agreement).
Game does not have any obligation to indemnify any Indemnified Party until
the Indemnified Parties have has suffered an aggregate loss by reason of all
such indemnity obligations in excess of $500,000, in which case, Game is
required to indemnify such Indemnified Party or Parties for the full amount of
their losses, without deduction. None of the limitations on indemnification
shall apply to any matter giving rise to a claim which, or the delay in
discovery of which, is the consequence of fraud or intentional concealment by
Game. (Section 10.5 of Merger Agreement).
Termination. The Merger Agreement may be terminated at any time prior to
the Closing, whether before or after approval by the stockholders of Game or
Acquisition Sub, by mutual written consent of Viad and Game. (Section 9.1(a) of
Merger Agreement).
Either Viad or Game may terminate the Merger Agreement at any time prior to
the Closing, whether before or after approval by the stockholders of Game or
Acquisition Sub, if (i) the Merger shall not have been consummated on or before
the Termination Date pursuant to the Merger Agreement; (ii) the requisite vote
of the stockholders of Game to approve the Merger Agreement and the transactions
contemplated thereby shall not be obtained at the Special Meeting; (iii) any
Governmental Authority, the consent of which is a condition to the obligations
of Acquisition Sub and Game to consummate the transactions contemplated by the
Merger Agreement, shall have determined not to grant its consent and any appeals
have been unsuccessful or such body shall have imposed conditions or limitations
on its consent that would have a material adverse effect on the Surviving
Corporation and any appeals have been unsuccessful; or (iv) any court of
competent jurisdiction shall have issued an order, judgment or decree (other
than a temporary restraining order) restraining, enjoining or otherwise
prohibiting the Merger and such order, judgment or decree shall have become
final and nonappealable. (Section 9.1(b) of Merger Agreement).
Viad may terminate the Merger Agreement at any time prior to the Closing,
whether before or after approval by the shareholders of Game or Acquisition Sub,
if (i) the Game Board of Directors shall have withdrawn or modified in a manner
adverse to Viad its approval or recommendation of the Merger, the Merger
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Agreement or the transactions contemplated thereby or shall have failed to
reaffirm such approval or recommendation upon Viad's request, or shall have
resolved to do any of the foregoing; (ii) Game or any of Game's officers,
directors, employees or other agents shall seek, initiate or encourage any offer
or proposal from any third party (other than Viad) to acquire any shares of the
capital stock, options or other securities of Game; (iii) there has been (a) an
uncured material breach of any covenant or agreement contained in the Merger
Agreement on the part of Game, (b) a representation or warranty of Game
contained in the Merger Agreement, Dachis under the Selling Shareholder's
Agreement is or becomes untrue or incorrect in a material respect unless the
untrue or incorrect representation or warranty does not result in a Game
Material Adverse Effect, (c) a condition to Closing set forth in Section 8.3 of
the Merger Agreement has not been satisfied by Game and Game has not satisfied
the condition at least ten days prior to the Termination Date; (d) the Viad
Price is below $17.20 per share (provided that Viad's election to terminate must
occur within one Business Day after the determination of the Viad Price); or (e)
the Merger would not qualify for pooling of interests accounting treatment.
(Section 9.1(c) of Merger Agreement).
Game may terminate the Merger Agreement at any time prior to the Closing,
whether before or after approval by the stockholders of Game or Acquisition Sub,
if: (i) there has been an uncured material breach of any covenant or agreement
herein on the part of Acquisition Sub or Viad; (ii) a representation or warranty
of Viad or Acquisition Sub contained in the Merger Agreement is or becomes
untrue or incorrect in a material respect, unless in either case the material
breach or the untrue or incorrect representation or warranty does not result in
a Viad Material Adverse Effect; (iii) a condition to Closing set forth in
Section 8.2 of the Merger Agreement has not been satisfied by Viad and Viad has
not satisfied the condition at least ten days prior to the Termination Date;
(iv) the Viad Price is above $21.20 per share (provided that Game's election to
terminate must occur within one Business Day after the determination of the Viad
Price); (v) the Merger would not qualify as a tax-free reorganization; or (vi)
Game enters into a definitive agreement with a third party for a Game
Acquisition transaction, provided Game has complied with all provisions of the
Merger Agreement, including the notice provisions, and that Game complies with
applicable requirements relating to payment of the Breakup Fee. (Section 9.1(d)
of Merger Agreement).
Termination Fees; Expenses. All costs and expenses incurred in connection
with the Merger Agreement and the transactions contemplated thereby shall be
paid by the party incurring such expenses; provided, however, that all costs and
expenses relating to printing, filing and mailing the Registration Statement,
the Proxy Statement and any other filings with the SEC and all SEC and other
regulatory filing fees (including fees under the HSR Act) incurred in connection
with such filings shall be borne equally by Game and Viad. (Section 7.6 of
Merger Agreement).
Notwithstanding the foregoing, in the event of termination of the Merger
Agreement or the abandonment of the Merger by either Viad, Acquisition Sub or
Game as provided above without the breach of any covenant or obligation
contained in the Merger Agreement of Game on the one hand, or Viad and
Acquisition Sub on the other hand, Game shall pay to Viad the Expense Fee of
$500,000 if the Merger Agreement is terminated or the transactions contemplated
therein fail to close for any reason other than (i) termination pursuant to the
mutual consent of Game and Viad; (ii) lack of approval from a necessary
Governmental authority; (iii) an order, judgment or decree from a court of
competent jurisdiction enjoining, restraining or prohibiting the Merger (unless
the court order, judgment or decree was sought by Game or any of its Affiliates,
in which case the Expense Fee shall be paid); (iv) the Viad Price is below
$17.20 per share; (v) the Merger would not qualify for pooling of interests
accounting treatment (unless the failure is a result of Game, Dachis or any
other Significant Game Shareholder intentionally taking any action or failing to
take any action after the date of the Merger Agreement); (vi) Viad or
Acquisition Sub has breached a covenant or agreement and has not cured its
breach or provided adequate assurance of cure within 15 days of notice of such
breach; (vii) a representation or warranty of Viad or Acquisition Sub is untrue
in a material respect; (viii) the Viad Price is above $21.20 per share; or (ix)
the failure of Viad or Acquisition Sub to satisfy the closing conditions set
forth in the Merger Agreement.
Game is required to pay to Viad the Breakup Fee of $2,000,000, with a
credit for any Expense Fee already paid to Viad by Game, as Viad's sole and
exclusive remedy if the Merger Agreement is terminated by reason of Game
entering into an agreement for a Game Acquisition transaction or if the Merger
Agreement is
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terminated or the transactions contemplated therein fail to close as a result of
(i) the breach by Game or any of its Affiliates of obligations relating to
solicitations for Third Party Offers; (ii) the failure to satisfy the mutual
conditions set forth in the Merger Agreement; (iii) Game or any of its
Subsidiaries having entered into an agreement with any third party relating to
the acquisition of Game's capital stock, options or other securities of Game
(except agreements in the ordinary course of Game's business consistent with
prior practices for amounts which are less than or equal to 5% of Game's then
issued and outstanding securities), the acquisition of any significant portion
of Game's assets, or for any other merger, joint venture, recapitalization,
consolidation or business combination relating to Game prior to January 31,
1999, or one year from the Termination Date if the Termination Date is extended
beyond January 31, 1998.
Viad is required to pay to Game a fee of $500,000 if the Merger Agreement
is terminated, or the transactions contemplated therein fail to close as a
result of Viad's intentionally taking any action or intentionally failing to
take any action after the date of the Merger Agreement (other than those
disclosed in the Viad Disclosure Schedule) that causes the Merger to fail for
pooling of interests accounting treatment. (Section 9.2(e) of Merger Agreement).
If an expense reimbursement or fee shall become due and payable by either
party, and such party shall fail to pay such expense or fee when due pursuant to
the preceding paragraph and, in order to obtain such payment, suit is commenced
which results in a judgment against such party therefor, such party shall pay
the other party's reasonable costs, fees and expenses (including reasonable
attorneys' fees) in connection with such suit, together with interest computed
on any such amounts determined to be due and such costs at the rate of 10% per
annum from the date such payment was due under the Merger Agreement. (Section
9.2(d) and (f) of Merger Agreement).
Dispute Resolution. All disputes between the parties (except in certain
cases specified in the Merger Agreement) will be governed by the dispute
resolution procedures set forth in the Merger Agreement, which include binding
arbitration procedures. (Article XI of Merger Agreement).
Amendment and Waiver. The Merger Agreement may be amended, modified or
supplemented by the parties before or after the Merger Agreement is approved by
the holders of Game Common Stock, subject to the provisions of applicable law.
(Sections 12.2 and 12.3 of Merger Agreement).
Survival. With the exception noted below, the respective representations,
warranties, covenants and agreements of Game and Viad and Acquisition Sub
contained in the Merger Agreement or in any certificates or other documents
delivered prior to or at the Closing terminate at the Effective Time. Those
representations, warranties, covenants and agreements relating to effects of the
Merger, conversion of shares, expenses, agreement to cooperate, confidentiality,
tax treatment, pooling, continuation of indemnities, no circular indemnities,
effect of termination or abandonment, indemnification, dispute resolution,
survival, notices, assignment, expenses, governing law, severability, specific
performance, disclosure schedules and parties in interest shall survive for a
period of one year following the Closing Date, except for the warranties,
covenants and agreements relating to non-filing of any Tax Returns or the
non-payment of any Taxes to any Governmental Authority, which survive until the
expiration of the applicable statute of limitations.
SELLING SHAREHOLDER'S AGREEMENT
Set forth below is a description of the primary terms and conditions of the
Selling Shareholder's Agreement, dated as of September 24, 1997, attached as
Appendix III and incorporated herein by reference. The following description
does not purport to be complete and is qualified in its entirety by reference to
the Selling Shareholder's Agreement. Unless otherwise indicated, references
under this caption to articles or sections are references to the Selling
Shareholder's Agreement. Whenever particular articles, sections or defined terms
are referred to, it is intended that such articles, sections or defined terms
shall be incorporated herein by reference. Capitalized terms appearing below
that are not otherwise defined herein have the same meanings as are given to
such terms in the Selling Shareholder's Agreement. Stockholders of Game are
urged
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to read the Selling Shareholder's Agreement in its entirety for a more complete
description of the rights and obligations of the parties thereunder.
Escrow of Dachis Shares. Pursuant to the terms of the Merger Agreement,
and as security for the representations, warranties, covenants, indemnities and
other obligations of Dachis to Viad or the Surviving Corporation, at the
Effective Time, Viad and Dachis agreed that certificates that would otherwise
have been issued to Dachis in the Merger pursuant to the Merger Agreement
representing Viad Common Stock having an aggregate value (based upon the Viad
Price) equal to the sum of the Maximum Indemnification Amount of $4,500,000 and
the Software Fee of $500,000 shall be deposited with and held in escrow by the
Escrow Agent pursuant to the terms of an Escrow Agreement to be entered into by
Dachis, Viad and the Escrow Agent prior to the Effective Time. All Escrowed
Shares, together with the proceeds from the sale of any Escrowed Shares and any
interest accrued from such proceeds from the Closing Date until their
distribution in accordance with the terms of the Escrow Agreement, shall be
payable into and held in escrow pursuant to the terms of the Escrow Agreement
("Escrowed Consideration"). Dachis may exercise any voting rights that he may
have with respect to the Escrowed Shares during the Escrow Term and all
dividends or other distributions (and interest accrued thereon) payable with
respect to the Escrowed Shares while such Escrowed Shares are held in escrow
during the Escrow Term shall be payable to Dachis. (Section 1.1 of Selling
Shareholder's Agreement).
Representations and Warranties. Dachis made representations and warranties
in the Selling Shareholder's Agreement to Viad and Acquisition Sub relating to
the following matters regarding himself and, in some instances, certain entities
affiliated with Dachis, including Game: (a) authority to enter into agreements;
(b) accuracy of Game's representations; (c) the capitalization of Game; (d)
organization existence and good standing of subsidiaries of Game; (e) power and
authority of Game to enter into certain agreements, non-contravention of Game's
organizational documents, laws, and necessary approvals; (f) financial
statements and the filing of all required forms, statements and documents; (g)
absence of undisclosed liabilities; (h) absence of certain changes or events;
(i) litigation; (j) accuracy of proxy statement; (k) no violation of law; (l)
compliance with charters or Bylaws of Game and subsidiaries; (m) compliance with
Minnesota takeover statutes; (n) required vote; (o) intellectual property; (p)
validity of contracts; (q) existence of and relationship with customers and
suppliers; (r) indebtedness to and from officers, directors and others; (s)
required licenses and permits; (t) taxes and returns; (u) ERISA related matters;
(v) labor and employment matters; (w) tax free structure; (x) compliance with
obligations under the Merger Agreement; (y) terms of UnBank agreements; (z) no
undisclosed liabilities; (aa) absence of other claims; (bb) no violations of
environmental law; (cc) no tax liabilities; (dd) no criminal conduct; (ee) no
violations of other agreements; (ff) no vendor liabilities; (gg) advisors and
investment bankers; (hh) complete disclosure; and (ii) complete performance. The
representations and warranties given in the Selling Shareholder's Agreement will
survive the Closing and are the subject of indemnification as described below
under indemnification. (Article II of Selling Shareholder's Agreement).
Agreement to Cooperate. Subject to the terms and conditions provided in
the Selling Shareholder's Agreement and Applicable Law, Dachis has agreed to use
all reasonable efforts to take, or cause to be taken, all action to do, or cause
to be done, all things necessary, proper or advisable under Applicable Law to
consummate and make effective the transactions contemplated by the Merger
Agreement and to cause Game and its Affiliates to comply with the Merger
Agreement. In connection with any filings under the HSR Act, Dachis has agreed
to promptly make all such filings at his sole expense or to represent and
warrant to Viad that no filing is required under the HSR Act with respect to
Dachis' acquisition of shares of Viad Common Stock in connection with the Merger
and provide an opinion from Fredrikson & Byron, P.A., counsel to Dachis to that
effect. (Sections 3.1 and 3.6 of Selling Shareholder's Agreement).
Confidentiality. Subject to certain exceptions, any information or
documents furnished in connection with the Selling Shareholder's Agreement shall
be kept strictly confidential by Dachis and his agents and assigns and only
disclosed in accordance with the terms of the Merger Agreement.
Tax Treatment; Pooling. Dachis has agreed to use his reasonable best
efforts to cause the Merger to qualify as a tax-free reorganization and Dachis
has agreed to not knowingly take any action or knowingly fail
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to take such action that would jeopardize the treatment of the Merger as a
tax-free reorganization or for pooling of interests accounting treatment.
(Sections 3.3 and 3.4 of Selling Shareholder's Agreement).
Affiliates Agreements. Dachis has agreed to enter into, and to use his
best efforts to ensure that each person who is or may be an "affiliate" of Game
within the meaning of Rule 145 promulgated under the Securities Act including
the Dachis Trust, enters into the Affiliate Agreements. (Section 3.5 of Selling
Shareholder's Agreement).
Delivery of Certificate of Adequate Software Documentation. On or before
October 24, 1998, Dachis has agreed to cause Viad and Surviving Corporation to
receive a certificate in form and substance reasonably satisfactory to Viad, to
the effect that documentation has been prepared and appropriate procedures are
in place to allow Game's software and systems existing as of the Effective Time
to be used and modified in the ordinary course of business and without undue
expense by any third party that is reasonably knowledgeable regarding systems
and software of a similar nature ("Certificate of Adequate Documentation"). Viad
has agreed to provide to Game and Dachis a complete written list of the
documents and procedures which, if completed, will cause an independent
consultant to issue such a certificate. (Section 3.7 of Selling Shareholder's
Agreement).
Continuation of Indemnities; No Circular Indemnities. The right to
indemnification, if any, from Game of Dachis as an officer or director of Game
pursuant to the Game Charter Documents or under any Applicable Law, shall
survive the Effective Time; provided, however, that subject to Applicable Law,
the indemnification is limited under certain circumstances described in the
Selling Shareholder's Agreement. (Section 3.8 of Selling Shareholder's
Agreement).
Termination. The Selling Shareholder's Agreement may be terminated at any
time prior to the Effective Time whether before or after approval of the Merger
by the stockholders of Game or the Acquisition Sub by mutual written consent of
Viad and Dachis', by Viad upon termination of the Merger Agreement by Viad, or
by Dachis upon termination of the Merger Agreement by Game, each in accordance
with the terms of Article IX of the Merger Agreement. Nothing contained in the
Selling Shareholder's Agreement relieves any party from any liability for any
inaccuracy, misrepresentation or breach of the Selling Shareholder's Agreement,
the Affiliate Agreements, the Merger Agreement, the Stock Option Agreement or
the Irrevocable Proxy Agreements prior to termination. (Sections 4.1 and 4.2 of
Selling Shareholder's Agreement).
Indemnification. Dachis has agreed to indemnify Viad, Acquisition Sub,
Surviving Corporation, and certain related parties from and against all
Indemnified Loss to the extent resulting or arising in any way from the breach
of any agreement, covenant, representation, warranty, or other obligation of
Dachis made or incurred under or pursuant to the Selling Shareholder's
Agreement, the Irrevocable Proxy Agreement, the Escrow Agreement, the Affiliate
Agreements or any other agreement or document delivered pursuant thereto or in
connection therewith and/or the liability of Game, the Surviving Corporation or
any of its Subsidiaries for certain tax-related matters. (Section 5.1 of Selling
Shareholder's Agreement).
Dachis does not have an obligation to indemnify any Indemnified Party from,
against or in respect of any Indemnified Loss unless the aggregate of all
Indemnified Losses incurred by all Indemnified Parties exceeds $500,000, in
which case Dachis shall be required to indemnify such Indemnified Parties for
the full amount of their losses, without deduction. In addition, the obligations
of Dachis to all Indemnified Parties for any and all Indemnified Loss shall not
in any event exceed, in the aggregate, the Maximum Indemnification Amount of
Four Million Five Hundred Thousand Dollars ($4,500,000). The Maximum
Indemnification Amount does not apply to any claim of indemnification based upon
(i) the failure to deliver a Certificate of Adequate Documentation relating to
certain software; (ii) a breach or inaccuracy of representations and warranties
relating to Taxes and Returns; (iii) a breach of Dachis' Employment Agreement;
or (iv) a breach of Dachis' Affiliate Agreement; and the Maximum Indemnification
Amount does not apply to the liability of Dachis to any Indemnified Party for
any claim asserted at law or in equity for fraud, intentional or willful
misrepresentation or other willful misconduct or any claim based upon any
federal or state securities laws or regulations. The Maximum Limitation Amount
also does not apply to any matter giving rise to a claim, the delay or the
discovery of which, is the consequence of fraud or willful misconduct by Dachis.
(Section 5.5 of Selling Shareholder's Agreement).
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In addition, in the event that a Certificate of Adequate Documentation is
not provided to Viad and Surviving Corporation on or before October 24, 1998,
Dachis has agreed to promptly pay to Surviving Corporation the Software Fee of
$500,000. Payment of such fee shall not operate to reduce the amount available
to any Indemnified Party pursuant to the other indemnification provisions of the
Selling Shareholder's Agreement. (Section 5.6 of Selling Shareholder's
Agreement).
In order to preserve the pooling of interests accounting treatment for the
Merger contemplated by the Merger Agreement, all Indemnified Losses and the
Software Fee to be paid pursuant to the Selling Shareholder's Agreement are
payable only in the manner set forth in the Selling Shareholder's Agreement,
which provides, among other things, the order and manner in which shares of Viad
Common Stock held in escrow under the Escrow Agreement shall be returned to Viad
for cancellation. (Section 5.7 of Selling Shareholder's Agreement).
Dispute Resolution. In the Selling Shareholder's Agreement, Viad and
Dachis agreed that all disputes arising under the Selling Shareholder's
Agreement will be governed by dispute resolution procedures except in certain
cases specified in the Selling Shareholder's Agreement, including binding
arbitration provisions, set forth in the Selling Shareholder's Agreement.
Survival. The representations, warranties, covenants and agreements of
Dachis set forth in the Selling Shareholder's Agreement or in any certificates
or other documents delivered prior to or at the Closing shall survive the
Closing. However, the representations and warranties of Dachis set forth in the
Selling Shareholder's Agreement shall survive for period of one year following
the Closing Date, except for the representations and warranties relating to the
non-filing of any Tax Returns or the non-payment of any Taxes to any
Governmental Authority, in which case such representations and warranties shall
survive until the expiration of the applicable statute of limitations.
STOCK OPTION AGREEMENT
Set forth below is a description of the primary terms and conditions of the
Stock Option Agreement, dated September 24, 1997, a copy of which is attached as
Appendix VI and incorporated herein by reference. The following description does
not purport to be complete and is qualified in its entirety by reference to the
Stock Option Agreement. Unless otherwise indicated, references under this
caption to articles or sections are to the Stock Option Agreement. Wherever
particular articles, sections or defined terms are referred to, it is intended
that such articles, sections or defined terms shall be incorporated herein by
reference. Capitalized terms appearing below that are not otherwise defined
herein have the same meaning as are given to such terms in the Stock Option
Agreement. Stockholders of Game are urged to read the Stock Option Agreement in
its entirety for a more complete description of the rights and obligations of
the parties thereunder.
Pursuant to the Stock Option Agreement, Game has granted to Viad an
irrevocable option to acquire, under certain circumstances, 1,500,000 shares of
Game Common Stock. The exercise price per share under the Stock Option is $10.00
per share, payable in cash. The number of shares issuable under the Stock Option
Agreement and the exercise price, are subject to adjustment in the event of
certain changes in Game's capitalization. With certain exceptions, the Stock
Option Agreement will be terminated upon the earlier to occur of the following
(i) the Effective Time, if the Merger is consummated, (ii) the Termination Date
of the Merger Agreement, (a) if the Merger Agreement is terminated pursuant to
mutual consent of Viad and Game, (b) by either Viad or Game if a court shall
have prohibited the Merger or if the parties cannot obtain the consent of a
Governmental Authority necessary to consummate the Merger (unless the failure to
close was due to failure of Game to perform its obligations under the Merger
Agreement, in which case the Stock Option will terminate one year from the
Termination Date), (c) by Viad if the Viad Price is below $17.20 per share or
the Merger would not qualify for pooling of interests accounting treatment
(unless the failure to qualify as a pooling of interests was due to the actions
or inactions of Game or Dachis), or (d) by Game, if there is a material uncured
breach of any covenant or agreement under the Merger Agreement by Viad or
Acquisition Sub, a material breach of a representation or warranty by Viad or
Acquisition Sub, the Viad Price is above $21.20 per share or the Merger would
not qualify as a tax-free reorganization (if the failure to qualify as a
tax-free reorganization was due to the actions or inactions of Viad or
Acquisition Sub), or (iii)
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<PAGE> 54
January 31, 1999, unless the Termination Date is extended by the agreement of
the parties to the Merger Agreement, in which case, it shall be one year from
the Termination Date. In the event Viad obtains Game Common Stock subject to the
Option, Viad shall have demand registration rights with respect to such shares.
IRREVOCABLE PROXY AGREEMENTS
Set forth below is a description of the primary terms and conditions of the
Irrevocable Proxy Agreements, a copy of the Irrevocable Proxy Agreement with
Dachis which is attached as Appendix IV and a form of the Irrevocable Proxy
Agreement for the other Significant Game Shareholders which is attached as
Appendix V and incorporated herein by reference. The following description does
not purport to be complete and is qualified in its entirety by reference to the
Irrevocable Proxy Agreements. Unless otherwise indicated, references under this
caption to articles or sections are to the Irrevocable Proxy Agreements.
Whenever particular articles, sections or defined terms are referred to, it is
intended that such articles, sections or defined terms shall be incorporated
herein by reference. Capitalized terms appearing below that are not otherwise
defined herein have the same meanings as are given to such terms in the
Irrevocable Proxy Agreements. Stockholders of Game are urged to read the
Irrevocable Proxy Agreements in their entirety for a more complete description
of the rights and obligations of the parties thereunder.
In connection with the Merger Agreement, the Significant Game Shareholders
have entered into or will enter into prior to the Effective Time, Irrevocable
Proxy Agreements. Pursuant to the Irrevocable Proxy Agreements, these
stockholders of Game have agreed that at any meeting of Game's stockholders,
however called, Viad may vote all of the shares of Game Common Stock held by
such stockholders in favor of the adoption and approval of the Merger Agreement
and the transactions contemplated by the Merger Agreement.
From the date of the Merger Agreement and for one year thereafter, each
Significant Game Shareholder irrevocably appoints Viad or any nominee of Viad,
with full power of substitution, as proxy for such Significant Game Shareholder,
to vote all Shares which such Significant Game Stockholder is entitled to vote
with respect to the Merger, at any annual, special or other meeting of the
holders of Game Common Stock and at any adjournment thereof or pursuant to any
written consent in lieu of a meeting, or at any meeting otherwise called to vote
with respect to the Merger. Viad's termination of the Merger Agreement in
accordance with its terms operates to terminate the foregoing proxy unless such
termination is based upon a breach of such Agreement by Game or a Significant
Game Shareholder. (Section 3 of Irrevocable Proxy Agreement).
From and after the date of the Irrevocable Proxy Agreement and unless and
until the Irrevocable Proxy Agreements are terminated, the Significant Game
Shareholders have agreed not to (a) solicit or initiate, directly or indirectly,
any inquiries or acquisition proposals, or participate in any negotiations
concerning, or provide any information in connection with, any proposal
concerning a merger or other business combination involving Game, or the
acquisition of any equity interest in or a substantial portion of the assets of,
Game, other than the acquisition contemplated by the Irrevocable Proxy Agreement
and the Merger Agreement; or (b) engage in any course of conduct, execute any
documents or otherwise act in such manner as to impede or render more difficult
the consummation of the Irrevocable Proxy Agreements or the Merger Agreement,
provided, however that nothing in the Irrevocable Proxy Agreements shall limit
the Significant Game Shareholders rights solely in their capacity as
stockholders of Game. (Section 1(j) of Irrevocable Proxy Agreements).
Each of the Significant Game Shareholders will give Viad notice upon
obtaining knowledge of any written or oral communication from any third party
alleging that the consent of such third party is or may be required in
connection with any of the transactions contemplated by the Irrevocable Proxy
Agreements or the Merger Agreement; challenging the legality or fairness of any
of the transactions contemplated by the Irrevocable Proxy Agreements or the
Merger Agreement; or the occurrence of any event or the failure of any event to
occur which involves or results in a breach of any representation or warranty by
any other Significant Game Shareholder under the Irrevocable Proxy Agreement or
by Game under the Merger Agreement or the failure to comply with the terms
thereof. (Section 1(l) of Irrevocable Proxy Agreements).
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AFFILIATE AGREEMENTS
To ensure that the Merger will qualify for pooling of interests accounting
treatment, prior to the Effective Time, each person who is or may be an
"affiliate" of Game within the meaning of the rules and regulations of the SEC
will enter into an Affiliate Agreement (which is included in Exhibit D to the
Merger Agreement set forth in Appendix II) and agree to certain restrictions on
Game Common Stock they own prior to the Merger and on the sale of Viad Common
Stock received in the Merger.
INTERESTS OF CERTAIN PERSONS IN THE MERGER
In considering the recommendations of the Board of Directors of Game with
respect to the Merger, Game stockholders should be aware that certain members of
Game's management and Board of Directors have certain interests in the Merger
that are in addition to the interests of stockholders of Game in general. The
Board of Directors of Game was aware of these interests and considered them,
among other matters, in evaluating the Merger Agreement and the transactions
contemplated thereby.
Employment Agreements. Game has entered into or will enter into separate
employment agreements with Gary A. Dachis, Louis Dachis, Jeffrey Ringer, Stephen
Weisbrod, Deanna Frederichs-Moose, Michael Barcelow and Jean Williams that will
become effective at the Effective Time. Each employment agreement is for a term
of two years (except for Mr. Weisbrod), and may be renewed upon mutual agreement
of the parties. The employment agreements provide for salaries and benefits
consistent with the current compensation levels of these executives, including
insurance and vacation benefits as are customarily found in executive employment
agreements. Each employee has agreed not to compete with the business acquired
by Viad in the Merger for a term of five years from the commencement of the
Agreement (except for Mr. Weisbrod) or three years after his or her employment
is terminated, whichever is later (Mr. Dachis is permitted, however, to continue
to provide certain services to the UnBank Company). All disputes arising under
the employment agreements, except disputes as to which a party would be entitled
to injunctive relief, will be settled by arbitration in Minnesota.
Automatic Conversion of Game Options. All outstanding stock options for
Game Common Stock were granted pursuant to option agreements that provide that
in the event of a merger of Game with or into another corporation, each
outstanding option may be assumed, or an equivalent option or right may be
substituted, by the successor corporation or a parent or subsidiary of the
successor corporation. Pursuant to the Merger Agreement, at the Effective Time,
each outstanding option to purchase shares of Game Common Stock will be
automatically converted into an option to purchase shares of Viad Common Stock.
The number of shares of Viad Common Stock subject to such converted options will
be equal to the product of (i) the number of shares of Game Common Stock subject
to such Game Option times (ii) the Exchange Ratio; at an exercise price per
share (rounded upward to the nearest full cent) equal to a fraction, (A) the
numerator of which is equal to the exercise price of such Game Option, and (B)
the denominator of which is the Exchange Ratio.
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Vesting of Game Options. Pursuant to the terms of grants issued under
Game's 1994 Stock Option and Incentive Plan, upon approval of the Merger by the
stockholders of Game, all outstanding Game stock options will become immediately
vested in full. The following table sets forth information with respect to the
number and approximate value of accelerated stock options held by the directors
and executive officers of Game, assuming the Merger is approved by stockholders
at the Special Meeting:
<TABLE>
<CAPTION>
NUMBER OF APPROXIMATE
UNVESTED NET VALUE OF
OPTIONS ACCELERATED
NAME AND TITLE ACCELERATED OPTIONS (1)
- ----------------------------------------------------------------------- ----------- ------------
<S> <C> <C>
Gary A. Dachis, President, Chief Executive Officer and Director........ 0 $ 0
Stephen P. Weisbrod, Vice President - Information Systems and
Development and Director............................................. 31,438 $234,520
Deanna Frederichs-Moose, Vice President - Operations................... 18,938 $128,645
Michael Barcelow, Vice President - National Sales...................... 15,500 $ 64,125
Jeffrey L. Ringer, Vice President and Chief Financial Officer.......... 15,500 $ 64,125
Louis A. Dachis, Vice President - Marketing............................ 8,000 $ 36,000
Tom Grossman, Director................................................. 25,000 $ 62,500
Paul H. Ravich, Director............................................... 25,000 $ 62,500
</TABLE>
- ---------------
(1) The amounts in this column have been determined by multiplying (i) the
number of Game Stock Options subject to accelerated vesting upon stockholder
approval of the Merger by (ii) the excess of the $10.75 per share price at
which the Game Common Stock is valued in the Merger over the exercise price
of each Game Stock Option.
Indemnification and Directors' and Officers' Insurance. Pursuant to the
Merger Agreement, Viad has agreed to maintain Game's current directors' and
officers' liability insurance for three years after the Effective Time and to
the continuation of any preexisting indemnification rights of Game's officers
and directors, subject to certain limitations. See "-- The Merger
Agreement -- Continuation of Indemnities; No Circular Indemnities."
Ownership and Voting of Stock. As of October 31, 1997, directors and
executive officers of Game and their affiliates may be deemed to have or share
beneficial ownership of approximately 62% of the outstanding shares of Game
Common Stock. Each of the directors and executive officers of Game that has not
signed an Irrevocable Proxy Agreement has advised Game that he or she intends to
vote or direct the vote of all the outstanding shares of Game Common Stock over
which he or she has or shares voting control in favor of the approval and
adoption of the Merger Agreement.
As of October 31, 1997, neither Game nor its directors and executive
officers or their affiliates beneficially owned any shares of Viad Common Stock
and neither Viad nor its directors and executive officers or their affiliates
beneficially owned any shares of Game Common Stock, except for the beneficial
ownership deemed to exist by virtue of the Irrevocable Proxy Agreements and the
Stock Option Agreement.
REGULATORY FILINGS AND APPROVALS
Under the HSR Act and the rules promulgated thereunder by the FTC, the
Merger may not be consummated until notifications have been given and certain
information has been furnished to the FTC and DOJ and specified waiting period
requirements have been satisfied. Viad filed notification and report forms under
the HSR Act with the FTC and the DOJ in September 1997. The required waiting
periods for the filings by Viad under the HSR Act expired on October 30, 1997.
Although Viad and Game believe the Merger complies with the antitrust laws, at
any time before or after the Effective Time the FTC, DOJ or any state could take
action under the antitrust laws with respect to the Merger, including seeking to
enjoin the consummation of the Merger, to rescind the Merger or to require
divestiture of substantial assets of Viad or Game. There can be no assurance
that a challenge to the Merger on antitrust grounds will not be made or, if such
a challenge is made, that it would not be successful. Viad's obligation to
consummate the Merger is
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<PAGE> 57
contingent upon the fulfillment of the Hart-Scott-Rodino Condition. See "-- The
Merger Agreement -- Viad's Conditions to Closing."
Game holds numerous licenses and permits issued by Governmental
Authorities, including Native American Authorities, relating to the conduct to
its business. Consummation of the Merger may require filings with, the consent
of, or waivers from, certain of the Governmental Authorities, and the failure to
make such filings or obtain such consents or waivers may result in termination
or cancellation of certain licenses or permits. Viad's obligation to consummate
the Merger is contingent upon the transfer or obtaining of all material licenses
and permits required to conduct Game's business (except to the extent such
licenses and permits may only be transferred or obtained by the Surviving
Corporation subsequent to the Effective Time).
Game is a party to certain credit facilities and numerous other agreements.
Consummation of the Merger may require the consent of, or waivers from, the
other parties to certain of such agreements and may constitute a default
resulting in termination, cancellation or acceleration thereunder if such
consents or waivers are not obtained. Among other things, Viad's obligation to
consummate the Merger is contingent upon the receipt of all third party consents
or approvals necessary for the consummation of the Merger.
ANTICIPATED ACCOUNTING TREATMENT
The Merger is intended to qualify for pooling of interests accounting
treatment. It is a condition to the consummation of the Merger that Viad shall
have received a letter from Ernst & Young LLP, Game's independent public
accountants, to the effect that they are not aware of any fact or circumstance
with respect to Game which could be interpreted as rendering the Merger
ineligible for pooling of interests accounting treatment. Under pooling of
interests accounting, the recorded assets and liabilities of Viad and Game will
be carried forward to the combined company at their recorded amounts, subject to
any adjustments required to conform the accounting policies of the two
companies. Results of prior periods will not be restated as the results of Game
are not significant to Viad's consolidated results. Consummation of the Merger
is conditioned upon the receipt of such letter prior to the Effective Time. See
"-- The Merger Agreement -- Viad's Conditions to Closing,"
In an effort to ensure that the parties satisfy the prerequisites for
pooling of interests accounting treatment, each director and executive officer
of Game has executed and delivered an Affiliate Agreement providing that such
person will not sell, transfer or otherwise reduce his or her interest or risk
in his or her shares of Game Common Stock during the period commencing on the
date which is 30 days prior to the closing date of the Merger and ending on the
day after Viad publishes financial results which reflect at least 30 days of
combined post-Merger operations of Viad and Game, subject to certain de minimis
exceptions. See "-- Affiliate Agreements."
PUBLIC TRADING MARKET
Viad and Game anticipate that the shares of Viad Common Stock to be issued
in connection with the Merger will be traded on the New York Stock Exchange, and
approval of such trading by the New York Stock Exchange is a condition precedent
to the effectiveness of the Merger. Until Viad receives notification that such
shares have been approved for listing on the New York Stock Exchange, there can
be no assurance that the shares will be approved for trading on such exchange.
STATUS UNDER FEDERAL SECURITIES LAWS
The shares of Viad Common Stock to be issued to stockholders of Game
pursuant to the Merger Agreement will have been registered under the Securities
Act pursuant to the Proxy Statement/Prospectus, thereby allowing such shares to
be freely traded without restriction by persons who will not be "affiliates" of
Viad after the Merger or who were not "affiliates" of Game on the date of the
Special Meeting. All directors and certain officers and stockholders of Game may
be deemed to have been "affiliates" of Game within the meaning of such rules.
Any such person may resell Viad Common Stock received by him or her in the
Merger only if such shares are registered under the Securities Act or an
exemption from registration under the Securities Act is available. Such persons
may be able to effect resales under the safe harbor provisions of Rule
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145 under the Securities Act (or Rule 144 in the case of such persons who become
"affiliates" of Viad) or as otherwise permitted under the Securities Act.
Persons who may be deemed "affiliates" of Game or Viad generally include
individuals or entities that control, are controlled by, or are under common
control with, such party, and may include certain officers and directors of such
party as well as principal stockholders of such party. It is recommended that
any such person obtain advice of securities counsel prior to effecting any
resales. See "-- The Merger Agreement -- Game's Conditions to Closing."
This Proxy Statement/Prospectus does not register resales of Viad Common
Stock received by any person who may be deemed to be an affiliate of Viad or
Game.
CERTAIN UNITED STATES FEDERAL INCOME TAX CONSEQUENCES
The following discussion addresses certain federal income tax
considerations of the Merger that are applicable to holders of Game Common
Stock. Game stockholders should be aware that the following discussion does not
deal with all federal tax consequences that may result from the Merger,
including the survival or availability of any tax attributes or elections of
Game as a result of the Merger, and does not deal with all federal income tax
considerations that may be relevant to particular Game stockholders in light of
their particular circumstances, such as stockholders who are dealers in
securities, who are foreign persons or who acquired their Game Common Stock
through stock option or stock purchase programs or in other compensatory
transactions. In addition, the following discussion generally does not address
the tax consequences of other transactions effectuated prior to, at the time of
or after the Merger (whether or not such transactions are in connection with the
Merger) including, without limitation, the exercise of options or similar rights
to purchase stock, or the exchange, assumption or substitution of options or
similar rights to purchase Game Common Stock for rights to purchase Viad Common
Stock. Furthermore, no foreign, state or local tax considerations are addressed
herein. This discussion is based on legal authorities in existence as of the
date hereof. No assurances can be given that future legislation, regulations,
administrative pronouncements or court decisions will not significantly change
the law and materially affect the conclusions expressed herein. Any such change,
even though made after consummation of the Merger, could be applied
retroactively. ACCORDINGLY, ALL GAME STOCKHOLDERS ARE URGED TO CONSULT THEIR OWN
TAX ADVISORS AS TO THE SPECIFIC FEDERAL, STATE, LOCAL AND FOREIGN TAX
CONSEQUENCES OF THE MERGER TO THEM.
The Merger is intended to qualify as a reorganization within the meaning of
Section 368(a) of the Code. Subject to the limitations and qualifications
described herein, and assuming the Merger so qualifies, then the following tax
consequences should generally result:
(a) No gain or loss should be recognized by holders of Game Common
Stock upon their receipt in the Merger of Viad Common Stock in exchange
therefor (except to the extent of cash received in lieu of fractional
shares);
(b) The aggregate tax basis of Viad Common Stock received in the
Merger (including any fractional share of Viad Common Stock deemed to be
received and subsequently redeemed by Viad) should be the same as the
aggregate tax basis of Game Common Stock surrendered in exchange therefor;
(c) The holding period of Viad Common Stock received in the Merger
should include the period for which Game Common Stock surrendered in
exchange therefor was held, provided that Game Common Stock is held as a
capital asset at the Effective Time;
(d) Cash payments received by Game stockholders in lieu of receipt of
fractional shares of Viad Common Stock should be treated as received in
redemption of such fractional shares, subject to the provisions of Code
Section 302, as if such fractional share had been issued in the Merger and
then redeemed by Viad for cash; and
(e) Neither Viad, Game nor Acquisition Sub should recognize gain or
loss as a result of the Merger.
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The parties are not requesting a ruling from the IRS regarding the
consequences of the Merger. It is a condition to the respective obligations of
the parties to consummate the Merger that Game receive an opinion of Ernst &
Young LLP to the effect that there is a reasonable basis to believe that the
Merger will constitute a tax-free reorganization within the meaning of Section
368(a) of the Code. Such opinion (the "Tax Opinion") neither binds the IRS nor
precludes the IRS from adopting a contrary position. In addition, this
discussion and the Tax Opinion will be subject to certain assumptions and
qualifications and will be based on the truth and accuracy of certain
representations and warranties made by Viad, Acquisition Sub, Game and perhaps
certain stockholders of Game. In particular, Viad, Acquisition Sub and Game will
represent that they have no knowledge of any plan or intention on the part of
Game's stockholders to engage in a sale, exchange, transfer, distribution,
pledge, disposition or any other transaction which results in a reduction in the
risk of ownership or direct or indirect disposition of shares of Viad Common
Stock to be issued in the Merger, which shares would have an aggregate fair
market value in excess of 50% of the aggregate fair market value, immediately
prior to the Merger, of all outstanding shares of Game Common Stock; and the Tax
Opinion will assume that there is in fact no such plan or intention. If that
assumption were incorrect, the Tax Opinion might be adversely affected and could
not be relied upon.
Irrespective of the reorganization status of the Merger, a recipient of
shares of Viad Common Stock would recognize income or gain to the extent such
shares were considered to be received in exchange for services or property other
than solely Game Common Stock. Gain would also be recognized to the extent a
Game stockholder was treated as receiving (directly or indirectly) consideration
other than Viad Common Stock in exchange for his or her Game Common Stock.
A successful IRS challenge to the reorganization status of the Merger would
result in a Game stockholder recognizing gain or loss with respect to each share
of Game Common Stock equal to the difference between the stockholder's basis in
such share and the fair market value, as of the Effective Time, of Viad Common
Stock received in exchange therefor. A stockholder's aggregate basis in Viad
Common Stock so received would equal its fair market value, and his or her
holding period for such stock would begin the day after the Merger.
Game stockholders will be required to attach a statement to their tax
returns for the year of the Merger that contains the information listed in
Treasury Regulation Section 1.368-3(b). Such statement must include the
stockholder's tax basis in the stockholder's Game Common Stock and a description
of Viad Common Stock received in the Merger.
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CERTAIN RELATED TRANSACTIONS
As of the date hereof, neither Viad nor Game is aware of any material
relationship between Viad or its directors or executive officers and Game or its
directors or executive officers, except as contemplated by the Merger Agreement
or as described herein or in the documents incorporated by reference herein.
INFORMATION REGARDING VIAD
The following briefly describes the business of Viad. Additional
information regarding Viad is contained in its filings with the SEC pursuant to
the Exchange Act. See "Available Information" and "Incorporation of Documents by
Reference."
BUSINESS OF VIAD
Viad is comprised of various operating companies and a division which
conduct diversified services businesses. Most of Viad's services are provided to
businesses for use by their customers. Accordingly, Viad markets its services to
approximately 47,000 agent locations in the U.S. (money orders), numerous trade
show organizers and exhibitors (convention and exhibit services), 80 domestic
and international airlines (in-flight food service), and others. Occupying the
number one or number two position in the markets in which they compete, Viad's
businesses seek to provide satisfying and attractive services with a discernible
difference to the ultimate users and thereby be considered a value-added
provider by Viad's business customers.
Viad's business consists primarily of companies which are leading
competitors in their markets, including companies engaged in airline catering
(Dobbs International Services, Inc.), airplane fueling and ground-handling
(Aircraft Service International, Inc.), convention and exhibit services (GES
Exposition Services, Inc. and Exhibitgroup/Giltspur), payment services
(Travelers), contract foodservices (Restaura, Inc.), airport and cruise ship
duty-free businesses (Greyhound Leisure Services, Inc.), and travel services
(Brewster Transport Company Limited).
Viad's services are classified into three principal business segments,
namely (1) Airline Catering and Services, (2) Convention Services, and (3)
Travel and Leisure and Payment Services.
Airline Catering and Services. Airline catering, aircraft fueling and
certain other ground-handling operations are conducted through Dobbs
International Services, Inc. ("Dobbs") and Aircraft Service International Group
("ASIG"). Dobbs, which has been conducting airline catering operations since
1941, is the second largest domestic in-flight caterer. ASIG provides certain
ground-handling services such as aircraft fueling, aircraft cleaning and baggage
handling for major domestic and international airlines at 35 airports throughout
the United States and in Freeport, Bahamas, London, England and Munich, Germany.
Dobbs and ASIG are focused on meeting the outsourcing needs of the airline
industry, providing a lower-cost alternative to permit airlines to reduce costs
and operate more profitably.
Convention Services. Convention services are provided by Viad's GES
Exposition Services, Inc. ("GES") and Exhibitgroup/Giltspur, a division of Viad.
GES, the nation's leading supplier of convention services, provides tradeshow
design and planning, decorating, exhibit design, preparation, installation and
dismantling, audio-visual, electrical, transportation and management services
for conventions and tradeshows. Exhibitgroup/Giltspur is a designer, builder and
installer of convention and tradeshow exhibits and displays.
Exhibitgroup/Giltspur is operated as a division of Viad, and consists of merged
operations formerly conducted by Exhibitgroup Inc. and Giltspur Inc.
Exhibitgroup/Giltspur operates the largest exhibit and display business in the
nation.
Travel and Leisure and Payment Services. Travel and leisure services are
provided by the Greyhound Leisure Services, Inc. ("GLSI"), Brewster Transport
Company Limited ("Brewster"), and Restaura, Inc. business units. GLSI operates
duty-free concessions on cruise ships operating primarily in North American,
Caribbean and European waters, and also operates duty-free shops at the Miami
and Fort Lauderdale/Hollywood, Florida international airports. It also conducts
a wholesale export operation. Brewster, an Alberta, Canada corporation, operates
tour and charter buses in the Canadian Rockies, and engages in travel
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<PAGE> 61
agency, hotel and snocoach tour operations. Restaura provides contract
foodservices and acts as the prime concessionaire for all food and beverage
services at the America West Arena in Phoenix, Arizona, and, commencing in 1998,
at Bank One Ballpark, also in Phoenix, Arizona (the future home of the Arizona
Diamondbacks baseball team). Restaura also operates 7 historic lodges in and
around Glacier National Park in Montana and Canada.
Travelers operates the payment services business of the Travel and Leisure
and Payment Services segment of Viad. Travelers provides payment and transaction
processing services for its retail, financial institution, utility and consumer
product customers. Travelers' product lines include money orders, official
checks, utility bill payments, home banking and check processing, which account
for more than 750 million payments per year and represent nearly $100 billion in
face value of payments processed. Travelers money order and utility bill payment
products are marketed to the public through approximately 47,000 retail
locations in the United States and Puerto Rico, with the official check, share
draft and home banking services processed through approximately 5,700 banks,
savings and loans and credit union customers.
RECENT DEVELOPMENTS
In September 1997, Viad's payment services subsidiary entered into a five
year agreement to sell, on a periodic basis, undivided percentage ownership
interests in its receivables in an amount not to exceed $250 million. The
receivables, representing cash in transit from money order agents, are being
sold in order to accelerate the funds flow into admissible investments which
satisfy requirements that qualified assets be equal to or exceed related payment
service obligations at all times.
In September 1997, Viad reduced its unused commitment under a long-term
revolving bank credit agreement from $400 million to $300 million. The
commitment is used to support short-term borrowings made through Viad's issuance
of commercial paper and promissory notes.
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DESCRIPTION OF VIAD CAPITAL STOCK
The following summary does not purport to be complete and is subject in all
respects to the applicable provisions of the Delaware General Corporation Law
(the "DGCL") and the Rights Plan (described below). The Rights Plan is included
in or incorporated by reference as an exhibit to the Registration Statement of
which this Proxy Statement/Prospectus is a part.
The authorized capital stock of Viad consists of 207,442,352 shares
consisting of 200 million shares of Viad Common Stock, par value $1.50 per
share, 442,352 shares of Viad $4.75 Preferred Stock, 5,000,000 shares of Viad
Preferred Stock, and 2,000,000 shares of Viad Junior Participating Preferred
Stock.
The transfer agent and registrar for Viad Common Stock and Viad $4.75
Preferred Stock is The First National Bank of Boston, N.A., c/o Boston
EquiServe, P.O. Box 8040, Boston, Massachusetts 02266-8040.
COMMON STOCK
The holders of Viad Common Stock are entitled to one vote per share on all
matters voted on by stockholders, including elections of directors, and, except
as otherwise required by law or provided in any resolution (a "Preferred Stock
Designation") adopted by Viad's Board of Directors, or as otherwise provided in
the Certificate of Incorporation with respect to any class or series of
preferred stock of Viad ("Viad Preferred Stock"), to which the holders of shares
of Viad Common Stock exclusively possess all voting power. Viad's Certificate of
Incorporation does not provide for cumulative voting in the election of
directors. Subject to any preferential rights of any outstanding shares of Viad
Preferred Stock, the holders of Viad Common Stock are entitled to such dividends
as may be declared from time to time by Viad's Board of Directors from funds
available therefor, and upon liquidation are entitled to receive pro rata all
assets of Viad available for distribution to such holders.
PREFERRED STOCK
Viad's Certificate of Incorporation authorizes Viad's Board of Directors to
establish one or more series of Viad Preferred Stock and to determine, with
respect to any series of Viad Preferred Stock, the terms and rights of such
series, including (i) the designation of the series, (ii) the number of shares
of the series, which number Viad's Board of Directors may thereafter (except
where otherwise provided in the Preferred Stock Designation) increase or
decrease (but not below the number of shares thereof then outstanding), (iii)
whether dividends, if any, will be cumulative or noncumulative and the dividend
rate of the series, (iv) the dates at which dividends, if any, will be payable,
(v) the redemption rights and price or prices, if any, for shares of the series,
(vi) the terms and amounts of any sinking fund provided for the purchase or
redemption of shares of the series, (vii) the amounts payable on, and the
preferences, if any, of, shares of the series in the event of any voluntary or
involuntary liquidation, dissolution or winding up of the affairs of Viad,
(viii) whether the shares of the series will be convertible into shares of any
other class or series, or any other security, of Viad or any other corporation,
and, if so, the specification of such other class or series or such other
security, the conversion price or prices or rate or rates, any adjustments
thereof, the date or dates as of which such shares shall be convertible and all
other terms and conditions upon which such conversion may be made, (ix)
restrictions on the issuance of shares of the same series or of any other class
or series, and (x) the voting rights, if any, of the holders of such series.
Although Viad's Board of Directors has no intention at the present time of
doing so, it could issue a series of Viad Preferred Stock that could, depending
on the terms of such series, impede the completion of a merger, tender offer or
other takeover attempt. Viad's Board of Directors will make any determination to
issue such shares based on its judgment as to the best interests of Viad and its
stockholders. Viad's Board of Directors, in so acting, could issue Viad
Preferred Stock having terms that could discourage an acquisition attempt
through which an acquiror may be able to change the composition of Viad's Board
of Directors, including a tender offer or other transaction that some, or a
majority, of Viad's stockholders might believe to be in their best interests or
in which stockholders might receive a premium for their stock over the then
current market price of such stock.
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<PAGE> 63
Viad Junior Preferred Stock. The following description of Viad's Junior
Preferred Stock does not purport to be complete and is subject to, and qualified
in its entirety by, the provisions of Viad's Certificate of Incorporation. Each
share of Viad Junior Preferred Stock will be entitled to a minimum preferential
quarterly dividend payment of one dollar per share but will be entitled to an
aggregate dividend equal to 100 times the dividend declared per share of Viad
Common Stock. In the event of liquidation, the holders of Viad Junior Preferred
Stock will be entitled to a minimum preferential liquidation payment of $100 per
share but will be entitled to an aggregate payment equal to 100 times the
payment made per share of Viad Common Stock. Each share of Viad Junior Preferred
Stock will have 100 votes, voting together with Viad Common Stock. Finally, in
the event of any merger, consolidation or other transaction in which Viad Common
Stock is exchanged, each share of Viad Junior Preferred Stock will be entitled
to receive an amount equal to 100 times the amount received per share of Viad
Common Stock. These rights are protected by customary antidilution provisions.
Viad $4.75 Preferred Stock. The following description of Viad's $4.75
Preferred Stock does not purport to be complete and is subject to, and qualified
in its entirety by, the provisions of Viad's Certificate of Incorporation.
Dividends will be paid quarterly on Viad $4.75 Preferred Stock at an annual rate
of $4.75 per share on the fifteenth day of January, April, July and October in
each year when and if declared. Such dividends will be cumulative, to the extent
not paid. In the event of any liquidation, dissolution or winding up of Viad,
the holders of Viad $4.75 Preferred Stock are entitled to receive an amount
equal to the accrued and unpaid dividends thereon plus, on involuntary
liquidation, $100 per share, or on voluntary liquidation, $101 per share before
any distribution shall be made to holders of common or any other stock junior to
Viad $4.75 Preferred Stock.
Shares of Viad $4.75 Preferred Stock are redeemable at the option of Viad
at $101 per share plus accrued and unpaid dividends thereon computed to the date
of redemption. In the case of redemption of less than all the outstanding Viad
$4.75 Preferred Stock, the shares to be redeemed will be selected by lot in the
manner prescribed by Viad's Board. All shares redeemed will be canceled and will
not be reissued as Viad $4.75 Preferred Stock. In addition, Viad $4.75 Preferred
Stock is entitled to the benefits of mandatory annual cumulative sinking fund
payments due September 1 of each year in an amount per share sufficient to
redeem 6,000 shares at par plus accrued and unpaid dividends. Previously
purchased shares of Viad $4.75 Preferred Stock may be used to satisfy the
sinking fund requirement.
When, if ever, dividends on Viad $4.75 Preferred Stock shall be in arrears,
in whole or in part, as to each of six quarterly dividends, whether or not
consecutive, holders of Viad $4.75 Preferred Stock will have the exclusive
right, voting separately as a class at the next annual meeting of shareholders,
and annually thereafter, to elect two Directors of Viad in addition to those
elected by other classes of shareholders. Such right of election and the
existence of such additional directorships shall continue until such time as all
cumulative dividends in arrears have been paid in full. The holders of at least
10% of Viad $4.75 Preferred Stock may require that a special meeting of such
holders be called to elect such additional Directors if the foregoing arrearages
shall occur more than 90 days prior to the date fixed by the Bylaws for the next
annual meeting of shareholders. Except as described herein and as otherwise
required by law, Viad $4.75 Preferred Stock will have no voting rights.
Viad, without the approval of at least a majority of the then outstanding
Viad $4.75 Preferred Stock, voting as a class, or the unanimous written consent
of such stock, may not create or issue any class or series of stock ranking on a
parity with Viad $4.75 Preferred Stock either as to dividends or liquidation
rights, or increase the authorized number of shares of any such class or series.
Also, Viad, without the approval of at least two-thirds of the then outstanding
Viad $4.75 Preferred Stock, voting as a class, or the unanimous written consent
of such stock, may not
(a) amend, alter or repeal any of the provisions of its Certificate of
Incorporation so as to alter materially any existing provisions of Viad $4.75
Preferred Stock,
(b) create or issue any class or series of stock ranking prior to Viad
$4.75 Preferred Stock either as to dividends or liquidation rights, or increase
the authorized number of shares of any such class or series or Viad $4.75
Preferred Stock, or
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(c) sell, lease or convey all or substantially all of Viad's property or
business, or voluntarily liquidate, merge or consolidate, provided that no such
vote or consent will be required for a consolidation or merger of Viad if, after
any such transaction, each holder possesses an equivalent number of shares of
the surviving corporation having substantially the same terms and provisions as
Viad $4.75 Preferred Stock and the surviving corporation has no stock either
authorized or outstanding ranking prior to or on a parity with such shares.
No such approval or consent will be required for issuance either of senior
or parity stock for the purpose of redeeming or otherwise retiring Viad $4.75
Preferred Stock.
If and so long as Viad may be in default with respect to any dividend or
sinking fund payment on Viad $4.75 Preferred Stock, it may not pay any dividends
(other than dividends payable in junior stock) or make other distributions on
junior stock or acquire shares of such junior stock for a consideration.
Holders of Viad $4.75 Preferred Stock will have no preemptive rights. Viad
$4.75 Preferred Stock is not liable for further calls or subject to assessment.
Viad $4.75 Preferred Stock is not entitled to conversion rights.
Stock Purchase Rights. Pursuant to the Viad Rights Agreement attached to each
share of Viad Common Stock is one right (a "Right") that, when exercisable,
entitles the holder of the Right to purchase one two-hundredth of a share of
Junior Preferred Stock at a purchase price (the "Purchase Price") of $55,
subject to adjustment. The number of Rights attached to each share of Viad
Common Stock is subject to adjustment. In certain events (such as a person or
group becoming the owner of 20% or more of the Viad Common Stock or a merger or
other transaction with an entity controlled by such an acquiring person or
group), exercise of the Rights would entitle the holders thereof (other than the
acquiring person or group) to receive Viad Common Stock or common stock of a
surviving corporation, or cash, property or other securities, with a market
value equal to twice the Purchase Price. Accordingly, exercise of the Rights may
cause substantial dilution to a person who attempts to acquire the Company. The
Rights automatically attach to each outstanding share of Viad Common Stock.
There is no monetary value presently assigned to the Rights, and they will not
trade separately from the Viad Common Stock unless and until they become
exercisable. The Rights, which expire on February 28, 2002, may be redeemed at a
price of $.025 per Right at any time until any individual, corporation or other
entity (excluding Viad or its affiliates) has acquired 20% or more of the
outstanding Viad Common Stock, except as otherwise provided in the Rights
Agreement. The Rights Agreement may have certain antitakeover effects, although
it is not intended to preclude any acquisition or business combination that is
at a fair price and otherwise in the best interests of Viad and its stockholders
as determined by the Board of Directors of Viad. However, a stockholder could
potentially disagree with the Board's determination of what constitutes a fair
price or the best interests of Viad and its stockholders. For a description of
the rights of holders of Viad Junior Preferred Stock, see "Viad Junior Preferred
Stock."
CERTAIN CHARTER AND BYLAW PROVISIONS
The Certificate of Incorporation and Bylaws of Viad contain certain
provisions that could make more difficult the acquisition of Viad by means of a
tender offer, a proxy contest or otherwise. The description set forth below is
intended as a summary only and is qualified in its entirety by reference to the
full text of the Viad Certificate of Incorporation and the Viad Bylaws which are
incorporated by reference herein.
Classification Of Board. The Certificate of Incorporation and Bylaws of
Viad provide that Viad's Board of Directors will be divided into three classes
of directors, with the classes to be as nearly equal in number as possible. The
term of office of one class of directors expires each year in rotation so that
one class is selected at each annual meeting of shareholders for a full
three-year term. The Bylaws provide for not less than three nor more than
seventeen directors which Viad would have if there were no vacancies (the "Whole
Board"). The Bylaws provide that a vacancy on Viad's Board of Directors may be
filled only by the affirmative vote of a majority of the remaining directors,
even though less than a quorum. The Certificate of Incorporation further
provides that a director may be removed only for cause and only by affirmative
vote of the holders of at least 80% of the voting power of the then outstanding
voting stock of Viad.
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These provisions would preclude a third party from removing incumbent
directors and simultaneously gaining control of Viad's Board of Directors by
filling the vacancies created by removal with its own nominees, unless such
third party controls at least 80% of the combined voting power of the voting
stock of Viad. Under the classified board provisions described above, it would
take at least two elections of directors for any individual or group to gain
control of Viad's Board of Directors. Accordingly, these provisions would tend
to deter unfriendly takeovers.
Stockholder Action. The Certificate of Incorporation and the Bylaws also
provide that stockholder action can be taken only at an annual or special
meeting of stockholders and prohibit stockholder action by written consent in
lieu of a meeting. The Bylaws provide that special meetings of stockholders can
be called only by the Chairman of the Board of Directors or by Viad's Board of
Directors pursuant to a resolution adopted by a majority of the Whole Board.
Stockholders are not permitted to call a special meeting or to require that
Viad's Board of Directors call a special meeting of stockholders.
Advance Notice Provisions. The Bylaws establish an advance notice
procedure for stockholders to make nominations of candidates for election as
directors, or to bring other business before an annual meeting of stockholders
of Viad (the "Stockholder Notice Procedure"). The Stockholder Notice Procedure
provides that only persons who are nominated by, or at the direction of, the
Board of Directors of Viad, or by a stockholder who has given timely written
notice to the Secretary of Viad prior to the meeting at which directors are to
be elected, will be eligible for election as directors of Viad. The Stockholder
Notice Procedure provides that at an annual meeting only such business may be
conducted as has been brought before the meeting by, or at the direction of, the
Chairman of Viad's Board of Directors or by a stockholder who has given timely
written notice to the Secretary of Viad of such stockholder's intention to bring
such business before such meeting.
Under the Stockholder Notice Procedure, for notice of stockholder
nominations to be made at an annual meeting to be timely, such notice must be
received by Viad not less than 70 days nor more than 90 days prior to the first
anniversary of the previous year's annual meeting (or if the date of the annual
meeting is advanced by more than 20 days, or delayed by more than 70 days, from
such anniversary date, not earlier than the 90th day prior to such meeting and
not later than the later of (i) the 70th day prior to such meeting and (ii) the
10th day after public announcement of the date of such meeting is first made).
Notwithstanding the foregoing, in the event that the number of directors to be
elected is increased and there is no public announcement made by Viad naming all
of the nominees for director or specifying the size of the increased Board of
Directors at least 80 days prior to the first anniversary of the preceding
year's annual meeting, a stockholder's notice will be timely, but only with
respect to nominees for any new positions created by such increase, if it is
received by Viad not later than the 10th day after such public announcement is
first made by Viad. Under the Stockholder Notice Procedure, for notice of a
stockholder nomination to be made at a special meeting at which directors are to
be elected to be timely, such notice must be received by Viad not earlier than
the 90th day before such meeting and not later than the later of (i) the 70th
day prior to such meeting and (ii) the 10th day after public announcement of the
date of such meeting is first made.
In addition, under the Stockholder Notice Procedure, a stockholder's notice
to Viad proposing to nominate a person for election as a director must contain
certain specified information. If the Chairman of the Board or other officer
presiding at a meeting determines that a person was not nominated, or other
business was not brought before the meeting, in accordance with the Stockholder
Notice Procedure, such person will not be eligible for election as a director,
or such business will not be conducted at such meeting, as the case may be.
Merger/Sale Of Assets. The Certificate of Incorporation of Viad provides
that certain "business combinations" (as defined) must be approved by the
holders of at least 66 2/3% of the voting power of the shares not owned by an
"interested shareholder" (as defined), unless the business combinations are
approved by the "Continuing Directors" or meet certain requirements regarding
price and procedure.
Delaware General Corporation Law Section 203. Viad is subject to the
provisions of Section 203 of the DGCL ("Delaware 203"), the "business
combination" statute. In general, Delaware 203 prohibits a public Delaware
corporation from engaging in a "business combination" with an "interested
stockholder" for a period of three years after the date of the transaction in
which the person became an interested stockholder, unless
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(i) prior to such date, the board of directors of the corporation approved
either the business combination or the transaction that resulted in the
stockholder becoming an interested stockholder, (ii) upon consummation of the
transaction that resulted in the stockholder becoming an interested stockholder,
the interested stockholder owned at least 85% of the voting stock of the
corporation outstanding at the time the transaction commenced (excluding certain
shares described in Delaware 203), or (iii) on or subsequent to such date, the
business combination is approved by the board of directors of the corporation
and authorized at an annual or special meeting of stockholders and by the
affirmative vote of at least two-thirds of the outstanding voting stock that is
not owned by the "interested stockholder." "Business combination" is defined to
include mergers, asset sales and certain other transactions resulting in a
financial benefit to a stockholder. An "interested stockholder" is defined
generally as a person who, together with affiliates and associates, owns (or,
within the prior three years, did own) 15% or more of a corporation's voting
stock. Viad's Certificate of Incorporation does not exclude Viad from the
restrictions imposed under Delaware 203. The statute could prohibit or delay the
accomplishment of mergers or other takeover or change in control attempts with
respect to Viad and, accordingly, may discourage attempts to acquire Viad.
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INFORMATION REGARDING GAME
The following briefly describes the business of Game. Additional
information regarding Game is contained in its filings with the SEC pursuant to
the Exchange Act. See "Additional Information" and "Incorporation of Documents
by Reference."
BUSINESS OF GAME
Game offers comprehensive cash access services to casinos and other gaming
establishments. Game's proprietary GameCash(TM) services allow casino patrons to
access cash through credit card cash advances, check cashing and ATMs.
GameCash(TM) credit card cash advance and check cashing systems also provide
casino operators with detailed demographic data about patrons who use those
services. Game believes that its ability to provide cash access services coupled
with patron specific and other transaction data supports the objective of casino
operators to increase the amount wagered and the frequency of return visits by
their patrons.
The number of locations at which Game operates has grown substantially
since it began its operations in December 1990. Game provided cash access
services in six locations at the end of 1993. The number of locations served by
Game had grown to 76 locations at December 31, 1996, and 83 as of September 30,
1997. Game believes that its growth reflects casino operators' need to provide
efficient and innovative on-site cash access services.
By contracting with Game for cash access services, casino operators are
able to increase gaming activity by providing convenient access to cash, earn a
share of the revenue generated by Game, minimize their investment in equipment
and system development and reduce their management burden by simplifying casino
cashier operations. In addition, Game believes that its technologically advanced
systems, value added marketing tools and superior service are valuable features
for casinos. Game also believes that its ability to process cash access
transactions quickly, offer personalized targeted coupons and provide its
services in a confidential manner are attractive to casino patrons.
GAMECASH(TM) SERVICES
Game's proprietary GameCash(TM) services are provided based on an agreement
negotiated with the casino operator. The agreement specifies which GameCash(TM)
services will be provided, the fees for each type of transaction, whether
transaction fees will be paid by casino patrons or the casino operator and what
commission, if any, will be paid by Game to the casino. Pursuant to
substantially all of Game's agreements with gaming establishments, Game is the
exclusive provider of credit card cash advance or check cashing services, or
both, for the term of the contract, which is generally one to three years.
GameCash(TM) Credit Card Cash Advance Services. The GameCash(TM) credit
card cash advance system allows casino patrons to use their VISA, MasterCard,
Discover and American Express cards to obtain cash. Unlike ATMs which have daily
limits and require a personal identification number ("PIN"), credit card cash
advances are limited only by the patron's available credit limit and, with the
exception of American Express cash advance transactions, do not require the
patron to enter a PIN. At September 30, 1997, Game provided GameCash(TM) credit
card cash advance services at 82 of its 83 locations.
GameCash(TM) Check Cashing Services. Game also offers check cashing
services to casino customers. At September 30, 1997, Game provided GameCash(TM)
check cashing services in addition to GameCash(TM) credit card cash advance
services at 27 of its 83 locations.
GameCash(TM) ATM Services. In April 1996, Game expanded its GameCash(TM)
solution to include ATM services. At September 30, 1997, Game provided
GameCash(TM)ATM services in approximately 17 of its 83 locations. ATMs provided
by Game have access to the major national and most regional networks, allowing
Game's machines to accept most ATM cards.
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CUSTOMERS
Game's customers include casino owners and operators in both the emerging
and traditional gaming markets. Game provided its GameCash(TM) services at 76
locations in 19 states at December 31, 1996, and at 83 locations in 20 states at
September 30, 1997. During the year ended December 31, 1996, approximately 70%
of Game's revenue was generated by casinos owned by Native American tribes and
approximately 4% of its revenue was generated in the traditional gaming markets.
During the nine months ended September 30, 1997, approximately 70% of Game's
revenue was generated by casinos owned by Native American tribes and
approximately 4% of its revenue was generated in the traditional gaming markets.
The following table summarizes the number of locations at which Game
operated at the indicated dates:
<TABLE>
<CAPTION>
DECEMBER 31,
------------------------------- SEPT. 30,
SERVICES PROVIDED 1993 1994 1995 1996 1997
----------------------------------------------- ---- ---- ---- ---- ---------
<S> <C> <C> <C> <C> <C>
Credit card only............................... 1 5 19 48 50
Credit card and check cashing.................. 5 5 9 15 16
Credit card and ATM............................ -- -- -- 4 5
Credit card, check cashing and ATM............. -- -- -- 6 11
ATM only....................................... -- -- -- 3 1
- -- -- -- -
Total.......................................... 6 10 28 76 83
= == == == =
Number of states............................... 3 6 14 19 20
</TABLE>
Contracts with casinos owned or operated by Grand Casinos, Inc. or its
subsidiaries accounted for approximately 81%, 79% and 46% of Game's revenues in
1994, 1995 and 1996, respectively, and 27% for the nine months ended September
30, 1997. Grand Casinos, Inc. or its subsidiaries currently own three casinos in
Mississippi, and have management contracts with Native American tribes for the
operation of two casinos in Minnesota and two in Louisiana. While Grand Casinos,
Inc. may influence the tribes' vendor selection, Game's contracts are negotiated
with and signed by tribal management. To Game's knowledge, Grand Casinos, Inc.
does not own any of Game's Common Stock.
During 1996 and the first nine months of 1997, Game substantially reduced
its dependence on Grand Casinos, Inc. by adding 55 contracts, and it is
aggressively pursuing contracts with other casino locations, which would further
reduce the percentage of revenue contributed by locations owned or managed by
Grand Casinos, Inc. In 1996 Game obtained contracts with three casinos in
Wisconsin owned by the Ho-Chunk Nation, and a contract with the Soaring Eagle
Casino in Michigan owned by the Saginaw Band of Chippewa.
STOCK OWNERSHIP OF MANAGEMENT AND CERTAIN BENEFICIAL OWNERS
The following table sets forth certain information regarding the beneficial
ownership of Game Common Stock as of October 31, 1997, by (i) each stockholder
known to Game who beneficially owned more than 5% of the outstanding shares of
Game Common Stock, (ii) each director of Game, (iii) the Chief Executive Officer
and each other executive officer of Game whose cash compensation for 1996
exceeded $100,000, and (iv) all directors and executive officers as a group.
<TABLE>
<CAPTION>
NO. OF SHARES
BENEFICIALLY APPROXIMATE
NAME AND ADDRESS(1) OWNED(2) PERCENT OWNED(3)
------------------------------------------------------- ------------- ----------------
<S> <C> <C>
Bruce Dachis(4)........................................ 703,120 15.5%
Gary A. Dachis......................................... 2,050,170 45.3%
Stephen P. Weisbrod(5)................................. 122,189 2.6%
Paul H. Ravich(5)...................................... 71,877 1.6%
Tom Grossman(5)........................................ 25,000 *
All directors and executive officers as a group
(8 persons)(5)....................................... 2,388,887 49.8%
</TABLE>
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- ---------------
* Less than one percent.
(1) The address of Mr. Ravich is 4545 IDS Center, Minneapolis, Minnesota 55402.
The address of Mr. Grossman is 7650 Metro Boulevard, Suite 300, Edina,
Minnesota 55439. The address of each other person is 13705 First Avenue
North, Suite 100, Minneapolis, Minnesota 55441.
(2) Each person has sole voting and dispositive power with respect to all
outstanding shares, except as noted.
(3) Based on 4,522,522 shares outstanding at October 31, 1997, which does not
include shares that may be issued upon the exercise of outstanding
stock options. Each figure showing the percentage of outstanding shares
owned beneficially has been calculated by treating as outstanding and owned
the shares which could be purchased by the indicated person(s) within 60
days upon the exercise of outstanding stock options.
(4) Such shares are owned by Bruce Dachis as sole trustee of the Dachis Trusts.
(5) Includes shares subject to stock options that are exercisable within 60
days, as follows: Mr. Weisbrod, 102,189 shares; Mr. Ravich, 48,439 shares;
Mr. Grossman, 25,000 shares; and all directors and executive officers as a
group (including the persons named above), 276,191 shares.
COMPARATIVE RIGHTS OF SHAREHOLDERS
In connection with the Merger, stockholders of Game will be converting
their shares of Game Common Stock into shares of Viad Common Stock. Game is a
Minnesota corporation and Viad is a Delaware corporation and the charter and
bylaws of Viad differ from those of Game in several significant respects.
Because of certain differences between the MBCA and DGCL and because of certain
differences between the respective charter and bylaws of Game and Viad, the
rights of a holder of Viad Common Stock differ from the rights of a holder of
Game Common Stock.
The following is a summary of certain of the material differences between
the MBCA and the DGCL and the charter and bylaws of Game and Viad. The following
summary does not purport to be a complete statement of the rights of holders of
Game Common Stock and Viad Common Stock under, and is qualified in its entirety
by reference to, the MBCA and the DGCL, the Articles of Incorporation and Bylaws
of Game, and the Certificate of Incorporation and Bylaws of Viad. Each Game
stockholder should carefully consider these differences, including but not
limited to provisions of the Certificate of Incorporation of Viad and the Bylaws
of Viad that may have an anti-takeover effect, in connection with the decision
to vote for or against the adoption and approval of the Merger Agreement. See
"Description of Viad Capital Stock" for a summary of certain other rights
relating to Viad Common Stock.
ELECTION OF DIRECTORS
The MBCA requires that a corporation shall have at least one director and
permits a board of directors to be divided into classes without regard to the
size of the board of directors. The Bylaws of Game provide that the number of
directors shall be established by resolution of the stockholders (subject to the
authority of the Board of Directors to increase or decrease the number of
directors as permitted by law). The Board of Directors of Game currently
consists of four directors. The Board of Directors of Game is not classified.
Under the MBCA, cumulative voting in the election of directors is mandatory
unless the corporation's articles of incorporation provide that there shall be
no cumulative voting. The Articles of Incorporation of Game contain a provision
that eliminates cumulative voting.
The DGCL requires that a corporation shall have at least one director. The
number of directors shall be fixed by, or in the manner provided in, the bylaws,
unless the certificate of incorporation fixes the number of directors. The
Bylaws of Viad provide for its Board of Directors to consist of three (3) to
seventeen (17) members. The Board of Directors of Viad currently consists of 8
directors. The Certificate of Incorporation of Viad and Bylaws of Viad provide
that the Board of Directors shall be divided into three classes of directors,
with the classes to be as nearly equal in number as possible. Within such
limits, the exact number of directors
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shall be fixed from time to time pursuant to a resolution adopted by a majority
of the Board of Directors. The terms of the directors are staggered such that
the terms of approximately one-third of the directors expire at each annual
election of directors. This method of electing directors makes a change in the
composition of the board of directors, and a potential change in control of a
corporation, a lengthier and more difficult process.
Under the DGCL, cumulative voting is permitted only if it is specifically
provided for in the corporation's certificate of incorporation. Under the
Certificate of Incorporation of Viad, cumulative voting is not permitted.
REMOVAL OF DIRECTORS
Under the MBCA, any director or the entire board of directors of a
Minnesota corporation may be removed, with or without cause, by the holders of
the proportion or number of the voting power of the shares of the classes or
series the director represents sufficient to elect them. In addition, a director
elected to fill a vacancy may be removed, with or without cause, by the
affirmative vote of a majority of the remaining directors, if the shareholders
have not elected directors since the appointment to fill the vacancy.
Under the DGCL, unless the certificate of incorporation provides otherwise,
directors of a corporation with a classified board of directors may be removed
only for cause. Under the Certificate of Incorporation of Viad, any director may
be removed from office at any time, but only for cause and only by the
affirmative vote of the holders of at least 80% of the voting power of the then
outstanding voting stock, voting together as a single class.
ACTION BY WRITTEN CONSENT
Under the MBCA, any action required or permitted to be taken at a meeting
of the stockholders may be taken without a meeting by written action signed by
all of the stockholders entitled to vote on that action.
Under the DGCL, unless otherwise provided in the corporation's certificate
of incorporation, any action required or permitted to be taken at a meeting of
the stockholders may be taken without a meeting by written action 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 to vote were present and voted. The Certificate of
Incorporation of Viad eliminates the rights of stockholders to act by written
consent.
AMENDMENTS TO CHARTER
Under the MBCA, an amendment to the articles of incorporation generally
requires the affirmative vote of the holders of majority of the shares present
and entitled to vote unless a larger affirmative vote is required by the
corporation's articles. The Articles of Incorporation of Game do not contain any
provisions that require a larger affirmative vote in order to amend the Articles
of Incorporation of Game. Prior to submitting the resolution for a stockholder
vote, the resolution must be approved by a majority of directors present at a
meeting where the resolution is considered, unless the resolution is proposed by
a stockholder or stockholders holding three percent or more of the voting power
of the outstanding shares entitled to vote.
Under the DGCL, an amendment to the certificate of incorporation requires
the affirmative vote of the holders of majority of the shares entitled to vote
thereon, unless the corporation's certificate of incorporation requires a
greater or lesser number for approval. The Certificate of Incorporation of Viad
requires a vote of at least 80% of the voting power of the then outstanding
voting stock to approve the amendment of certain provisions of the Certificate
of Incorporation of Viad, including those regarding (i) the elimination of the
stockholders' right to act by written consent, (ii) the number, removal and
election of directors, and (iii) the power of the board of directors and
stockholders to amend the Bylaws of Viad. The Certificate of Incorporation of
Viad also requires a vote of at least 66 2/3% of the voting power of the then
outstanding voting stock and at least 66 2/3% of the voting power of the then
outstanding voting stock that is not owned by an "Interested Stockholder" (as
defined in the Certificate of Incorporation of Viad) to approve the amendment of
provisions of the Certificate of Incorporation of Viad regarding the vote
required for certain business combinations. Furthermore, under the DGCL, the
holders of the outstanding shares of a class are entitled to
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vote as a class upon any proposed amendment to the certificate of incorporation,
whether or not they are entitled to vote thereon by the provisions of the
corporation's certificate of incorporation, if the amendment would increase or
decrease the aggregate number of authorized shares of such class, increase or
decrease the par value of the shares of such class, or alter or change the
powers, preferences or special rights of the shares of such class so as to
adversely affect them. The effect of such supermajority voting provisions is to
make any of these changes more difficult.
AMENDMENTS TO BYLAWS
Under the MBCA and The Bylaws of Game, the power to adopt, amend or repeal
The Bylaws of Game is vested in the Game Board of Directors and is subject to
the power of the stockholders to adopt, amend or repeal bylaws adopted, amended,
or repealed by the Game Board of Directors. The Game Board of Directors shall
not, without stockholder approval, amend, or repeal a bylaw fixing a quorum for
meetings of stockholders, prescribing procedures for removing directors or
filling vacancies in the board, or fixing the number of directors or their
classifications, qualifications, or terms of office, but may adopt or amend a
bylaw to increase the number of directors. A stockholder or stockholders holding
three percent or more of the voting power of the shares entitled to vote may
propose a resolution for action by the stockholders to adopt, amend, or repeal
bylaws adopted, amended or repealed by the Game Board of Directors. The Bylaws
of Game may be amended by a majority vote of the Game Board of Directors, or by
a majority vote of the votes cast by the stockholders of Game at any legal
meeting.
Under the DGCL and The Bylaws of Viad, the power to adopt, amend or repeal
The Bylaws of Viad is vested in the Viad Board of Directors and is subject to
the power of the stockholders to adopt, amend or repeal bylaws adopted, amended,
or repealed by the Viad Board of Directors. The Bylaws of Viad may be amended by
a majority vote of the Viad Board of Directors, or by the affirmative vote of at
least 80% of the voting power of the then outstanding voting stock at any legal
meeting of stockholders.
SPECIAL MEETINGS OF STOCKHOLDERS
Under the MBCA, a special meeting of stockholders may be called by certain
officers, two or more directors, a person authorized to do so in the articles or
bylaws, or stockholders holding at least 10% of the voting power of all shares
entitled to vote, except that a special meeting for the purpose of considering
an action to effect, directly or indirectly, a business combination, including
any action to change or otherwise affect the composition of the board of
directors for that purpose, must be called by stockholders holding at least 25%
of the voting power of all shares entitled to vote.
Under the DGCL, a special meeting of stockholders may be called by the
board of directors or any other person authorized to do so in the corporation's
certificate of incorporation or bylaws. Under The Bylaws of Viad, a special
meeting of stockholders may be called only by the Chairman of the Board or by
the Board of Directors by resolution adopted by a majority of the Board.
Stockholders are not permitted to call special meetings.
VOTE ON EXTRAORDINARY CORPORATE TRANSACTIONS
Under both the MBCA and the DGCL, an agreement of merger, exchange or
consolidation must be approved by the directors of each constituent corporation
and adopted by the affirmative vote of the holders of a majority of the
outstanding shares entitled to vote thereon, or by a greater vote as provided in
a corporation's charter. Neither the MBCA nor the DGCL requires the separate
vote of any class of shares, unless any provision of the plan of merger would,
if contained in a proposed amendment to the charter, entitle the class or series
to vote as a class or series. Additionally, both the MBCA and the DGCL provide
generally that, unless its charter provides otherwise, no vote of the
stockholders of the surviving corporation is required to approve the merger if
(i) the agreement of merger does not amend in any respect the corporation's
charter, (ii) each share outstanding immediately prior to the effective date is
to be an identical outstanding share of the surviving corporation after the
effective date, and (iii) the number of shares of the surviving corporation's
common stock to be issued in the merger plus the number of shares of common
stock into which any other securities to be issued in the merger are initially
convertible does not exceed 20% of its common stock outstanding immediately
prior to the effective date of the merger.
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The MBCA provides that a corporation may acquire all of the outstanding
shares of one or more classes or series of another corporation pursuant to a
plan of exchange. Unlike a merger in which there is a single surviving
corporation, an exchange results in an acquired company becoming the
wholly-owned subsidiary of the acquiring corporation. The DGCL contains no
provisions for statutory exchanges. The DGCL, however, does contain provisions
relating to statutory consolidations in which all of constituent corporations
disappear and a new entity is created to continue the business. The MBCA does
not provide for consolidations.
The Certificate of Incorporation of Viad provides that certain business
combinations require the affirmative vote of at least 66 2/3% of the voting
power of the then outstanding voting stock and at least 66 2/3% of the voting
power of the then outstanding voting stock that is not owned by an "Interested
Stockholder" (as defined in Viad Certificate). Business combinations subject to
this requirement include (i) any merger or consolidation with an Interested
Stockholder, (ii) any sale, lease, exchange, mortgage, pledge, transfer or other
disposition to or with an Interested Stockholder of assets having a fair market
value of $10,000,000 or more, (iii) the issuance or transfer of securities of
Viad or any of its subsidiaries to an Interested Stockholder having an aggregate
fair market value of $10,000,000 or more, (iv) the adoption of any plan or
proposal for liquidation or dissolution of Viad proposed by or on behalf of an
Interested Stockholder, and (v) any reclassification of securities or
recapitalization of Viad or similar transaction if such transaction would have
the effect of increasing the proportionate shares of the outstanding shares of
any class of equity or convertible securities of Viad or any of its subsidiaries
which are owned by an Interested Stockholder. The higher vote is not required if
such business combination is approved by the Continuing Directors (as defined in
the Certificate of Incorporation of Viad) or if certain price and procedure
requirements are met.
DIVIDENDS
Under the MBCA, a corporation may pay dividends and purchase its own
shares, provided the board of directors reasonably determines that such payments
would not render the corporation unable to pay its debts in the ordinary course
of business and would not result in the corporation's total assets being less
than the sum of (i) its total liabilities, plus (ii) the amount that would be
needed, if the corporation were to be dissolved, to satisfy the rights of
preferred stockholders. The MBCA also restricts a Minnesota corporation's
ability to repurchase shares from certain stockholders. Specifically, a
Minnesota corporation may not purchase or agree to purchase any voting shares
from a person who owns more than 5% of the corporation's voting power for more
than the fair market value of such shares if the shares have been owned for less
than two years, unless the purchase is approved by stockholders who hold a
majority of the voting power of all shares entitled to vote. The corporation may
also make such a purchase if it makes an offer to purchase shares from all of
its stockholders for at least equal value per share. These provisions may limit
Game's ability to purchase shares in opposition to a takeover attempt.
Subject to any restrictions contained in a corporation's certificate of
incorporation, the DGCL generally provides that a corporation may declare and
pay dividends out of surplus (defined as net assets minus stated capital) or,
when no surplus exists, out of net profits for the fiscal year in which the
dividend is declared and/or for the preceding fiscal year. Dividends may not be
paid out of net profits if the capital of the corporation is less than the
amount of capital represented by the issued and outstanding stock of all classes
having a preference upon the distribution of assets.
APPRAISAL RIGHTS OF DISSENTING STOCKHOLDERS
The MBCA and the DGCL both contain provisions which entitle certain
dissenting stockholders to receive the appraised value of their ownership in
connection with certain transactions. While the appraisal rights provided by the
DGCL and the MBCA are similar, the specific provisions of the statutes differ,
as discussed below.
Under the MBCA, dissenting stockholders are entitled to appraisal rights in
connection with the lease, sale, exchange, transfer or certain other
dispositions of all or substantially all of the assets of a corporation and in
connection with certain amendments to its articles of incorporation which
adversely affect a stockholder's rights. In addition, stockholders of a
Minnesota corporation are entitled, except in limited situations, to
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appraisal rights in connection with any merger or with any exchange which
requires a stockholder vote. See "The Special Meeting -- Dissenters' Rights."
Stockholders of an acquiring corporation are entitled to appraisal rights in a
merger, combination or majority share acquisition in which such stockholders are
entitled to vote.
Under the DGCL, appraisal rights are available only in connection with
statutory mergers or consolidations. Generally, stockholders of a Delaware
corporation who dissent from a merger or consolidation of the corporation for
which a stockholders' vote is required are entitled to appraisal rights,
requiring the surviving corporation to purchase the dissenting shares at fair
value. There are, however, no statutory rights of appraisal with respect to
stockholders of a Delaware corporation whose shares of stock are either (i)
listed on a national securities exchange or designated as a national market
system security on an interdealer quotation system by the National Association
of Securities Dealers, Inc. or (ii) held of record by more than 2,000
stockholders where such stockholders receive only shares of stock of the
corporation surviving or resulting from the merger or consolidation (or cash in
lieu of fractional interests therein).
INDEMNIFICATION AND LIMITATION OF LIABILITY OF DIRECTORS AND OFFICERS
Under the MBCA, a corporation may include in its articles of incorporation
a provision which would, subject to the limitations described below, eliminate
or limit directors' liability to the corporation or its stockholders for
monetary damages for breach of fiduciary duty. Under the MBCA, a director's
liability cannot be eliminated or limited for (i) any breach of the director's
duty of loyalty to the corporation or its stockholders; (ii) acts or omissions
not in good faith or that involve intentional misconduct or a knowing violation
of law; (iii) the making of an unlawful distribution under the MBCA; (iv)
certain violations of Minnesota securities laws; (v) any transaction from which
the director derived an improper personal benefit; or (vi) any act or omission
occurring before the date the provision in the corporation's articles
eliminating or limiting liability became effective. The Articles of
Incorporation of Game include such a provision.
Under the MBCA, Minnesota corporations are required to indemnify persons in
their official capacity (directors, officers, employees and agents) within
prescribed limits as long as they satisfy the five criteria of eligibility set
forth in the MBCA. The Bylaws of Game provide that Game is to indemnify such
persons to the fullest extent permitted by the MBCA.
The MBCA provides that the corporation must make advance payment of
expenses upon the request of a person who is eligible for indemnification, if
that person supplies the corporation with an affidavit stating that the person
honestly believes that he or she has met the criteria for mandatory
indemnification and promises to repay the corporation if it is ultimately found
that the criteria were not met.
Minnesota law further provides specific statutory authority for directors
in discharging their duties to consider factors in addition to the interests of
the corporation's stockholders, such as the interests of the corporation's
employees, suppliers, creditors and customers; the economy of the state and
nation; community and societal considerations; the long-term and short-term
interests of the corporation and its stockholders; and the possibility that
these interests may be best served by the continued independence of the
corporation.
Under the DGCL, a corporation may include in its certificate of
incorporation a provision which would, subject to the limitations described
below, eliminate or limit directors' liability for monetary damage for breaches
of their fiduciary duty of care. Under the DGCL, a director's liability cannot
be eliminated or limited (i) for breaches of duty of loyalty, (ii) for acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violation of law, (iii) for the payment of unlawful dividends or expenditure of
funds for unlawful stock purchases or redemptions, or (iv) for transactions from
which such director derived an improper personal benefit. The Certificate of
Incorporation of Viad includes such a provision. The Certificate of
Incorporation of Viad and the Bylaws of Viad provide that subject to certain
conditions, Viad will indemnify any person in connection with any threatened,
pending or completed action, suit or proceeding by reason of the fact that
person is or was or has agreed to become a director or officer of Viad, or is or
was serving, or has agreed to serve, at the request of Viad as a director, to
the fullest extent permitted by the DGCL.
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Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to Viad's directors, officers or persons controlling Viad
pursuant to the foregoing provisions, Viad has been informed that in the opinion
of the SEC such indemnification is against public policy as expressed in the
Securities Act and is therefore unenforceable.
PREEMPTIVE RIGHTS
Under the Articles of Incorporation of Game, holders of Game Common Stock
are expressly denied preemptive rights. The DGCL provides that a corporation's
stockholders have preemptive rights only if such rights are expressly granted in
the corporation's certificate of incorporation. The Certificate of Incorporation
of Viad does not grant preemptive rights.
BUSINESS COMBINATION RESTRICTIONS
Game is governed by Sections 302A.671 and 302A.673 of the MBCA. In general,
Section 302A.671 provides that the shares of a corporation acquired in a
"control share acquisition" have no voting rights unless voting rights are
approved in a prescribed manner. A "control share acquisition" is an
acquisition, directly or indirectly, of beneficial ownership of shares that
would, when added to all other shares beneficially owned by the acquiring
person, entitle the acquiring person to have voting power of 20% or more in the
election of directors. In general, Section 302A.673 prohibits a public Minnesota
corporation from engaging in a "business combination" with an "interested
shareholder" for a period of four years after the date of the transaction in
which the person became an interested shareholder, unless the business
combination is approved in a prescribed manner. "Business combination" includes
mergers, asset sales and other transactions resulting in a financial benefit to
the interested stockholder. An "interested shareholder" is a person who is the
beneficial owner, directly or indirectly, of 10% or more of the corporations'
voting stock or who is an affiliate or associate of the corporation and at any
time within four years prior to the date in question was the beneficial owner,
directly or indirectly, of 10% or more of the corporation's voting stock. Such
provisions of Minnesota law could have the effect of delaying, deferring or
preventing a change in control of Game.
Delaware law contains no provisions directly comparable to the control
share acquisition provision in the MBCA. For a description of Section 203 of the
DGCL relating to the prohibition of certain transactions between a Delaware
corporation and an "interested stockholder," see "Description of Viad Capital
Stock -- Certain Charter and Bylaw Provisions -- Delaware General Corporation
Law Section 203."
ADVANCE NOTICE REQUIREMENT FOR STOCKHOLDER PROPOSALS AND DIRECTOR NOMINATIONS
Game Bylaws do not specifically provide for stockholder nominations of
persons for election to the Board of Directors or for stockholder proposals,
except proposals to amend the Bylaws. See "-- Amendments to Bylaws."
For a description of the advance notice requirements for stockholder
proposals and director nominations contained in the Certificate of Incorporation
and Bylaws of Viad, see "Description of Viad Capital Stock -- Certain Charter
and Bylaw Provisions -- Advance Notice Provisions."
STOCKHOLDER RIGHTS PLAN
The Viad Board of Directors has adopted a Stockholders Rights Plan. For
discussion of the Rights, see "Description of Viad Capital Stock -- Rights
Plan." Game has not adopted a stockholder rights plan.
STOCKHOLDER'S RIGHT TO EXAMINE BOOKS AND RECORDS
The MBCA provides that any stockholder or group of stockholders of a
publicly held corporation have the right, upon written demand stating the
purpose, to examine and copy the corporation's share register and other
corporate records upon demonstrating a proper purpose. The DGCL provides that a
stockholder of a Delaware corporation may inspect books and records of the
corporation upon written demand under oath
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stating the purpose of the inspection, if such purpose is reasonably related to
such person's interest as a stockholder.
LEGAL MATTERS
The legality of the Viad Common Stock offered hereby and certain other
legal matters will be passed upon for Viad by Bryan Cave LLP, Phoenix, Arizona.
Certain legal matters for Game will be passed upon by Robins, Kaplan, Miller &
Ciresi L.L.P., Minneapolis, Minnesota.
EXPERTS
The financial statements incorporated in this Proxy Statement/Prospectus by
reference from Viad's Annual Report on Form 10-K for the year ended December 31,
1996 have been audited by Deloitte & Touche LLP, independent auditors, as stated
in their report (which expresses an unqualified opinion and includes an
explanatory paragraph relating to Viad's change in the method of accounting for
impairment of long-lived assets in 1995) which is incorporated herein by
reference, and have been so incorporated in reliance upon the report of such
firm given upon their authority as experts in accounting and auditing.
The consolidated financial statements of Game Financial Corporation
included in Game Financial Corporation's Annual Report (Form 10-KSB) for the
year ended December 31, 1996, have been audited by Ernst & Young LLP,
independent auditors, as set forth in their report thereon included therein and
incorporated herein by reference. Such consolidated financial statements are
incorporated herein by reference in reliance upon such report given upon the
authority of such firm as experts in accounting and auditing.
The consolidated financial statements of Game Financial Corporation
included in Game Financial Corporation's Annual Report (Form 10-KSB) for the
year ended December 31, 1996, have been audited by Lurie, Besikof, Lapidus &
Co., LLP, independent auditors, as set forth in their report thereon included
therein and incorporated herein by reference. Such consolidated financial
statements are incorporated herein by reference in reliance upon such report
given upon the authority of such firm as experts in accounting and auditing.
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APPENDIX I
LIST OF DEFINED TERMS
As used in this Proxy Statement/Prospectus, the following terms shall have
the meanings specified below:
"Acquisition Sub" shall mean Game Acquisition Corp., a Minnesota
corporation and a wholly-owned subsidiary of Viad.
"Affiliate" with respect to any person, shall mean and include any person
controlling, controlled by or under common control with such person.
"Agreements" shall mean any written or oral contract, purchase or sales
order, franchise, insurance policy, license, undertaking, arrangement,
understanding, commitment, document, lease, sublease, deed, mortgage, plan,
indenture, bill of sale, assignment, proxy, voting trust or other agreement or
instrument.
"Applicable Laws" shall mean all applicable provisions of all (i)
constitutions, treaties, statutes, laws (including the common law), rules,
regulations, ordinances, permits, concessions, grants, franchises, licenses,
orders or other governmental authorization or approval of any Governmental
Authority, (ii) Governmental Approvals and (iii) orders, decisions, judgments,
awards and decrees of or agreements with any Governmental Authority.
"Approval" shall mean any consent, waiver, license, permit, certificate or
authorization.
"ATM" shall mean an Automated Teller Machine.
"Breakup Fee" shall mean the $2,000,000 fee to be paid to Viad if the
Merger Agreement is terminated under the circumstances set forth in Section
9.2(c) of the Merger Agreement.
"Business Day" shall mean each weekday that is not a holiday under federal
or Minnesota law.
"Certificate" shall mean the certificate representing shares of the
Surviving Corporation which immediately prior to the Effective Time had
evidenced outstanding shares of Game Common Stock (other than Dissenting
Shares).
"Certificate of Merger" shall mean a certificate of merger prepared by the
parties to comply with the requirements of the MBCA to be filed with the
Secretary of State of the State of Minnesota.
"Closing" shall mean the closing of the transactions contemplated by this
Merger Agreement.
"Closing Date" shall mean the first Business Day immediately following the
date on which the last of the conditions set forth in the Merger Agreement is
fulfilled or waived, or at such other time as Viad and Game shall mutually
agree.
"Code" shall mean the Internal Revenue Code of 1986, as amended, and all
rules and regulations and revenue rulings and revenue procedures and amendments
promulgated thereunder.
"Contracts" shall mean all contracts, leases, commitments, plans,
agreements, and licenses including those described in Game Disclosure Schedule
to which Game and its Subsidiaries are a party or by which they are obligated.
"Dachis" shall mean Gary A. Dachis, together with his successors and
assigns.
"Dachis Trusts" shall mean The Marnie J. Dachis Irrevocable Trust, Bruce
Dachis, Trustee, dated as of December 28, 1993 and The Louis A. Dachis
Irrevocable Trust, Bruce Dachis, Trustee, dated as of December 28, 1993.
"DGCL" shall mean the Delaware General Corporation Law.
"Dissenting Shares" shall mean shares of Game Common Stock to which holders
have exercised their dissenter's rights pursuant to MBCA.
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"DOJ" shall mean U.S. Department of Justice.
"Effective Time" shall mean the time when the Merger shall become
effective.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended.
"Escrow Agent" shall mean the Escrow Agent that is a party to the Escrow
Agreement.
"Escrow Agreement" shall mean the Escrow Agreement to be entered into by
and among Dachis, Viad and Exchange Agent.
"Escrowed Consideration" shall have the meaning set forth in the Selling
Shareholder's Agreement.
"Escrowed Shares" shall mean the certificate representing Viad Common Stock
that would otherwise be issued to Dachis in the Merger pursuant to the Merger
Agreement having an aggregate value (based upon Viad Price) equal to the Maximum
Indemnification Amount and the Software Fee deposited and held in escrow by the
Escrow Agreement pursuant to the Escrow Agreement.
"Exchange Act" shall mean the Securities and Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder.
"Exchange Agent" shall mean First National Bank of Boston, N.A. or its
successor or assign serving as Viad's transfer agent.
"Exchange Fund" shall mean certificates for shares of Viad Common Stock,
together with any dividends or distributions with respect thereto and cash for
the benefit of the Game shareholders and held pursuant to Section 3.2 of the
Merger Agreement by the Exchange Agent for the benefit of the holders of Game
Common Stock in connection with the Merger in accordance with Section 3.2 of the
Merger Agreement.
"Exchange Ratio" shall mean the Game Price divided by the Viad Price,
subject to adjustment for certain changes in the capitalization of Viad as set
forth in Section 3.1(b) of the Merger Agreement.
"Expense Fee" shall mean the sum of Five Hundred Thousand Dollars
($500,000) paid by Game to Viad if the Merger Agreement is terminated in the
circumstances described in Section 9.2(b) of the Merger Agreement.
"Fairness Opinion" shall mean Ladenburg's written opinion addressed to
Game's Board of Directors for inclusion in the Prospectus/Proxy Statement to the
effect that the consideration received by Game shareholders in the Merger is
fair from a financial point of view.
"FTC" shall mean the U.S. Federal Trade Commission.
"GAAP" shall mean U.S. generally accepted accounting principles,
consistently applied from period to period.
"Game" shall mean Game Financial Corporation, a Minnesota corporation, and
its subsidiaries.
"Game Acquisition" shall mean the acquisition of any significant portion of
Game's assets, or for any other merger, joint venture, recapitalization,
consolidation or business combination relating to Game prior to January 31,
1999, or one year from the Termination Date if the Termination Date is extended
beyond January 31, 1998.
"Game Common Stock" shall mean each share of common stock, par value $.01
per share, of Game issued and outstanding immediately prior to the Effective
Time.
"Game Disclosure Schedule" shall mean the separate disclosure schedules
executed and delivered by Game simultaneously with the execution and delivery of
the Merger Agreement, as it may be amended prior to the Closing Date.
"Game Financial Statements" shall mean the audited consolidated financial
statements and unaudited interim financial statements of Game included in Game
SEC Reports and the Recent Game Financial Statements.
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"Game Material Adverse Effect" shall mean any event, claim, occurrence or
change in circumstances that would or could have a material adverse effect upon
any of the properties, assets, business, financial condition, results of
operations or prospects of Game and/or its Subsidiaries or the Surviving
Corporation, taken as a whole.
"Game Option" shall means any issued and outstanding stock option, warrant,
right or other agreement to purchase or sell any capital stock of Game granted
by Game which has, pursuant to the terms of the grant, vested with the holder
thereof.
"Game Price" shall mean $10.75 per share.
"Game SEC Reports" shall mean (a) Annual Reports on Form 10-KSB, Quarterly
Reports on Form 10-QSB, and Current Reports on Form 8-K filed by Game with the
SEC from January 1, 1993, until the date of the Merger Agreement; (b) proxy and
information statements relating to all meetings of its stockholders (whether
annual or special) and actions by written consent in lieu of a stockholders'
meeting from January 1, 1993 until the date of the Merger Agreement; and (c) all
other reports or registration statements filed by Game with the SEC from January
1, 1993, until the date of the Merger Agreement.
"Game Stockholders' Approval" shall mean stockholder approval of the Merger
Agreement and the transactions contemplated thereby in accordance with Section
4.13.
"Game Stockholders' Meeting" shall mean a stockholder meeting to be held as
soon as practicable after the Registration Statement is declared effective by
the SEC.
"Game 10-KSB" shall mean Game's Annual Report on Form 10-KSB for the year
ended December 31, 1996.
"Game's Counsel" shall mean the law firm specified in the Merger Agreement
that is acting as legal counsel to Game.
"Governmental Authority" shall mean any regulatory body, agency,
instrumentality, department, commission, court, tribunal, authority or board of
any government, whether foreign or domestic and whether national, federal,
state, provincial or local, including all Native American Authorities.
"Hearing" shall mean a hearing date for an arbitration.
"HSR Act" shall mean the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended.
"Hart-Scott-Rodino Condition" shall mean satisfaction of the applicable
waiting period following the filing of a Notice and Report of the Merger
pursuant to the HSR Act and the absence of any additional requirements under the
HSR Act.
"Indemnification Amount" shall mean any amount to be indemnified under the
Merger Agreement or the Selling Shareholder's Agreement, as appropriate.
"Indemnified Loss" shall mean all claims, liabilities, losses, costs,
deficiencies, damages (including punitive, consequential or treble damages) or
expenses, including reasonable attorneys' fees and costs, interest and penalties
in connection therewith, and expenses and costs of investigation, obligations,
liens, assessments, judgments and fines which may be sustained, suffered or
incurred by an Indemnified Party.
"Indemnified Party" shall mean each of Viad, Acquisition Sub, any
corporation affiliated with Viad, and any director, officer, stockholder,
employee or agent of any of them.
"Intellectual Property" shall mean trademarks, service marks,
registrations, copyrights, registrations and applications therefor, and all
software owned, used, licensed, or assigned by or to Game which is used in or is
reasonably necessary to conduct the business and operations of Game and its
Subsidiaries.
"Irrevocable Proxy Agreements" shall mean the Irrevocable Proxy Agreements
dated September 24, 1997, by and between Dachis and Viad and by and between the
Dachis Trusts and Viad, and the Irrevocable Proxy Agreements to be entered into
by and between Viad and each of Significant Game Shareholders.
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"IRS" shall mean the U.S. Internal Revenue Service.
"Ladenburg" shall mean Ladenburg Thalmann & Co. Inc., the financial advisor
to Game.
"Liability" and "Liabilities" shall include any direct or indirect
indebtedness, claim, loss, damage, penalty, deficiency (including deferred
income tax and other net tax deficiencies), cost, expense, obligation, duties or
guarantee, whether accrued, absolute, or contingent, known or unknown, fixed or
unfixed, liquidated or unliquidated, matured or unmatured or secured or
unsecured.
"Maximum Indemnification Amount" shall mean the sum of Four Million and
Five Hundred Thousand Dollars ($4,500,000) to be paid by Dachis in accordance
with the Selling Shareholder's Agreement.
"MBCA" shall mean the Minnesota Business Corporation Act.
"Merger" shall mean the merger of Acquisition Sub with and into Game in
accordance with the Merger Agreement.
"Merger Agreement" shall mean the Agreement and Plan of Merger, dated as of
September 24, 1997 by and among Game, Acquisition Sub and Viad.
"Merger Consideration" shall mean shares of Viad Common Stock which holders
of Game Common Stock have the right to receive in respect of the shares of Game,
cash or shares in lieu of fractional shares of Viad Common Stock to which such
holder is entitled, and any dividends or other distributions to which such
holder is entitled.
"Native American Tribe" shall mean a sovereign nation state of Native
American descent recognized by the United States of America.
"Native American Authority" shall mean any regulatory body, agency,
instrumentality, department, commission, court, tribunal, authority, board or
other governing body of any Native American Tribe.
"NYSE" shall mean the New York Stock Exchange.
"Person" shall include an individual, a partnership, a joint venture, a
corporation, a limited liability company, a trust, an unincorporated
organization and a Government Authority or other legal body thereof or any other
entity.
"Plan" shall mean any arrangement as set forth in Section 4.20 of Game
Disclosure Schedule pursuant to which Game or its Subsidiaries has any
liability, contingent or otherwise.
"Proxy Statement/Prospectus" shall mean this proxy statement/prospectus
together with any and all amendments or supplements thereto.
"Record Date" shall mean .
"Registration Statement" shall mean the Proxy Statement/Prospectus forming
part of the Registration Statement on Form S-4 (including the Proxy
Statement/Prospectus) to be filed under the Securities Act with the SEC by Viad
for the purpose of registering the shares of Viad Common Stock to be issued in
the Merger.
"Right" shall mean a right that entitles the holder of such Right to
purchase one one-hundredth of a share of Junior Preferred Stock pursuant to
Viad's Rights Agreement.
"Right Purchase Price" shall mean the price at which the Right may be
purchased.
"SEC" shall mean the Securities and Exchange Commission.
"Securities Act" shall mean the Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder.
"Selling Shareholder's Agreement" shall mean the Selling Shareholder's
Agreement, dated September 24, 1997, by and between Dachis and Viad.
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"Significant Game Shareholders" shall mean Gary A. Dachis, Stephen
Weisbrod, Jeffrey L. Ringer, Deanna Frederichs-Moose, Michael Barcelow, Louis
Dachis, Jean Williams and the Dachis Trusts.
"Software Fee" shall mean Five Hundred Thousand Dollars ($500,000) to be
paid by Dachis in accordance with Section 5.6 of the Selling Shareholder's
Agreement.
"Special Meeting" shall mean the Special Meeting of Stockholders of Game to
be held in connection with the Merger.
"Stock Option" shall mean the option granted to Viad pursuant to the Stock
Option Agreement.
"Stock Option Agreement" shall mean the Stock Option Agreement, dated as of
September 24, 1997, by and between Game and Viad.
"Subsidiary" or "Subsidiaries" shall mean all direct or indirect
subsidiaries of Game or Viad, as the case may be.
"Surviving Corporation" shall mean the surviving corporation in the Merger.
"Tax" shall mean any federal, state, local, Native American Tribe, foreign
or provincial income, gross receipts, property, sales, profit, gross receipts,
capital, use, license, excise, franchise, employment, payroll, social security,
disability, occupation, property, severance, production, alternative or added
minimum, ad valorem, transfer or excise tax, or any other tax, custom, duty,
governmental fee or other like assessment or charge of any kind whatsoever,
together with any interest or penalty imposed by any Governmental Authority,
including all interest, penalties and additions imposed with respect to such
amounts and any obligations under any agreements or arrangements relating to
such agreements.
"Tax Return" shall mean a report, return, statements or other information
(including any attached schedules or any amendments to such report, return or
other information) required to be supplied to or filed with a governmental
entity and any Native American Authority with respect to any Tax, including an
information return, claim for refund, amended return or declaration or estimated
Tax.
"Termination Date" shall mean the termination date of the Merger Agreement,
which shall be January 31, 1998, unless extended by the mutual agreement of Game
and Viad.
"Third Party Offer" shall mean any offer or proposal from any person,
entity or group (other than Viad) to acquire any shares of the capital stock,
options or other securities of Game, to acquire any significant portion of
Game's assets or for any other merger, joint venture, recapitalization,
consolidation or business combination.
"Transfer" shall include any sale, pledge, gift, assignment, conveyance,
lease or disposition and the term "transferred" shall include sold, pledged,
gave, assigned, conveyed, leased or disposed of.
"Travelers" shall mean Travelers Express Company, Inc., a Minnesota
corporation and a wholly-owned subsidiary of Viad.
"Viad" shall mean Viad Corp, a Delaware corporation.
"Viad Adverse Impact" shall mean a material adverse effect on the
properties, assets, business financial condition, results of operations or
prospects of Viad and/or its Subsidiaries.
"Viad Common Stock" shall mean validly issued, fully paid and nonassessable
shares of common stock, $1.50 par value, of Viad.
"Viad Disclosure Schedule" shall mean the separate disclosure schedule
executed and delivered by Viad simultaneously with the execution and deliver of
the Merger Agreement, as it may be amended prior to the Closing Date.
"Viad Material Adverse Effect" shall mean a material adverse effect on the
properties, assets, business, financial condition, results of operations or
prospects of Viad and its Subsidiaries, taken as a whole.
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"Viad Price" shall mean the average of the closing sales prices of Viad
Common Stock as listed on the NYSE for the 30-trading day period ending four
trading days prior to the Closing Date.
"Viad SEC Reports" shall mean Viad's (a) Annual Reports on Form 10-K,
Quarterly Reports on Form 10-Q, and Current Reports on Form 8-K filed by Viad
with the SEC from January 1, 1993 until the date the Merger Agreement; (b) proxy
and information statements relating to all meetings of its shareholders (whether
annual or special) and actions by written consent in lieu of all shareholder's
meeting from January 1, 1993, until the date of the Merger Agreement; and (c)
all other reports or registration statements filed by Viad with the SEC from
January 1, 1994, until the date hereof (other than registration statements on
Form S-8 and the registration statement on Form S-3 for Viad's Dividend
Reinvestment Plan).
"Viad 10-K" shall mean Viad's Annual Report on Form 10-K for the year ended
December 31, 1996.
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APPENDIX II
================================================================================
AGREEMENT AND PLAN OF MERGER
DATED AS OF SEPTEMBER 24, 1997
BY AND AMONG
VIAD CORP,
GAME ACQUISITION CORP.
AND
GAME FINANCIAL CORPORATION
================================================================================
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TABLE OF CONTENTS
<TABLE>
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ARTICLE I
THE MERGER
Section 1.1. The Merger............................................................. 1
Section 1.2. Effects of the Merger.................................................. 1
Section 1.3. Effective Time......................................................... 1
Section 1.4. Closing................................................................ 2
ARTICLE II
THE SURVIVING CORPORATION
Section 2.1. Articles of Incorporation; By-laws..................................... 2
Section 2.2. Directors and Officers................................................. 2
ARTICLE III
CONVERSION OF SHARES
Section 3.1. Conversion of Shares in the Merger..................................... 2
Section 3.2. Terms of Exchange...................................................... 3
Section 3.3. Stock Transfer Books................................................... 5
Section 3.4. Stock Options, Warrants, Rights or Other Agreements.................... 5
Section 3.5. Dissenting Shares...................................................... 5
Section 3.6. Escrow of Dachis Shares................................................ 5
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Section 4.1. Organization and Qualification......................................... 6
Section 4.2. Company Stock.......................................................... 6
Section 4.3. Subsidiaries........................................................... 6
Section 4.4. Authority; Non-Contravention; Approvals................................ 7
Section 4.5. Reports and Financial Statements....................................... 8
Section 4.6. Absence of Undisclosed Liabilities..................................... 8
Section 4.7. Absence of Certain Changes or Events................................... 8
Section 4.8. Litigation............................................................. 9
Section 4.9. Accuracy of Proxy Statement............................................ 9
Section 4.10. No Violation of Law.................................................... 9
Section 4.11. Compliance with Organizational Document................................ 9
Section 4.12. State Takeover Statutes................................................ 9
Section 4.13. Vote Required.......................................................... 9
Section 4.14. Intellectual Property.................................................. 10
Section 4.15. Validity of Contracts.................................................. 10
Section 4.16. Customers and Suppliers................................................ 12
Section 4.17. Indebtedness to and From Officers, Directors and Others................ 12
Section 4.18. Licenses and Permits................................................... 12
Section 4.19. Taxes and Returns...................................................... 12
Section 4.20. ERISA Related Matters.................................................. 13
Section 4.21. Labor and Employment Matters........................................... 15
Section 4.22. Tax-Free Structure..................................................... 16
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Section 4.23. Advisors and Investment Bankers........................................ 16
Section 4.24. Un-bank Agreements..................................................... 16
Section 4.25. Complete Disclosure.................................................... 16
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF ACQUISITION SUB AND PARENT
Section 5.1. Organization and Qualification......................................... 16
Section 5.2. Parent Common Stock.................................................... 16
Section 5.3. Authority; Non-Contravention; Approvals................................ 17
Section 5.4. Reports and Financial Statements....................................... 18
Section 5.5. Absence of Undisclosed Liabilities..................................... 18
Section 5.6. Absence of Certain Changes or Events................................... 18
Section 5.7. Registration Statement................................................. 18
Section 5.8. No Violation of Law.................................................... 19
Section 5.9. Litigation............................................................. 19
Section 5.10. Compliance with Agreements............................................. 19
Section 5.11. Taxes and Returns...................................................... 19
Section 5.12. Advisors and Investment Bankers........................................ 19
Section 5.13. Pooling Structure...................................................... 19
Section 5.14. Complete Disclosure.................................................... 19
ARTICLE VI
CONDUCT OF BUSINESS PENDING THE MERGER
Section 6.1. Conduct of Business by the Company Pending the Merger.................. 20
ARTICLE VII
ADDITIONAL AGREEMENTS
Section 7.1. Access to Information.................................................. 21
Section 7.2. No Solicitation........................................................ 21
Section 7.3. Registration Statement; Prospectus/Proxy Statement..................... 22
Section 7.4. Stockholders' Approval................................................. 23
Section 7.5. The New York Stock Exchange............................................ 24
Section 7.6. Expenses............................................................... 24
Section 7.7. Agreement to Cooperate................................................. 24
Section 7.8. Confidentiality........................................................ 24
Section 7.9. Tax Treatment.......................................................... 25
Section 7.10. Pooling................................................................ 25
Section 7.11. Affiliates Agreements.................................................. 25
Section 7.12. Directors and Officers Insurance....................................... 25
Section 7.13. Continuation of Indemnities; No Circular Indemnities................... 25
Section 7.14. Recovering Drawer Shortages............................................ 25
ARTICLE VIII
CONDITIONS TO CLOSING
Section 8.1. Conditions to Each Party's Obligation to Effect the Merger............. 26
Section 8.2. Conditions to Obligation of the Company to Effect the Merger........... 26
Section 8.3. Conditions to Obligation of Parent and Acquisition Sub to Effect the 27
Merger.................................................................
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ARTICLE IX
TERMINATION, AMENDMENT AND WAIVER
Section 9.1. Termination............................................................ 29
Section 9.2. Effect of Termination or Abandonment................................... 31
ARTICLE X
INDEMNIFICATION
Section 10.1. Indemnification........................................................ 32
Section 10.2. Participation in Litigation............................................ 33
Section 10.3. Claims Procedure....................................................... 33
Section 10.4. Payment of Indemnification Losses...................................... 33
Section 10.5. Limitations on Liability............................................... 34
ARTICLE XI
DISPUTE RESOLUTION
Section 11.1. Representatives........................................................ 34
Section 11.2. Mediation.............................................................. 34
Section 11.3. Arbitration............................................................ 35
ARTICLE XII
GENERAL PROVISIONS
Section 12.1. Definitions............................................................ 36
Section 12.2. Amendment and Modification............................................. 36
Section 12.3. Waiver................................................................. 36
Section 12.4. Survival............................................................... 36
Section 12.5. Notices................................................................ 37
Section 12.6. Binding Effect; Assignment............................................. 37
Section 12.7. Expenses............................................................... 38
Section 12.8. Governing Law.......................................................... 38
Section 12.9. Interpretation......................................................... 38
Section Entire Agreement.......................................................
12.10. 38
Section Severability...........................................................
12.11. 38
Section Specific Performance...................................................
12.12. 38
Section Advice of Counsel......................................................
12.13. 38
Section Disclosure Schedules...................................................
12.14. 38
Section Counterparts...........................................................
12.15. 39
Section Parties in Interest....................................................
12.16. 39
SCHEDULE A DEFINITIONS............................................................ 41
EXHIBIT A OPINION OF COUNSEL TO PARENT AND ACQUISITION SUB
EXHIBIT B OPINION OF COUNSEL TO THE COMPANY
EXHIBIT C FORM OF ASSIGNMENT OF INTELLECTUAL PROPERTY
EXHIBIT D FORM OF AFFILIATE AGREEMENT
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AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER, dated as of September 24, 1997 (this
"Agreement"), is by and among VIAD CORP, a Delaware corporation ("Parent"), GAME
ACQUISITION CORP., a Minnesota corporation and a wholly-owned subsidiary of
Parent or a subsidiary of Parent formed prior to the Closing Date ("Acquisition
Sub") and GAME FINANCIAL CORPORATION, a Minnesota corporation (the "Company").
RECITALS:
WHEREAS, the respective Boards of Directors of Parent and the Company have
approved the merger of Acquisition Sub with and into the Company pursuant to the
terms and conditions set forth in this Agreement;
WHEREAS, as a condition and inducement to Parent and Acquisition Sub
entering into this Agreement, concurrently with the execution and delivery of
this Agreement, the Company has granted to Parent an option to acquire common
stock of the Company pursuant to a Stock Option Agreement with the Parent
("Stock Option Agreement");
WHEREAS, as a condition and inducement to Parent and Acquisition Sub
entering into this Agreement, concurrently with the execution and delivery of
this Agreement, certain of the Company's shareholders have granted to Parent an
irrevocable proxy to vote the common stock of the Company owned by such
shareholder's pursuant to an Irrevocable Proxy Agreement ("Irrevocable Proxy
Agreement"); and
WHEREAS, as a condition and inducement to Parent and Acquisition Sub
entering into this Agreement, concurrently with the execution and delivery of
this Agreement, Gary A. Dachis, a significant shareholder of the Company
(together with his successor and assigns, "Dachis") has entered into the Selling
Shareholder's Agreement ("Selling Shareholder's Agreement") with the Parent.
AGREEMENT:
NOW, THEREFORE, in consideration of the premises and the representations,
warranties, covenants and agreements contained herein, Parent, Acquisition Sub
and the Company, intending to be legally bound hereby, agree as follows
(capitalized terms used herein and not defined in the text hereof shall have the
meanings set forth in Schedule A, attached hereto and incorporated herein):
ARTICLE I
The Merger
Section 1.1. The Merger. Upon the terms and subject to the conditions of
this Agreement, at the Effective Time in accordance with the Minnesota
Corporation Law ("MCL"), Acquisition Sub shall be merged with and into the
Company in accordance with this Agreement (the "Merger"). The Company shall be
the surviving corporation in the Merger as a wholly-owned subsidiary of Parent
(hereinafter sometimes referred to as the "Surviving Corporation"). The parties
shall prepare, execute or file an appropriate certificate of merger (the
"Certificate of Merger") to comply with the requirements of the MCL and the
separate existence of Acquisition Sub shall thereupon cease.
Section 1.2. Effects of the Merger. The Merger shall have the effects set
forth in Section 302A.641 of the MCL.
Section 1.3. Effective Time. The Merger shall become effective at the
time of the filing of the Articles of Merger with the Secretary of State of the
State of Minnesota in accordance with the applicable provisions of the MCL, or
at such later time as may be specified in the Articles of Merger. The Articles
of Merger shall be filed as soon as practicable after all of the conditions set
forth in this Agreement have been satisfied or waived by the party or parties
entitled to the benefit of the same. The time when the Merger shall become
effective is herein referred to as the "Effective Time".
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Section 1.4. Closing. The closing (the "Closing") of the transactions
contemplated by this Agreement shall take place at the offices of Bryan Cave
LLP, 2800 North Central Avenue, Phoenix Arizona 85004 at 10:00 A.M. Phoenix time
on the first Business Day immediately following the date on which the last of
the conditions set forth in Article VIII hereof is fulfilled or waived, or at
such other time and place as Parent and the Company shall mutually agree (the
"Closing Date"), but in no event later than the Termination Date.
ARTICLE II
The Surviving Corporation
Section 2.1. Articles of Incorporation; By-laws. At the Effective Time of
the Merger, the Articles of Incorporation and By-Laws, respectively, of the
Surviving Corporation shall be amended and restated in their entirety to read as
the Articles of Incorporation and By-Laws of Acquisition Sub.
Section 2.2. Directors and Officers. (a) At the Effective Time, the Board
of Directors of the Surviving Corporation shall consist of the directors of
Acquisition Sub.
(b) At the Effective Time, the officers of the Surviving Corporation shall
be the officers of Acquisition Sub, provided, however that Dachis shall be the
President of the Surviving Corporation.
ARTICLE III
Conversion of Shares
Section 3.1. Conversion of Shares in the Merger. (a) At the Effective
Time, by virtue of the Merger and without any action on the part of any holder
of any capital stock of the Company except as set forth in this Section 3.1,
subject to the other provisions of this Article III, each share of common stock,
par value $.01 per share, of the Company issued and outstanding immediately
prior to the Effective Time ("Company Common Stock") (excluding any treasury
shares and Dissenting Shares) shall be converted into the right to receive that
number of validly issued, fully paid and nonassessable shares of common stock,
$1.50 par value, of Parent ("Parent Common Stock") equal to the Game Price
divided by the Viad Price (as such terms are defined in Schedule A), subject to
adjustment as set forth in subparagraph (b) below (such number being referred to
hereinafter as the "Exchange Ratio").
(b) Notwithstanding the foregoing, if between the date of this Agreement
and the Effective Time, the outstanding shares of Parent Common Stock shall have
been changed into a different number of shares or a different class, by reason
of any stock dividend, subdivision, reclassification, recapitalization, split,
combination or exchange of shares, the Exchange Ratio shall be correspondingly
adjusted to reflect such stock dividend, subdivision, reclassification,
recapitalization, split, combination or exchange of shares.
(c) If the Viad Price is greater than $21.20 per share, the Company may
elect to terminate this Agreement upon written notice to the Parent. If the Viad
Price is less than $17.20 per share, the Parent may elect to terminate this
Agreement upon written notice to the Company. Any election to terminate pursuant
to this subparagraph (c) must be made within one Business Day after the
determination of the Viad Price.
(d) At the Effective Time, all shares of Company Common Stock issued and
outstanding shall no longer be outstanding and shall automatically be canceled
and retired and shall cease to exist, and each certificate previously evidencing
any such shares shall thereafter represent the right to receive the Merger
Consideration. The holders of certificates previously evidencing shares of
Company Common Stock outstanding immediately prior to the Effective Time shall
cease to have any rights with respect to shares of Company Common Stock except
as otherwise provided herein or by Applicable Law. Certificates previously
evidencing shares of Company Common Stock shall be exchanged for certificates
evidencing whole shares of Parent Common Stock issued in consideration therefor
in accordance with the procedures of this Section 3.1 and upon the surrender of
such certificates in accordance with the provisions of Section 3.2, without
interest. No fractional shares of Parent Common Stock shall be issued, and, in
lieu thereof, a cash payment or an adjustment in the number of shares issued
shall be made pursuant to Section 3.2(e).
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(e) At the Effective Time, each outstanding share of the Common Stock of
Acquisition Sub shall automatically be converted into a share of Common Stock of
the Surviving Corporation and such shares shall continue to be owned by Parent
or a wholly-owned subsidiary of Parent.
Section 3.2. Terms of Exchange.
(a) Exchange Agent. Promptly after completion of the procedures set forth
in Section 3.1, but prior to the Effective Time, Parent or Acquisition Sub shall
deposit, or shall cause to be deposited, with a bank or trust company designated
by Parent (the "Exchange Agent"), for the benefit of the holders of shares of
Company Common Stock for exchange in accordance with this Article III, through
the Exchange Agent, (i) certificates (containing appropriate legends, if any)
evidencing such number of shares of Parent Common Stock required to be delivered
hereunder and (ii) if appropriate, cash in an amount as estimated by the
Exchange Agent as necessary to pay for fractional shares (such certificates for
shares of Parent Common Stock, together with any dividends or distributions with
respect thereto and cash, being hereinafter referred to as the "Exchange Fund").
The Exchange Agent shall, pursuant to irrevocable instructions, deliver the
Parent Common Stock and cash out of the Exchange Fund in accordance with Section
3.1. The Exchange Fund shall not be used for any other purpose.
(b) Exchange Procedures. As soon as reasonably practicable after the
Effective Time, the Surviving Corporation shall instruct the Exchange Agent to
promptly mail to each holder of record of a certificate or certificates which
immediately prior to the Effective Time evidenced outstanding shares of Company
Common Stock (other than Dissenting Shares) (the "Certificate") (i) a letter of
transmittal (which shall specify that delivery shall be effected, and risk of
loss and title to the Certificates shall pass, only upon proper delivery of the
Certificates to the Exchange Agent and shall be in such form and have such other
provisions as the Surviving Corporation may reasonably specify) and (ii)
instructions for use in effecting the surrender of the Certificates in exchange
for certificates evidencing shares of Parent Common Stock. Subject to Section
3.6 and the Selling Shareholder's Agreement, upon surrender of a Certificate for
cancellation to the Exchange Agent (or, in lieu thereof, delivery to the
Exchange Agent of an appropriate affidavit of loss and such other documents as
may be required under Section 3.2(i)) together with such letter of transmittal,
duly executed, and such other customary documents as may be required pursuant to
such instructions, the holder of such Certificates shall be entitled to receive,
and shall instruct the Exchange Agent to promptly deliver, in exchange therefor
(A) certificates evidencing that number of whole shares of Parent Common Stock
which such holder has the right to receive in respect of the shares of Company
Common Stock formerly evidenced by such Certificate in accordance with Section
3.1, (B) cash or whole shares in lieu of fractional shares of Parent Common
Stock to which such holder is entitled pursuant to Section 3.2(e) and (C) any
dividends or other distributions to which such holder is entitled pursuant to
Section 3.2(c) (the shares of Parent Common Stock, dividends, distributions and
cash described in clauses (A), (B) and (C) being collectively, the "Merger
Consideration") and the Certificate so surrendered shall forthwith be canceled.
In the event of a transfer of ownership of shares of Company Common Stock
which is not registered in the transfer records of the Company, a certificate
evidencing the proper number of shares of Parent Common Stock and/or cash may be
issued and/or paid in accordance with this Article III to a transferee if the
Certificates evidencing such shares of Company Common Stock are presented to the
Exchange Agent, accompanied by all documents required to evidence and effect
such transfer and by evidence that any applicable stock transfer taxes have been
paid. Until surrendered as contemplated by this Section 3.2, each Certificate
shall be deemed at any time after the Effective Time to evidence only the right
to receive the Merger Consideration upon such surrender.
(c) Parent Distribution with Respect to Unsurrendered Certificates of the
Company. No dividends or other distributions declared or made after the
Effective Time with a record date after the Effective Time with respect to
Parent Common Stock shall be paid to the holder of any unsurrendered Certificate
with respect to the shares of Parent Common Stock evidenced thereby, and no
other part of the Merger Consideration shall be paid to any such holder, until
the holder of such Certificate shall surrender such Certificate or complies with
Section 3.2(i).
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Subject to the effect of Applicable Laws, Section 3.6 and the Selling
Shareholder's Agreement, following surrender of any such Certificate or
compliance with Section 3.2(i), there shall be paid to the holder of such
Certificates promptly (i) the Merger Consideration and (ii) the amount of
dividends or other distributions with a record date after the Effective Time
theretofore paid with respect to such whole shares of Parent Common Stock and,
at the appropriate payment date, the amount of dividends or other distributions,
with a record date after the Effective Time but prior to surrender and a payment
date occurring after surrender, payable with respect to such whole shares of
Parent Common Stock. No interest shall be paid on the Merger Consideration or
any dividends or other distributions.
(d) No Further Rights in Company Common Stock. All shares of Parent Common
Stock issued and cash paid upon conversion of the shares of Company Common Stock
in accordance with the terms hereof shall be deemed to have been issued or paid
in full satisfaction of all rights pertaining to such shares of Company Common
Stock.
(e) No Fractional Shares. (i) No certificates or scrip evidencing
fractional shares of Parent Common Stock shall be issued upon the surrender for
exchange of Certificates, and such fractional share interests will not entitle
the owner thereof to vote or to any rights of a stockholder of Parent. In lieu
of any such fractional shares, each holder of Company Common Stock upon
surrender of a Certificate for exchange pursuant to this Section 3.2, shall
either (A) be paid an amount in cash (without interest), rounded to the nearest
cent, determined by multiplying (1) the Viad Price by (2) the fractional
interest to which such holder would otherwise be entitled (after taking into
account all shares of Company Common Stock then held of record by such holder)
or (B) be issued a whole share in lieu of any fractional share larger than or
equal to one half share and no shares for shares smaller than one half share, at
the sole discretion of the Parent.
(ii) As soon as practicable after the determination of the amount of
cash, if any, to be paid to holders of Company Common Stock with respect to
any fractional share interests, the Exchange Agent shall promptly pay such
cash amounts to such holders of Company Common Stock subject to and in
accordance with this Agreement.
(f) Termination of Exchange Fund. Any portion of the Exchange Fund which
remains undistributed to the holders of Company Common Stock for six months
after the Effective Time shall be delivered to the Surviving Corporation, upon
demand, and any holders of Company Common Stock who have not theretofore
complied with this Article III shall thereafter look only to the Surviving
Corporation for the Merger Consideration to which they are entitled.
(g) No Liability. Neither Parent nor the Surviving Corporation shall be
liable to any holder of shares of Company Common Stock for any such shares of
Parent Common Stock or cash (or dividends or distributions with respect thereto)
from the Exchange Fund delivered in good faith to a public official pursuant to
any applicable abandoned property, escheat or similar law.
(h) Withholding Rights. Parent and/or the Surviving Corporation shall be
entitled to deduct and withhold from the consideration otherwise payable
pursuant to this Agreement to any holder of shares of Company Common Stock such
amounts, if any, as Parent and/or the Surviving Corporation is required to
deduct and withhold with respect to the making of such payment under the Code,
or any provision of state, local or foreign tax law. To the extent that amounts
are so withheld by Parent and/or the Surviving Corporation, such withheld
amounts shall be treated for all purposes of this Agreement as having been paid
to the holder of the shares of Company Common Stock in respect of which such
deduction and withholding was made by Parent and/or the Surviving Corporation.
(i) Lost Certificates. In the event any Certificate shall have been lost,
stolen or destroyed, upon the making of an affidavit of that fact by the person
claiming such Certificate to be lost, stolen or destroyed and, if reasonably
required by the Surviving Corporation (which determination may be delegated to
the Exchange Agent), the posting by such person of a bond in such amount as the
Surviving Corporation or such Exchange Agent may determine is reasonably
necessary as indemnity against any claim that may be made against it with
respect to such Certificate, the Exchange Agent will issue in exchange for such
lost, stolen or destroyed certificate the Merger Consideration deliverable in
respect thereof pursuant to this Agreement.
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Section 3.3. Stock Transfer Books. At the Effective Time, the stock
transfer books of the Company shall be closed and there shall be no further
registration of transfers of shares of Company Common Stock thereafter on the
records of the Company. On or after the Effective Time, any certificates
presented to the Exchange Agent, Parent or the Surviving Corporation for any
reason shall be converted into the Merger Consideration.
Section 3.4. Stock Options, Warrants, Rights or Other Agreements. (a) At
the Effective Time, each issued and outstanding stock option, warrant, right or
other agreement to purchase or sell any capital stock of the Company granted by
the Company which has, pursuant to the terms of the grant, vested with the
holder thereof (collectively, the "Options") shall be automatically converted,
without any action by the Option holders, into an option to purchase, on the
same terms and conditions as were applicable to such Options immediately prior
to the Effective Time (including any existing vesting schedules) under the terms
of the option plans of the Company existing immediately prior to the Effective
Time (which shall survive the Effective Time and shall be the obligation of the
Surviving Corporation), a number of Parent Common Stock equal to the product of
(i) the number of shares of Company Common Stock subject to such Option times
(ii) the Exchange Ratio; at an exercise price per share (rounded upward to the
nearest full cent) equal to a fraction, (A) the numerator of which is equal to
the exercise price of such Option by (B) the denominator which is the Exchange
Ratio. At the Effective Time, the holders of Options shall cease to have any
rights with respect to shares of Company Common Stock and will only have rights
with respect to Parent Common Stock set forth in this Section 3.4(a).
(b) The Company shall take such actions as are necessary to ensure that
from and after the date hereof none of the Company, the Surviving Corporation or
any of their respective subsidiaries is or will be bound by any Options which
would entitle any person, other than Parent or its wholly owned Subsidiaries, to
beneficially own, or receive any payments in respect of (other than as otherwise
contemplated by Section 3.1 hereof), any capital stock of the Company or the
Surviving Corporation.
Section 3.5. Dissenting Shares. Notwithstanding any other provisions of
this Agreement to the contrary, shares of Company Common Stock that are
outstanding immediately prior to the Effective Time and which are held by
stockholders who shall have not voted in favor of the Merger or consented
thereto in writing and who shall have demanded properly in writing appraisal for
such shares in accordance with MCL sec. 302A.471 (collectively, the "Dissenting
Shares") shall not be converted into or represent the right to receive the
Merger Consideration. Such stockholders shall be entitled to receive from the
Company payment of the appraised value of such shares of Company Common Stock
held by them in accordance with the provisions of such MCL sec. 302A.471, except
that all Dissenting Shares held by stockholders who shall have failed to perfect
or who effectively shall have withdrawn or lost their rights to appraisal of
such shares of Company Common Stock under such MCL sec. 302A.471 shall thereupon
be deemed to have been converted into and to have become exchangeable, as of the
Effective Time, for the right to receive, without any interest thereon, the
Merger Consideration, upon surrender, in the manner provided in Section 3.2, of
the certificate or certificates that formerly evidenced such shares of Company
Common Stock. The Company shall give Parent prompt notice of any demands for
appraisals received by the Company.
Section 3.6. Escrow of Dachis Shares. Certificates representing Parent
Common Stock, with a value (based upon the Viad Price at the Effective Time)
equal to sum of the Maximum Indemnification Amount and the Software Fee, which
would have otherwise been issued to Dachis in accordance with the procedures of
Section 3.1, shall be held in escrow by the Escrow Agent, with the other
Escrowed Consideration pursuant to the terms of the Escrow Agreement. Except as
otherwise provided in the Escrow Agreement, the Escrow Agent shall hold the
Escrowed Consideration for one year following the Closing Date and shall only
release such Escrowed Consideration pursuant to the terms of the Escrow
Agreement. Any amounts held in escrow and not payable to Parent or subject to
claim of Parent at the end of such escrow period will be paid to Dachis;
provided, however, that except as expressly provided in the Selling
Shareholder's Agreement, such payment to Dachis will not release Dachis from any
liabilities under the Selling Shareholder's Agreement.
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ARTICLE IV
Representations and Warranties of the Company
The Company represents and warrants to Parent and Acquisition Sub as
follows:
Section 4.1. Organization and Qualification. The Company is a corporation
duly organized, validly existing and in good standing under the laws of its
state of incorporation and has the requisite corporate power and authority to
own, lease and operate its assets and properties and to carry on its businesses
as they are now being conducted. The Company is qualified to do business and is
in good standing in each State listed in Section 4.1 of the Company Disclosure
Schedule and, without limiting the foregoing, to the best knowledge of the
Company, is qualified to do business with the Native American Tribes set forth
in Section 4.1 of the Company Disclosure Schedule. The Company does not own,
lease or operate property or otherwise conduct business in any State or Native
American Tribe which is not listed in Section 4.1 of the Company Disclosure
Schedule.
Section 4.2. Company Stock. (a) The Company has 10,000,000 authorized
shares of Common Stock, of which 4,522,522 shares are outstanding as of August
31, 1997, all of which are or shall be validly issued and are fully paid,
nonassessable and free of preemptive rights, and 1,000,000 shares of Preferred
Stock, none of which have been issued or are outstanding. Except as set forth in
Section 4.2 of the Company Disclosure Schedule, as of the date hereof and as of
the Closing Date, there are no outstanding stock appreciation rights,
subscriptions, options, warrants, rights, calls, contracts, voting trusts,
proxies or other commitments, understandings, restrictions, or arrangements,
including any right of conversion or exchange under any outstanding security,
instrument or other agreement obligating the Company to issue, deliver, sell or
cause to be issued, delivered or sold, additional shares of the capital stock of
the Company or obligating the Company or any Subsidiary of the Company to grant,
extend or enter into any such agreement or commitment except pursuant to this
Agreement. Except for the Stock Option Agreement or set forth in Section 4.2 of
the Company Disclosure Schedule, there are no commitments, understandings,
restrictions or arrangements obligating the Company to purchase, redeem or
acquire, or register under any securities law any shares of capital stock or any
securities or rights convertible into, exchangeable for, or evidencing the right
to subscribe to any shares of capital stock of the Company.
(b) Except as set forth in Section 4.2 of the Company Disclosure Schedule
and except for any obligations in connection with this Agreement, there are not
as of the date hereof and there will not be at the Closing Date any stockholder
agreement, voting trust or other agreements or understandings to which the
Company or any of the Significant Shareholders of the Company are a party or to
which any of them is bound relating directly or indirectly to any Company Common
Stock or other capital stock. Except as stated in Section 4.2 of the Company
Disclosure Schedule, there has not been, and there will not have been on the
Closing Date, any change in the equity interest of the Common Stock or other
capital stock of the Company since June 30, 1994. For purposes of this
subsection, "any change in the equity interest of the Common Stock or other
capital stock of the Company" includes but is not limited to: distributions to
shareholders of any dividends; additional issuances, exchanges or retirements of
stock; reacquisition of shares (treasury shares); grants, exercises, or
cancellation of stock options; outstanding warrants; and spin-offs.
Section 4.3. Subsidiaries. Each Subsidiary of the Company is set forth in
Section 4.3 of the Disclosure Schedule, is a corporation duly organized, validly
existing and in good standing under the laws of its jurisdiction of
incorporation and has the requisite power and authority to own, lease and
operate its assets and properties and to carry on its business as it is now
being conducted. The Company has never had a Subsidiary that is not listed in
Section 4.3 of the Company Disclosure Schedule as a Subsidiary of the Company.
Except as set forth in Section 4.3 of the Company Disclosure Schedule, each of
such Subsidiaries is qualified to do business in the State(s) set forth in
Section 4.3 of the Company Disclosure Schedule and, without limiting the
foregoing, to the best knowledge of the Company, is qualified to do business
with the Native American Tribes set forth in Section 4.3 of the Company
Disclosure Schedule. Any such Subsidiary does not own, lease or operate
properties, or otherwise conduct business in any State or to the best knowledge
of the Company, with any Native American Tribe which is not listed in Section
4.3 of the Company Disclosure Schedule. Except as set forth in Section 4.3 of
the Disclosure Schedule, all of the outstanding shares of capital stock of each
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Subsidiary are validly issued, fully paid, nonassessable and free of preemptive
rights, and are owned directly or indirectly by the Company free and clear of
any liens, claims, encumbrances, security interests, equities, charges and
options of any nature whatsoever. Each then existing Subsidiary of the Company
is listed in Exhibit 21 to the Company's Annual Report on Form 10-KSB for the
year ended December 31, 1996 (the "Company 10-KSB" and, together with those
reports listed on Section 4.3 of the Company Disclosure Schedule filed by
Company with the SEC under the Exchange Act after the Company 10-KSB and prior
to the date of this Agreement, the "Recent Company Reports"). As of the date
hereof and as of the Closing Date, there are no outstanding stock appreciation
rights, subscriptions, options, warrants, rights, calls, contracts, voting
trusts, proxies or other commitments, understandings, restrictions or
arrangements relating to the issuance, sale, voting, transfer, ownership or
other rights affecting any shares of capital stock of any Subsidiary of the
Company, including any right of conversion or exchange under any outstanding
security, instrument or agreement. Section 4.3 of the Company's Disclosure
Schedule sets forth a complete list of all corporations, partnerships, joint
ventures and other business entities in which the Company or any of its
Subsidiaries directly or indirectly owns an interest and such Subsidiaries'
direct and indirect share, partnership or other ownership interest of each such
entity.
Section 4.4. Authority; Non-Contravention; Approvals. (a) The Company has
full corporate power and authority to enter into this Agreement and the Stock
Option Agreement and subject to Company Stockholders' Approval and the Company
Required Approvals, to consummate the transactions contemplated hereby. The
execution, delivery and performance of this Agreement and the Stock Option
Agreement and the consummation by the Company of the transactions contemplated
hereby have been duly authorized by the Company's Board of Directors, and no
other corporate proceedings on the part of the Company are necessary to
authorize the execution and delivery of this Agreement and the Stock Option
Agreement and the consummation by the Company of the transactions contemplated
hereby, except for the receipt of the Company Stockholders' Approval and the
obtaining of the Company Required Approvals. This Agreement and the Stock Option
Agreement have been duly and validly executed and delivered by the Company and,
assuming the due authorization, execution and delivery hereof by Parent and
Acquisition Sub, constitutes valid and legally binding agreements of the Company
enforceable against it in accordance with their respective terms, except to the
extent that enforcement may be limited by the laws of bankruptcy or insolvency,
or laws relating to creditors' remedies generally.
(b) Except as set forth in Section 4.4 of the Company's Disclosure
Schedule, the execution and delivery of this Agreement and the Stock Option
Agreement by the Company does not, and the consummation by the Company of the
transactions contemplated hereby will not, violate, conflict with or result in a
breach of any provision of, or constitute a default (or an event which, with
notice or lapse of time or both, would constitute a default) under, or result in
the termination of, or accelerate the performance required by, or result in a
right of termination or acceleration under, or result in the creation of any
lien, security interest, charge or encumbrance upon any of the properties or
assets of the Company or any of its Subsidiaries under any of the terms,
conditions or provisions of (i) the respective charters or By-Laws of the
Company ("Company Charter Documents") or any of its Subsidiaries, (ii) subject
to obtaining the Company Required Approvals and the receipt of the Company
Stockholders' Approval, any statute, law, ordinance, rule, regulation, judgment,
decree, order, injunction, writ, permit or license of any Governmental Authority
(other than a Native American Authority), or, to the best knowledge of the
Company, any Native American Authority, applicable to the Company or any of its
Subsidiaries or any of their respective properties or assets, or (iii) any note,
bond, mortgage, indenture, deed of trust, license, franchise, permit,
concession, contract, lease or other instrument, obligation or agreement of any
kind to which the Company or any of its Subsidiaries is now a party or by which
the Company or any of its Subsidiaries or any of their respective properties or
assets may be bound or affected, excluding from the foregoing clauses (ii) and
(iii) such violations, conflicts, breaches, defaults, terminations,
accelerations or creations of liens, security interests, charges or encumbrances
that would not, in the aggregate, have a Company Material Adverse Effect.
(c) Except for (i) the filings by the Company required by Title II of the
HSR Act, (ii) the filing of the Proxy Statement with the SEC pursuant to the
Exchange Act and the Securities Act and the declaration of the effectiveness
thereof by the SEC and filings with various blue sky authorities, (iii) the
filing of necessary
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certificates with the State of Minnesota in connection with the Merger and (iv)
any approval required with respect to any license or permit required as a result
of this Agreement or the transactions contemplated hereby (the filings and
approvals referred to in clauses (i) through (iv) are collectively referred to
as the "Company Required Approvals"), no declaration, filing or registration
with, or notice to, or authorization, consent or approval of, any Governmental
Authority (other than a Native American Authority), and to the best knowledge of
the Company, any Native American Authority, is necessary for the execution and
delivery of this Agreement and the Stock Option Agreement by the Company or the
consummation by the Company of the transactions contemplated hereby, except for
such declarations, filings, registrations, notices, authorizations, consents or
approvals the failure of which to make or obtain, as the case may be, will not,
in the aggregate, have or may have a Company Material Adverse Effect or material
adverse effect on the properties, assets, business, financial condition, results
of operations or prospects of the Parent and/or its Subsidiaries ("Parent
Adverse Impact").
Section 4.5. Reports and Financial Statements. Since December 31, 1992,
the Company and each of its Subsidiaries have filed all forms, statements,
reports and documents (including all exhibits, amendments and supplements
thereto) required to be filed by them under each of the Securities Act, the
Exchange Act, applicable laws and regulations of the Company's and its
Subsidiaries' jurisdictions of incorporation and the respective rules and
regulations thereunder, all of which complied in all material respects with all
applicable requirements of the appropriate act and the rules and regulations
thereunder ("Company Reports"). The Company has delivered to Parent true and
complete copies of its (a) Annual Reports on Form 10-KSB, Quarterly Reports on
Form 10-Q, and Current Reports on Form 8-K filed by the Company or any of its
Subsidiaries with the SEC from January 1, 1993 until the date hereof, (b) proxy
and information statements relating to all meetings of its stockholders (whether
annual or special) and actions by written consent in lieu of a stockholders'
meeting from January 1, 1993 until the date hereof and (c) all other reports or
registration statements filed by Company or its Subsidiaries with the SEC from
January 1, 1993, until the date hereof (collectively, the "Company SEC
Reports"), and (d) audited consolidated financial statements for the fiscal year
ended December 31, 1996, and its unaudited consolidated financial statements for
the three months ended March 31, 1997 and the six months ended June 30, 1997
(collectively the "Recent Company Financial Statements") and will deliver copies
to the Parent of all Company Reports filed after the date hereof but before the
Closing Date. As of their respective dates, the Company SEC Reports did 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 therein, in
light of the circumstances under which they were made, not misleading. The
audited consolidated financial statements and unaudited interim financial
statements of the Company included in the Company SEC Reports and the Recent
Company Financial Statements (collectively, the "Company Financial Statements")
fairly present the financial position of the Company and its Subsidiaries as of
the dates thereof and the results of their operations and cash flows for the
periods then ended in conformity with generally accepted accounting principles
applied on a consistent basis (except as may be indicated therein or in the
notes thereto), subject, in the case of the unaudited interim financial
statements, to normal year end and audit adjustments and any other adjustments
described therein.
Section 4.6. Absence of Undisclosed Liabilities. Except as set forth in
Section 4.6 of the Company's Disclosure Schedule or in the Recent Company
Reports, neither the Company nor any of its Subsidiaries had at December 31,
1996, or has incurred since that date, any liabilities or obligations (whether
absolute, accrued, contingent or otherwise) of any nature, except liabilities,
obligations or contingencies (a) which are accrued or reserved against in the
Recent Company Financial Statements or reflected in the notes thereto or (b)
which were incurred after December 31, 1996, and were incurred in the ordinary
course of business and consistent with past practices and, in either case,
except for any such liabilities, obligations or contingencies which (i) would
not, in the aggregate, have a Company Material Adverse Effect or Parent Adverse
Impact, (ii) have been discharged or paid in full prior to the date hereof, or
(iii) would not be required to be disclosed in the Company Financial Statements
or the notes thereto.
Section 4.7. Absence of Certain Changes or Events. Except as set forth in
Section 4.7 of the Company's Disclosure Schedule or in the Recent Company
Reports, since December 31, 1996, there has not been any material adverse change
in the business, financial condition or the results of operations of the
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Company and its Subsidiaries, taken as a whole that would result in a Company
Material Adverse Effect or Parent Adverse Impact and the Company and its
Subsidiaries have in all material respects conducted their respective businesses
in the ordinary course consistent with past practice.
Section 4.8. Litigation. Except as disclosed in the Recent Company
Reports, the Recent Company Financial Statements, or Section 4.8 of the
Company's Disclosure Schedule, (a) there are no claims, suits, actions or
proceedings pending or, to the knowledge of the Company, threatened, nor to the
knowledge of the Company are there any investigations or reviews pending or
threatened, against, relating to or affecting the Company or any of its
Subsidiaries, which, if adversely determined, is reasonably likely to have a
Company Material Adverse Effect; (b) there have not been any developments since
December 31, 1996 with respect to such claims, suits, actions, proceedings,
investigations or reviews which, individually or in the aggregate, is reasonably
likely to have a Company Material Adverse Effect; and (c) except as contemplated
by the Company Required Approvals, neither the Company nor any of its
Subsidiaries is subject to any judgment, decree, injunction, rule or order of
any, Governmental Authority or any arbitrator which prohibits or restricts the
consummation of the transactions contemplated hereby or is reasonably likely to
have a Company Material Adverse Effect or Parent Adverse Impact.
Section 4.9. Accuracy of Proxy Statement. The proxy statement to be
distributed in connection with the Company Stockholders' Meeting ("Proxy
Statement") and which shall be included in the Registration Statement will not
at the time of the mailing of the Proxy Statement and any amendment or
supplement thereto (unless the same is corrected prior to the Company
Stockholders' Meeting), and at the time of the Company Stockholders' Meeting,
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they are made, not misleading
or necessary to correct any statement in any earlier filing with the SEC of such
Proxy Statement or any amendment or supplement thereto or any earlier
communication to stockholders of the Company with respect to the transactions
contemplated by this Agreement. The Proxy Statement will comply as to form in
all material respects with all Applicable Laws, including the provisions of the
Exchange Act. Notwithstanding the foregoing, no representation is made by the
Company with respect to information supplied by Parent or Acquisition Sub or
their representatives specifically for inclusion in the Proxy Statement.
Section 4.10. No Violation of Law. Except as set forth in Section 4.10 of
the Company's Disclosure Schedule or the Recent Company Reports, neither the
Company nor any of its Subsidiaries has violated, is in violation of, or, to the
knowledge of the Company, is under investigation with respect to or has been
given notice or been charged with any violation of, any law, statute, order,
rule, regulation, ordinance, or judgment of any Governmental Authority, except
for (a) violations which in the aggregate would not have a Company Material
Adverse Effect or Parent Adverse Impact and (b) subject to Section 4.18, any
violations which arise solely from the failure by the Company or any of its
Subsidiaries to obtain Company Approvals from any Native American Authority.
Section 4.11. Compliance with Organizational Document. Except as
disclosed in the Recent Company Reports, the Recent Company Financial Statements
or Section 4.11 of the Company's Disclosure Schedule, the Company and each of
its Subsidiaries are not in breach or violation of or in default in the
performance or observance of any term or provision of, and no event has occurred
which, with lapse of time or action by a third party (or both), could result in
a default under the respective charters or By-laws of the Company or any of its
Subsidiaries.
Section 4.12. State Takeover Statutes. The Board of Directors of the
Company has approved the Merger and any related transactions and the provisions
of MCL sec. 302A.671 will not prevent, and the provisions of MCL 302A.675 will
not impair, impede or prevent, any transaction contemplated hereby, including
the grant of the irrevocable proxy contemplated by the Irrevocable Proxy
Agreement.
Section 4.13. Vote Required. The affirmative vote of the holders of a
majority of the outstanding Company Common Stock is the only vote of the holders
of any class or series of Company capital stock necessary to approve the Merger
or the other transactions contemplated herein.
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Section 4.14. Intellectual Property. Set forth on Section 4.14 of the
Company Disclosure Schedule is a complete list of each patent, trademark or
service mark registration, copyright registration and applications therefor, and
a complete list of all software (including any software being developed by or
for the Company) owned, used, licensed, or assigned by or to the Company which
is used in or is reasonably necessary to conduct the business and operations of
the Company and its Subsidiaries ("Intellectual Property"). Except as set forth
on Section 4.14 of the Company Disclosure Schedule:
(a) The Company or its Subsidiaries are the sole and exclusive owner
of, or has the unrestricted right to use, any and all Intellectual Property
and all items of Intellectual Property are valid and subsisting and Section
4.14 of the Company Disclosure Schedule identifies the owner, licensor and
licensee of each item of Intellectual Property, as applicable;
(b) The conduct of the business and operations of the Company and its
Subsidiaries and the ownership, manufacture, purchase, sale, licensing, use
and performance of the products or services of the Company and its
Subsidiaries do not contravene, conflict with, violate or infringe upon any
patent, trademark, service mark, copyright or other intellectual property
right of a third party and no proprietary information or trade secret has
been misappropriated by the Company or any of its Subsidiaries from any
third party. In addition, the use, licensing or sale by or to the Company
as its Subsidiaries of any of the Intellectual Property does not require
the acquiescence, agreement or consent of any third party;
(c) To the Company's knowledge, the Intellectual Property and the
Company's products and services are not subject to a challenge or claim of
infringement, interference or unfair competition or other claim and the
Intellectual Property is not being infringed upon or violated by any third
party;
(d) With respect to any software included in the Intellectual
Property, the occurrence in or use by such software of dates on or after
January 1, 2000, will not adversely affect the performance of the software
in any material way with respect to date dependent data, computations,
output or other functions (including, without limitation, calculating,
computing and sequencing) ("Year 2000 Problem"), and the software will
create, store and generate output data related to or including dates on or
after January 1, 2000, without errors or omissions;
(e) Each item of software owned, used or licensed by the Company and
its Subsidiaries is fully operative, sufficiently developed and is
currently capable of performing its intended application(s) as described in
Section 4.14 of the Company Disclosure Schedule; and
(f) The Intellectual Property is sufficient, fit and adequate for the
reasonably anticipated or intended future business and operations of the
Company and its Subsidiaries.
Section 4.15. Validity of Contracts. (a) Except for contracts, leases,
commitments, plans, agreements and licenses, together with all amendments
thereto, listed in Section 4.15(a) of the Company Disclosure Schedule (complete
and accurate copies of which have been delivered to Parent) and the agreements
entered into in connection with the Merger, the Company and its Subsidiaries are
neither a party to nor subject to:
(i) any plan or contract providing for bonuses, pensions, options,
stock purchases, profit sharing, severance or termination pay, collective
bargaining or the like, or any contract or agreement with any labor union;
(ii) any employment contract or contract for services which requires
the payment of $30,000 or more annually or which is not terminable within
30 days by the Company or any of its Subsidiaries without liability for any
penalty or severance payment other than pursuant to the Company's severance
policies existing on the date hereof;
(iii) any contract or agreement for the purchase of any commodity,
material or equipment except purchase orders in the ordinary course for
less than $50,000 each;
(iv) any other contracts or agreements creating any obligation of the
Company or its Subsidiaries of $50,000 or more with respect to any such
contract;
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(v) any contract or agreement providing for the purchase of all or
substantially all of its
requirements of a particular product from a supplier;
(vi) any contract or agreement which by its terms does not terminate
or is not terminable by the Company or its Subsidiaries or any successor or
assign within six months after the date hereof without payment of a penalty
of $50,000 or more;
(vii) any contract or agreement for the sale or lease of its products
or services not made in the ordinary course of business;
(viii) any contract with any sales agent or distributor of products or
services of the Company or any Subsidiary;
(ix) any contract containing covenants limiting the freedom of the
Company or its Subsidiary to compete in any line of business or with any
person or entity;
(x) any contract or agreement for the purchase of any fixed asset for
a price in excess of $50,000 whether or not such purchase is in the
ordinary course of business;
(xi) any license agreement (as licensor or licensee);
(xii) any indenture, mortgage, promissory note, loan agreement,
guaranty or other agreement or commitment for the borrowing of money and
any related security agreement;
(xiii) any contract or agreement with any officer, employee, director
or stockholder of the Company or any Subsidiary or with any persons or
organizations controlled by or affiliated with any of them;
(xiv) any partnership, joint venture, or other similar contract,
arrangement or agreement;
(xv) any registration rights agreements, warrants, warrant agreements
or other rights to subscribe for securities, any voting agreements, voting
trusts, shareholder agreements or other similar arrangements or any stock
purchase or repurchase agreements or stock restriction agreements; or
(xvi) any other contract (written or oral) not described in
subsections (i) - (xv) which is material to the business or operations of
the Company.
(b) All contracts, leases, commitments, plans, agreements, and licenses
including those described in Section 4.15(a) to which the Company and its
Subsidiaries are a party or by which the Company are obligated ("Contracts") are
valid and are in full force and effect and constitute legal, valid and binding
obligations of the Company and its Subsidiaries and the other parties thereto,
enforceable in accordance with their respective terms. Neither the Company, its
Subsidiaries, nor any other party to any Contract of the Company or a
Subsidiary, is in default in complying with any provisions thereof, and no
condition or event or facts exists which, with notice, lapse of time or both
would constitute a default thereof on the part of either of the Company, or any
Subsidiary or on the part of any other party thereto in any such case that could
have a Company Material Adverse Effect.
(c) Except as disclosed in Section 4.15(c) of the Company Disclosure
Schedule, no Contract with a customer or supplier of the Company or its
Subsidiaries provides, by its terms, for or permits the customer to terminate
the Contract at will, for convenience, without cause, or upon a change of the
ownership or control of the Company.
(d) Except as disclosed in Section 4.15(d) of the Company Disclosure
Schedule, no consent of any party to a Contract (that is not a Native American
Tribe) is required in connection with the consummation of the transactions
contemplated herein.
(e) With respect to any Contracts to which a Native American Tribe is a
party, to the best knowledge of the Company, except for the Contracts listed in
Section 4.15(e) of the Company Disclosure Schedule ("Tribal Consents"), no
consent of any Native American Tribe is required for the consummation of the
transactions contemplated herein.
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Section 4.16. Customers and Suppliers. Section 4.16 of the Company
Disclosure Schedule sets forth a true, complete and correct list of all
customers from which the Company has received revenues of over $100,000 and the
10 largest suppliers of the Company and its Subsidiaries by volume of purchases,
for each of the years ended December 31, 1994, 1995 and 1996, and for the six
month period ended June 30, 1997. Except as set forth in Section 4.16 of the
Company Disclosure Schedule, the Company and its Subsidiaries have not received
any indication from any material supplier of the Company or any of its
Subsidiaries to the effect that, and has no reason to believe that, such
supplier will stop, or materially decrease the rate of, supplying materials,
products or services to the Company or its Subsidiaries. Except as set forth in
Section 4.16 of the Company Disclosure Schedule, the Company and its
Subsidiaries have not received any indication from any material customer of the
Company or any Subsidiaries to the effect that, and has no reason to believe
that, such customer will stop, or materially decrease the rate of, buying
materials, products or services from the Company or any of its Subsidiaries.
Section 4.17. Indebtedness To and From Officers, Directors and
Others. Except as set forth in Section 4.17 of the Company Disclosure Schedule,
(a) the Company and its Subsidiaries are not indebted to any shareholder,
director, officer, employee or agent of the Company and its Subsidiaries except
for amounts due as normal salaries, wages, overtime payments, employee benefits
and bonuses and in reimbursement of ordinary expenses on a basis consistent with
the past practices of the Company and (b) no shareholder, director, officer,
employee or agent of the Company or any of its Subsidiaries is indebted to the
Company or any of its Subsidiaries except for advances for ordinary business
expenses on a basis consistent with the past practices of the Company.
Section 4.18. Licenses and Permits. Section 4.18 of the Company
Disclosure Schedule lists all material permits, registrations, licenses,
franchises, certifications and other approvals, including without limitation,
all gaming licenses, gambling licenses, sale-of-deck licenses, and
money-changing licenses (collectively, the "Company Approvals") required from
any Governmental Authority (other than any Native American Authority) and, to
the best knowledge of the Company, any Native American Authority, in order for
the Company and its Subsidiaries to conduct its business. The Company has
obtained all Company Approvals (other than from Native American Authorities),
which are valid and in full force and effect, and, to the best of its knowledge,
the Company has obtained all Company Approvals from Native American Authorities,
which are to the Company's knowledge in full force and effect, except where the
lack of such Company Approvals would not have a Company Material Adverse Effect
or Parent Adverse Impact. Except as disclosed in Section 4.18 of the Company
Disclosure Schedule, none of the Company Approvals is subject to termination by
their express terms as a result of the execution of this Agreement by the
Company or the consummation of the Merger. No further Company Approvals (other
than from Native American Authorities) and, to the best knowledge of the
Company, no further Company Approvals from any Native American Authority will be
required in order to continue to conduct the business currently conducted by the
Company subsequent to the Closing, except where the termination of such Company
Approvals or the lack of such further Company Approvals would not have a Company
Material Adverse Effect or Parent Adverse Impact. Except as disclosed in Section
4.18 of the Company Disclosure Schedule or in any other schedule hereto, neither
the Company nor any of its Subsidiaries is subject to nor bound by any
agreement, judgment, decree or order which may have a Company Material Adverse
Effect or Parent Adverse Impact.
Section 4.19. Taxes and Returns. (a) Except as disclosed in Section
4.19(a) of the Company Disclosure Schedule, the Company and each of its
Subsidiaries, its previously owned subsidiaries and any affiliated group within
the meaning of Section 1504 of the Code of which the Company, its Subsidiaries
or previously owned Subsidiaries is or has been a member (each a "Taxpayer") has
timely filed, or caused to be timely filed all Tax Returns required to be filed
and all such returns were complete and accurate in all material respects, and
has paid, collected or withheld, or caused to be paid, collected or withheld,
all Taxes required to be paid, collected or withheld, other than such Taxes for
which adequate reserves in the Company Financial Statements have been
established or which are being contested in good faith. Except as set forth in
Section 4.19(a) of the Company Disclosure Schedule, there are no claims or
assessments pending against any Taxpayer for any alleged deficiency in any Tax,
and no Taxpayer has been notified in writing of any proposed Tax liens, claims
or assessments against any Taxpayer (other than in each case, claims or
assessments for
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which adequate reserves in the Company Financial Statements have been
established or which are being contested in good faith). Except as set forth in
Section 4.19(a) of the Company Disclosure Schedule, no Taxpayer has any waivers
or extensions of any applicable statute of limitations to assess any Taxes in
excess of $10,000. Except as set forth in Section 4.19(a) of the Company
Disclosure Schedule, there are no outstanding requests by any Taxpayer for any
extension of time within which to file any material Tax Return or within which
to pay any material amounts of Taxes shown to be due on any Tax Return.
(b) To the best knowledge of the Company, there are no liens for material
amounts of Taxes on the assets of the Company or any of its Subsidiaries except
for statutory liens for current Taxes not yet due and payable.
(c) Other than as set forth on Section 4.19(c) of the Company Disclosure
Schedule, there have been no audits and there are no ongoing audits of any Tax
Returns or reports of any Tax filed by Taxpayer. There is set forth on Section
4.19(c) of the Company Disclosure Schedule a brief description of the status of
all prior audits, all ongoing audits and all notifications of audits for any
Taxpayer, and except as otherwise disclosed on such Section 4.19(c) of the
Company Disclosure Schedule all deficiencies resulting from such audits have
either been paid or adequately provided for in the Company Financial Statements.
(d) Section 4.19(d) of the Company Disclosure Schedule sets forth all
elections made by Taxpayer in the past five years that remain in effect for any
Taxpayer with respect to Taxes. Except as set forth on Section 4.19(d) of the
Company Disclosure Schedule, there are no ongoing audit adjustments of Taxes
that will affect taxable periods subsequent to the audit.
(e) Except as set forth in Section 4.19(e) of the Company Disclosure
Schedule, (i) there has not been made with respect to any Taxpayer, or any
property held by any Taxpayer, any consent under Section 341 of the Code (or any
corresponding provisions of state, local or foreign income Tax Law), (ii) no
property of any Taxpayer is "tax exempt use property" within the meaning of
Section 168(h) of the Code, and (iii) no Taxpayer is a party to any lease made
pursuant to former Section 168(f)(8) of the Code.
(f) Except as set forth in Section 4.19(f) of the Company Disclosure
Schedule, no Taxpayer is party to any Tax sharing agreement or any other
agreement with respect to Taxes.
(g) Except as disclosed in Section 4.19(g) of the Company Disclosure
Schedule, the charges, accruals and reserves on the books of the Company with
respect to Taxes due and payable after the Closing Date have been presented in
accordance with GAAP consistently applied.
(h) Except as set forth in Section 4.19(h) of the Company Disclosure
Schedule, no Taxpayer is a party to any joint venture, partnership, or other
arrangement or contract that could be treated as a partnership for federal
income tax purposes.
Section 4.20. ERISA Related Matters. (a) Section 4.20 of the Company
Disclosure Schedule sets forth each employee pension, defined benefit, defined
contribution, retirement, profit sharing, stock bonus, stock option, stock
purchase, incentive, deferred compensation, hospitalization, medical, dental,
vision, life insurance, sick pay, disability, severance or other plan, fund,
program, policy, contract or arrangement providing employee benefits
administered, maintained or contributed to by the Company or any of its
Subsidiaries in which any employee or former employee or beneficiary of the
Company or any of its Subsidiaries currently participates, has participated or
was eligible to participate or under which any employee, former employee or
beneficiary of the Company or any of its Subsidiaries has accrued or is or will
be entitled to any benefits or pursuant to which the Company or its Subsidiaries
has any liability, contingent or otherwise or on behalf of which the Company or
its Subsidiaries is or has acted as a fiduciary since January 1, 1987
(individually, a "Plan" and collectively, the "Plans").
(b) The Company shall have delivered to Parent true, complete and correct
copies, together with all amendments thereto, of (i) each Plan (other than
certain union Plans listed in Section 4.20(b) of the Company Disclosure Schedule
which cannot be obtained upon reasonable effort or, in the case of any unwritten
Plans, descriptions thereof), (ii) the three most recent annual reports on Form
5500 filed with the IRS with respect to each Plan (if any such report was
required), (iii) the most recent summary plan
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description for each Plan for which such a summary plan description is required,
(iv) each trust agreement and group annuity contract relating to any Plan; (v)
reasonable evidence of adoption for each Plan; and (vi) a complete copy of each
IRS determination letter for each Plan for which such a letter was obtained.
Neither the Company nor any corporation or trade or business (whether or not
incorporated) which would be or was treated as a member of the controlled group
of the Company under Section 4001(a)(14) of ERISA (hereinafter the "Controlled
Group"), is now sponsoring or contributing to or ever has sponsored or
contributed to, prior to the Closing Date, any Plan subject to Title IV of
ERISA.
(c) Except as set forth in Section 4.20(c) of the Company Disclosure
Schedule, there exists no liability in connection with any Plan that has been
terminated and all procedures for termination of such plans have been properly
followed.
(d) Neither the Company nor any of its Subsidiaries or any of the Plans, or
any trust created thereunder, or any trustee or administrator thereof, or any
other "disqualified person" within the meaning of Section 4975(e)(2) of the
Code, has engaged in a transaction in connection with which the Company or any
such subsidiaries or any trustee or administrator of the Plans or any such
trust, or any other such "disqualified person," could be subject to either a
liability or civil penalty assessed pursuant to Sections 409, 502(i) or 502(l)
of ERISA or a tax imposed pursuant to Section 4975 through 4980 of the Code.
(e) Except as described in Section 4.20(e) of the Company Disclosure
Schedule, each of the Plans and any trust created thereunder has been operated
and administered in accordance with its terms and in compliance with Applicable
Laws, including but not limited to ERISA and the Code. There are no pending or
threatened claims, action, audits, or examinations with respect to any of the
Plans and any trust created thereunder by any Governmental Authority. There are
no pending or threatened claims with respect to any of the Plans and any trust
created thereunder, by any employee or former employee that participated in,
currently participates in, or is or was eligible to participate in, or
beneficiary covered under any such Plan, or otherwise involving any such Plan
(other than routine claims for benefits).
(f) All contributions required to be made to each Plan have been timely
made or accrued for on the Company Financial Statements. All account allocations
required to have been made under each Plan and Applicable Law have been made.
(g) None of the Plans or any trust established thereunder has incurred any
"accumulated funding deficiency" (as defined in Section 302 of ERISA and Section
412 of the Code), whether or not waived, as of the last day of the most recent
fiscal year of each of the Plans. No contribution failure has occurred with
respect to any Plan sufficient to give rise to a lien under Section 302(f) of
ERISA.
(h) With respect to any Plan that provides welfare benefits as defined in
Section 419(e) of the Code, except as disclosed in Section 4.20 of the Company
Disclosure Schedule, no such Plan is unfunded or funded through a welfare
benefits fund, as such term is defined in Section 419(e) of the Code.
(i) With respect to any "welfare plan" (as defined in Section 3(1) of
ERISA) which qualifies as a "group health plan" under Section 607(1) of ERISA
and Section 4980B of the Code and related regulations (relating to the benefit
continuation rights imposed by COBRA), the Company, and each of its
Subsidiaries, such group health plan and the administrator of such group health
plan have all complied, in all material respects, with all reporting,
disclosure, notice, election and other benefit requirements imposed under COBRA,
as and when applicable; and the Company has not incurred any direct or indirect
liability, nor is the Company subject to any loss, assessment, excise tax
penalty, loss of federal income tax deduction or other sanction arising on
account of or in respect of any direct or indirect failure to comply with such
COBRA requirements.
(j) With respect to each Plan that is funded wholly or partially through an
insurance policy, there will be no liability of the Company or its Subsidiaries
as of the Closing Date that has not been either paid or reasonably estimated and
reserved for in accordance with GAAP consistently applied.
(k) Except as otherwise set forth in Section 4.20(k) of the Company
Disclosure Schedule, neither the execution and delivery of this Agreement nor
the consummation of the transactions contemplated hereby will
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(A) result in any payment (including, without limitation, severance,
unemployment compensation, golden parachute or otherwise) becoming due from the
Company under any Plan, (B) increase any benefits otherwise payable under any
Plan, or (C) result in the acceleration of the time of payment or vesting of any
such benefits.
(l) The Company has not announced any plan or made any legally binding
commitment to create additional benefits which are intended to cover employees
or former employees of the Company or to make any amendment or modifications to
any Plan that covers or has covered or is available to the Company employees or
former employees other than as set forth in Section 4.20(l) of the Company
Disclosure Schedule or as required by Applicable Law. No payment under any Plan
will not be deductible by the Company by reason of failure to comply with any
provisions of the Code.
(m) The Company does not, nor has it ever contributed to or participated in
any Multiemployer Plan as defined in Section 3(37) of ERISA.
Section 4.21. Labor and Employment Matters. (a) Except as set forth in
Section 4.21(a) of the Company Disclosure Schedule, the Company and its
Subsidiaries are and have been in compliance in all material respects with all
Applicable Laws respecting employment and employment practices, terms and
conditions of employment and wages and hours, and such laws relating to
employment discrimination, equal opportunity, affirmative action, worker's
compensation, occupational safety and health requirements and unemployment
insurance and related matters, and is not engaged in and has not engaged in any
unfair labor practice, as defined under Applicable Laws.
(a) The Company and its Subsidiaries are not delinquent or in arrears in
payments to any of their respective employees or agents for any wages, salaries,
commission, overtime payments, bonuses or other direct compensation for any
services performed by them or benefits required to be provided or amounts
required to be reimbursed to such officers, directors, employees or agents.
(b) If the employment of any such officers, directors, employees or agents
terminates for any reason, neither Company, Parent, Acquisition Sub nor the
Surviving Corporation will, pursuant to any agreement in effect, or by reason of
any act or omission by Company or any Subsidiary before the Effective Time, be
liable to any of such officers, directors, employees or agents for so-called
"severance pay" or any other payments, benefits or damages.
(c) Except as set forth in Section 4.21(d) of the Company Disclosure
Schedule, there is no material controversy pending or, to the knowledge of the
Company, threatened between Company and its Subsidiaries, on the one hand, and
any of its employees or consultants or former employees or consultants, on the
other hand.
(d) The Company and its Subsidiaries (i) have never been and are not now
subject to a union organizing effort, (ii) are not subject to any collective
bargaining agreement with respect to any of their respective employees, and
(iii) are not subject to any other contract, written or oral, with any trade or
labor union, employees' association or similar organization. Company and its
Subsidiaries have good labor relations, and have no knowledge of any facts
indicating that the consummation of the transactions contemplated hereby will
have a material adverse effect on such labor relations, and has no knowledge
that any of their key employees intends to leave their employ.
(e) Except as set forth in Section 4.21(f) to Company Disclosure Schedule,
the Company and its Subsidiaries have no employment contracts or consulting
agreements currently in effect that are not terminable at will (other than
agreements with the sole purpose of providing for the confidentiality of
proprietary information or assignment of inventions). To the knowledge of
Company and its Subsidiaries, no employee of Company or any of its Subsidiaries
are in violation of any term of any employment contract, patent disclosure
statement, noncompetition agreement, or any other contract or agreement, or any
restrictive covenant, relating to the right of any such employee to be employed
thereby, or to use the proprietary information of others, and the employment of
such employees does not subject Company and its Subsidiaries to any claim by any
other Person.
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(f) A list of all employees, officers and consultants of Company and its
Subsidiaries and their current compensation is set forth on Section 4.21(g) of
the Company Disclosure Schedule. Such list also describes any vested benefits,
including, without limitation, vacation or sick pay, which each Person on such
list is entitled to receive from Company.
Section 4.22. Tax-Free Structure. To the knowledge of the Company, the
Merger, together with the other transactions contemplated under this Agreement,
shall qualify as a tax-free reorganization under the provisions of Section
368(a)(1)(B) of the Code and the Company, to its knowledge, has not taken any
action, or failed to take any action, that would make the Merger ineligible as a
tax-free reorganization.
Section 4.23. Advisors and Investment Bankers. Except for the Company's
investment banking firm, Ladenburg Thalmann & Co. Inc., whose advisory fee
arrangement has been disclosed to Parent prior to the date hereof, no broker,
advisor, finder or investment banker is entitled to any brokerage, advisor's,
finder's or other fee or commission in connection with the Merger or the
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of the Company.
Section 4.24. Un-bank Agreements. All agreements or arrangements between
the Company and Un-bank Company LLP are on terms no less advantageous to the
Company than could be secured from an unaffiliated third party in a transaction
negotiated at arm's-length. The Company has made no material payments to Un-bank
Company LLP or any of its principals or members in connection with or arising
from any business between the Company and Un-bank Company LLP.
Section 4.25. Complete Disclosure. Neither this Agreement, the Stock
Option Agreement nor any of the certificates or documents required to be
delivered by Company and/or Dachis to Parent under this Agreement as a condition
to closing, taken together, contains a statement of a material fact that is
untrue in any material respect, or omits to state any material fact necessary in
order to make the statements contained herein and therein, in light of the
circumstances under which such statements were made, not misleading in any
material respect.
ARTICLE V
Representations and Warranties
of Acquisition Sub and Parent
Acquisition Sub, upon being formed prior to the Closing Date, and Parent
hereby jointly and severally represent and warrant to the Company as follows:
Section 5.1. Organization and Qualification. Parent is, and Acquisition
Sub shall be, corporations duly organized, validly existing and in good standing
under the laws of their states of incorporation and have the requisite corporate
power and authority to own, lease and operate their assets and properties and to
carry on their businesses as they are now being conducted. Parent is, and
Acquisition Sub shall be, qualified to do business and in good standing in each
jurisdiction in which the properties owned, leased or operated by each or the
nature of the businesses conducted by each makes such qualification necessary,
except where the failure to be so qualified and in good standing will not, when
taken together with all other such failures, have a Parent Material Adverse
Effect. Prior to or at the Closing, Parent will directly own and have the power
to vote all of the outstanding capital stock of Acquisition Sub, and, as the
sole stockholder of Acquisition Sub, will have approved this Merger Agreement
and the transactions contemplated hereunder.
Section 5.2. Parent Common Stock. Parent has 200,000,000 authorized
shares of Common Stock, of which 96,568,213 shares are outstanding on August 31,
1997. Acquisition Sub or Parent holds, or by the Effective Time shall hold, a
number of shares of Parent Common Stock sufficient to convert all Company Common
Stock to Parent Common Stock pursuant to Article III, all of which are or shall
be validly issued and are or will be fully paid, nonassessable and free of
preemptive rights. Except as set forth in Section 5.2 of the separate disclosure
schedule executed and delivered by Parent simultaneously with the execution and
delivery of this Agreement ("Parent's Disclosure Schedule") or in Parent's
Annual Report on Form 10-K for the year ended December 31, 1996, and the
exhibits and schedules thereto (the "Parent 10-K") and, together
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with any reports filed by Parent with the SEC under the Exchange Act after the
Parent 10-K and prior to the date of this Agreement, the "Recent Parent
Reports") or any of the Recent Parent Reports, as of the date hereof, there are
no outstanding subscriptions, options, warrants, rights, calls, contracts,
voting trusts, proxies and other commitments, understandings, restrictions and
arrangements, including any right of conversion or exchange under any
outstanding security, instrument or other agreement obligating Parent to issue,
deliver or sell, or cause to be issued, delivered or sold, additional shares of
the capital stock of Parent or obligating Parent or any subsidiary of Parent to
grant, extend or enter into any such agreement or commitment, except pursuant to
this Agreement and the issuance of certain options granted by the Parent to
certain employees by the Human Resources Committee of its Board of Directors at
a meeting held on August 20, 1997. The shares of Parent Common Stock to be
issued to stockholders of the Company in the Merger will be at the Effective
Time duly authorized, validly issued, fully paid, nonassessable and free of
preemptive rights.
Section 5.3. Authority; Non-Contravention; Approvals. (a) Parent has, and
Acquisition Sub shall have, full corporate power and authority to enter into
this Agreement and subject to obtaining the Parent Required Approvals, to
consummate the transactions contemplated hereby. The execution, delivery and
performance of this Agreement and the consummation by Parent and Acquisition Sub
of the transactions contemplated hereby have been duly authorized by Parent's,
and will have been duly authorized by, Acquisition Sub's Boards of Directors,
and no other corporate proceedings on the part of Parent and Acquisition Sub are
necessary to authorize the execution and delivery of this Agreement and the
consummation by Parent and Acquisition Sub of the transactions contemplated
hereby except for the obtaining of the Parent Required Approvals and the
formation of Acquisition Sub. This Agreement has been duly and validly executed
and delivered by Parent, and, assuming the due authorization, execution and
delivery hereof by the Company, constitutes a valid and legally binding
agreement of Parent enforceable against it in accordance with its terms, except
to the extent that enforcement may be limited by laws of bankruptcy or
insolvency or laws relating to creditor's rights generally.
(b) Except as set forth in Section 5.3(b) of Parent Disclosure Schedule,
the execution and delivery of this Agreement by Parent does not, and the
consummation by Parent of the transactions contemplated hereby will not,
violate, conflict with or result in a breach of any provision of, or constitute
a default (or an event which, with notice or lapse of time or both, would
constitute a default) under, or result in the termination of, or accelerate the
performance required by, or result in a right of termination or acceleration
under, or result in the creation of any lien, security interest, charge or
encumbrance upon any of the properties or assets of Parent or any of its
Subsidiaries under any of the terms, conditions or provisions of (i) the
charters or By-Laws of Parent or any of its Subsidiaries, (ii) subject to
obtaining the Parent Required Approvals, any statute, law, ordinance, rule,
regulation, judgment, decree, order, injunction, writ, permit or license of any
court or governmental authority applicable to Parent or any of its Subsidiaries
or any of their respective properties or assets, and (iii) any note, bond,
mortgage, indenture, deed of trust, license, franchise, permit, concession,
contract, lease or other instrument, obligation or agreement of any kind to
which Parent or any of its Subsidiaries is now a party or by which Parent or any
of its Subsidiaries or any of their respective properties or assets may be bound
or affected, excluding from the foregoing clauses (ii) and (iii) such
violations, conflicts, breaches, defaults, terminations, accelerations or
creations of liens, security interests, charges or encumbrances that would not,
in the aggregate, have a Parent Material Adverse Effect.
(c) Except for (i) the filings by Parent and the Company required by Title
II of the HSR Act, (ii) the filing of the Registration Statement with the SEC
pursuant to the Securities Act and the declaration of the effectiveness thereof
by the SEC and filings with various blue sky authorities, (iii) the filing of
necessary certificates with the Secretary of State of the State of Minnesota in
connection with the Merger and (iv) the listing with the NYSE of the additional
shares of Parent Common Stock to be issued in the Merger (the filings and
approvals referred to in clauses (i) through (iv) are collectively referred to
as the "Parent Required Approvals"), no declaration, filing or registration
with, or notice to, or authorization, consent or approval of, any Governmental
Authority is necessary for the execution and delivery of this Agreement by
Parent or the consummation by Parent or Acquisition Sub of the transactions
contemplated hereby, other than as contemplated in this Agreement and such
filings, registrations, authorizations, consents or approvals the
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failure of which to make or obtain, as the case may be, will not, in the
aggregate, have a Parent Material Adverse Effect.
Section 5.4. Reports and Financial Statements. Since December 31, 1992,
Parent and each of its Subsidiaries have filed all forms, statements, reports
and documents (including all exhibits, amendments and supplements thereto)
required to be filed by them under each of the Securities Act, the Exchange Act,
applicable laws and regulations of Parent's and its Subsidiaries' jurisdictions
of incorporation and the respective rules and regulations thereunder, all of
which complied in all material respects with all applicable requirements of the
appropriate act and the rules and regulations thereunder. Parent has delivered
to the Company true and complete copies of its (a) Annual Reports on Form 10-K,
Quarterly Reports on Form 10-Q, and Current Reports on Form 8-K filed by Parent
or any of its subsidiaries with the SEC from January 1, 1993 until the date
hereof, (b) proxy and information statements relating to all meetings of its
shareholders (whether annual or special) and actions by written consent in lieu
of a shareholder's meeting from January 1, 1993, until the date hereof and (c)
all other reports or registration statements filed by Parent or its subsidiaries
with the SEC from January 1, 1994, until the date hereof (other than
registration statements on Form S-8 and the registration statement on Form S-3
for the Parent Dividend Reinvestment Plan) (collectively, the "Parent SEC
Reports") and (d) audited consolidated financial statements of Parent for the
fiscal year ended December 31, 1996, and its unaudited consolidated financial
statements for the three months ended March 31, 1997 and for the six months
ended June 30, 1997 (collectively, the "Recent Parent Financial Statements"). As
of their respective dates, the Parent SEC Reports did 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 therein, in light of the
circumstances under which they were made, not misleading. The financial
statements of Parent included in the Parent SEC Reports and the Recent Parent
Financial Statements (collectively, the "Parent Financial Statements") fairly
present the financial position of Parent and its Subsidiaries as of the dates
thereof and the results of their operations and cash flows for the periods then
ended in conformity with generally accepted accounting principles applied on a
consistent basis (except as may be indicated therein or in the notes thereto)
subject, in the case of the unaudited interim financial statements, to normal
year-end and audit adjustments and any other adjustments described therein.
Section 5.5. Absence of Undisclosed Liabilities. Except as set forth in
Section 5.5 of Parent Disclosure Schedule or in the Parent SEC Reports, neither
Parent nor any of its Subsidiaries had at June 30, 1997, or has incurred since
that date, any liabilities or obligations (whether absolute, accrued, contingent
or otherwise) of any nature, except liabilities, obligations or contingencies
(a) which are accrued or reserved against in the Recent Parent Financial
Statements or reflected in the notes thereto or (b) which were incurred after
June 30, 1997, and were incurred in the ordinary course of business and
consistent with past practices and, in either case, except for any such
liabilities, obligations or contingencies which (i) would not, in the aggregate,
have a Parent Material Adverse Effect, (ii) have been discharged or paid in full
prior to the date hereof or (iii) would not be required to be disclosed in the
Parent's financial statements or the notes thereto.
Section 5.6. Absence of Certain Changes or Events. Except as set forth in
Section 5.6 of Parent Disclosure Schedule or in the Recent Parent Reports, since
December 31, 1996, there has not been any material adverse change in the
business, financial condition or results of operations of Parent and its
Subsidiaries, taken as a whole that would result in a Parent Material Adverse
Effect, and Parent and its subsidiaries have in all material respects conducted
their respective businesses in the ordinary course consistent with past
practice.
Section 5.7. Registration Statement. The Prospectus forming part of the
Registration Statement on Form S-4 to be filed under the Securities Act with the
SEC by Parent for the purpose of registering the shares of Parent Common Stock
to be issued in the Merger or the Stock Option Agreement (the "Registration
Statement") will not at the time it becomes effective and at the Effective Time,
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they are made, not
misleading; provided, however, that in the event of such untrue statement or
omission, Parent shall timely file with the SEC an amendment or supplement
correcting such untrue statement or omission prior to the Effective Time. The
Registration Statement will comply as to form in all material respects with all
applicable laws, including the
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provisions of the Securities Act and the rules and regulations promulgated
thereunder. Notwithstanding the foregoing, no representation is made by Parent
with respect to information supplied by the Company or its representatives
specifically for inclusion therein.
Section 5.8. No Violation of Law. Except as disclosed in the Parent SEC
Reports or set forth in Section 5.8 of Parent's Disclosure Schedule, neither
Parent nor any of its Subsidiaries is in violation of, or, to the knowledge of
Parent, is under investigation with respect to or has been given notice or been
charged with any violation of, any law, statute, order, rule, regulation,
ordinance, or judgment of any Governmental Authority, except for violations
which in the aggregate do not have a Parent Material Adverse Effect. Parent and
its subsidiaries have all material governmental permits, licenses, franchises
and other governmental authorizations, consents and approvals necessary to
conduct their businesses as presently conducted, except those which the failure
to obtain would not, in the aggregate have a Parent Material Adverse Effect.
Section 5.9. Litigation. Except as disclosed in the Recent Parent
Reports, the Recent Parent Financial Statements, or Section 5.9 of the Parent's
Disclosure Schedule, (a) there are no claims, suits, actions or proceedings
pending or, to the knowledge of Parent, threatened, nor to the knowledge of
Parent are there any investigations or reviews pending or threatened, against,
relating to or affecting the Parent or any of its subsidiaries, which, if
adversely determined, could have a Parent Material Adverse Effect; (b) there
have not been any developments since December 31, 1996, with respect to such
claims, suits, actions, proceedings, investigations or reviews which
individually or in the aggregate, is reasonably likely to have a Parent Material
Adverse Effect; and except as contemplated by the Parent Required Approvals,
neither Parent nor any of its Subsidiaries is subject to any judgment, decree,
injunction, rule or order of any Governmental Authority or any arbitrator which
prohibits or restricts the consummation of the transactions contemplated hereby
or is reasonably likely to have a Parent Material Adverse Effect.
Section 5.10. Compliance with Agreements. Except as disclosed in the
Recent Parent Reports, the Recent Parent Financial Statements or Section 5.10 of
the Parent Disclosure Schedule, Parent and each of its Subsidiaries are not in
breach or violation of or in default in the performance or observance of any
term or provision of, and no event has occurred which, with lapse of time or
action by a third party (or both), could result in a default under, (a) the
respective charters or By-laws of the Parent or any of its subsidiaries or (b)
any contract, commitment, agreement, indenture, mortgage, loan agreement, note,
lease, bond, license, approval or other instrument to which Parent or any of its
Subsidiaries is a party or by which any of them is bound or to which any of
their property is subject, which breaches, violations and defaults, in the case
of clause (b) of this Section 5.10 would have, in the aggregate, a Parent
Material Adverse Effect.
Section 5.11. Taxes and Returns. The Parent and each of its Subsidiaries
has timely filed, or caused to be timely filed all material Tax Returns required
to be filed by it, and has paid, collected or withheld, or caused to be paid,
collected or withheld, all material amounts of Taxes required to be paid,
collected or withheld, other than such Taxes for which adequate reserves have
been established or which are being contested in good faith.
Section 5.12. Advisors and Investment Bankers. The Parent represents and
warrants that no broker, advisors, finder or investment banker is entitled to
any brokerage, advisor's, finder's or other fee or commission in connection with
the Merger or the transactions contemplated by this Agreement based upon
arrangements made by or on behalf of the Parent.
Section 5.13. Pooling Structure. Except as set forth in Section 5.13 of
the Parent Disclosure Schedule, to the best knowledge of Parent, prior to the
date hereof, neither Parent nor Acquisition Sub has taken any action, or failed
to take any action, that would cause the Merger to be ineligible as a pooling of
interest for accounting, reporting or tax purposes.
Section 5.14. Complete Disclosure. Neither this Agreement, nor any of the
certificates or documents required to be delivered by the Parent to Company and
Dachis under this Agreement as a condition to closing, taking together, contains
a statement of a material fact that is untrue in any material respect, or omits
to state any material fact necessary in order to make the statements contained
herein and therein, in light of the circumstances under which such statements
were made, not misleading in any material respect.
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ARTICLE VI
Conduct of Business Pending the Merger
Section 6.1. Conduct of Business by the Company Pending the
Merger. Except as set forth in Section 6.1 of the Company Disclosure Schedule
or as otherwise contemplated by this Agreement, after the date hereof and prior
to the Effective Time or the earlier termination of this Agreement, unless
Parent shall otherwise agree in writing, the Company shall and shall cause each
of its Subsidiaries to:
(a) conduct their respective businesses in the ordinary and usual
course of business and consistent with past practice;
(b) not (i) amend or propose to amend their respective charters or
By-Laws; (ii) split, combine, subdivide, recapitalize, reclassify or
exchange their outstanding capital stock or declare, set aside or pay any
dividend or distribution payable in cash, stock, property or otherwise; or
(iii) knowingly take any action which would result in a failure to maintain
the trading of Company Common Stock on the NASDAQ NMS;
(c) not (i) authorize the issuance of, or issue, sell, pledge or
dispose of, or agree to issue, sell, pledge or dispose of, any additional
shares of, or any options, warrants or rights of any kind to acquire any
shares of, their capital stock of any class or any debt or equity
securities convertible into or exchangeable for such capital stock except
to honor the exercise of previously granted options; (ii) sell (including,
without limitation, by sale/leaseback), pledge, dispose of, license or
encumber any material assets (including without limitation intellectual
property), or any interests therein, other than in the ordinary course of
business and consistent with past practice; (iii) redeem, purchase, acquire
or offer to purchase or acquire any (x) shares of its capital stock, other
than in accordance with the governing terms of such securities or (y)
long-term debt, other than as required by the governing instruments
relating thereto; or (iv) enter into any contract, agreement, commitment or
arrangement with respect to any of the foregoing;
(d) use their best efforts to preserve intact their respective
business organizations and goodwill, keep available the services of their
respective present officers and key employees, and preserve the goodwill
and business relationships with suppliers, distributors, customers, and
others having business relationships with them;
(e) confer on a regular and frequent basis with one or more
representatives of Parent to discuss operational matters of materiality and
the general status of ongoing operations;
(f) promptly notify Parent of any significant changes in the business,
financial condition or results of operations of the Company or its
Subsidiaries taken as a whole;
(g) not acquire, or publicly propose to acquire, all or any
substantial part of the business and properties or capital stock of any
person not a party to this Agreement, whether by merger, purchase of
assets, tender offer or otherwise;
(h) not enter into or amend any employment, severance, special pay
arrangement with respect to termination of employment or other similar
arrangements or agreements with any directors, officers or key employees;
(i) not adopt, enter into or amend any bonus, profit sharing,
compensation (except regularly scheduled, ordinary course salary
adjustments consistent with historic practice), stock option, pension,
retirement, deferred compensation, health care, employment or other
employee benefit plan, agreement, trust, fund or arrangement for the
benefit or welfare of any employee or retiree, except as required to comply
with changes in applicable law occurring after the date hereof, except with
the prior written approval of Parent;
(j) maintain with financially responsible insurance companies,
insurance on its tangible assets and its businesses in such amounts and
against such risks and losses as are consistent with past practice;
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(k) not enter into any material arrangement, agreement, or contract
with any third party which provides for an exclusive arrangement with that
third party or is substantially more restrictive on the Company or
substantially less advantageous to the Company than arrangements,
agreements, or contracts existing on the date hereof;
(l) not establish any new lines of credit or other credit facilities
or incur any indebtedness other than pursuant to existing credit facilities
except for trade liabilities incurred in the ordinary course of business;
and
(m) not agree in writing, or otherwise, to take any of the foregoing
actions or any other action which would make any representation or warranty
contained in Article IV untrue or incorrect in any material respect as of
the time of the Closing.
ARTICLE VII
Additional Agreements
Section 7.1. Access to Information. (a) The Company and its Subsidiaries
shall afford to Parent, Travelers Express Company, Inc., and their employees,
accountants, counsel, and other representatives access during normal business
hours throughout the period prior to the Effective Time to all of their
respective properties, books, contracts, commitments and records (including, but
not limited to, tax returns) and to their customers, vendors, employees,
consultants and professional advisors and, during such period, shall furnish
promptly to Parent (i) a copy of each report, schedule and other document filed
or received by any of them pursuant to the requirements of federal or state
securities laws or the HSR Act or filed or received by any of them with or from
the SEC, FTC or DOJ and (ii) all other information concerning their respective
businesses, properties and personnel as Parent may reasonably request; provided,
however, that no investigation pursuant to this Section 7.1(a) shall affect any
representations or warranties made herein (except as to breaches or inaccuracies
therein of which Parent had Actual Knowledge as to both existence and scope) or
the conditions to the obligations of the respective parties to consummate the
Merger. Parent agrees that it shall only contact vendors of the Company after
consultation with the Company, and the Company agrees to consult freely with the
Parent with respect thereto. The Company and its Subsidiaries shall promptly
advise Parent in writing of any change or occurrence of any event after the date
of this Agreement having, or which, insofar as can reasonably be foreseen, in
the future is likely to have, a Company Material Adverse Effect or Parent
Adverse Impact.
(b) Parent and its Subsidiaries shall afford to the Company and its
financial advisors, Ladenburg Thalmann & Co. Inc., access during normal business
hours throughout the period prior to the Effective Time to such information as
may be reasonably necessary for such financial advisors to prepare and deliver
the Fairness Opinion. From the date hereof until the Effective Time, Parent
shall furnish promptly to Company a copy of each report, schedule and other
document filed or received by the Parent pursuant to the requirements of federal
or state securities laws or the HSR Act or filed or received by any of them with
or from the SEC, FTC or DOJ, unless the Parent believes in its reasonable
discretion that such report, schedule or document contains confidential
information or does not relate to the transactions contemplated herein. Parent
and its Subsidiaries shall promptly advise the Company in writing of any change
or occurrence of any event after the date of this Agreement having, or which,
insofar as can reasonably be foreseen, in the future is likely to have, a Parent
Material Adverse Effect.
Section 7.2. No Solicitation.
(a) From the date hereof until the termination hereof, the Company
agrees not to, and will not authorize any of the Company's officers,
directors, employees or other agents to, directly or indirectly, (i) take
any action to seek, initiate or encourage any offer or proposal from any
person, entity or group (other than Parent) to acquire any shares of the
capital stock, options or other securities of the Company, to acquire any
significant portion of the Company's assets or for any other merger, joint
venture, recapitalization, consolidation or business combination (a "Third
Party Offer"), or (ii) engage in negotiations concerning or disclose
nonpublic financial information relating to the Company, or any
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confidential or proprietary trade or business information relating to the
business of the Company, or afford access to the properties, books or
records of the Company (except as required by Applicable Law), to any third
party that may be considering a Third Party Offer. Except as disclosed in
Section 7.2(a) of the Company Disclosure Schedule, since May 15, 1997,
neither the Company, nor any of the officers, directors, employees or other
agents of the Company or any of its Subsidiaries has engaged in any
activities, discussions or negotiations with any parties with respect to
any of the foregoing.
(b) The Company will orally notify Parent immediately, followed by
prompt written notice (identifying the offeror and describing, in
reasonable detail, the terms of the offer or the request for information),
of any Third Party Offer from any person, entity or group (other than from
Parent) or of any request for information with respect to a Third Party
Offer or any indication from any person, entity or group that it or another
person, entity or group is considering making a Third Party Offer.
(c) Notwithstanding anything contained in this Section 7.2 to the
contrary, the Company and its Subsidiaries may furnish information pursuant
to an unsolicited Third Party Offer if the Company's Counsel advises the
Board of Directors of the Company that the failure to take such action or
actions might reasonably subject the Company's directors to liability for
breach of their fiduciary duties and the Company's financial advisors
advise the Board that the consideration to be paid pursuant to said
unsolicited Third Party Offer is greater than that to be received by the
Company's stockholders pursuant to this Agreement and said offeror has the
necessary financial capability to effect such transaction. Following
receipt of a bona fide Third Party Offer to consummate a Company
Acquisition transaction, (i) the Company may take and disclose to the
Company's stockholders the position of the Board of Directors of the
Company contemplated by Rule 14e-2 under the Exchange Act or otherwise make
appropriate disclosures to its stockholders, (ii) the Company may furnish
or cause to be furnished information concerning its business, properties or
assets to a bona fide third party in accordance with the terms and
provisions of this Agreement, and (iii) the Company may engage in
discussions or negotiations with a third party concerning a Company
Acquisition transaction. In the event the Company shall determine to
provide any information as described above, or shall receive any offer
relating to a Company Acquisition transaction, it shall promptly notify the
Parent as to the fact that information is to be provided or that an offer
relating to a Company Acquisition transaction has been received and shall
furnish to the Parent the identity of the recipient of information or the
proponent of such Company Acquisition transaction if applicable, and, if a
Third Party Offer has been received, a description of the material terms
thereof. The Company may enter into a definitive agreement for a Company
Acquisition transaction meeting the requirements set forth above with the
offeror with which it is permitted to negotiate pursuant to this Section
7.2(c), only if its failure to do so would, in the judgment of the
Company's Board of Directors based upon the advice of the Company's
Counsel, constitute a breach of the fiduciary duties of the Board of
Directors, provided, that at least ten Business Days prior to the Company's
execution thereof, the Company shall have notified the Parent in writing
indicating the Company's intent to enter into such agreement and describing
all of the material terms of such agreement.
Section 7.3. Registration Statement; Prospectus/Proxy Statement.
(a) For the purposes of (i) registering the issuance of Parent Common
Stock to holders of the Company Common Stock in connection with the Merger
with the SEC under the Securities Act, and complying with applicable state
securities laws and (ii) holding the meeting of Company stockholders to
vote upon the adoption of this Agreement and the Merger and the
transactions contemplated hereby and thereby (the "Company Proposals"),
Parent and Company will cooperate in the preparation of a registration
statement on Form S-4 (such registration statement, together with any and
all amendments and supplements thereto, being herein referred to as the
"Registration Statement," including a prospectus/proxy statement satisfying
all requirements of applicable state securities laws, the Securities Act
and the Exchange Act. Such prospectus/proxy statement in the form mailed by
Company and Parent to Company's stockholders, together with any and all
amendments or supplements thereto, is herein referred to as the
"Prospectus/Proxy Statement."
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(b) Company will furnish Parent with such information concerning
Company and its Subsidiaries as is necessary in order to cause the
Prospectus/Proxy Statement, insofar as it relates to Company and its
Subsidiaries, to comply with Applicable Law. None of the information
relating to Company and its Subsidiaries supplied by Company for inclusion
in the Prospectus/Proxy Statement will be false or misleading with respect
to any material fact or will 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.
Company agrees promptly to advise Parent if, at any time prior to the
respective meetings of the stockholders of Company or Parent referenced
herein, any information provided by it in the Prospectus/Proxy Statement is
or becomes incorrect or incomplete in any material respect and to provide
Parent with the information needed to correct such inaccuracy or omission.
Company will furnish Parent with such supplemental information as may be
necessary in order to cause the Prospectus/Proxy Statement, insofar as it
relates to Company and its subsidiaries, to comply with Applicable Law
after the mailing thereof to the stockholders of Company or Parent.
(c) Parent will furnish Company with such information concerning
Parent and its Subsidiaries as is necessary in order to cause the
Prospectus/Proxy Statement, insofar as it relates to Parent and its
Subsidiaries, to comply with Applicable Law. None of the information
relating to Parent and its Subsidiaries supplied by Parent for inclusion in
the Prospectus/Proxy Statement will be false or misleading with respect to
any material fact or will 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 were made, not misleading,
Parent agrees promptly to advise Company if, at any time prior to the
respective meetings of stockholders of Company or Parent referenced herein,
any information provided by it in the Prospectus/Proxy Statement is or
becomes incorrect or incomplete in any material respect and to provide
Company with the information needed to correct such inaccuracy or omission.
Parent will furnish Company with such supplemental information as may be
necessary in order to cause the Prospectus/Proxy Statement, insofar as it
relates to Parent and its subsidiaries, to comply with applicable Law after
the mailing thereof to the stockholders of Company or Parent.
(d) Parent shall cooperate with Company in making any preliminary
filings of the Prospectus/Proxy Statement with the SEC, as promptly as
practicable, pursuant to Rule 14a-6 under the Exchange Act.
(e) Parent will file the Registration Statement with the SEC and
appropriate materials with applicable state securities agencies as promptly
as practicable and will use all reasonable efforts to cause the
Registration Statement to become effective under the Securities Act and all
such state filed materials to comply with applicable state securities laws.
Company authorizes Parent to utilize in the Registration Statement and in
all such state filed materials, the information concerning Company and its
subsidiaries provided to Parent in connection with, or contained in, the
Prospectus/Proxy Statement. Parent promptly will advise Company when the
Registration Statement has become effective and of any supplements or
amendments thereto, and Parent will furnish Company with copies of all such
documents. Except for the Prospectus/Proxy or the preliminary
prospectus/proxy, neither Parent nor Company shall distribute any written
material that might constitute a "prospectus" relating to the Merger or the
Company Proposals within the meaning of the Securities Act or any
applicable state securities law without the prior written consent of the
other party. Parent shall also take any action required to be taken under
applicable state blue sky or securities laws in connection with the
issuance of Parent Common Stock in the Merger; provided, however, that with
respect to such blue sky qualifications neither Parent nor the Company
shall be required to register or qualify as a foreign corporation or to
take any action which would subject it to service of process in any
jurisdiction where any such entity is not now so subject, except as to
matters and transactions relating to or arising solely from the offer and
sale of Parent Common Stock.
Section 7.4. Stockholders' Approval. The Company shall promptly submit
this Agreement and the transactions contemplated hereby for the approval of its
stockholders at a stockholder meeting (the "Company Stockholders' Meeting") to
be held as soon as practicable after the Registration Statement is declared
effective by the SEC and, subject to the fiduciary duties of the Board of
Directors of the Company under Applicable Laws, shall use its best efforts to
obtain stockholder approval (the "Company Stockholders' Approval") of this
Agreement and the transactions contemplated hereby in accordance with Section
4.13.
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Subject to the fiduciary duties of the Board of Directors of the Company under
Applicable Law, as determined by such directors in good faith after
consultations with and based upon the advice of the Company's Counsel, the
Company shall, through its Board of Directors, recommend to its stockholders
approval of this Agreement and the transactions contemplated by this Agreement.
Section 7.5. The New York Stock Exchange. Parent shall use its best
efforts to obtain the listing on the New York Stock Exchange, at or before the
Effective Time, of the additional shares of Parent Common Stock to be issued
pursuant to the Merger.
Section 7.6. Expenses. Except as otherwise specifically set forth in this
Agreement, all costs and expenses incurred in connection with this Agreement and
the transactions contemplated hereby shall be paid by the party incurring such
expenses; provided, however that all costs and expenses relating to printing,
filing and mailing the Registration Statement, the Proxy Statement and any other
filings with the SEC and all SEC and other regulatory filing fees (including HSR
fees) incurred in connection with such filings shall be borne equally by the
Company and Parent.
Section 7.7. Agreement to Cooperate. Subject to the terms and conditions
provided in this Agreement and Applicable Law, each of the parties hereto shall
use all reasonable efforts to take, or cause to be taken, all action to do, or
cause to be done, all things necessary, proper or advisable under Applicable
Laws to consummate and make effective the transactions contemplated by this
Agreement, including using its reasonable efforts to obtain all necessary or
appropriate waivers, consents and approvals and SEC "no-action" letters
(including, but not limited to, required approvals under applicable Minnesota
state laws and regulations), to effect all necessary registrations and filings
(including, but not limited to, filings under the HSR Act) and to lift any
injunction or other legal bar to the Merger (and, in such case, to proceed with
the Merger as expeditiously as possible). The Company agrees to allow the Parent
to review each regulatory filing made by the Company prior to the filing thereof
during the term of this Agreement. The Parent agrees to allow the Company to
review each regulatory filing made by the Parent relating to the transactions
contemplated herein prior to the filing hereof during the term of this
Agreement, unless such filing contains information which the Parent in its
reasonable discretion believes contains confidential information.
Section 7.8. Confidentiality. Unless (a) otherwise expressly provided in
this Agreement, (b) required by Applicable Law or any listing agreement with, or
the rules and regulations of, any applicable securities exchange or the NASD,
(c) necessary to secure any required Consents as to which the other party has
been advised, or (d) consented to in writing by Parent and Company, any
information or documents furnished in connection herewith shall be kept strictly
confidential by Company, Parent, Acquisition Sub and their respective officers,
directors, employees and agents. Prior to any disclosure pursuant to the
preceding sentence, the party intending to make such disclosure shall consult
with the other party regarding the nature and extent of the disclosure. Nothing
contained herein shall preclude disclosures to the extent necessary to comply
with accounting, SEC and other disclosure obligations imposed by Applicable Law.
To the extent required by such disclosure obligations, Parent or Company, after
consultation with the other party, may file with the SEC a Report on Form 8-K
pursuant to the Securities Exchange Act with respect to the Merger, which report
may include, among other things, financial statements and pro forma financial
information with respect to the other party. In connection with any filing with
the SEC of a registration statement or amendment thereto under the Securities
Act, Company or Parent, after consultation with the other party, may include a
prospectus containing any information required to be included therein with
respect to the Merger, including, but not limited to, financial statements and
pro forma financial information with respect to the other party, and thereafter
distribute such prospectus. Parent and Company shall cooperate with the other
and provide such information and documents as may be required in connection with
any such filings. In the event the Merger is not consummated, each party shall
return to the other any documents furnished by the other and all copies thereof
any of them may have made (or destroy all such documents and certify as to the
complete destruction of such documents) and will hold in absolute confidence any
information obtained from the other party except to the extent (i) such party is
required to disclose such information by Applicable Law or such disclosure is
necessary in connection with the pursuit or defense of a claim, (ii) such
information was known by such party prior to such disclosure or was thereafter
developed or obtained by such party independent of such disclosure, or (iii)
such information is or becomes generally available to the public or is otherwise
no longer confidential.
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Prior to any disclosure of information pursuant to the exception in clause (i)
of the preceding sentence, the party intending to disclose the same shall so
notify the party which provided the same in order that such party may seek a
protective order or other appropriate remedy should it choose to do so.
Section 7.9. Tax Treatment. Each of Parent, Acquisition Sub and the
Company will use its reasonable best efforts to cause the Merger to qualify as a
tax-free reorganization under the provisions of Section 368(a)(1)(B) of the Code
and Company shall not knowingly take any action or knowingly fail to take such
action that would be reasonably likely to jeopardize the treatment of the Merger
as a tax-free reorganization.
Section 7.10. Pooling. From and after the date hereof, neither Company
nor Dachis shall knowingly take any action, or knowingly fail to take any
action, that would jeopardize the treatment of the Merger as a pooling of
interests for accounting, reporting and tax purposes.
Section 7.11. Affiliates Agreements. Dachis shall enter into, and Company
and Dachis shall each use their respective best efforts to ensure that each
person who is or may be an "affiliate" of Company within the meaning of Rule 145
promulgated under the Securities Act, shall enter into the Affiliates Agreement.
Section 7.12. Directors and Officers Insurance. The Company shall
maintain or procure a policy of directors and officers insurance from a
reputable insurance Company providing not less than $5 million coverage to their
officers and directors for its actions and decisions relating to the
transactions contemplated hereby (with a retention amount not exceeding
$250,000), which policy shall remain in effect for a period not less than three
years from the Effective Date.
Section 7.13. Continuation of Indemnities; No Circular Indemnities. The
right to indemnification, if any, from the Company of any current or former
officer or director of the Company pursuant to the Company Charter Documents or
under any Applicable Law, shall survive the Effective Date; provided, however,
that subject to Applicable Law (a) no indemnification shall be available to the
Company from the Parent, Surviving Corporation or Acquisition Sub for any claim
or matter for which any Indemnified Party would be entitled to receive
indemnification under this Agreement, (b) no indemnification shall be available
to Dachis from the Company, the Parent, the Surviving Corporation or the
Acquisition Sub for any claim or matter for which any Indemnified Party would be
entitled to receive indemnification under Article V of the Selling Shareholder's
Agreement, and (c) no indemnification shall be available to any officer or
director (including, without limitation, Dachis) for any claim or matter if,
with regard to the subject matter thereof, the Company, the Parent, the
Surviving Corporation or the Acquisition Sub prevails upon a claim (at law or in
equity) against that officer or director. For purposes of the foregoing, the
Company, the Parent, the Surviving Corporation or the Acquisition Sub, as the
case may be, shall be considered to have "prevailed upon a claim" only if: (x) a
final order resolving such claim in favor of the Company, the Parent, the
Surviving Corporation or the Acquisition Sub, as the case may be, shall be
issued by a court, administrative body or other tribunal of competent
jurisdiction, unless such final order is subsequently overturned on appeal; or
(y) the subject officer or director enters into an agreement with the Company,
the Parent, the Surviving Corporation or the Acquisition Sub, as the case may
be, for the purpose of resolving such claim and therein agrees that the Company,
the Parent, the Surviving Corporation or the Acquisition Sub, as the case may
be, has prevailed upon such claim for purposes of this Section 7.13.
Notwithstanding the foregoing, the current and former officers and directors of
the Company may pursue such rights as they may have under the insurance policy
described in Section 7.12.
Section 7.14. Recovering Drawer Shortages. At the request of the Parent,
the Company shall not withhold drawer shortages from the payroll checks of
cashiers.
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ARTICLE VIII
Conditions to Closing
Section 8.1. Conditions to Each Party's Obligation to Effect the
Merger. The respective obligations of each party to effect the Merger shall be
subject to the fulfillment at or prior to the Effective Time of the following
conditions:
(a) Stockholder Approval. This Agreement and the transactions
contemplated hereby shall have been approved and adopted by the requisite
vote of the stockholders of the Company pursuant to Section 4.13.
(b) No Injunction. No preliminary or permanent injunction or other
order or decree by any federal or state court which prevents the
consummation of the Merger shall have been issued and remain in effect
(each party agreeing to use all reasonable efforts to have any such
injunction, order or decree lifted).
(c) No Adverse Action. No action shall have been taken, and no
statute, rule or regulation shall have been enacted, by any state, federal
or foreign government or governmental agency which would prevent the
consummation of the Merger.
(d) Government Consents. All governmental consents and approvals
legally required for the consummation of the Merger and the transactions
contemplated hereby, including, without limitation, approval (if required)
by the DOJ, FTC and the SEC, shall have been obtained and be in effect at
the Effective Time on terms and conditions that would not have a material
adverse effect on the Surviving Corporation.
(e) Expiration of Waiting Period. The waiting period applicable to
the consummation of the Merger under the HSR Act shall have expired or been
terminated and no additional requirements relating thereto shall be
applicable.
(f) Effectiveness of Registration Statement. The Registration
Statement shall have become effective in accordance with the provisions of
the Securities Act, and no stop order suspending such effectiveness shall
have been issued and remain in effect and no action, suit, proceeding or
investigation for that purpose shall have been initiated or threatened by
any Governmental Authority.
(g) Blue Sky. Parent shall have received all state securities law
authorizations necessary to consummate the transaction contemplated hereby.
(h) NYSE Listing Available. The shares of Parent Common Stock
issuable in the Merger shall have been authorized for listing on the NYSE.
(i) Delivery of Fairness Opinion. The Company's Board of Directors
shall have received from its financial advisors, Ladenburg Thalmann & Co.
Inc., a written opinion addressed to it for inclusion in the
Prospectus/Proxy Statement to the effect that the Exchange Ratio is fair to
the holders of the Company's Common Stock from a financial point of view
("Fairness Opinion").
Section 8.2. Conditions to Obligation of the Company to Effect the
Merger. The obligation of the Company to effect the Merger shall be subject to
the fulfillment at or prior to the Effective Time of the following additional
conditions:
(a) Performance by Parent. Acquisition Sub and Parent shall have
performed in all material respects their agreements contained in this
Agreement required to be performed on or prior to the Effective Time.
(b) Representations and Warranties. The representations and
warranties of Acquisition Sub and Parent contained in this Agreement shall
be true and correct in all respects on and as of the date of this Agreement
and on and as of the Effective Time as if made on and as of such date,
except as contemplated or permitted by this Agreement and except those
which in the aggregate do not result in a Parent
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Material Adverse Effect, and the Company shall have received a certificate
of the President or the Chief Financial Officer of each of Acquisition Sub
and Parent to that effect.
(c) No Material Adverse Change. Since the date hereof, no Parent
Material Adverse Effect shall have occurred.
(d) Price of Parent Stock. The Viad Price shall be no greater than
$21.20 per share.
(e) Opinion of Counsel. The Company shall have received an opinion
addressed to the Company from Bryan Cave LLP, special counsel to the Parent
and Acquisition Sub substantially in the form set forth in Exhibit A and
relying on the certificates and opinions provided by the Company's General
Counsel, dated the Closing Date. Any opinion of General Counsel shall be
addressed to the Company.
(f) Tax Opinion. The Company shall have received an opinion dated the
Closing Date, addressed to the Company and Parent from Ernst & Young LLP to
the effect that there is a reasonable basis to believe that the Merger will
be treated for Federal Income Tax purposes as a tax-free reorganization
within the meaning of Section 368(a)(1)(B) of the Code.
(g) Delivery of Merger Consideration. Parent shall have deposited the
Parent Common Stock and cash into the Exchange Fund in accordance with
Section 3.2(a).
(h) Necessary Documents. Parent shall have delivered to the Company
at or prior to the Effective Time such other documents (including
certificates of officers of Parent) as the Company may reasonably request
in order to enable the Company to determine whether the conditions to its
obligations under this Agreement have been met and otherwise to carry out
the provisions of this Agreement.
Section 8.3. Conditions to Obligation of Parent and Acquisition Sub to
Effect the Merger. The obligation of Parent and Acquisition Sub to effect the
Merger shall be subject to the fulfillment at or prior to the Effective Time of
the additional following conditions:
(a) Performance by Company and Dachis. The Company and Dachis shall
have performed in all material respects their respective agreements
contained in this Agreement, the Selling Shareholder's Agreement, the Stock
Option Agreement and the Irrevocable Proxy Agreement required to be
performed on or prior to the Effective Time.
(b) Representations and Warranties. The representations and
warranties of the Company contained in this Agreement shall be true and
correct in all respects on and as of the date of this Agreement and on and
as of the Effective Time as if made on and as of such date, except as
contemplated or permitted by this Agreement and except those which in the
aggregate do not result in a Company Material Adverse Effect, and Parent
and Acquisition Sub shall have received a Certificate of the President and
the Chief Financial Officer of the Company to that effect.
(c) No Material Adverse Change. Since the date hereof, no Company
Material Adverse Effect shall have occurred.
(d) Price of Parent Stock. The Viad Price shall be no less than
$17.20 per share.
(e) Dissenting Shareholders. The number of Dissenting Shares shall
not exceed five percent (5%) of the Company Common Stock outstanding at the
Effective Time.
(f) Licenses and Permits. All material licenses and permits required
to conduct business of the Company (other than licenses or permits from any
Native American Authority) shall have been properly transferred or obtained
(except to the extent that such licenses and permits may only be
transferred or obtained by the Surviving Corporation subsequent to the
Effective Time) and shall be in full force and effect as of the Effective
Time. All licenses and permits required to conduct the business of the
Company that the Parent has requested that the Company obtain from any
Native American Authority shall have been properly transferred or obtained
and shall be in full force and effect as of the Effective Time.
(g) Required Consents. All third party consents and approvals
necessary for the consummation of the Merger and the transactions
contemplated hereby (other than those consents and approvals from any
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Native American Tribes that the Parent and Company have agreed not to
procure) shall have been obtained and shall be in full force and effect at
the Effective Time. All third party consents and approvals of any Native
American Authority that the Parent has requested that the Company procure
shall have been obtained and be in effect at the Effective Time.
(h) Note Receivables. All notes and other receivables from any
employees, consultants or other third parties due to the Company shall have
been fully paid and satisfied.
(i) FBS Credit Agreement. The Credit Agreement and the Security
Agreement, each dated as of June 20, 1997, between the Company and First
Bank System shall have been terminated effective no later than the
Effective Time and all obligations of the Company under the Credit
Agreement and the Security Agreement shall have been satisfied, subject to
any obligations that survive full payment of all outstanding principal and
interest in accordance with the terms of the Credit Agreement.
(j) Merchant Member Agreement. In the event the Company or any of its
Subsidiaries enters into the Merchant Member Agreement with First Bank
National Association, such Agreement shall be in form and substance
reasonably satisfactory to Parent.
(k) License in Wisconsin. Company shall have in full force and effect
the Non-gaming Vendor License from the Wisconsin Gaming Board described in
the Company Disclosure Schedule.
(l) Certificate of Significant Shareholders. Each of the Significant
Shareholders shall have executed and delivered a Certificate certifying
that as of the Closing Date, the representations and warranties of the
Company set forth in this Agreement are true and correct and do not contain
any untrue statement of a material fact or omit to state a material fact
required to be stated herein necessary in order to make the statements
herein, in light of the circumstances under which they were made, not
misleading.
(m) Director's and Officers Liability Insurance. Company shall have
in force and effect the policy of director's and officer's liability
insurance coverage required by Section 7.12.
(n) Termination of 401K Profit Sharing Plan. The Company shall
provide evidence of the termination of any 401K Plan or Profit Sharing Plan
of the Company, including without limitation the Game Financial Corporation
and Affiliate Profit Sharing and Savings Plan.
(o) Resignations. Except to the extent Parent directs otherwise or as
contemplated by this Agreement, Company shall cause the resignation,
termination or other removal of the Company's present directors and
officers, effective as of the Closing Date.
(p) Accounting Treatment. The Parent shall have adequate assurance,
in its sole and absolute discretion, that the Merger and other transactions
related thereto shall be approved as a "pooling of interests" for all
accounting and reporting purposes of Parent and Surviving Corporation,
including, without limitation, a letter from Ernst & Young LLP, the
Company's independent certified public accountants dated as of the Closing
Date, confirming that such firm is not aware of any fact or circumstance
with respect to the Company which could be interpreted as rendering the
Merger ineligible for the pooling of interests method of accounting in
accordance with GAAP and all published rules, regulations and policies of
the SEC.
(q) Assignment of Intellectual Property. The Company shall have
delivered fully executed assignments, in the form attached hereto as
Exhibit C, conveying all rights, title and interest to the Intellectual
Property from those persons set forth in Section 8.3(n) of the Company
Disclosure Schedule and any person hired by the Company after the execution
of this Agreement who has access to the Intellectual Property.
(r) Opinion of Counsel. Parent and Acquisition Sub shall have
received an opinion from Robin, Kaplan, Miller and Ciresi, PA, special
counsel to the Company, or other counsel reasonably acceptable to Parent
and Acquisition Sub, in substantially the form set forth in Exhibit B.
(s) Selling Shareholder's Agreement. The Selling Shareholder's
Agreement shall be in full force and effect.
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(t) Escrow Agreement. The Escrow Agreement, dated as of the Closing
Date, by and among the Parent, Dachis and the Escrow Agent in substantially
the form attached to the Selling Shareholder's Agreement or another form
reasonably acceptable to the parties thereto ("Escrow Agreement") shall be
executed and delivered and shall be in full force and effect.
(u) Employment Agreements. The Employment Agreements, in the forms
approved by Parent, between the Company, and each of Gary A. Dachis,
Jeffrey L. Ringer, Deanna Frederichs-Moose, Michael Barcelow, Louis Dachis
and Jean Williams shall be in full force and effect.
(v) Affiliate Agreements. Each person who is or may be an "affiliate"
of the Company within the meaning of Rule 145 of the rules and regulations
of the SEC under the Securities Act including Bruce Dachis, as trustee
under The Marnie J. Dachis Irrevocable Trust Agreement, dated December 28,
1993 and as trustee under The Louis A. Dachis Irrevocable Trust Agreement
dated December 28, 1993, shall have entered into an Affiliate Agreement in
the form attached hereto as Exhibit D.
(w) Stock Option Agreement. The Stock Option Agreement by and among
Parent and Company shall be in full force and effect.
(x) Irrevocable Proxy Agreements. The Irrevocable Proxy Agreement by
and between the Parent and Dachis shall be in full force and effect. In
addition, an irrevocable proxy from each Significant Shareholder and from
Bruce Dachis, as trustee under The Marnie J. Dachis Irrevocable Trust
Agreement, dated December 28, 1993 and as trustee under The Louis A. Dachis
Irrevocable Trust Agreement dated December 28, 1993, to vote their shares
of Company Common Stock in form and substance reasonably satisfactory to
Parent shall be in full force and effect.
(y) HSR Filing by Dachis. Dachis shall have timely filed any filing
required to be filed by Dachis under the HSR Act or shall have provided the
written representations and warranties and the opinion of counsel described
in Section 3.1(a) of the Selling Shareholder's Agreement.
(z) Necessary Documents. The Company shall have delivered to Parent
at or prior to the Effective Time such other documents (including
certificates of officers of the Company) as Parent and Acquisition Sub may
reasonably request in order to enable Parent to determine whether the
conditions to its obligations under this Agreement have been met and
otherwise to carry out the provisions of this Agreement.
ARTICLE IX
Termination, Amendment and Waiver
Section 9.1. Termination. This Agreement may be terminated at any time
prior to the Effective Time, whether before or after approval by the
shareholders of Company or Acquisition Sub:
(a) by mutual written consent of Parent and Company;
(b) by either Parent or Company if:
(i) the Merger shall not have been consummated on or before the
Termination Date; provided, however, that the right to terminate this
Agreement pursuant to this Section 9.1 shall not be available to any
party whose failure to perform any of its obligations under this
Agreement results in the failure of the Merger to be consummated by such
time;
(ii) the requisite vote of the stockholders of the Company to
approve this Agreement pursuant to Section 4.13 and the transactions
contemplated hereby shall not be obtained at the Company Stockholders'
Meeting, or any adjournments or postponement thereof,
(iii) any Governmental Authority, the consent of which is a
condition to the obligations of Acquisition Sub and the Company to
consummate the transactions contemplated hereby, shall have determined
not to grant its consent and any appeals of such determination shall
have been taken and have been unsuccessful or such body shall have
imposed conditions or limitations on its consent that
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would have a material adverse effect on the Surviving Corporation and
any appeals from such imposition shall have been taken and have been
unsuccessful, or
(iv) any court of competent jurisdiction in the United States, or
any state or any country in which there is a Subsidiary of the Company,
shall have issued an order, judgment or decree (other than a temporary
restraining order) restraining, enjoining or otherwise prohibiting the
Merger and such order, judgment or decree shall have become final and
nonappealable;
(c) by Parent if:
(i) the Board of Directors of the Company shall have withdrawn or
modified in a manner adverse to Parent its approval or recommendation of
the Merger, this Agreement or the transactions contemplated hereby or
shall have failed to reaffirm such approval or recommendation upon
Parent's request, or shall have resolved to do any of the foregoing;
(ii) the Company or any of the other persons or entities described
in Section 7.2 shall take any of the actions that would be proscribed by
Section 7.2;
(iii) there has been (x) a material breach of any covenant or
agreement herein on the part of the Company which has not been cured or
adequate assurance of cure given, in either case within 15 Business Days
following receipt of notice of such breach, (y) a representation or
warranty of the Company herein and Dachis under the Selling
Shareholder's Agreement is or becomes untrue or incorrect in a material
respect which representation or warranty by its nature cannot be made
true and correct in all material respects prior to the Termination Date
or is not made true and correct prior to the Termination Date unless the
untrue or incorrect representation or warranty does not result in a
Company Material Adverse Effect, or (z) a condition to Closing set forth
in Section 8.3 (which is an obligation of the Company) has not been
satisfied by the Company and the Company has not satisfied the condition
at least ten days prior to the Termination Date;
(iv) the Viad Price is below $17.20 per share; or
(v) the Merger would not qualify as a "pooling of interests" for
all accounting, reporting and tax purposes.
(d) by the Company if :
(i) there has been a material breach of any covenant or agreement
herein on the part of Acquisition Sub or Parent which has not been cured
or adequate assurance of cure given, in either case within 15 business
days following receipt of notice of such breach, or
(ii) a representation or warranty of Parent or Acquisition Sub
herein is or becomes untrue or incorrect in a material respect which
representation or warranty by its nature cannot be made true and correct
in all material respects prior to the Termination Date or is not made
true and correct prior to the Termination Date, unless in either case,
the material breach or the untrue or incorrect representation or
warranty does not result in a Parent Material Adverse Effect or (y) a
condition to Closing set forth in Section 8.2 (which is an obligation of
the Parent) has not been satisfied by the Parent and Parent has not
satisfied the condition at least ten days prior to the Termination Date;
(iii) the Viad Price is above $21.20 per share;
(iv) the Merger would not qualify as a tax-free reorganization
under the provisions of Section 368(a)(1)(B) of the Code; or
(v) the Company enters into a definitive agreement for a Company
Acquisition transaction in accordance with Section 7.2(c), provided
Company has complied with all provisions thereof, including the notice
provisions therein, and that the Company complies with applicable
requirements relating to payment of the Breakup Fee.
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Section 9.2. Effect of Termination or Abandonment.
(a) In the event of termination of this Agreement or the abandonment
of the Merger by either Parent, Acquisition Sub or the Company as provided
in Section 9.1 without the breach of any covenant or obligation of the
Company on the one hand, or the Parent and Acquisition Sub on the other
hand, contained in this Agreement or any related agreement (including the
exhibits thereto), there shall be no liability on the part of either the
Company or Parent or Acquisition Sub or their respective officers or
directors, except for the fees provided for in Section 9.2(b), (c) and (e),
provided, nothing contained in this Agreement shall relieve any party from
any liability for any inaccuracy, misrepresentations or breach of this
Agreement prior to termination.
(b) The Company shall promptly, but in no event later than two
Business Days after termination, pay to the Parent a fee of $500,000
("Expense Fee") to defray the expenses incurred by Parent in connection
herewith, payable by wire transfer of immediately available funds if this
Agreement is terminated or the transactions contemplated herein fails to
close for any reason other than (i) termination in accordance with Sections
9.1(a), (b)(iii) or (iv) (unless the court order, judgment or decree
enjoining, restraining or prohibiting the Merger was sought by the Company
or any of its Affiliates in which case the Expense Fee shall be paid),
9.1(c)(iv), 9.1(c)(v) (unless the failure to qualify as a pooling of
interests is a result of the Company or any Significant Shareholder
intentionally taking any action or failing to take any action after the
date of this Agreement), 9.1(d)(i), 9.1(d)(ii), 9.1(d)(iii), or (ii) the
failure of Parent or Acquisition Sub to satisfy the closing conditions
(which are obligations of the Parent or Acquisition Sub) set forth in
Section 8.2.
(c) If this Agreement is terminated pursuant to Section 9.1(d)(v) or
if this Agreement is terminated or the transactions contemplated herein
fails to close as a result of (i) the breach of Section 7.2 by the Company
or any of its Affiliates; (ii) the failure to satisfy the condition set
forth in Section 8.1(a); (iii) the Company or any of its Subsidiaries
having entered into an agreement with any third party relating to the
acquisition of the Company's capital stock, options or other securities of
the Company (except agreements in the ordinary course of the Company's
business consistent with prior practices for amounts which are less than or
equal to 5% of the Company's then issued and outstanding securities), the
acquisition of any significant portion of the Company's assets, or for any
other merger, joint venture, recapitalization, consolidation or business
combination relating to the Company prior to January 31, 1999, or one year
from the Termination Date if the Termination Date is extended beyond
January 31, 1998 ("Company Acquisition"), then the Company shall promptly
upon the earlier of (x) the termination of this Agreement, or (y) the date
of the Company Acquisition, pay to the Parent a fee of $2,000,000 ("Breakup
Fee"), with a credit for any Expense Fee already paid to the Parent by the
Company, as the Parent's sole and exclusive remedy together with its rights
under the Stock Option Agreement, to defray the Parent's out-of-pocket and
other expenses, lost opportunity costs and the costs of tying up capital,
payable by wire transfer of immediately available funds.
(d) The Company acknowledges that the agreements contained in Section
9.2(b) and (c) are an integral part of the transactions contemplated by
this Agreement, and that, without these agreements, Parent would not enter
into this Agreement. Accordingly, if Company fails to promptly pay the
amounts due pursuant to this Section 9.2(b) and (c), and in order to obtain
such payment, Parent or Acquisition Sub commences a suit which results in a
judgment against the Company for such fees, Company shall also pay to
Parent its costs and expenses (including attorney's fees and expenses) in
connection with such suit, together with interest at 10% per annum from the
date such payment was due hereunder.
(e) If this Agreement is terminated or the transactions contemplated
herein fails to close as a result of the failure to satisfy the condition
set forth in Section 8.3(p) as a result of the Parent's intentionally
taking any action or intentionally failing to take any action after the
date of this Agreement (other than those disclosed in the Parent Disclosure
Schedule) that causes the Merger to fail as a "pooling of interests" for
accounting, reporting and tax purposes, the Parent shall promptly pay to
Company, but in no event later than two Business Days after the termination
of this Agreement $500,000 to defray the out-
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of-pocket and other expenses and lost opportunity costs incurred by the
Company in connection herewith as the Company's sole and exclusive remedy,
payable by wire transfer of immediately available funds.
(f) The Parent acknowledges that the agreements contained in Section
9.2(e) are an integral part of the transactions contemplated by this
Agreement, and that, without these agreements, Company would not enter into
this Agreement. Accordingly, if Parent fails to promptly pay the amounts
due pursuant to this Section 9.2(e), and in order to obtain such payment,
Company commences a suit which results in a judgment against the Parent for
such fees, Parent shall also pay to Company its costs and expenses
(including attorney's fees and expenses) in connection with such suit,
together with interest at 10% per annum from the date such payment was due
hereunder.
ARTICLE X
Indemnification
Section 10.1 Indemnification. The Company (the "Indemnifying Party")
shall indemnify, defend and hold harmless each of Parent, Acquisition Sub, any
corporation affiliated with Parent, and any director, officer, stockholder,
employee or agent of any of them (each, an "Indemnified Party") from and against
all claims, liabilities, losses, costs, deficiencies, damages (including
punitive, consequential or treble damages) or expenses, including reasonable
attorneys' fees and costs, interest and penalties in connection therewith, and
expenses and costs of investigation, obligations, liens, assessments, judgments
and fines ("Indemnified Loss") which may be sustained, suffered or incurred by
an Indemnified Party to the extent resulting or arising in any way from
(regardless of any investigation or inquiry by the Parent at any time, provided,
that no Indemnified Person shall be entitled to indemnification under this
Agreement with respect to the breach of any representation or warranty of the
Company, if the Parent had Actual Knowledge of the existence and scope of such
breach):
(a) The breach of any agreement, covenant, representation, warranty,
or other obligation of Company made or incurred under or pursuant to this
Agreement, the Stock Option Agreement or any other agreement or document
delivered pursuant thereto or in connection herewith;
(b) The assertion against any Indemnified Party of any liability or
obligation of Company or its affiliates or in connection with the business
of the Company or any of its Subsidiaries conducted prior to the Closing
Date;
(c) The assertion of any claim for injury, property or economic
damage, or other product or strict liability claim arising from the design,
manufacture, sale or distribution of or exposure to any product or
component thereof or the provision of any service by Company or any
Subsidiary prior to the Closing Date;
(d) Any violation by the Company or any of its Subsidiaries of or
liability under any Environmental Law (including remediation expenses), the
Occupational Safety and Health Act or any other U.S. federal, state or
local or any foreign statute, regulation, ordinance or other requirement
regulating or otherwise affecting public health, employee health and
safety, any employee wage and labor law regulation (including for the
failure to pay required overtime payments), including any such liability
arising out of the conduct prior to the Closing Date which is imposed upon
Parent (whether or not disclosed or required to be disclosed on the Company
Disclosure Schedule);
(e) The presence on any real property owned, used or leased by the
Company or any of its Subsidiaries or in the improvements thereon at or
prior to the Closing Date, including without limitation the soil, sub-soil
and groundwater, of "hazardous substances," "hazardous waste," "hazardous
constituents" and "solid waste" (as those terms are defined in any
applicable U.S. federal, state or local or foreign statute, regulation,
ordinance or requirement of any kind) in any quantity;
(f) The liability of the Company or any of its Subsidiaries for its
own Taxes or its liability, if any, for Taxes of others, including, but not
limited to the Company or any affiliate (for example, by reason of
transferee liability or application of Treas. Reg. Section 1.1502-6),
damage or Indemnified Losses
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payable with respect to Taxes claimed or assessed against the Company (i)
for any taxable period ending on or before the Effective Time or as a
result of this transaction (including any Section 338(h)(10) election) or
(ii) for any taxable period as a result of a breach of any of the
representations or warranties contained in Section 4.19 hereof;
(g) Any criminal misconduct by the Company or any of its Subsidiaries,
whether or not disclosed or required to be disclosed on the Company
Disclosure Schedule;
(h) Any breach of any agreement, covenant, representation, warranty or
other obligation by Dachis under the Irrevocable Proxy Agreement, the
Selling Shareholder's Agreement or the Escrow Agreement;
(i) Any breach of any agreement, covenant, representation, warranty or
other obligation by the Company under the Stock Option Agreement; and/or
(k) Any losses arising out of any joint liability due to affiliations,
partnerships, joint ventures, associations or other similar business
arrangements, whether by contract or by operation of law in which Company
or Dachis participated prior to the Closing Date.
Section 10.2. Participation in Litigation. In the event any suit or other
proceeding is initiated against an Indemnified Party with respect to which
Parent alleges the Company is or may be obligated to indemnify an Indemnified
Party hereunder, the Company shall be entitled to participate in such suit or
proceeding, at its expense and by counsel of its choosing, provided that (a)
such counsel is reasonably satisfactory to Parent, and (b) Parent shall retain
primary control over such suit or proceeding. Such counsel shall be afforded
access to all information pertinent to the suit or proceeding in question.
Parent shall not settle or otherwise compromise any such suit or proceeding
without the prior written consent of the Company, which consent shall not be
unreasonably withheld or delayed, if the effect of such settlement or compromise
would be to impose liability on the Company hereunder.
Section 10.3. Claims Procedure. In the event from time to time Parent
believes that it or any other Indemnified Party has or will suffer any
Indemnified Loss for which the Company is obligated to indemnify it hereunder
("Indemnified Event"), it shall promptly notify the Company in writing of the
matter, specifying therein the reason why Parent believes that the Company is or
will be obligated to indemnify, the amount, if liquidated, to be indemnified,
and the basis on which Parent has calculated such amount; if not yet liquidated,
the notice shall so state. The failure of the Indemnified Party to give such
notification shall not affect the indemnification provided in this Agreement.
The Indemnified Party may seek, and has sole and unfettered discretion in
seeking, indemnification from any other Person (including, without limitation,
Dachis) before or while seeking indemnification from the Indemnifying Party in
accordance with the terms of this Agreement and the Selling Shareholder's
Agreement, and nothing herein shall create any duty to seek indemnification from
the Indemnifying Party. An Indemnified Party may not seek indemnification under
this Article X for any amounts that the Indemnified Party has actually received
under any insurance policy, unless such recovery is sought pursuant to the
subrogation rights of the insurer. Any Indemnified Party may in its sole and
exclusive discretion determine whether or not it will seek insurance
payments/coverage under such policy. The Indemnified Party shall retain sole and
unfettered discretion to submit a claim seeking coverage under a policy of
insurance and nothing herein shall create a duty to submit such claim. The
Company shall pay any amount to be indemnified hereunder not more than five days
after receipt of notice from Parent of the liquidated amount to be indemnified
("Indemnification Amount") in accordance with Section 10.4. In the event any
payment is made after such fifth day, it shall bear interest from (and
including) the date due (but excluding the date of payment), at an interest rate
equal to five percent above the Prime Rate in effect on the date such payment
became due, but in no event to exceed the maximum contract rate permitted under
Applicable Laws, provided, however, that no such payment shall be due so long as
it is the subject of any bona fide, reasonable contest.
Section 10.4. Payment of Indemnification Losses. The Company shall pay
the Indemnified Loss of any Indemnified Party within ten (10) days of receipt of
notice from that Indemnified Party of an Indemnified Loss, unless the Company
has given a notice of dispute of the Indemnified Loss to the Indemnified Party
and the Escrow Agent, in which case the claim for Indemnified Loss shall be
subject to the provisions of Article XI of this Agreement.
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In order to preserve the pooling of interests treatment for the Merger as
anticipated by this Agreement, all Indemnified Losses (whether to be paid
pursuant to this Agreement or pursuant to an Award in accordance with Article
XI) shall be payable as follows:
(a) if the Indemnifying Party is the beneficial owner of Parent Common
Stock, through the surrender for cancellation of that number of
Certificates representing Parent Common Stock equal to (i) the total amount
of the Indemnified Loss divided by (ii) the Viad Price at the Effective
Time, regardless of the fair market value of the Parent Common Stock on the
date of payment; or
(b) if the Indemnifying Party does not own a sufficient number of
shares of Parent Common Stock to satisfy the Indemnified Loss, through the
payment of cash by wire transfer of immediately available funds to an
account designated by Parent of an amount equal to the amount of the
Indemnified Loss not paid in Parent Common Stock in accordance with Section
10.4(a).
Section 10.5. Limitations on Liability. The Company shall not have any
obligation to indemnify any Indemnified Party or Parties from, against, for or
in respect of any Indemnified Loss until such time as the Indemnified Party has
suffered an aggregate loss by reason of all such indemnity obligations in excess
of $500,000, in which case, the Company shall be required to indemnify such
Indemnified Party or Parties for the full amount of their losses, without
deduction. None of the limitations in this Article X shall apply to any matter
giving rise to a claim which, or the delay in discovery of which, is the
consequence of fraud or intentional concealment by the Company.
ARTICLE XI
Dispute Resolution
Section 11.1. Representatives. (a) Subject to Section 11.1(b), if any
dispute arises under or relates to this Agreement, at the written request of
either party each party will appoint a designated representative (the
"Representative") to meet for the purpose of resolving the dispute. The
Representatives will meet at a mutually agreeable place within 10 days after
either party makes a written request to the other for such a meeting. The
Representatives will honor reasonable requests to exchange information related
to the dispute and will make an effort to negotiate a resolution to the dispute.
Negotiations shall continue until the dispute is resolved or until either party
informs the other in writing that negotiations will not result in a mutually
acceptable resolution and a mediator should be appointed.
(b) The parties hereto agree that the circumstance in which disputes
between them will not be subject to the provisions of this Article XI is where
(i) there is an alleged breach of any provision of this Agreement relating to
Intellectual Property, confidentiality or nondisclosure, (ii) a party makes a
good faith determination that a breach of the terms of this Agreement by the
other party is such that irreparable harm to such party may result from the
breach such that equitable or other relief in the form of a temporary
restraining order or other immediate injunctive relief is the only adequate
remedy, or (iii) the determination of the satisfaction of the conditions to the
obligations of Parent and Acquisition Sub as set forth in Section 8.3. The
question of damages, if any, incurred by such party as a result of such breach
will be resolved pursuant to the dispute resolution procedures set forth in this
Article XI.
Section 11.2. Mediation. In the event that the dispute is not resolved
under Section 11.1, the dispute shall be submitted to nonbinding mediation (the
"Mediation"). The parties shall appoint a mutually agreeable neutral mediator
(the "Mediator"). If the parties are unable to agree on a Mediator within 10
days after the mediation is requested, either party may refer the matter to the
office of the American Arbitration Association ("AAA") for the limited purpose
of having AAA provide a panel of seven names from which the parties will select
a Mediator. If the parties are unable to agree on a person on the panel, the
parties shall alternately strike names from the panel until one name is left on
the panel. A coin toss will determine which party is entitled to strike the
first name. Except as otherwise provided in this Agreement or as the parties may
agree otherwise at the time of the Mediation, the Mediation shall be conducted
pursuant to the Commercial Mediation Rules of the AAA, as it may be amended from
time to time. The Mediation shall be conducted within 30 days after the
appointment of the Mediator. The parties shall share equally the cost of the
Mediation, including, but not
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limited to, fees of the Mediator, the cost, if any, of obtaining a location for
the Mediation and any filing fee. If during the Mediation the parties reach a
settlement of all or any of their disputes, they shall reduce the settlement to
the form of a written settlement agreement which shall be binding upon the
parties. The Mediation may be terminated only after both parties have
participated in the Mediation and are unable to agree on a settlement. Mediation
discussions or opinions of the Mediator are confidential and may not be relied
upon, referred to or introduced as evidence in any subsequent arbitration or
other proceeding.
Section 11.3. Arbitration.
(a) In the event the dispute is not resolved under Section 11.2, the
parties agree that the dispute shall be resolved by a private arbitration
conducted by one arbitrator. Within 10 days after the termination of
negotiations pursuant to Section 11.2, the parties shall agree upon one
arbitrator, selected from a permanent panel of no fewer than fifteen names
agreed upon by the parties (the "Permanent Panel"). The parties shall select the
arbitrator from the Permanent Panel by alternately striking names until only one
name remains on the Permanent Panel. A toss of a coin will determine which party
is to strike the first name. Neither party may choose as its arbitrator the
person who was its Representative under Section 11.2 of this Agreement or any
person who participated in the Mediation or any person who is an officer,
director or employee of either party or any affiliated entity of either party,
or a person who has a direct or indirect personal or financial interest in the
outcome of the arbitration.
(b) The Arbitrator shall set a hearing date for an arbitration (the
"Hearing") within 90 days from the date the Arbitrator is selected, unless
otherwise agreed by the parties, or unless otherwise ordered by the Arbitrator
at the request of either party.
(c) Unless otherwise agreed, within 15 days before the Hearing each party
shall submit to the Arbitrator with a copy to the other party a list of all
witnesses and exhibits which it intends to present at the Hearing.
(d) No later than 10 days before the scheduled Hearing, each party shall
provide to the Board of Arbitrators a short (not to exceed five single-spaced
pages or such other page limit as the Board of Arbitrators permits) a statement
of its position with regard to the dispute.
(e) At the Hearing, each party shall, unless it waives the opportunity,
make an oral opening statement, and an oral closing statement.
(f) The Arbitrator shall not be strictly bound by rules of procedure or
rules of evidence, but shall use the Federal Rules of Evidence as a guideline in
conducting the Hearing.
(g) When testimony is complete and each party has introduced its exhibits,
subject to the provisions of this Agreement, and each party has made a closing
statement pursuant the provisions of this Agreement or waived the opportunity to
do so, the Arbitrator shall declare the Hearing closed; provided, however, the
parties may submit post-hearing briefs pursuant to an agreed upon schedule or
one formulated by the Arbitrator.
(h) The Hearing shall be held at a location agreed upon by the parties and
convenient for the Arbitrator, or if the parties cannot agree upon a location,
at a location designated by the Arbitrator.
(i) The Hearing shall be conducted in private. Attendance at the Hearing
shall be limited to the following: (i) the Arbitrator; (ii) representatives of
each party; (iii) each party's attorneys and attorneys' assistants or advisors,
if any, including expert witnesses, if any; (iv) a court reporter if requested
by either party; and (v) any witnesses. The Arbitrator may sequester witnesses
upon the motion of a party.
(j) Within 30 days of the close of the Hearing or submission of the
post-hearing briefs, the Arbitrator shall issue a written opinion and award (the
"Award"), based on evidence, arguments and post-hearing briefs, if any. The
Award shall be a decision of the Arbitrator, shall resolve the parties' dispute,
and shall be final and binding on the parties. The fact that an opinion is
issued does not enlarge or restrict the authority of a court provided in the
Arbitration Act to review the arbitration proceedings or the Award. The
Arbitrator shall have the Award delivered to each Party in accordance with
Section 10.4.
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(k) Except as otherwise provided in this Agreement, there shall be no ex
parte communication regarding the subject matter of the Hearing between a party
or its attorneys and any Arbitrator from the time the Arbitrator is appointed
until after the parties receive the Award.
(l) The parties may agree to submit the dispute to the Arbitrator without a
Hearing, in which event the Arbitrator will render and deliver to the parties a
written opinion and Award within 30 days of being notified that the parties
waive the Hearing.
(m) Notwithstanding any other provision of this Agreement, the Arbitrator
shall have no power to delete from, add to, nor modify the terms of this
Agreement, and may not award any remedy which effectively conflicts directly or
indirectly with any provision of this Agreement.
(n) The arbitration shall be governed by the laws of the State of
Minnesota, including without limitation the provisions of the Minnesota Uniform
Arbitration Act, except as otherwise provided in this Agreement.
(o) The parties shall share equally the costs and expenses of the
arbitration, including, but not limited to, filing fees, fees of the arbitrators
and costs, if any, of obtaining a location for the arbitration. Each party shall
bear its own witness and expert fees, and copying and travel expenses. Each
party shall bear its own attorney fees relating to the dispute.
ARTICLE XII
General Provisions
Section 12.1. Definitions. Capitalized terms used in this Agreement
without definition herein shall have the meaning set forth in Schedule A
attached hereto.
Section 12.2. Amendment and Modification. To the extent permitted by
Applicable Law, this Agreement may be amended, modified or supplemented only by
a written agreement among Company, and Parent, whether before or after approval
of this Agreement by the stockholders of Company and Acquisition Sub (if in
existence at the time) or approval of the transactions contemplated by this
Agreement by the Board of Directors of Parent.
Section 12.3. Waiver. Any failure of Company on the one hand, or Parent
or Acquisition Sub on the other hand, to comply with any obligation, covenant,
agreement or condition herein may be waived by Parent or Acquisition Sub on the
one hand, or Company on the other hand, only by a written instrument signed by
the party granting such waiver, but such waiver or failure to insist upon strict
compliance with such obligation, covenant, agreement or condition shall not
operate as a waiver of, or estoppel with respect to, any subsequent or other
failure. Whenever this Agreement requires or permits consent by or on behalf of
any party hereto, such consent shall be given in writing in a manner consistent
with the requirements for a waiver of compliance as set forth in this Section
12.3.
Section 12.4. Survival. (a) Subject to Section 12.4(b), the respective
representations, warranties, covenants and agreements of Company on the one hand
and Parent and Acquisition Sub on the other hand contained herein or in any
certificates or other documents delivered prior to or at the Closing shall not
survive the execution and delivery of the Closing, but shall terminate at the
Effective Time, except for those contained in Section 1.2 (Effects of the
Merger), Article III (Conversion of Shares), Section 7.6 (Expenses), Section 7.7
(Agreement to Cooperate), Section 7.8 (Confidentiality), 7.9 (Tax Treatment),
7.10 (Pooling), 7.13 (Continuation of Indemnities; No Circular Indemnities), 9.2
(Effect of Termination or Abandonment), Article X (Indemnification), Article XI
(Dispute Resolution), 12.4 (Survival), 12.5 (Notices), 12.6 (Assignment), 12.7
(Expenses), 12.8 (Governing Law), 12.11 (Severability), 12.12 (Specific
Performance), 12.14 (Disclosure Schedules) and 12.16 (Parties in Interest).
(b) With respect to the representations and warranties of the Company set
forth in Article IV, such representations and warranties shall survive for a
period of one year following the Closing Date, except for the nonfiling of any
Tax Returns or the non-payment of any Taxes to any Governmental Authority in
which case, such representations and warranties shall survive until the
expiration of the applicable statute of limitations.
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<PAGE> 122
(c) The survival of the Closing of the Company's representations and
warranties shall not create, expand, alter or diminish any right of any
Indemnified Party against any current or former officer, director or shareholder
of Company, such rights being unaltered, and neither increased or diminished
hereby.
Section 12.5. Notices. All notices and other communications hereunder
shall be in writing and shall be deemed to have been duly given when delivered
in person, by facsimile, receipt confirmed, or on the next business day when
sent by overnight courier or on the second succeeding business day when sent by
registered or certified mail (postage prepaid, return receipt requested) to the
respective parties at the following addresses (or at such other address for a
party as shall be specified by like notice).
(a) If to Acquisition Sub or Parent, to:
Viad Corp
1850 North Central Avenue
Phoenix, Arizona 85077
Attn: Peter Novak, Vice President and General Counsel
Telephone: (602) 207-5913
Facsimile: (602) 207-5480
with a copy to:
Travelers Express Company, Inc.
1550 Utica Avenue South, Mail Stop 8060
Minneapolis, Minnesota 55416
Attn: Michael Berry
Telephone: (612) 591-3820
Facsimile: (612) 591-3870
and to:
Bryan Cave LLP
2800 North Central Avenue
Phoenix, Arizona 85253
Attn: Frank M. Placenti, Esq.
Telephone: (602) 280-8451
Facsimile: (602) 266-5938
(b) If to the Company to:
Game Financial Corporation
13705 First Avenue North
Minneapolis, Minn. 55441
Attn: Gary A. Dachis
Telephone: (612) 404-6580
Facsimile: (612) 476-8051
with a copy to:
Ravich, Meyer, Wilson, Kirkman, McGrath & Nauman, PA
4545 IDS Center
Minneapolis, Minn. 55402
Attn: Paul H. Ravich, Esq.
Telephone: (612) 332-8511
Facsimile: (612) 332-8302
Section 12.6. Binding Effect; Assignment. This Agreement and all of the
provisions hereof shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and permitted assigns. Neither this
Agreement nor any of the rights, interests or obligations hereunder shall be
assigned by any of the parties hereto prior to the Effective Time without the
prior written consent of the other party hereto,
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<PAGE> 123
except that Parent or Acquisition Sub may assign to any direct subsidiary
of Parent, including Travelers Express Company, Inc. and Surviving Corporation,
any and all rights, interests and obligations of Parent or of Acquisition Sub
under this Agreement.
Section 12.7. Expenses. All costs and expenses incurred in connection
with this Agreement and the transactions contemplated hereby shall be paid by
the party incurring such costs or expenses, subject to the rights of such party
contemplated under Section 7.6, above.
Section 12.8. Governing Law. This Agreement shall be deemed to be made
in, and in all respects shall be interpreted, construed and governed by and in
accordance with the internal laws of, the State of Minnesota.
Section 12.9. Interpretation. The article and section headings contained
in this Agreement are solely for the purpose of reference, are not part of the
agreement of the parties and shall not in any way affect the meaning or
interpretation of this Agreement. The headings contained in this Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. Whenever the words "include," "includes," or
"including" are used in this Agreement, they shall be deemed to be followed by
the words "without limitation."
Section 12.10. Entire Agreement. This Agreement and the documents or
instruments referred to herein including, but not limited to the Employment
Agreements, Stock Option Agreement, the Selling Shareholder's Agreement, the
Irrevocable Proxy Agreement, the Escrow Agreement, the Confidentiality Letter
and Exhibits and Schedules, the Disclosure Schedules referred to herein, which
Exhibits and Disclosure Schedules are incorporated herein by reference, embody
the entire agreement and understanding of the parties hereto in respect of the
subject matter contained herein. There are no restrictions, promises,
representations, warranties, covenants, or undertakings, other than those
expressly set forth or referred to herein. This Agreement supersedes all prior
agreements and understandings between the parties with respect to such subject
matter.
Section 12.11. Severability. In case any provision in this Agreement
shall be held invalid, illegal or unenforceable in a jurisdiction, such
provision shall be modified or deleted, as to the jurisdiction involved, only to
the extent necessary to render the same valid, legal and enforceable, and the
validity, legality and enforceability of the remaining provisions hereof shall
not in any way be affected or impaired thereby nor shall the validity, legality
or enforceability of such provision be affected thereby in any other
jurisdiction.
Section 12.12. Specific Performance. The parties hereto agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with their specific terms or were
otherwise breached. Accordingly, the parties further agree that each party shall
be entitled to an injunction or restraining order to prevent breaches of this
Agreement and to enforce specifically the terms and provisions hereof in any
court of the United States or any state having jurisdiction, this being in
addition to any other right or remedy to which such party may be entitled under
this Agreement, at law or in equity.
Section 12.13. Advice of Counsel. Each party represents and warrants that
in executing this Agreement: (a) such party has had the opportunity to obtain
independent accounting, financial, investment, legal, tax and other appropriate
advice; (b) the terms of the Agreement have been carefully read by such party
and its consequences explained to such party by his, her or its independent
advisors; (c) such party fully understands the terms and consequences of this
Agreement; (d) such party has not relied on any inducements, promises or
representations made by the other party (except those expressly set forth
herein) or the accountants, attorneys or other agents representing or serving
the other party; and (e) such party's execution of this Agreement is free and
voluntary.
Section 12.14. Disclosure Schedules. Company and Parent acknowledge that
the Schedules to this Agreement, the Company Disclosure Schedule and the Parent
Disclosure Schedule (a) relate to certain matters concerning the disclosures
required and transactions contemplated by this Agreement, (b) are qualified in
their entirety by reference to specific provisions of this Agreement, (c) are
not intended to constitute and shall not be construed as indicating that such
matter is required to be disclosed, nor shall such disclosure be construed as an
admission that such information is material with respect to Company or Parent,
as the case may be, except to the extent required by this Agreement, and (d)
disclosure of the information
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<PAGE> 124
contained in one section of the Company or Parent Disclosure Schedule shall not
be deemed as proper disclosure for all sections of Company or Parent Disclosure
Schedule, as the case may be, unless specific cross reference citations are
made.
Section 12.15. Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be deemed to be an original, but all of
which shall constitute one and the same agreement.
Section 12.16. Parties in Interest. This Agreement shall be binding upon
and inure solely to the benefit of each party hereto and the Surviving
Corporation and nothing in this Agreement or on any instrument or document
executed by any party in connection with the transactions contemplated hereby,
express or implied, is intended to confer upon any other person (other than the
Surviving Corporation) any rights or remedies of any nature whatsoever under
this Agreement.
[Intentionally left blank.]
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IN WITNESS WHEREOF, Parent and the Company have caused this Agreement to be
signed by their respective officers thereunto duly authorized and Parent have
caused this Agreement to be signed on behalf of Acquisition Sub, as of the date
first written above.
VIAD CORP,
A Delaware Corporation
By: /s/ PHILIP W. MILNE
------------------------------------
Name: Philip W. Milne
Title: President and CEO of
Travelers Express Company, Inc.
GAME ACQUISITION CORP.,
a Minnesota corporation
By: /s/ PHILIP W. MILNE
------------------------------------
Name: Philip W. Milne
Title: President and CEO of
Travelers Express Company, Inc.
GAME FINANCIAL CORP.,
A Minnesota Corporation
By: /s/ GARY A. DACHIS
------------------------------------
Name: Gary A. Dachis
Title: President
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<PAGE> 126
SCHEDULE A
Definitions
The following terms shall have the meanings specified in the following
section of the Agreement:
<TABLE>
<CAPTION>
DEFINED WORD SECTION WHERE DEFINED
- -------------------------------------------------------------------------- ---------------------
<S> <C>
AAA....................................................................... Section 11.2
Acquisition Sub........................................................... Introduction
Agreement................................................................. Introduction
Award..................................................................... Section 11.3(j)
Breakup Fee............................................................... Section 9.2(c)
Certificate............................................................... Section 3.2(b)
Certificate of Merger..................................................... Section 1.1
Closing................................................................... Section 1.4
Closing Date.............................................................. Section 1.4
Company................................................................... Introduction
Company Acquisition....................................................... Section 9.2(c)
Company Charter Documents................................................. Section 4.4(b)
Company 10-KSB............................................................ Section 4.3
Company Approvals......................................................... Section 4.18
Company Common Stock...................................................... Section 3.1(a)
Company Financial Statements.............................................. Section 4.5
Company Proposals......................................................... Section 7.3(a)
Company Reports........................................................... Section 4.5
Company Required Approvals................................................ Section 4.4(c)
Company SEC Reports....................................................... Section 4.5
Company Stockholders' Approval............................................ Section 7.4
Company Stockholders' Meeting............................................. Section 7.4
Contracts................................................................. Section 4.15(b)
Controlled Group.......................................................... Section 4.20
Dachis.................................................................... Recitals
Effective Time............................................................ Section 1.3
Escrow Agreement.......................................................... Section 8.3(q)
Exchange Agent............................................................ Section 3.2(a)
Exchange Fund............................................................. Section 3.2(a)
Exchange Ratio............................................................ Section 3.1(a)
Expense Fee............................................................... Section 9.2(b)
Fairness Opinion.......................................................... Section 8.1(i)
Hearing................................................................... Section 11.3(b)
Indemnification Amount.................................................... Section 10.3
Indemnified Event......................................................... Section 10.3
Indemnified Loss.......................................................... Section 10.1
Indemnified Party......................................................... Section 10.1
Indemnifying Party........................................................ Section 10.1
Intellectual Property..................................................... Section 4.14
Irrevocable Proxy Agreement............................................... Recitals
Mediation................................................................. Section 11.2
Mediator.................................................................. Section 11.2
Merger.................................................................... Section 1.1
</TABLE>
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<TABLE>
<CAPTION>
DEFINED WORD SECTION WHERE DEFINED
- -------------------------------------------------------------------------- ---------------------
<S> <C>
Merger Consideration...................................................... Section 3.2(b)
Options................................................................... Section 3.4
Parent.................................................................... Introduction
Parent Adverse Impact..................................................... Section 4.4(c)
Parent Common Stock....................................................... Section 3.1(a)
Parent Financial Statements............................................... Section 5.4
Parent Required Approvals................................................. Section 5.3(c)
Parent SEC Reports........................................................ Section 5.4
Parent 10-K............................................................... Section 5.2
Permanent Panel........................................................... Section 11.3(a)
Plan...................................................................... Section 4.20
Prospectus/Proxy Statement................................................ Section 7.3(a)
Proxy Statement........................................................... Section 4.9
Recent Company Financial Statements....................................... Section 4.5
Recent Company Reports.................................................... Section 4.3
Recent Parent Financial Statements........................................ Section 5.4
Recent Parent Reports..................................................... Section 5.2
Registration Statement.................................................... Section 5.7
Selling Shareholder's Agreement........................................... Recitals
Stock Option Agreement.................................................... Recitals
Surviving Corporation..................................................... Section 1.1
Taxpayer.................................................................. Section 4.19
Third Party Offer......................................................... Section 7.2(a)
Tribal Consents........................................................... Section 4.15(e)
Year 2000 Problem......................................................... Section 4.14(d)
</TABLE>
As used in this Agreement, the following terms shall have the meaning
specified below:
"Actual Knowledge" shall mean the facts and information that are within the
actual knowledge of Michael J. Berry, Joseph A. Hafermann, Anthony P. Ryan and
Stuart R. Meislik.
"Affiliate" with respect to any person, shall mean and include any person
controlling, controlled by or under common control with such person.
"Agreements" and "Contracts" shall include any written or oral contract,
purchase or sales order, franchise, insurance policy, license, undertaking,
arrangement, understanding, commitment, document, lease, sublease, deed,
mortgage plan, plan, indenture, bill of sale, assignment, proxy, voting trust or
other agreement or instrument.
"Applicable Laws" shall mean all applicable provisions of all (i)
constitutions, treaties, statutes, laws (including the common law), rules,
regulations, ordinances, permits, concessions, grants, franchises, licenses,
orders or other governmental authorization or approval of any Governmental
Authority, (ii) Governmental Approvals and (iii) orders, decisions, judgments,
awards and decrees of or agreements with any Governmental Authority.
"Approval" shall mean any consent, waiver, license, permit, certificate or
authorization.
"Breach" shall mean any default, event of default or event, occurrence,
condition or act which, with notice or lapse of time or both, would constitute a
breach, default, or event of default or give the other party or parties a right
to accelerate any obligation under the applicable agreement.
"Business Day" shall mean each weekday that is not a holiday under federal
or Minnesota law.
"COBRA" shall mean the Consolidated Omnibus Budget Reconciliation Act of
1985, as amended.
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<PAGE> 128
"Code" shall mean the Internal Revenue Code of 1986, as amended, and all
rules and regulations and revenue rulings and revenue procedures and amendments
promulgated thereunder. All citations to the Codes or to the regulations
promulgated thereunder shall include any amendments or any substitute or
successor provisions thereto.
"Company Disclosure Schedule" shall mean the separate disclosure schedules
executed and delivered by the Company simultaneously with the execution and
delivery of this Agreement, as it may be amended prior to the Closing Date.
"Company Material Adverse Effect" shall mean any event, claim, occurrence
or change in circumstances that would or could have a material adverse effect
upon any of the properties, assets, business, financial condition, results of
operations or prospects of the Company and/or its Subsidiaries or the Surviving
Corporation, taken as a whole.
"Company's Counsel" shall mean any of the following firms who are acting as
legal counsel to the Company: Dorsey & Witney LLP, Faegre & Benson, Kaplan,
Strangis & Kaplan, P.A., Oppenheimer, Wolff & Donnelly, Briggs & Morgan,
Lindquist & Vennum, PLLP, or Robins, Kaplan, Miller & Ciresi, PA.
"Dachis" shall mean Gary A. Dachis, together with his successors and
assigns.
"DOJ" shall mean U.S. Department of Justice.
"Environmental Law" shall mean all Applicable Laws in effect as of the
Closing Date issued, promulgated, approved, or entered relating to the
protection of the environment, the protection of public health and safety from
environmental concerns, or the protection of worker health and safety.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended.
"Escrow Agent" shall mean the Escrow Agent that is a party to the Escrow
Agreement.
"Escrowed Consideration" shall have the meaning set forth in the Selling
Shareholders' Agreement.
"Exchange Act" shall mean the Securities and Exchange Act of 1934, as
amended, and the rules and regulators promulgated thereunder.
"FTC" shall mean the U.S. Federal Trade Commission.
"GAAP" shall mean U.S. generally accepted accounting principles,
consistently applied from period to period.
"Game Price" shall mean $10.75 per share.
"Governmental Authority" shall mean any regulatory body, agency,
instrumentality, department, commission, court, tribunal, authority or board of
any government, whether foreign or domestic and whether national, federal,
state, provincial or local, including all Native American Authorities.
"HSR Act" shall mean the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended.
"IRS" shall mean the U.S. Internal Revenue Service.
"Liability" and "Liabilities" shall include any direct or indirect
indebtedness, claim, loss, damage, penalty, deficiency (including deferred
income tax and other net tax deficiencies), cost, expense, obligation, duties or
guarantee, whether accrued, absolute, or contingent, known or unknown, fixed or
unfixed, liquidated or unliquidated, matured or unmatured or secured or
unsecured.
"Maximum Indemnification Amount" shall mean Four Million and Five Hundred
Thousand Dollars ($4,500,000).
"Native American Tribe" shall mean a sovereign nation state of Native
American descent recognized by the United States of America.
"Native American Authority" shall mean any regulatory body, agency,
instrumentality, department, commission, court, tribunal, authority, board or
other governing body of any Native American Tribe.
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<PAGE> 129
"NYSE" shall mean the New York Stock Exchange.
"Parent Disclosure Schedule" shall mean the separate disclosure schedule
executed and delivered by the Parent simultaneously with the execution and
deliver of this Agreement, as it may be amended prior to the Closing Date.
"Parent Material Adverse Effect" shall mean a material adverse effect on
the properties, assets, business, financial condition, results of operations or
prospects of the Parent and its Subsidiaries, taken as a whole.
"Person" shall include an individual, a partnership, a joint venture, a
corporation, a limited liability company, a trust, an unincorporated
organization and a Government Authority or other legal body thereof or any other
entity.
"Prime Rate" shall mean the rate of interest published by The Wall Street
Journal each Business Day under the column "Money Rates" under the heading Prime
Rates or if The Wall Street Journal no longer publishes the Prime Rate, the
Prime Rate as established by other national financial newspapers.
"SEC" shall mean the Securities and Exchange Commission.
"Securities Act" shall mean the Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder.
"Significant Shareholders" shall mean Gary A. Dachis, Stephen Weisbrod,
Jeffrey L. Ringer, Deanna Frederichs-Moose, Michael Barcelow, Louis Dachis and
Jean Williams.
"Subsidiary" or "Subsidiaries" shall mean all direct or indirect
subsidiaries of the Company or the Parent, as the case may be.
"Tax" shall mean any federal, state, local, Native American Tribe, foreign
or provincial income, gross receipts, property, sales, profit, gross receipts,
capital, use, license, excise, franchise, employment, payroll, social security,
disability, occupation, property, severance, production, alternative or added
minimum, ad valorem, transfer or excise tax, or any other tax, custom, duty,
governmental fee or other like assessment or charge of any kind whatsoever,
together with any interest or penalty imposed by any Governmental Authority,
including all interest, penalties and additions imposed with respect to such
amounts and any obligations under any agreements or arrangements relating to
such agreements.
"Tax Return" shall mean a report, return, statements or other information
(including any attached schedules or any amendments to such report, return or
other information) required to be supplied to or filed with a governmental
entity and any Native American Authority with respect to any Tax, including an
information return, claim for refund, amended return or declaration or estimated
Tax.
"Termination Date" shall mean January 31, 1998, unless extended by the
mutual agreement of the Company and the Parent.
"Transfer" shall include any sale, pledge, gift, assignment, conveyance,
lease or disposition and the term "transferred" shall include sold, pledged,
gave, assigned, conveyed, leased or disposed of.
"Viad Price" shall mean the average of the closing sale price of Viad
Common Stock as listed on the NYSE for the 30 trading day period ending four
trading days prior to the Closing Date.
44
<PAGE> 130
EXHIBIT A
[FORM OF OPINION OF COUNSEL TO PARENT]
December , 1997
Game Financial Corporation
13705 First Avenue North
Minneapolis, Minnesota 55441
RE: Merger of Game Financial Corporation
with and into Game Acquisition Corp.
Ladies and Gentlemen:
We have acted as special counsel to Viad Corp, a Delaware corporation (the
"Parent") and Game Acquisition Corp., a Minnesota corporation ("Acquisition
Sub"), in connection with the proposed merger of the Acquisition Sub with and
into the Company (the "Transaction"). Capitalized terms used without definition
herein are used with the meanings attributed to such terms in the Agreement and
Plan of Merger, dated as of September 24, 1997 (the "Merger Agreement").
For the purpose of rendering this opinion, we have made, such factual and
legal examination as we deemed necessary under the circumstances, and in that
connection, we have examined or relied upon, among other things, originals or
copies of the following (collectively, the "Transaction Documents"):
1. The Agreement and Plan of Merger, dated as of September 24, 1997,
by and among the Parent, the Acquisition Sub and the Company;
2. The Selling Shareholder's Agreement, dated as of September 24,
1997, by and between the Parent and Gary A. Dachis;
3. The Escrow Agreement, dated as of September 24, 1997, by and among
Parent, Gary A. Dachis and the Escrow Agent identified therein;
4. The Stock Option Agreement, dated as of September 24, 1997, by and
among the Parent and the Company; and
5. The Irrevocable Proxy Agreement, dated as of September 24, 1997,
between the Parent, the Company and certain holders of Common Stock of the
Company set forth in such agreement.
With respect to certain factual matters relevant to this opinion, we have
relied solely upon, and assumed the accuracy, completeness and genuineness of,
certificates of public officials and if necessary, subsequent telephone
confirmation of the information included in such certificates, and various
certificates of officers of the Parent (the "Officers' Certificates") and other
written and oral representations made to us by officers of the Parent. With
respect to certain legal matters relevant to this opinion, we have relied solely
upon, and assumed the accuracy, completeness and genuineness of certificates and
legal opinion of the General Counsel of Parent and other written and oral
representations made to us by the Stuart Meislik, Assistant General Counsel of
the Parent and Scott E. Sayre, Secretary and Associate General Counsel of the
Parent. While we have no reason to believe that any of the information presented
in this letter or upon which we have relied in expressing any of the opinions
set forth herein is inaccurate or incomplete, we have not independently verified
the accuracy or completeness of such information.
In rendering this opinion, we have assumed:
(a) the genuineness and authenticity of all signatures of persons
executing the documents on behalf of the parties thereto (other than on
behalf of the Parent and Acquisition Sub);
(b) the authenticity and completeness of all documents submitted to us
as originals;
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(c) the conformity to authentic original documents of all documents
submitted to us as certified, conformed or photostatic copies;
(d) the due authorization, execution and delivery of the documents by
the parties thereto (other than the Parent and Acquisition Sub);
(e) the legal capacity of all natural persons executing the documents
examined by us;
(f) that the documents delivered in connection with the Transaction
accurately describe and contain the mutual understanding of the parties,
and that there are no oral or written statements or agreements that modify,
amend, vary, or purport to modify, amend or vary, any of the material terms
of such documents; and
(g) that no party executing the documents delivered in connection with
the Transaction is involved in any court or administrative proceeding
relating to or otherwise affecting the Transaction or subject to any order,
writ, injunction or decree of any court or governmental agency or
commission that would prohibit the execution and deliver of such documents
or the consummation of any transaction therein contemplated.
On the basis of the foregoing and subject to the limitations and
qualifications set forth herein, we are of the opinion that as of the date
hereof:
1. Each of Parent and Acquisition Sub is a corporation duly organized,
validly existing and in good standing under the laws of their states of
incorporation and have the requisite corporate power and authority to own,
lease and operate their assets and properties and to carry on their
respective businesses as they are now being conducted.
2. Parent and Acquisition Sub each are qualified to do business and
are in good standing in each jurisdiction in which the properties owned,
leased or operated by each or the nature of the businesses conducted by
each makes such qualification necessary, except where the failure to be so
qualified and in good standing will not, when taken together with all other
such failures, have a Parent Material Adverse Effect.
3. Parent has the power to vote all of the outstanding capital stock
of Acquisition Sub, and, as the sole stockholder of Acquisition Sub, has
approved the Merger Agreement and the transactions contemplated thereunder.
4. Parent has 200,000,000 authorized shares of Common Stock, of which
96,484,329 shares are outstanding on July 31, 1997. Parent holds a number
of shares of Parent Common Stock sufficient to convert all Company Common
Stock to Parent Common Stock pursuant to Article III of the Merger
Agreement, all of which are or shall be validly issued and are fully paid,
nonassessable and free of preemptive rights. Except as set forth in Section
5.2 of the Parent Disclosure Schedule or the Parent Form 10-K or any of the
Recent Parent Reports, as of the date of the Merger Agreement and as of the
date hereof, there are no outstanding subscriptions, options, warrants,
rights, calls, contracts, voting trusts, proxies and other commitments,
understandings, restrictions and arrangements, including any right of
conversion or exchange under any outstanding security, instrument or other
agreement obligating Parent to issue, deliver or sell, or cause to be
issued, delivered or sold, additional shares of the capital stock of Parent
or obligating Parent or any subsidiary of Parent to grant, extend or enter
into any such agreement or commitment, except pursuant to the Merger
Agreement. The shares of Parent Common Stock to be issued to stockholders
of the Company in the Merger will be at the Effective Time duly authorized,
validly issued, fully paid, nonassessable and free of preemptive rights.
5. Parent and Acquisition Sub have full corporate power and authority
to enter into the Merger Agreement and the Other Transaction Documents and
subject to obtaining the Parent Required Approvals, to consummate the
transactions contemplated thereby. The execution, delivery and perform-
<PAGE> 132
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ance of the Merger Agreement and Other Transaction Documents and the
consummation by Parent and Acquisition Sub of the transactions contemplated
thereby have been duly authorized by Parent's and Acquisition Sub's Boards
of Directors, and no other corporate proceedings on the part of Parent and
Acquisition Sub are necessary to authorize the execution and delivery of
the Merger Agreement and the Other Transaction Documents and the
consummation by Parent and Acquisition Sub of the transactions contemplated
thereby except for the obtaining of the Parent Required Approvals. The
Merger Agreement and the Other Transaction Documents has been duly and
validly executed and delivered by Parent and Acquisition Sub, and, assuming
the due authorization, execution and delivery hereof by the Company,
constitutes a valid and legally binding agreement of Parent enforceable
against each of them in accordance with their respective terms, subject to
the qualifications expressed herein.
6. Except as set forth in Section 5.3(b) of Parent Disclosure
Schedule, to the best of our knowledge, the execution and delivery of the
Merger Agreement by Parent does not, and the consummation by Parent of the
transactions contemplated thereby will not, violate, conflict with or
result in a breach of any provision of, or constitute a default (or an
event which, with notice or lapse of time or both, would constitute a
default) under, or result in the termination of, or accelerate the
performance required by, or result in a right of termination or
acceleration under, or result in the creation of any lien, security
interest, charge or encumbrance upon any of the properties or assets of
Parent or any of its Subsidiaries under any of the terms, conditions or
provisions of (i) the charters or By-Laws of Parent or any of its
Subsidiaries, (ii) subject to obtaining the Parent Required Approvals, any
statute, law, ordinance, rule, regulation, judgment, decree, order,
injunction, writ, permit or license of any court or governmental authority
applicable to Parent or any of its Subsidiaries or any of their respective
properties or assets, and (iii) any note, bond, mortgage, indenture, deed
of trust, license, franchise, permit, concession, contract, lease or other
instrument, obligation or agreement of any kind to which Parent or any of
its Subsidiaries is now a party or by which Parent or any of its
Subsidiaries or any of their respective properties or assets may be bound
or affected, excluding from the foregoing clauses (ii) and (iii) such
violations, conflicts, breaches, defaults, terminations, accelerations or
creations of liens, security interests, charges or encumbrances that would
not, in the aggregate, have a Parent Material Adverse Effect.
7. Except for Parent Required Approvals, no declaration, filing or
registration with, or notice to, or authorization, consent or approval of,
any governmental or regulatory body or authority is necessary for the
execution and delivery of the Merger Agreement by Parent or the
consummation by Parent or Acquisition Sub of the transactions contemplated
thereby, other than as contemplated in the Merger Agreement and such
filings, registrations, authorizations, consents or approvals the failure
of which to make or obtain, as the case may be, will not, in the aggregate,
have a Parent Material Adverse Effect.
In addition to the assumptions set forth above, the opinions expressed
herein are also subject to the following qualifications:
(a) This opinion is limited to the laws of the State of Arizona,
the federal laws of the United States currently in effect and to facts
known to us as they currently exist.
(b) No opinion is expressed by us as to the effect of the laws of
any other jurisdiction or as to matters of conflict or choice of law. In
every instance where the laws of another jurisdiction might normally
control the issue, we have nonetheless expressed our opinion based upon
the assumption (which we have not verified and as to which we express no
opinion) that the laws (including the principles of conflict of laws) of
such other jurisdiction is identical in all respects to the current laws
(excluding the principles of conflict of laws) of the State of Arizona,
and except where noted otherwise, the United States.
(c) We undertake no obligation to supplement this opinion if any
applicable laws change, or if we become aware of facts that might change
the opinions expressed above, after the date of this opinion.
<PAGE> 133
Page 4
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(d) The enforceability of any given document or provision thereof
may be limited by bankruptcy, insolvency, reorganization, or similar
federal or state laws, by general equity principles, by rules of law
governing other equitable remedies, and by certain other limitations
which may be imposed upon the availability of certain remedies or the
exercise of certain rights.
(e) The qualification of any opinion or statement herein by the use
of the words "to our knowledge," or similar phrase, means that, during
the course of our representation of the Parent and the Acquisition Sub
in this transaction, no information has come to the attention of the
particular attorneys in our firm who have represented the Parent and the
Acquisition Sub in connection with the Transaction that gives us current
actual knowledge of the existence of the matters, actions, proceedings,
items, documents or facts so qualified.
(f) We have not made any independent inquiry into, or review or
investigation of any orders, writs, judgments, injunctions,
determinations, awards or decrees by which the Company or any of its
properties may be bound or otherwise affected, or of suits,
investigations or proceedings, if any, pending or threatened against the
Parent and the Acquisition Sub except for a limited inquiry of the
Parent and the Acquisition Sub and the particular attorneys in our firm
referenced above, which did not reveal any information that would negate
or qualify the opinions expressed herein.
This opinion is furnished by us pursuant to Section 8.2(e) of the Merger
Agreement, as Special Counsel to the Parent and the Acquisition Sub, solely to
you for your benefit and may not be otherwise quoted or relied upon or delivered
to any person or entity, without our prior express written consent.
Very truly yours,
BRYAN CAVE LLP
<PAGE> 134
EXHIBIT B
[FORM OF OPINION OF COUNSEL TO THE COMPANY]
December , 1997
Viad Corp
1850 North Central Avenue
Phoenix, Arizona 85077
Game Acquisition Corp.
1850 North Central Avenue
Phoenix, Arizona 85077
Re: Merger of Game Financial Corporation
with and into Game Acquisition Corp.
Ladies and Gentlemen:
We have acted as special counsel to Game Financial Corporation, a Minnesota
corporation (the "Company") in connection with the proposed merger of Game
Acquisition Corp., a Minnesota corporation ("Acquisition Sub") with and into the
Company (the "Transaction"). Capitalized terms used without definition herein
are used with the meanings attributed to such terms in the Agreement and Plan of
Merger, dated as of September 24, 1997 (the "Merger Agreement"). This opinion is
furnished by us, as special counsel to the Company, pursuant to Section of the
Merger Agreement.
For the purpose of rendering this opinion, we have made, such factual and
legal examination as we deemed necessary under the circumstances, and in that
connection we have examined or relied upon, among other things, originals or
copies of the following (collectively, the "Transaction Documents"):
1. The Agreement and Plan of Merger, dated as of September 24, 1997,
by and among Viad Corp (the "Parent"), the Acquisition Sub and the Company;
2. The Selling Shareholder's Agreement, dated as of September 24,
1997, by and between the Parent and Gary A. Dachis;
3. The Escrow Agreement, dated as of September 24, 1997, by and among
Parent, Gary A. Dachis and the Escrow Agent identified therein;
4. The Stock Option Agreement, dated as of September 24, 1997, by and
among the Parent and the Company; and
5. The Irrevocable Proxy Agreements dated as of September 24, 1997,
between the Parent, the Company and certain holders of Common Stock of the
Company set forth in such agreements.
With respect to certain factual matters relevant to this opinion, we have
relied solely upon, and assumed the accuracy, completeness and genuineness of,
certificates of public officials and if necessary, subsequent telephone
confirmation of the information included in such certificates, and various
certificates of officers of the Company (the "Officers' Certificates"),
including certificates of public officials and officers of the Company delivered
to you as of the date hereof, and other written and oral representations made to
us by officers of the Company. [With respect to certain legal matters relevant
to this opinion, we have relied solely upon, and assumed the accuracy,
completeness and genuineness of the legal opinion of ,
counsel to the Company.] While we have no reason to believe that any of the
information presented in this letter or upon which we have relied in expressing
any of the opinions set forth herein is inaccurate or incomplete, we have not
independently verified the accuracy or completeness of such information.
<PAGE> 135
Viad Corp
Game Acquisition Corp.
December , 1997
Page 2
In rendering this opinion, we have assumed:
(a) the genuineness and authenticity of all signatures of persons
executing the documents on behalf of the parties thereto (other than on
behalf of the Company);
(b) the authenticity and completeness of all documents submitted to us
as originals;
(c) the conformity to authentic original documents of all documents
submitted to us as certified, conformed or photostatic copies;
(d) the due authorization, execution and delivery of the documents by
the parties thereto (other than the Company);
(e) the legal capacity of all natural persons executing the documents
examined by us;
(f) that the documents delivered in connection with the Transaction
accurately describe and contain the mutual understanding of the parties,
and that there are no oral or written statements or agreements that modify,
amend, vary, or purport to modify, amend or vary, any of the material terms
of such documents; and
(g) that no party executing the documents delivered in connection with
the Transaction is involved in any court or administrative proceeding
relating to or otherwise affecting the Transaction or subject to any order,
writ, injunction or decree of any court or governmental agency or
commission that would prohibit the execution and deliver of such documents
or the consummation of any transaction therein contemplated.
On the basis of the foregoing and subject to the limitations and
qualifications set forth herein, we are of the opinion that as of the date
hereof:
1. The Company is a corporation duly organized, validly existing and
in good standing under the laws of its state of incorporation and has the
requisite corporate power and authority to own, lease and operate its
assets and properties and to carry on its businesses as they are now being
conducted. The Company is qualified to do business and is in good standing
in each State listed in Section 4.1 of the Company Disclosure Schedule.
While we have not made any independent inquiry with respect thereto, we are
not aware of any failure by the Company to be qualified to do business with
any Native American Tribe listed in Section 4.1 of the Company Disclosure
Schedule.
2. The Company has 10,000,000 authorized shares of Common Stock, of
which 4,522,522 shares are outstanding as of August 31, 1997, all of which
are or shall be validly issued and are fully paid, nonassessable and free
of preemptive rights, and 1,000,000 shares of Preferred Stock, none of
which have been issued or are outstanding. To our knowledge after due
inquiry, except as set forth in Section 4.2 of the Company Disclosure
Schedule or the Recent Company Reports, as of the date hereof there are no
outstanding stock appreciation rights, subscriptions, options, warrants,
rights, calls, contracts, voting trusts, proxies or other commitments,
understandings, restrictions, or arrangements, including any right of
conversion or exchange under any outstanding security, instrument or other
agreement obligating the Company to issue, deliver, sell or cause to be
issued, delivered or sold, additional shares of the capital stock of the
Company or obligating the Company or any Subsidiary of the Company to
grant, extend or enter into any such agreement or commitment except
pursuant to the Merger Agreement. To our knowledge after due inquiry,
except for the Stock Option Agreement or as set forth in Section 4.2 of the
Company Disclosure Schedule, there are no commitments, understandings,
restrictions or arrangements obligating the Company to purchase, redeem or
acquire, or register under any securities law any shares of capital stock
or any securities or rights convertible into, exchangeable for, or
evidencing the right to subscribe to any shares of capital stock of the
Company.
<PAGE> 136
Viad Corp
Game Acquisition Corp.
December , 1997
Page 3
3. To our knowledge after due inquiry, except as set forth in Section
4.2 of the Company Disclosure Schedule and for any obligations in
connection with the Merger Agreement, there are no stockholder agreements,
voting trusts or other agreements or understandings to which the Company or
any of the Significant Shareholders of the Company is a party or to which
any of them is bound relating directly or indirectly to any Company Common
Stock. To our knowledge after due inquiry, except as stated in Section 4.2
of the Company Disclosure Schedule, there has not been, and there is not as
of the date hereof, any change in the equity interest of the Common Stock
of the Company since June 30, 1994. For purposes of this paragraph, "any
change in the equity interest of the Common Stock of the Company" includes
but is not limited to: distributions to shareholders of dividends;
additional issuances, exchanges or retirements of stock; reacquisition of
shares (treasury shares); grants, exercises, or cancellation of stock
options; outstanding warrants; and spin-offs.
4. Each Subsidiary of the Company is set forth in Section 4.3 of the
Disclosure Schedule, 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 to own, lease and operate
its assets and properties and to carry on its business as it is now being
conducted. To our knowledge after due inquiry, the Company has never had a
Subsidiary that is not listed in Section 4.3 of the Company Disclosure
Schedule as a subsidiary of the Company. Each such Subsidiary is qualified
to do business in the State(s) set forth in Section 4.3 of the Company
Disclosure Schedule. To our knowledge after due inquiry, except as set
forth in Section 4.3 of the Disclosure Schedule, all of the outstanding
shares of capital stock of each Subsidiary are validly issued, fully paid,
nonassessable and free of preemptive rights, and are owned directly or
indirectly by the Company free and clear of any liens, claims,
encumbrances, security interests, equities, charges and options of any
nature whatsoever. Each then existing Subsidiary of the Company is listed
in Exhibit 21 to the Company's Annual Report on Form 10-KSB for the year
ended December 31, 1996. To our knowledge after due inquiry, as of the
Closing Date there are no outstanding stock appreciation rights,
subscriptions, options, warrants, rights, calls, contracts, voting trusts,
proxies or other commitments, understandings, restrictions or arrangements
relating to the issuance, sale, voting, transfer, ownership or other rights
affecting any shares of capital stock of any Subsidiary of the Company,
including any right of conversion or exchange under any outstanding
security, instrument or agreement. To our knowledge after due inquiry,
Section 4.3 of the Company's Disclosure Schedule sets forth a list of all
corporations, partnerships, joint ventures and other business entities in
which the Company or any of its Subsidiaries directly or indirectly owns a
material interest and such Subsidiaries' direct and indirect share,
partnership or other ownership interest of each such entity.
5. The Company has the requisite corporate power and authority to
enter into the Merger Agreement and the Stock Option Agreement and subject
to Company Stockholders' Approval and the Company Required Approvals, to
consummate the transactions contemplated thereby. The execution, delivery
and performance of the Merger Agreement and the Stock Option Agreement and
the consummation by the Company of the transactions contemplated by the
Merger Agreement have been duly authorized by the Company's Board of
Directors, and no other corporate proceedings on the part of the Company
are necessary to authorize the execution and delivery of the Merger
Agreement and the Stock Option Agreement and the consummation by the
Company of the transactions contemplated thereby, except for the receipt of
the Company Stockholders' Approval and the obtaining of the Company
Required Approvals. The Merger Agreement and the Option Agreement have been
duly and validly executed and delivered by the Company and, assuming the
due authorization, execution and delivery thereof by the Parent and the
Acquisition Sub, constitute valid and legally binding agreements of the
Company enforceable against it in accordance with their respective terms.
<PAGE> 137
Viad Corp
Game Acquisition Corp.
December , 1997
Page 4
6. Except as set forth in Section 4.4 of the Company's Disclosure
Schedule, the execution and delivery of the Merger Agreement and the Stock
Option Agreement by the Company does not, and the consummation by the
Company of the transactions contemplated thereby will not, violate,
conflict with or result in a breach of any provision of, or constitute a
default (or an event which, with notice or lapse of time or both, would
constitute a default) under, or result in the termination of, or accelerate
the performance required by, or result in a right of termination or
acceleration under, or result in the creation of any lien, security
interest, charge or encumbrance upon any of the properties or assets of the
Company or any of its Subsidiaries under any of the terms, conditions or
provisions of (i) the respective charters or By-Laws of the Company or any
of its Subsidiaries, (ii) subject to obtaining the Company Required
Approvals and the receipt of the Company Stockholders' Approval, any
statute, law, ordinance, rule, regulation, judgment, decree, order,
injunction, writ, permit or license of any Governmental Authority (other
than a Native American Authority, as to which we express no opinion) known
to us after due inquiry to be applicable to the Company or any of its
Subsidiaries or any of their respective properties or assets, or (iii) any
note, bond, mortgage, indenture, deed of trust, license, franchise, permit,
concession, contract, lease or other instrument, obligation or agreement of
any kind known to us after due inquiry to which the Company or any of its
Subsidiaries is now a party or by which the Company or any of its
Subsidiaries or any of their respective properties or assets may be bound
or affected, excluding from the foregoing clauses (ii) and (iii) such
violations, conflicts, breaches, defaults, terminations, accelerations or
creations of liens, security interests, charges or encumbrances that would
not, in the aggregate, have a Company Material Adverse Effect.
7. Except for (i) the filings by the Company, the Parent [or Dachis]
required by Title II of the HSR Act, (ii) the filing of the Proxy Statement
with the SEC pursuant to the Exchange Act and the Securities Act and the
declaration of the effectiveness thereof by the SEC and filings with
various blue sky authorities, (iii) the filing of necessary certificates
with the State of Minnesota in connection with the Merger and (iv) any
approval required with respect to any license or permit required as a
result of the Merger Agreement or the transactions contemplated by the
Merger Agreement, no declaration, filing or registration with, or notice
to, or authorization, consent or approval of, any Governmental Authority
(other than a Native American Authority) and to our knowledge, a Native
American Authority, is necessary for the execution and delivery of the
Merger Agreement and the Stock Option Agreement by the Company or the
consummation by the Company of the transactions contemplated thereby,
except for such declarations, filings, registrations, notices,
authorizations, consents or approvals the failure of which to make or
obtain, as the case may be, will not, in the aggregate, have or may have a
Company Material Adverse Effect or Parent Material Adverse Effect.
8. To our knowledge after due inquiry, except as disclosed in the
Recent Company Reports, the Recent Company Financial Statements, or Section
4.8 of the Company's Disclosure Schedule, (a) there are no claims, suits,
actions or proceedings pending or threatened, nor are there any
investigations or reviews pending or threatened, against, relating to or
affecting the Company or any of its Subsidiaries, which, if adversely
determined, are reasonably likely to have a Company Material Adverse
Effect; and (b) except as contemplated by the Company Required Approvals,
neither the Company nor any of its Subsidiaries is subject to any judgment,
decree, injunction, rule or order of any Governmental Authority or any
Arbitrator which prohibits or restricts the consummation of the
transactions contemplated by the Merger Agreement or is reasonably likely
to have a Company Material Adverse Effect or Parent Material Adverse
Effect.
9. The Proxy Statement, together with all amendments and supplements
thereto, complies as to form in all material respects with all Applicable
Laws, including the provisions of the Exchange Act and the rules and
regulations promulgated by the Securities and Exchange Commission.
<PAGE> 138
Viad Corp
Game Acquisition Corp.
December , 1997
Page 5
10. To our knowledge after due inquiry, except as set forth in Section
4.10 of the Company's Disclosure Schedule or the Recent Company Reports,
neither the Company nor any of its Subsidiaries has violated, is in
violation of, or is under investigation with respect to or has been given
notice or been charged with any violation of, any law, statute, order,
rule, regulation, ordinance, or judgment of any Governmental Authority,
except for violations which in the aggregate would not have a Company
Material Adverse Effect or Parent Material Adverse Effect.
11. To our knowledge after due inquiry, except as disclosed in the
Recent Company Reports, the Recent Company Financial Statements or Section
4.11 of the Company's Disclosure Schedule, neither the Company nor any of
its Subsidiaries is in breach or violation of or in default in the
performance or observance of any term or provision of, and no event has
occurred which, with lapse of time or action by a third party (or both),
would result in a default under the respective charters or By-laws of the
Company or any of its Subsidiaries.
12. The Board of Directors of the Company has approved the Merger and
the transactions which are contemplated by the Merger Agreement and to
which the Company is a party. The provisions of MCL sec.302A.671 will not
prevent, and the provisions of MCL sec.302A.673 will not impair, impede or
prevent, any transaction contemplated by the Merger Agreement, including
the grant of the irrevocable proxies contemplated by the Irrevocable Proxy
Agreements.
13. The affirmative vote of the holders of a majority of the
outstanding Company Common Stock is the only vote of the holders of any
class or series of Company capital stock necessary to approve the Merger or
the other transactions contemplated by the Merger Agreement.
14. (a) To our knowledge after due inquiry, except as disclosed in
Section 4.15(c) of the Company Disclosure Schedule, no material contract
with a customer or supplier of the Company or its Subsidiaries provides, by
its terms, for or permits the customer to terminate the Contract at will,
for convenience, without cause, or upon a change of the ownership or
control of the Company.
(b) To our knowledge after due inquiry, except as disclosed in Section
4.15(d) of the Company Disclosure Schedule, no consent of any party to a
Contract (that is not a Native American Tribe) is required in connection
with the consummation of the transactions contemplated in the Merger
Agreement.
15. To our knowledge after due inquiry, except as disclosed in Section
4.18 of the Company Disclosure Schedule, none of the Company Approvals is
subject to termination by their express terms as a result of the execution
of the Merger Agreement by the Company or the consummation of the Merger,
and no further Approvals will be required in order to continue to conduct
the business currently conducted by the Company subsequent to the Closing,
except where the termination of such Company Approvals or the lack of such
further Company Approvals would not have a Company Material Adverse Effect
or Parent Material Adverse Effect.
16. To our knowledge, there are no pending or threatened claims,
actions, audits, or examinations with respect to any of the Plans and any
trust created thereunder by any Governmental Authority. To our knowledge,
there are no pending or threatened claims with respect to any of the Plans
and any trust created thereunder, by any employee or former employee that
participated in, currently participates in, or is or was eligible to
participate in, or beneficiary covered under any such Plan, or otherwise
involving any such Plan (other than routine claims for benefits).
17. (a) To our knowledge, based on officers' certificates but without
any independent inquiry, except as set forth in Section 4.21(a) of the
Company Disclosure Schedule, the Company and its Subsidiaries
<PAGE> 139
Viad Corp
Game Acquisition Corp.
December , 1997
Page 6
are and have been in compliance in all material respects with all
Applicable Laws respecting employment.
(b) To our knowledge after due inquiry, except as set forth in Section
4.21(a) of the Company Disclosure Schedule, there are no pending or
threatened claims against the Company or its Subsidiaries with respect to
employment or employment practices, terms and conditions of employment and
wages and hours, or relating to employment discrimination, equal
opportunity, affirmative action, worker's compensation, occupational safety
and health requirements and unemployment insurance and related matters.
18. To our knowledge, the Company and its Subsidiaries (i) are not
subject to any collective bargaining agreement with respect to any of their
respective employees, and (ii) are not subject to any contract, written or
oral, with any trade or labor union, employees' association or similar
organization.
19. Except as set forth in Section 4.21(f) of the Company Disclosure
Schedule, the Company and its Subsidiaries have no employment contracts or
consulting agreements currently in effect that are not terminable at will
(other than agreements with the sole purpose of providing for the
confidentiality of proprietary information or assignment of inventions).
Nothing has come to our attention during the course of our engagement in
connection with the transactions contemplated under the Merger Agreement which
has caused us to believe that the Company has breached any of its
representations, warranties or agreements therein or has made an untrue
statement of material fact or has omitted to state a material fact necessary to
make the statements made in the Merger Agreement, in light of the circumstances
under which they were made, not misleading.
In addition to the assumptions set forth above, the opinions expressed
herein are also subject to the following qualifications:
(a) The qualification of any opinion or statement herein by the use
of the words "to our knowledge," or similar phrase, means that during
the course of our representation of the Company in this transaction, no
information has come to the attention of the particular attorneys in our
firm who have represented the Company in connection with the Transaction
that gives us current actual knowledge of the existence of the matters,
actions, proceedings, items, documents or facts so qualified.
(b) We have not made any independent inquiry into, or review or
investigation of any orders, writs, judgments, injunctions,
determinations, awards or decrees by which the Company or any of its
properties may be bound or otherwise affected, or of suits,
investigations or proceedings, if any, pending or threatened against the
Company except for a limited inquiry of the Company and the particular
attorneys in our firm referenced above, which did not reveal any
information that would negate or qualify the opinions expressed herein.
(c) This opinion is limited to the laws of the State of Minnesota,
the federal laws of the United States currently in effect and to facts
known to us as they currently exist.
(d) No opinion is expressed by us as to the effect of the laws of
any other jurisdiction or as to matters of conflict or choice of law. In
every instance where the laws of another jurisdiction might normally
control the issue, we have nonetheless expressed our opinion based upon
the assumption (which we have not verified and as to which we express no
opinion) that the laws (including the principles of conflict of laws) of
such other jurisdiction is identical in all respects to the current laws
(excluding the principles of conflict of laws) of the State of
Minnesota, and except where noted otherwise, the United States.
<PAGE> 140
Viad Corp
Game Acquisition Corp.
December , 1997
Page 7
(e) The enforceability of any given document or provision thereof
may be limited by bankruptcy, insolvency, reorganization or similar
federal or state laws, by general equity principles, by rules of law
governing other equitable remedies, and by certain other limitations
which may be imposed upon the availability of certain remedies or the
exercise of certain rights, and with respect to indemnification for
violations of federal and state securities laws, by public policy under
such federal and state securities laws.
(f) We undertake no obligation to supplement this opinion if any
applicable laws change, or if we become aware of facts that might change
the opinions expressed above, after the date of this opinion.
This opinion is furnished solely to you for your benefit and may not be
otherwise quoted or relied upon or delivered to any person or entity, without
our prior express written consent.
Very truly yours,
ROBINS, KAPLAN, MILLER & CIRESI,
L.L.P.
<PAGE> 141
EXHIBIT C
ASSIGNMENT
WHEREAS (Name) , an individual, residing at ________________
("ASSIGNOR") has assisted in developing certain software for Game Financial
Corporation, a Minnesota corporation having a place of business at 13705 First
Avenue North, Plymouth, MN 55441-6114 ("ASSIGNEE"); and
WHEREAS, said software is used to acquire and process credit card cash
advance and check cashing transaction services in various gaming and retail
locations, and is used in conjunction with point of sale ("POS") terminal
applications and remote PC based application systems to process, manage, balance
and reconcile credit card and check cashing transactions, and includes, but is
not limited to the central office systems used to consolidate, process,
reconcile and settle the credit card and check cashing transactions acquired at
remote gaming and retail locations ("SOFTWARE"); and
WHEREAS, ASSIGNEE and ASSIGNOR desire to confirm that ASSIGNEE is the owner
of the SOFTWARE and all patent, copyright, trade secret and other intellectual
property rights therein ("INTELLECTUAL PROPERTY RIGHTS");
NOW, THEREFORE, in consideration of ten dollars ($10.00) and other good and
valuable consideration, the receipt of which is hereby acknowledged, ASSIGNOR
hereby assigns, grants, conveys and transfers unto ASSIGNEE and its successors
and assigns, ASSIGNOR's entire right, title and interest for the United States
and all other countries in and to said SOFTWARE and said INTELLECTUAL PROPERTY
RIGHTS, together with any and all exclusive rights therein throughout the world,
including all rights of action and damages for past infringement.
ASSIGNOR covenants and agrees for ASSIGNOR and his legal representatives,
heirs and assigns that ASSIGNOR will assist ASSIGNEE without expense to ASSIGNOR
or his legal representatives, heirs and assigns, in the making or prosecution of
any and all patent, copyright or other applications which ASSIGNEE may elect to
make covering said INTELLECTUAL PROPERTY RIGHTS, and in any administrative
proceedings, litigation or other proceedings that may arise involving said
INTELLECTUAL PROPERTY RIGHTS, and that ASSIGNOR will execute and deliver to
ASSIGNEE any and all additional documents and papers and perform any further
acts necessary to vest in ASSIGNEE the rights hereby conveyed.
ASSIGNOR warrants and represents that ASSIGNOR has full and unencumbered
legal and equitable title to said INTELLECTUAL PROPERTY RIGHTS, and that
ASSIGNOR's contributions to the SOFTWARE comprise original works of authorship,
and do not violate or infringe upon the intellectual property rights of any
third party.
ASSIGNOR:
NAME
- ----------------------------
STATE OF Minnesota )
COUNTY OF ) ss.
-------------------- )
The foregoing instrument was acknowledged before me this ____ day of
______________ , 1997 by (Name) .
--------------------------------------
Notary Public
SEAL
<PAGE> 142
ASSIGNMENT
WHEREAS, (Company Name) , a/n ____________corporation having a
place of business at ________________ ("ASSIGNOR") has assisted in developing
certain software for Game Financial Corporation, a Minnesota corporation having
a place of business at 13705 First Avenue North, Plymouth, MN 55441-6114
("ASSIGNEE"); and
WHEREAS, said software is used to acquire and process credit card cash
advance and check cashing transaction services in various gaming and retail
locations, and is used in conjunction with point of sale ("POS") terminal
applications and remote PC based application systems to process, manage, balance
and reconcile credit card and check cashing transactions, and includes, but is
not limited to the central office systems used to consolidate, process,
reconcile and settle the credit card and check cashing transactions acquired at
remote gaming and retain locations ("SOFTWARE"); and
WHEREAS, ASSIGNEE and ASSIGNOR desire to confirm that ASSIGNEE is the owner
of the SOFTWARE and all patent, copyright, trade secret and other intellectual
property rights therein ("INTELLECTUAL PROPERTY RIGHTS");
NOW, THEREFORE, in consideration of ten dollars ($10.00) and other good and
valuable consideration, the receipt of which is hereby acknowledged, ASSIGNOR
hereby assigns, grants, conveys and transfers unto ASSIGNEE and its successors
and assigns, ASSIGNOR's entire right, title and interest for the United States
and all other countries in and to said SOFTWARE and said INTELLECTUAL PROPERTY
RIGHTS, together with any and all exclusive rights therein throughout the world,
including all rights of action and damages for past infringement.
ASSIGNOR covenants and agrees for ASSIGNOR and its legal representatives,
successors and assigns that ASSIGNOR will assist ASSIGNEE without expense to
ASSIGNOR or its legal representatives, successors and assigns, in the making or
prosecution of any and all patent, copyright or other applications which
ASSIGNEE may elect to make covering said INTELLECTUAL PROPERTY RIGHTS, and in
any administrative proceedings, litigation or other proceedings that may arise
involving said INTELLECTUAL PROPERTY RIGHTS, and that ASSIGNOR will execute and
deliver to ASSIGNEE any and all additional documents and papers and perform any
further acts necessary to vest in ASSIGNEE the rights hereby conveyed.
ASSIGNOR warrants and represents that ASSIGNOR has full and unencumbered
legal and equitable title to said INTELLECTUAL PROPERTY RIGHTS, and that
ASSIGNOR's contributions to the SOFTWARE comprise original works of authorship,
and do not violate or infringe upon the intellectual property rights of any
third party.
ASSIGNOR:
COMPANY NAME
By
- --------------------------------------------
Name
- ----------------------------------------
Title
- ------------------------------------------
STATE OF Minnesota )
COUNTY OF ) ss.
---------------- )
The foregoing instrument was acknowledged before me this ____ day of
______________ , 1997 by (Name) , (Title) of
(Company Name) , a/n ________ corporation, on behalf of the
corporation.
------------------------------------------
Notary Public
SEAL
<PAGE> 143
EXHIBIT D
Viad Corp
Page 1
AFFILIATE AGREEMENT
Viad Corp
1850 North Central Avenue
Phoenix, AZ 85077
Ladies and Gentlemen:
I have executed this Affiliate Agreement as required by Section 8.3(s) of
the Agreement and Plan of Merger, dated as of September 24, 1997, among Viad
Corp, a Delaware corporation ("Parent"), Game Acquisition Corp., a Minnesota
corporation ("Acquisition Sub"), and Game Financial Corporation, a Minnesota
corporation (the "Company"), (hereinafter the "Merger Agreement"). I am
willingly undertaking the commitments contained in this Affiliate Agreement so
that the Parent and the Company may ensure that the merger contemplated by the
Merger Agreement (the "Merger") will qualify as a "pooling of interests" for all
accounting, reporting and tax purposes of the Parent and the Surviving
Corporation (as defined in the Merger Agreement). I understand that the Parent,
Acquisition Sub and the Company will rely on the representations, warranties,
covenants and undertakings that I make in this agreement and I agree that such
parties may so rely, and that their reliance is reasonable.
I further agree as follows:
1. I acknowledge, covenant and agree that the number of shares of
Parent Common Stock that I will receive in the Merger shall, as a
percentage of the shares of Parent Common Stock received by all
shareholders of the Company in the Merger, represent the same percentage
interest that I held in the Company immediately prior to the Closing Date
of the Merger.
2. I further acknowledge, covenant and agree that I will not sell or
otherwise reduce my risk relative to the Parent Common Stock which I
receive in the Merger until financial results covering at least thirty (30)
days of the post-closing combined operations of the Parent and the
Surviving Corporation have been published.
3. I further acknowledge, covenant, and agree that I have not and
will not reduce my risk relative to the number of Shares of the Company
Common Stock which I now own during the thirty-day period immediately
preceding the Effective Time of the Merger.
4. Without limiting the generality of the foregoing, I further
acknowledge, covenant and agree that, during the periods described in
paragraph 2 and 3 above, I will not sell, transfer, hypothecate, pledge,
hedge, sell short against the box, engage in the sale of put or call
options (whether covered or otherwise), or otherwise act to reduce the
financial risks associated with my ownership of such shares.
5. I agree that the foregoing covenants and agreements are supported
by adequate consideration, including the Parent Common Stock which I am to
receive in the Merger. I agree that this Affiliate Agreement is binding
upon my heirs, beneficiaries, executors, successors, representatives and
permitted assigns, as the case may be, and that this Affiliate Agreement
may be enforced by the Parent, the Acquisition Sub and the Surviving
Corporation, and their respective successors, representatives and assigns,
and that this Affiliate Agreement may be enforced against my estate,
notwithstanding my intervening death or incompetency.
6. I agree that this Affiliate Agreement shall be governed by and
construed in accordance with internal laws of the State of Minnesota
applicable to contracts made and to be performed therein. I irrevocably
submit to the jurisdiction of the courts within the State of Minnesota for
the purpose of any suit, action or proceeding arising out of or based upon
this Affiliate Agreement or the transactions
<PAGE> 144
Viad Corp
Page 2
contemplated hereby, and I hereby waive, to the extent not prohibited by
law, and agree not to assert, by way of motion, as a defense or otherwise,
in any such proceeding, any claim that I am not subject personally to the
jurisdiction of the above-named courts. I further appoint Ravich, Meyer,
Wilson, Kirkman, McGrath & Nauman, P.A., who has agreed to accept service
of process on my behalf, as my authorized agent to receive service of
process on my behalf in connection with any legal matters or proceedings
pertaining to this Affiliate Agreement or to any transactions contemplated
hereby. Alternatively, at the option of the Parent, I consent to the
service of process in any such proceeding by registered or certified mail,
return-receipt requested, at the address indicated below.
7. I acknowledge that the Merger represents a unique opportunity for
the Parent to acquire the business and operations of the Company, and that
such acquisition represents a unique opportunity for the Parent to
strengthen its financial condition so as to permit the Parent to expand its
current operations and possibly to acquire additional businesses, and to
improve its future earnings. I further acknowledge that any failure of the
Merger to qualify for pooling-of-interests treatment for accounting,
reporting and tax purposes would constitute an immediate and irreparable
harm to the Parent and Surviving Corporation that would result in financial
injury which would be substantial, irreparable and not susceptible to
measurement. Accordingly, I agree that the Parent, Acquisition Sub and
Surviving Corporation shall be entitled to require me to specifically
perform my obligations under this Affiliate Agreement and to sue me in any
court in the State of Minnesota to obtain such specific performance and
enjoin any transaction inconsistent with the agreements which I have made
herein. I further agree to waive any requirement for a bond and not to
contest any of the matters as set forth in this paragraph 7 in the event of
any attempt by Parent, Acquisition Sub or Surviving Corporation to seek any
such equitable remedy.
8. I agree that in the event of any action to enforce the covenants
or agreements that I have made in this Affiliate Agreement, the prevailing
party shall be entitled to the recovery of its attorneys' fees, expert fees
and other costs.
9. I agree that this Agreement shall terminate on the later of the
one year anniversary of the Merger or the complete performance of my
obligations under this Agreement.
SHAREHOLDERS' NAME AND ADDRESS:
By:
- ----------------------------------------------------
Date:
--------------------------------------
<PAGE> 145
APPENDIX III
================================================================================
SELLING SHAREHOLDER'S AGREEMENT
DATED AS OF SEPTEMBER 24, 1997
BY AND BETWEEN
VIAD CORP
AND
GARY A. DACHIS
================================================================================
<PAGE> 146
TABLE OF CONTENTS
ARTICLE I
ESCROW OF DACHIS SHARES
<TABLE>
<S> <C> <C>
Section 1.1. Escrow of Dachis Shares................................................. 1
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF DACHIS
Section 2.1. Authority............................................................... 2
Section 2.2. Accuracy of Company's Representations................................... 2
Section 2.3. Company Stock........................................................... 2
Section 2.4. Subsidiaries............................................................ 2
Section 2.5. Authority; Non-Contravention; Approvals................................. 3
Section 2.6. Reports and Financial Statements........................................ 4
Section 2.7. Absence of Undisclosed Liabilities...................................... 4
Section 2.8. Absence of Certain Changes or Events.................................... 4
Section 2.9. Litigation.............................................................. 4
Section 2.10. Accuracy of Proxy Statement............................................. 5
Section 2.11. No Violation of Law..................................................... 5
Section 2.12. Compliance with Organizational Document................................. 5
Section 2.13. State Takeover Statutes................................................. 5
Section 2.14. Vote Required........................................................... 5
Section 2.15. Intellectual Property................................................... 5
Section 2.16. Validity of Contracts................................................... 6
Section 2.17. Customers and Suppliers................................................. 7
Section 2.18. Indebtedness to and From Officers, Directors and Others................. 7
Section 2.19. Licenses and Permits.................................................... 7
Section 2.20. Taxes and Returns....................................................... 8
Section 2.21. ERISA Related Matters................................................... 9
Section 2.22. Labor and Employment Matters............................................ 10
Section 2.23. Tax Free Structure...................................................... 11
Section 2.24. No Breach............................................................... 11
Section 2.25. Un-bank Agreements...................................................... 11
Section 2.26. No Undisclosed Liabilities.............................................. 11
Section 2.27. Absence of Other Claims................................................. 11
Section 2.28. No Violations of Environmental Law...................................... 11
Section 2.29. No Tax Liabilities...................................................... 11
Section 2.30. No Criminal Conduct..................................................... 12
Section 2.31. No Violations of Other Agreement........................................ 12
Section 2.32. No Vendor Liabilities................................................... 12
Section 2.33. Advisors and Investment Bankers......................................... 12
Section 2.34. Complete Disclosure..................................................... 12
Section 2.35. Complete Performance.................................................... 12
ARTICLE III
CERTAIN AGREEMENTS
Section 3.1. Agreement to Cooperate.................................................. 12
Section 3.2. Confidentiality......................................................... 13
Section 3.3. Tax Treatment........................................................... 13
Section 3.4. Pooling................................................................. 13
Section 3.5. Affiliates Agreements................................................... 13
Section 3.6. Comply With Merger Agreement............................................ 13
</TABLE>
i
<PAGE> 147
<TABLE>
<S> <C> <C>
Section 3.7. Delivery of Certificate of Adequate Documentation....................... 13
Section 3.8. Continuation of Indemnities: No Circular Indemnities.................... 13
ARTICLE IV
TERMINATION, AMENDMENT AND WAIVER
Section 4.1. Termination............................................................. 14
Section 4.2. Effect of Termination or Abandonment.................................... 14
ARTICLE V
INDEMNIFICATION
Section 5.1. Indemnification......................................................... 14
Section 5.2. Participation in Litigation............................................. 15
Section 5.3. Claims Procedure........................................................ 15
Section 5.4. Payment of Indemnified Losses........................................... 15
Section 5.5. Limitations on Indemnity................................................ 15
Section 5.6. Special Indemnification................................................. 16
Section 5.7. Manner of Payment....................................................... 16
ARTICLE VI
DISPUTE RESOLUTION
Section 6.1. Representatives......................................................... 17
Section 6.2. Mediation............................................................... 17
Section 6.3. Arbitration............................................................. 17
ARTICLE VII
GENERAL PROVISIONS
Section 7.1. Definitions............................................................. 19
Section 7.2. Amendment and Modification.............................................. 19
Section 7.3. Waiver.................................................................. 19
Section 7.4. Survival................................................................ 19
Section 7.5. Notices................................................................. 19
Section 7.6. Binding Effect; Assignment.............................................. 20
</TABLE>
ii
<PAGE> 148
<TABLE>
<S> <C> <C>
Section 7.7. Expenses................................................................ 20
Section 7.8. Governing Law........................................................... 20
Section 7.9. Interpretation.......................................................... 20
Section 7.10. Entire Agreement........................................................ 20
Section 7.11. Severability............................................................ 21
Section 7.12. Specific Performance.................................................... 21
Section 7.13. Disclosure Schedules.................................................... 21
Section 7.14. Counterparts............................................................ 21
Section 7.15. Parties in Interest..................................................... 21
EXHIBIT A FORM OF ESCROW AGREEMENT
</TABLE>
iii
<PAGE> 149
SELLING SHAREHOLDER'S AGREEMENT
This SELLING SHAREHOLDER'S AGREEMENT, dated as of September 24, 1997 (this
"Agreement"), is by and between VIAD CORP, a Delaware corporation ("Parent") and
Gary A. Dachis, a significant shareholder of GAME FINANCIAL CORPORATION, a
Minnesota corporation ("Company") (together with his successors and assigns,
"Dachis"), solely in his capacity as a shareholder and not in his capacity as an
officer or director of the Company.
RECITALS:
WHEREAS, the respective Boards of Directors of Parent and the Company have
approved the merger ("Merger") of Game Acquisition Corp., a Minnesota
corporation ("Acquisition Sub") with and into the Company pursuant to the terms
and conditions set forth in the Agreement and Plan of Merger dated as of the
date hereof, by and among Parent, Acquisition Sub and the Company ("Merger
Agreement"); and
WHEREAS, as a condition and inducement to Parent and Acquisition Sub
entering into the Merger Agreement, concurrently with the execution and delivery
of this Agreement, Dachis has agreed to enter into this Agreement and has agreed
to and will enter into the Escrow Agreement, in substantially the form set forth
in Exhibit A or another form reasonably satisfactory to each of the parties
thereto ("Escrow Agreement"), by and among Parent, Dachis and the Escrow Agent
(as defined therein) on or before the Closing Date (as defined in the Merger
Agreement).
AGREEMENT:
NOW, THEREFORE, in consideration of the premises and the representations,
warranties, covenants and agreements contained herein, Parent and Dachis,
intending to be legally bound hereby, agree as follows (capitalized terms used
herein without definition shall have the meanings set forth in the Merger
Agreement or, if not defined therein, the Escrow Agreement):
ARTICLE I
Escrow of Dachis Shares
Section 1.1. Escrow of Dachis Shares. Pursuant to the terms of Section
3.6 of the Merger Agreement, and as security for the representations,
warranties, covenants, indemnities and other obligations of Dachis to the Parent
or the Surviving Corporation, at the Effective Time, Certificates that would
otherwise have been issued to Dachis in the Merger pursuant to Section 3.1 of
the Merger Agreement representing Parent Common Stock having an aggregate value
(based upon the Viad Price) equal to the sum of the Maximum Indemnification
Amount (as defined in Section 5.5(b)), and the Software Fee (as defined in
Section 5.6) shall be deposited with and held in escrow by the Escrow Agent (the
"Escrowed Shares"). All Escrowed Shares, together with the proceeds from the
sale of any Escrowed Shares and any interest accrued from such proceeds from the
Closing Date until its distribution in accordance with the terms of the Escrow
Agreement, shall be payable into and held in escrow pursuant to the terms of the
Escrow Agreement ("Escrowed Consideration"). Dachis may exercise any voting
rights that he may have with respect to the Escrowed Shares during the Escrow
Term and all dividends or other distributions (and interest accrued thereon)
payable with respect to the Escrowed Shares while such Escrowed Shares are held
in escrow during the Escrow Term shall be payable to Dachis.
1
<PAGE> 150
ARTICLE II
Representations and Warranties of Dachis
Dachis represents and warrants to Parent and Surviving Corporation as
follows:
Section 2.1. Authority. Dachis has the requisite capacity, power and
authority to enter into his Employment Agreement with the Company, the
Irrevocable Proxy Agreement, the Escrow Agreement, the Affiliate Agreement and
this Agreement and to consummate the transactions contemplated hereby and
thereby. The Employment Agreement, the Irrevocable Proxy Agreement, the Escrow
Agreement, the Affiliate Agreement and this Agreement have each been duly and
validly executed and delivered by Dachis and, assuming the due authorization,
execution and delivery of such agreements by Parent and Company, if applicable,
constitute valid and legally binding agreements of Dachis enforceable against
him in accordance with their respective terms, except to the extent that
enforcement may be limited by the laws of bankruptcy or insolvency, or laws
relating to creditor's rights generally.
Section 2.2. Accuracy of Company's Representations. To the best knowledge
of Dachis, the representations and warranties of the Company contained in the
Merger Agreement are true and correct in all material respects on and as of the
date of this Agreement and on and as of the Effective Time as if made on and as
of such date, except as contemplated or permitted by this Agreement and except
those which in the aggregate would not have a Company Material Adverse Effect or
Parent Adverse Impact.
Section 2.3. Company Stock. (a) The Company has 10,000,000 authorized
shares of Common Stock, of which 4,522,522 shares are outstanding as of August
31, 1997, all of which are or shall be validly issued and are fully paid,
nonassessable and free of preemptive rights and 1,000,000 shares of Preferred
Stock, none of which have been issued or are outstanding. Except as set forth in
Section 4.2 of the Company Disclosure Schedule, as of the date hereof and as of
the Closing Date, there are no outstanding stock appreciation rights,
subscriptions, options, warrants, rights, calls, contracts, voting trusts,
proxies or other commitments, understandings, restrictions, or arrangements,
including any right of conversion or exchange under any outstanding security,
instrument or other agreement obligating the Company to issue, deliver, sell or
cause to be issued, delivered or sold, additional shares of the capital stock of
the Company or obligating the Company or any Subsidiary of the Company to grant,
extend or enter into any such agreement or commitment except pursuant to this
Agreement. Except as set forth in the Stock Option Agreement or set forth in
Section 4.2 of the Company Disclosure Schedule, there are no commitments,
understandings, restrictions or arrangements obligating the Company to purchase,
redeem or acquire, or register under any securities law any shares of capital
stock or any securities or rights convertible into, exchangeable for, or
evidencing the right to subscribe to any shares of capital stock of the Company.
(b) Except as set forth in Section 4.2 of the Company Disclosure Schedule,
and except for any obligations in connection with this Agreement, there are not
as of the date hereof and there will not be at the Closing Date, any stockholder
agreement, voting trust or other agreements or understandings to which the
Company or any of the Significant Shareholders of the Company are a party or to
which any of them is bound relating directly or indirectly to any Company Common
Stock or other capital stock. Except as stated in Section 4.2 of the Company
Disclosure Schedule, there has not been, and there will not have been on the
Closing Date, any change in the equity interest of the Common Stock or other
capital stock of the Company since June 30, 1994. For purposes of this
subsection, "any change in the equity interest of the Common Stock or other
capital stock of the Company" includes but is not limited to: distributions to
shareholders of any dividends; additional issuances, exchanges or retirements of
stock; reacquisition of shares (treasury shares); grants, exercises, or
cancellation of stock options; outstanding warrants; and spin-offs.
Section 2.4. Subsidiaries. Each Subsidiary of the Company is set forth in
Section 4.3 of the Disclosure Schedule, is a corporation duly organized, validly
existing and in good standing under the laws of its jurisdiction of
incorporation and has the requisite power and authority to own, lease and
operate its assets and properties and to carry on its business as it is now
being conducted. The Company has never had a Subsidiary that is not listed in
Section 4.3 of the Company Disclosure Schedule as a Subsidiary of the Company.
Except as set forth in Section 4.3 of the Company Disclosure Schedule, each of
such Subsidiaries is qualified to do
2
<PAGE> 151
business, and is in good standing in the State(s) set forth in Section 4.2 of
the Company Disclosure Schedule, and without limiting the foregoing, to the best
knowledge of Dachis, is qualified to do business with the Native American Tribes
set forth in Section 4.3 of the Company Disclosure Schedule. Any such Subsidiary
does not lease or operate properties or otherwise conduct business in any other
State or to the best knowledge of Dachis, with any Native American Tribe. Except
as set forth in Section 4.3 of the Disclosure Schedule, all of the outstanding
shares of capital stock of each Subsidiary are validly issued, fully paid,
nonassessable and free of preemptive rights, and are owned directly or
indirectly by the Company free and clear of any liens, claims, encumbrances,
security interests, equities, charges and options of any nature whatsoever. Each
then existing Subsidiary of the Company is listed in Exhibit 21 to the Company
10-KSB. As of the date hereof and as of the Closing Date, there are no
outstanding stock appreciation rights, subscriptions, options, warrants, rights,
calls, contracts, voting trusts, proxies or other commitments, understandings,
restrictions or arrangements relating to the issuance, sale, voting, transfer,
ownership or other rights affecting any shares of capital stock of any
Subsidiary of the Company, including any right of conversion or exchange under
any outstanding security, instrument or agreement. Section 4.3 of the Company's
Disclosure Schedule sets forth a complete list of all corporations,
partnerships, joint ventures and other business entities in which the Company or
any of its Subsidiaries directly or indirectly owns an interest and such
Subsidiaries' direct and indirect share, partnership or other ownership interest
of each such entity.
Section 2.5. Authority; Non-Contravention; Approvals. (a) The Company has
full corporate power and authority to enter into the Merger Agreement and the
Stock Option Agreement and subject to Company Stockholders' Approval and the
Company Required Approvals, to consummate the transactions contemplated hereby.
The execution, delivery and performance of the Merger Agreement and the Stock
Option Agreement and the consummation by the Company of the transactions
contemplated thereby have been duly authorized by the Company's Board of
Directors, and no other corporate proceedings on the part of the Company are
necessary to authorize the execution and delivery of the Merger Agreement and
the Stock Option Agreement and the consummation by the Company of the
transactions contemplated hereby, except for receipt of the Company
Stockholders' Approval and the obtaining of the Company Required Approvals. The
Merger Agreement and the Stock Option Agreement have been duly and validly
executed and delivered by the Company and, assuming the due authorization,
execution and delivery hereof by Parent and Acquisition Sub, constitute valid
and legally binding agreements of the Company enforceable against it in
accordance with their respective terms, except to the extent that enforcement
may be limited by the laws of bankruptcy or insolvency, or laws relating to
creditors' remedies generally.
(b) Except as set forth in Section 4.4 of the Company's Disclosure
Schedule, the execution and delivery of the Merger Agreement and the Stock
Option Agreement by the Company does not, and the consummation by the Company of
the transactions contemplated thereby will not, violate, conflict with or result
in a breach of any provision of, or constitute a default (or an event which,
with notice or lapse of time or both, would constitute a default) under, or
result in the termination of, or accelerate the performance required by, or
result in a right of termination or acceleration under, or result in the
creation of any lien, security interest, charge or encumbrance upon any of the
properties or assets of the Company or any of its Subsidiaries under any of the
terms, conditions or provisions of (i) the respective charters or By-Laws of the
Company or any of its Subsidiaries, (ii) subject to obtaining the Company
Required Approvals and the receipt of the Company Stockholders' Approval, any
statute, law, ordinance, rule, regulation, judgment, decree, order, injunction,
writ, permit or license of any Governmental Authority (other than a Native
American Authority), or to the best knowledge of Dachis, any Native American
Authority, applicable to the Company or any of its Subsidiaries or any of their
respective properties or assets, or (iii) any note, bond, mortgage, indenture,
deed of trust, license, franchise, permit, concession, contract, lease or other
instrument, obligation or agreement of any kind to which the Company or any of
its Subsidiaries is now a party or by which the Company or any of its
Subsidiaries or any of their respective properties or assets may be bound or
affected, excluding from the foregoing clauses (ii) and (iii) such violations,
conflicts, breaches, defaults, terminations, accelerations or creations of
liens, security interests, charges or encumbrances that would not, in the
aggregate, have or may have a Company Material Adverse Effect or Parent Adverse
Impact.
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(c) Except for the Company Required Approvals, no declaration, filing or
registration with, or notice to, or authorization, consent or approval of, any
Governmental Authority (other than a Native American Authority), or, to the best
knowledge of Dachis, any Native American Authority, is necessary for the
execution and delivery of the Merger Agreement and the Option Agreement by the
Company or the consummation by the Company of the transactions contemplated
hereby, except for such declarations, filings, registrations, notices,
authorizations, consents or approvals the failure of which to make or obtain, as
the case may be, will not, in the aggregate, have or may have a Company Material
Adverse Effect or a Parent Adverse Impact.
Section 2.6. Reports and Financial Statements. Since December 31, 1992,
the Company and each of its Subsidiaries have filed all forms, statements,
reports and documents (including all exhibits, amendments and supplements
thereto) required to be filed by them under each of the Securities Act, the
Exchange Act, applicable laws and regulations of the Company's and its
Subsidiaries' jurisdictions of incorporation and the respective rules and
regulations thereunder, all of which complied in all material respects with all
applicable requirements of the appropriate act and the rules and regulations
thereunder. The Company has delivered to Parent true and complete copies of its
Company SEC Reports, and the Recent Company Financial Statements and will
deliver copies of all Company Reports filed after the date hereof but before the
Closing Date. As of their respective dates, the Company SEC Reports did 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 therein, in
light of the circumstances under which they were made, not misleading. The
Company Financial Statements fairly present in all material respects the
financial position of the Company and its Subsidiaries as of the dates thereof
and the results of their operations and cash flows for the periods then ended in
conformity with generally accepted accounting principles applied on a consistent
basis (except as may be indicated therein or in the notes thereto), subject, in
the case of the unaudited interim financial statements, to normal year end and
audit adjustments and any other adjustments described therein.
Section 2.7. Absence of Undisclosed Liabilities. Except as set forth in
Section 4.6 of the Company's Disclosure Schedule or in the Recent Company
Reports, neither the Company nor any of its Subsidiaries had at December 31,
1996, or has incurred since that date, any liabilities or obligations (whether
absolute, accrued, contingent or otherwise) of any nature, except liabilities,
obligations or contingencies (a) which are accrued or reserved against in the
Recent Company Financial Statements or reflected in the notes thereto or (b)
which were incurred after December 31, 1996, and were incurred in the ordinary
course of business and consistent with past practices and, in either case,
except for any such liabilities, obligations or contingencies which (i) would
not, in the aggregate, have a Company Material Adverse Effect or Parent Adverse
Impact, (ii) have been discharged or paid in full prior to the date hereof; or
(iii) would not be required to be disclosed in the Company Financial Statements
or the notes thereto.
Section 2.8. Absence of Certain Changes or Events. Except as set forth in
Section 4.7 of the Company's Disclosure Schedule or in the Recent Company
Reports, since December 31, 1996, there has not been any material adverse change
in the business, financial condition or the results of operations of the Company
and its Subsidiaries, taken as a whole that would result in a Company Material
Adverse Effect or Parent Adverse Impact and the Company and its Subsidiaries
have in all material respects conducted their respective businesses in the
ordinary course consistent with past practice.
Section 2.9. Litigation. Except as disclosed in the Recent Company
Reports, the Recent Company Financial Statements, or Section 4.8 of the
Company's Disclosure Schedule, (a) there are no claims, suits, actions or
proceedings pending or, to the knowledge of Dachis, threatened, nor to the
knowledge of Dachis are there any investigations or reviews pending or
threatened, against, relating to or affecting the Company or any of its
Subsidiaries, which, if adversely determined, is reasonably likely to have a
Company Material Adverse Effect; (b) there have not been any developments since
December 31, 1996 with respect to such claims, suits, actions, proceedings,
investigations or reviews which, individually or in the aggregate, is reasonably
likely to have a Company Material Adverse Effect; and (c) except as contemplated
by the Company Required Approvals, neither the Company nor any of its
Subsidiaries is subject to any judgment, decree, injunction, rule or order of
any Governmental Authority, or any arbitrator which prohibits or restricts the
consummation of the
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transactions contemplated hereby or is reasonably likely to have a Company
Material Adverse Effect or Parent Adverse Impact.
Section 2.10. Accuracy of Proxy Statement. The Proxy Statement which
shall be included in the Registration Statement will not at the time of the
mailing of the Proxy Statement and any amendment or supplement thereto (unless
the same is corrected prior to the Company Stockholders' Meeting), and at the
time of the Company Stockholders' Meeting, contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading or necessary to correct
any statement in any earlier filing with the SEC of such Proxy Statement or any
amendment or supplement thereto or any earlier communication to stockholders of
the Company with respect to the transactions contemplated by this Agreement. The
Proxy Statement will comply as to form in all material respects with all
Applicable Laws, including the provisions of the Exchange Act. Notwithstanding
the foregoing, no representation is made by Dachis with respect to information
supplied by Parent or Acquisition Sub or their representatives specifically for
inclusion in the Proxy Statement.
Section 2.11. No Violation of Law. Except as set forth in Section 4.10 of
the Company's Disclosure Schedule or the Recent Company Reports, neither the
Company nor any of its Subsidiaries has violated, is in violation of, or, to the
knowledge of Dachis, is under investigation with respect to or has been given
notice or been charged with any violation of, any law, statute, order, rule,
regulation, ordinance, or judgment of any Governmental Authority, except for (a)
any violations which in the aggregate would not have a Company Material Adverse
Effect or Parent Adverse Impact and (b) subject to Section 2.19, any violations
which arise solely from the failure by the Company or any of its Subsidiaries to
obtain Company Approvals from any Native American Authority.
Section 2.12. Compliance with Organizational Document. Except as
disclosed in the Recent Company Reports, the Recent Company Financial Statements
or Section 4.11 of the Company's Disclosure Schedule, to the knowledge of
Dachis, the Company and each of its Subsidiaries have not violated, are not in
breach or violation of or in default in the performance or observance of any
term or provision of, and no event has occurred which, with lapse of time or
action by a third party (or both), could result in a default under the
respective charters or By-laws of the Company or any of its Subsidiaries.
Section 2.13. State Takeover Statutes. The Board of Directors of the
Company has approved the Merger and any related transactions and the provisions
of MCL Section 302A.671 will not prevent, and the provisions of MCL 302A.673
will not impair, impede or prevent, any transaction contemplated hereby,
including the granting of the irrevocable proxy contemplated by the Irrevocable
Proxy Agreement.
Section 2.14. Vote Required. The affirmative vote of the holders of a
majority of the outstanding Company Common Stock is the only vote of the holders
of any class or series of Company capital stock necessary to approve the Merger
or the other transactions contemplated herein.
Section 2.15. Intellectual Property. Set forth on Section 4.14 of the
Company Disclosure Schedule is a complete list of the Intellectual Property.
Except as set forth in Section 4.14 of the Company Disclosure Schedule:
(a) The Company or its Subsidiaries are the sole and exclusive owner
of, or has the unrestricted right to use, any and all Intellectual
Property, and all items of Intellectual Property are valid and subsisting
and Section 4.14 of the Company Disclosure Schedule identifies the owner,
licensor and licensee of each item of Intellectual Property, as applicable;
(b) The conduct of the business and operations of the Company and its
Subsidiaries and the ownership, manufacture, purchase, sale, licensing, use
and performance of the products or services of the Company and its
Subsidiaries do not contravene, conflict with, violate or infringe upon any
patent, trademark, service mark, copyright or other intellectual property
right of a third party and no proprietary information or trade secret has
been misappropriated by the Company or any of its Subsidiaries from any
third party. In addition, the use, licensing or sale by or to the Company
as its Subsidiaries of any of the Intellectual Property does not require
the acquiescence, agreement or consent of any third party;
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(c) To Dachis' knowledge, the Intellectual Property, and the Company's
products and services are not subject to a challenge or claim of
infringement, interference or unfair competition or other claim and the
Intellectual Property, is not being infringed upon or violated by any third
party;
(d) With respect to any software included in the Intellectual
Property, there is no Year 2000 Problem, and the software will create,
store and generate output data related to or including dates on or after
January 1, 2000, without errors or omissions;
(e) Each item of software owned, used or licensed by the Company and
its Subsidiaries is fully operative, sufficiently developed and is
currently capable of performing its intended application(s) as described in
Section 4.14 of the Company Disclosure Schedule; and
(f) The Intellectual Property is sufficient, fit and adequate for the
reasonably anticipated or intended future business and operations of the
Company and its Subsidiaries.
Section 2.16. Validity of Contracts. (a) Except for contracts, leases,
commitments, plans, agreements and licenses, together with all amendments
thereto, listed in Section 4.15(a) of the Company Disclosure Schedule (complete
and accurate copies of which have been delivered to Parent) and the agreements
entered into in connection with the Merger, the Company and its Subsidiaries are
neither a party to nor subject to:
(i) any plan or contract providing for bonuses, pensions, options,
stock purchases, profit sharing, severance or termination pay, collective
bargaining or the like, or any contract or agreement with any labor union;
(ii) any employment contract or contract for services which requires
the payment of $30,000 or more annually or which is not terminable within
30 days by the Company or any of its Subsidiaries without liability for any
penalty or severance payment other than pursuant to the Company's severance
policies existing on the date hereof;
(iii) any contract or agreement for the purchase of any commodity,
material or equipment except purchase orders in the ordinary course for
less than $50,000 each;
(iv) any other contracts or agreements creating any obligation of the
Company or its Subsidiaries of $50,000 or more with respect to any such
contract;
(v) any contract or agreement providing for the purchase of all or
substantially all of its requirements of a particular product from a
supplier;
(vi) any contract or agreement which by its terms does not terminate
or is not terminable by the Company or its Subsidiaries or any successor or
assign within six months after the date hereof without payment of a penalty
of $50,000 or more;
(vii) any contract or agreement for the sale or lease of its products
or services not made in the ordinary course of business;
(viii) any contract with any sales agent or distributor of products or
services of the Company or any subsidiary;
(ix) any contract containing covenants limiting the freedom of the
Company or its Subsidiary to compete in any line of business or with any
person or entity;
(x) any contract or agreement for the purchase of any fixed asset for
a price in excess of $50,000 whether or not such purchase is in the
ordinary course of business;
(xi) any license agreement (as licensor or licensee);
(xii) any indenture, mortgage, promissory note, loan agreement,
guaranty or other agreement or commitment for the borrowing of money and
any related security agreement;
(xiii) any contract or agreement with any officer, employee, director
or stockholder of the Company or any Subsidiary or with any persons or
organizations controlled by or affiliated with any of them;
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(xiv) any partnership, joint venture, or other similar contract,
arrangement or agreement;
(xv) any registration rights agreements, warrants, warrant agreements
or other rights to subscribe for securities, any voting agreements, voting
trusts, shareholder agreements or other similar arrangements or any stock
purchase or repurchase agreements or stock restriction agreements; or
(xvi) any other contract, written or oral, not described in
subsections (i)-(xv) which is material to the business or operations of the
Company.
(b) All Contracts are valid and are in full force and effect and constitute
legal, valid and binding obligations of the Company and its Subsidiaries and the
other parties thereto, enforceable in accordance with their respective terms,
except to the extent that enforcement may be limited by the laws of bankruptcy
or insolvency or other laws relating to creditors' remedies generally. Neither
the Company, its Subsidiaries, nor any other party to any Contract of the
Company or a Subsidiary, is in default in complying with any provisions thereof,
and no condition or event or facts exists which, with notice, lapse of time or
both would constitute a default thereof on the part of either of the Company, or
any Subsidiary or on the part of any other party thereto in any such case that
could have a Company Material Adverse Effect.
(c) Except as disclosed in Section 4.15(c) of the Company Disclosure
Schedule, no Contract with a customer or supplier of the Company or its
Subsidiaries provides, by its terms, for or permits the customer to terminate
the Contract at will, for convenience, without cause, or upon a change of the
ownership or control of the Company.
(d) Except as disclosed in Section 4.15(d) of the Company Disclosure
Schedule, no consent of any party to a Contract that is not a Native American
Tribe is required in connection with the consummation of the transactions
contemplated herein and in the Merger Agreement.
(e) With respect to any Contracts to which a Native American Tribe is a
party, to the best knowledge of Dachis, except as disclosed in Section 4.15(e)
of the Company Disclosure Schedule, no consent of any Native American Tribe is
required for the consummation of the transactions contemplated herein and in the
Merger Agreement.
Section 2.17. Customers and Suppliers. Section 4.16 of the Company
Disclosure Schedule sets forth a true, complete and correct list of all
customers from which the Company has received revenues of over $100,000 and the
10 largest suppliers of the Company and its Subsidiaries by volume of purchases,
for each of the years ended December 31, 1994, 1995 and 1996 and for the six
month period ended June 30, 1997. Except as set forth in Section 4.16 of the
Company Disclosure Schedule, the Company and its Subsidiaries have not received
any indication from any material supplier of the Company or any of its
Subsidiaries to the effect that, and has no reason to believe that, such
supplier will stop, or materially decrease the rate of, supplying materials,
products or services to the Company or its Subsidiaries. Except as set forth in
Section 4.16 of the Company Disclosure Schedule, the Company and its
Subsidiaries have not received any indication from any material customer of the
Company or its Subsidiaries to the effect that, and has no reason to believe
that, such customer will stop, or materially decrease the use of the services of
the Company or any of its Subsidiaries.
Section 2.18. Indebtedness To and From Officers, Directors and
Others. Except as set forth in Section 4.17 of the Company Disclosure Schedule,
(a) the Company and its Subsidiaries are not indebted to any shareholder,
director, officer, employee or agent of the Company and its Subsidiaries except
for amounts due as normal salaries, wages, overtime payments, employee benefits
and bonuses and in reimbursement of ordinary expenses on a basis consistent with
the past practices of the Company and (b) no shareholder, director, officer,
employee or agent of the Company or any of its Subsidiaries is indebted to the
Company or any of its Subsidiaries except for advances for ordinary business
expenses on a basis consistent with the past practices of the Company.
Section 2.19. Licenses and Permits. Section 4.18 of the Company
Disclosure Schedule lists all Company Approvals required from any Governmental
Authority (other than a Native American Authority) and to the best knowledge of
Dachis, any Native American Authority in order for the Company and its
Subsidiaries to conduct its business. The Company has obtained all Company
Approvals (other than from
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Native American Authorities), which are valid and in full force and effect, and
to the best knowledge of Dachis, the Company has obtained all Company Approvals
from Native American Authorities and to the Company's knowledge, such approvals
are in full force and effect, except where the lack of such Company Approvals
would not have a Company Material Adverse Effect or Parent Adverse Impact.
Except as disclosed in Section 4.18 of the Company Disclosure Schedule, none of
the Company Approvals is subject to termination by their express terms as a
result of the execution of this Agreement by the Company or the consummation of
the Merger. No further Company Approvals (other than from Native American
Authorities) and, to the best knowledge of Dachis, no further Company Approvals
from any Native American Authority will be required in order to continue to
conduct the business currently conducted by the Company subsequent to the
Closing, except where the termination of such Company Approvals or the lack of
such further Company Approvals would not have a Company Material Adverse Effect.
Except as disclosed in Section 4.18 of the Company Disclosure Schedule or in any
other schedule thereto, neither the Company nor any of its Subsidiaries is
subject to nor bound by any agreement, judgment, decree or order which may have
a Company Material Adverse Effect or Parent Adverse Impact.
Section 2.20. Taxes and Returns. (a) Except as disclosed in Section
4.19(a) of the Company Disclosure Schedule, each Taxpayer has timely filed, or
caused to be timely filed all Tax Returns required to be filed and all such
returns were complete and accurate in all material respects, and has paid,
collected or withheld, or caused to be paid, collected or withheld, all Taxes
required to be paid, collected or withheld, other than such Taxes for which
adequate reserves in the Company Financial Statements have been established or
which are being contested in good faith. Except as set forth in Section 4.19(a)
of the Company Disclosure Schedule, there are no claims or assessments pending
against any Taxpayer for any alleged deficiency in any Tax, and no Taxpayer has
been notified in writing of any proposed Tax liens, claims or assessments
against any Taxpayer (other than in each case, claims or assessments for which
adequate reserves in the Company Financial Statements have been established or
which are being contested in good faith). Except as set forth in Section 4.19(a)
of the Company Disclosure Schedule, no Taxpayer has any waivers or extensions of
any applicable statute of limitations to assess any Taxes in excess of $10,000.
Except as set forth in Section 4.19(a) of the Company Disclosure Schedule, there
are no outstanding requests by any Taxpayer for any extension of time within
which to file any material Tax Return or within which to pay any material
amounts of Taxes shown to be due on any Tax Return.
(b) To the best knowledge of Dachis, there are no liens for material
amounts of Taxes on the assets of the Company or any of its Subsidiaries except
for statutory liens for current Taxes not yet due and payable.
(c) Other than as set forth on Section 4.19(c) of the Company Disclosure
Schedule, there have been no audits and there are no ongoing audits of any Tax
Returns or reports of any Tax filed by Taxpayer. There is set forth on Section
4.19(c) of the Company Disclosure Schedule a brief description of the status of
all prior audits, all ongoing audits and all notifications of audits for any
Taxpayer, and except as otherwise disclosed on such Section 4.19(c) of the
Company Disclosure Schedule all deficiencies resulting from such audits have
either been paid or adequately provided for in the Company Financial Statements.
(d) Section 4.19(d) of the Company Disclosure Schedule sets forth all
elections made by Taxpayer in the past five years that remain in effect for any
Taxpayer with respect to Taxes. Except as set forth on Section 4.19(d) of the
Company Disclosure Schedule, there are no ongoing audit adjustments of Taxes
that will affect taxable periods subsequent to the audit.
(e) Except as set forth in Section 4.19(e) of the Company Disclosure
Schedule, (i) there has not been made with respect to any Taxpayer, or any
property held by any Taxpayer, any consent under Section 341 of the Code (or any
corresponding provisions of state, local or foreign income Tax Law), (ii) no
property of any Taxpayer is "tax exempt use property" within the meaning of
Section 168(h) of the Code, and (iii) no Taxpayer is a party to any lease made
pursuant to former Section 168(f)(8) of the Code.
(f) Except as set forth in Section 4.19(f) of the Company Disclosure
Schedule, no Taxpayer is party to any Tax sharing agreement or any other
agreement with respect to Taxes.
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(g) Except as disclosed in Section 4.19(g) of the Company Disclosure
Schedule, the charges, accruals and reserves on the books of the Company with
respect to Taxes due and payable after the Closing Date have been presented in
accordance with GAAP consistently applied.
(h) Except as set forth in Section 4.19(h) of the Company Disclosure
Schedule, no Taxpayer is a party to any joint venture, partnership, or other
arrangement or contract that could be treated as a partnership for federal
income tax purposes.
Section 2.21. ERISA Related Matters. (a) Section 4.20 of the Company
Disclosure Schedule sets forth a complete list of all Plans of the Company and
its Subsidiaries.
(b) The Company has delivered to Parent true, complete and correct copies,
together with all amendments thereto, of (i) each Plan (other than certain union
Plans listed in Section 4.20(b) of the Company Disclosure Schedule which cannot
be obtained upon reasonable effort or, in the case of any unwritten Plans,
descriptions thereof), (ii) the three most recent annual reports on Form 5500
filed with the IRS with respect to each Plan (if any such report was required),
(iii) the most recent summary plan description for each Plan for which such a
summary plan description is required, (iv) each trust agreement and group
annuity contract relating to any Plan; (v) reasonable evidence of adoption for
each Plan; and (vi) a complete copy of each IRS determination letter for each
Plan for which such a letter was obtained. Neither the Company nor any
corporation or trade or business (whether or not incorporated) which would be or
was treated as a member of Controlled Group, is now sponsoring or contributing
to or ever has sponsored or contributed to, prior to the Closing Date, any Plan
subject to Title IV of ERISA.
(c) Except as set forth in Section 4.20 of the Company Disclosure Schedule,
there exists no liability in connection with any Plan that has been terminated
and all procedures for termination of such plans have been properly followed.
(d) Neither the Company nor any of its Subsidiaries or any of the Plans, or
any trust created thereunder, or any trustee or administrator thereof, or any
other "disqualified person" within the meaning of Section 4975(e)(2) of the
Code, has engaged in a transaction in connection with which the Company or any
such Subsidiaries or any trustee or administrator of the Plans or any such
trust, or any other such "disqualified person," could be subject to either a
liability or civil penalty assessed pursuant to Sections 409, 502(i) or 502(l)
of ERISA or a tax imposed pursuant to Section 4975 through 4980 of the Code.
(e) Except as described in Section 4.20(c) of the Company Disclosure
Schedule, each of the Plans and any trust created thereunder has been operated
and administered in accordance with its terms and in compliance with Applicable
Laws, including but not limited to ERISA and the Code. There are no pending or
threatened claims, action, audits, or examinations with respect to any of the
Plans and any trust created thereunder by any Governmental Authority. There are
no pending or threatened claims with respect to any of the Plans and any trust
created thereunder, by any employee or former employee that participated in,
currently participates in, or is or was eligible to participate in, or
beneficiary covered under any such Plan, or otherwise involving any such Plan
(other than routine claims for benefits).
(f) All contributions required to be made to each Plan have been timely
made or accrued for on the Company Financial Statements. All account allocations
required to have been made under each Plan and Applicable Law have been made.
(g) None of the Plans or any trust established thereunder has incurred any
"accumulated funding deficiency" (as defined in Section 302 of ERISA and Section
412 of the Code), whether or not waived, as of the last day of the most recent
fiscal year of each of the Plans. No contribution failure has occurred with
respect to any Plan sufficient to give rise to a lien under Section 302(f) of
ERISA.
(h) With respect to any Plan that provides welfare benefits as defined in
Section 419(e) of the Code, except as disclosed in Section 4.20 of the Company
Disclosure Schedule, no such Plan is unfunded or funded through a welfare
benefits fund, as such term is defined in Section 419(e) of the Code.
(i) With respect to any "welfare plan" (as defined in Section 3(1) of
ERISA) which qualifies as a "group health plan" under Section 607(1) of ERISA
and Section 4980B of the Code and related regulations
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(relating to the benefit continuation rights imposed by COBRA), the Company, and
each of its Subsidiaries, such group health plan and the administrator of such
group health plan have all complied, in all material respects, with all
reporting, disclosure, notice, election and other benefit requirements imposed
under COBRA, as and when applicable; and the Company has not incurred any direct
or indirect liability, nor is the Company subject to any loss, assessment,
excise tax penalty, loss of federal income tax deduction or other sanction
arising on account of or in respect of any direct or indirect failure to comply
with such COBRA requirements.
(j) With respect to each Plan that is funded wholly or partially through an
insurance policy, there will be no liability of the Company or its Subsidiaries
as of the Closing Date that has not been either paid or reasonably estimated and
reserved for in accordance with GAAP consistently applied.
(k) Except as otherwise set forth in Section 4.20(k) of the Company
Disclosure Schedule, neither the execution and delivery of this Agreement nor
the consummation of the transactions contemplated hereby will (A) result in any
payment (including, without limitation, severance, unemployment compensation,
golden parachute or otherwise) becoming due from the Company under any Plan, (B)
increase any benefits otherwise payable under any Plan, or (C) result in the
acceleration of the time of payment or vesting of any such benefits.
(l) The Company has not announced any plan or made any legally binding
commitment to create additional benefits which are intended to cover employees
or former employees of the Company or to make any amendment or modifications to
any Plan that covers or has covered or is available to the Company employees or
former employees other than as set forth in Section 4.20(l) of the Company
Disclosure Schedule or as required by Applicable Law. No payment under any Plan
will not be deductible by the Company by reason of failure to comply with any
provisions of the Code.
(m) The Company does not, nor has it ever contributed to or participated in
any Multiemployer Plan as defined in Section 3(37) of ERISA.
Section 2.22. Labor and Employment Matters. (a) Except as set forth in
Section 4.21(a) of the Company Disclosure Schedule, the Company and its
Subsidiaries are and have been in compliance in all material respects with all
Applicable Laws relating to employment and employment practices, terms and
conditions of employment and wages and hours, and such laws respecting
employment discrimination, equal opportunity, affirmative action, worker's
compensation, occupational safety and health requirements and unemployment
insurance and related matters, and is not engaged in and has not engaged in any
unfair labor practice as defined under Applicable Laws.
(b) The Company and its Subsidiaries are not delinquent or in arrears in
payments to any of their respective employees or agents for any wages, salaries,
commission, overtime payments, bonuses or other direct compensation for any
services performed by them or benefits required to be provided or amounts
required to be reimbursed to such officers, directors, employees or agents.
(c) Except as set forth in Schedule 4.21(c), if the employment of any such
officers, directors, employees or agents terminates for any reason, neither
Company, Parent, Acquisition Sub nor the Surviving Corporation will, pursuant to
any agreement in effect, or by reason of any act or omission by Company or any
subsidiary before the Effective Time, be liable to any of such officers,
directors, employees or agents for so-called "severance pay" or any other
payments, benefits or damages.
(d) Except as set forth in Section 4.21(d) of the Company Disclosure
Schedule, there is no material controversy pending or, to the knowledge of
Dachis, threatened between Company and its Subsidiaries, on the one hand and any
of its employees or consultants or former employees or consultants, on the other
hand.
(e) Company and its Subsidiaries (i) have never been and are not now
subject to a union organizing effort, (ii) are not subject to any collective
bargaining agreement with respect to any of their respective employees, and
(iii) are not subject to any other contract, written or oral, with any trade or
labor union, employees' association or similar organization. Company and its
Subsidiaries have good labor relations, and have no knowledge of any facts
indicating that the consummation of the transactions contemplated hereby will
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have a Company Adverse Effect on such labor relations, and has no knowledge that
any of their key employees intends to leave their employ.
(f) Except as set forth in Schedule 4.21(f), Company and its Subsidiaries
have no employment contracts or consulting agreements currently in effect that
are not terminable at will (other than agreements with the sole purpose of
providing for the confidentiality of proprietary information or assignment of
inventions). To the knowledge of Dachis, no employee of Company and its
Subsidiaries is in violation of any term of any employment contract, patent
disclosure statement, noncompetition agreement, or any other contract or
agreement, or any restrictive covenant, relating to the right of any such
employee to be employed thereby, or to use proprietary information of others,
and the employment of such employees does not subject Company and its
Subsidiaries to any claim by any other Person.
(g) A list of all employees, officers and consultants of Company and its
Subsidiaries and their current compensation is set forth on Section 4.21(g) of
the Company Disclosure Schedule. Such list also describes any vested benefits,
including, without limitation, vacation or sick pay, which each Person on such
list is entitled to receive from Company.
Section 2.23. Tax Free Structure. To the knowledge of Dachis (a) the
Merger, together with the other transactions contemplated under this Agreement,
shall qualify as a tax-free reorganization under the provisions of Section
368(a)(1)(B) of the Code, and (b) each of the Company and Dachis has not taken
any action, or failed to take any action that would make the Merger ineligible
as a tax-free reorganization.
Section 2.24. No Breach. The Company and its Subsidiaries are not in
breach of any agreement, covenant, representation, warranty, or other obligation
of Company made or incurred under or pursuant to the Merger Agreement or any
document delivered pursuant thereto.
Section 2.25. Un-bank Agreements. All agreements or arrangements between
the Company and Un-bank Company LLP are on terms no less advantageous to the
Company than could be secured from an unaffiliated third party in a transaction
negotiated at arm's-length. The Company has made no material payments to Un-bank
Company LLP or any of its principals or members in connection with or arising
from any business between the Company and Un-bank Company LLP.
Section 2.26. No Undisclosed Liabilities. There exists no basis for
assertion against the Company (or any Party whom the Company would be required
to indemnify) and the Company has no liability for any claim against the Company
or any of its Affiliates in connection with the business of the Company and any
of its Subsidiaries conducted prior to the Closing Date (including claims for
injury, property or economic damage or any product or strict liability claim
arising from the design, sale or distribution of or exposure to any product or
component thereof or the provision of any service by the Company or any
Subsidiary), other than claims specifically identified in the Merger Agreement.
Section 2.27. Absence of Other Claims. There exists no basis for
assertion against the Company (or any party whom the Company would be required
to indemnify) and the Company has no liability for any claim of the type
described in Sections 10.1(c), (d), (e), (f), (g), (i) or (k) of the Merger
Agreement.
Section 2.28. No Violations of Environmental Law. The Company has not
violated and will have no liability under any Environmental Law (including
remediation expenses), including any such liability arising out of the conduct
of the Company or any of its Subsidiaries prior to the Closing Date which is
imposed upon Parent or the Surviving Corporation; whether or not disclosed or
required to be disclosed on the Company Disclosure Schedule. There will be no
presence of any real property owned, used or leased by the Company or in the
improvements thereon at or prior to the Closing Date, including without
limitation on the soil, sub-soil and groundwater, of "hazardous substances,"
"hazardous waste," "hazardous constituents" and "solid waste" (as those terms
are defined in any applicable U.S. federal, state or local or foreign statute,
regulation, ordinance or requirement of any kind) in any quantity.
Section 2.29. No Tax Liabilities. The Company does not have any
liabilities for Taxes of others, including, but not limited to the Company or
any Affiliate (for example, by reason of transferee liability or application of
Treas. Reg. Section 1.1502-6), damage or Indemnified Loss payable with respect
to Taxes
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claimed or assessed against the Company (a) for any taxable period ending on or
before the Effective Time or as a result of transactions contemplated under the
Merger Agreement (including any Section 338(h)(10) election) or (b) for any
taxable period as a result of a breach of any of the representations or
warranties contained in Section 4.19 of the Merger Agreement.
Section 2.30. No Criminal Conduct. To the knowledge of Dachis, neither
the Company or any of its Subsidiaries have engaged in any criminal misconduct,
whether or not disclosed or required to be disclosed on the Company Disclosure
Schedule.
Section 2.31. No Violations of Other Agreement. There has been, and as of
the Effective Time, there will be no breach of any agreement, covenant,
representation, warranty or other obligation by Dachis under the Irrevocable
Proxy Agreement, the Affiliate Agreement, the Escrow Agreement or this
Agreement.
Section 2.32. No Vendor Liabilities. There are and as of the Effective
Time there will be no losses arising out of any joint liability due to
affiliations, partnerships, joint ventures, associations or other similar
business arrangements, whether by contract or operation of law in which Company
or Dachis participated prior to the Closing Date.
Section 2.33. Advisors and Investment Bankers. Except for the Company's
investment banking firm, Ladenburg Thalmann & Co. Inc., whose advisory fee
arrangement has been disclosed to Parent prior to the date hereof, no broker,
advisor, finder or investment banker is entitled to any brokerage, advisor's,
finder's or other fee or commission in connection with the Merger or the
transactions contemplated by the Merger Agreement based upon arrangements made
by or on behalf of the Company.
Section 2.34. Complete Disclosure. Neither the Merger Agreement, the
Stock Option Agreement, the Irrevocable Proxy Agreement, the Escrow Agreement or
this Agreement, nor any of the certificates or documents required to be
delivered by Company and/or Dachis to Parent under the Merger Agreement as a
condition to closing, taken together, contains a statement of a material fact
that is untrue in any material respect, or omits to state any material fact
necessary in order to make the statements contained herein and therein, in light
of the circumstances under which such statements were made, not misleading in
any material respect.
Section 2.35. Complete Performance. To the best knowledge of Dachis, the
Company has performed and as of the Effective Time shall have performed, in all
material respects, all agreements and obligations of the Company contained in
the Merger Agreement and the Stock Option Agreement required to be performed by
them on or prior to the Effective Time.
ARTICLE III
Certain Agreements
Section 3.1. Agreement to Cooperate. (a) Subject to the terms and
conditions provided in this Agreement and Applicable Law, Dachis shall use all
reasonable efforts to take, or cause to be taken, all action to do, or cause to
be done, all things necessary, proper or advisable under Applicable Law to
consummate and make effective the transactions contemplated by the Merger
Agreement, including causing the Company to use its reasonable efforts to obtain
all necessary or appropriate waivers, consents and approvals and SEC "no-action"
letters (including, but not limited to, required approvals under applicable
Minnesota state laws and regulations), to effect all necessary registrations and
filings (including, but not limited to, filings under the HSR Act) and to lift
any injunction or other legal bar to the Merger (and, in such case, to proceed
with the Merger as expeditiously as possible).
(b) In connection with any filings under the HSR Act, (i) in the event that
Dachis determines that a filing by Dachis (as an acquiring person) under the HSR
Act is necessary, Dachis shall promptly make all such necessary filings at his
sole expense, or (ii) in the event that Dachis determines that such a filing by
Dachis under the HSR Act is not necessary, Dachis shall represent and warrant to
Parent in writing in a form reasonably satisfactory to Parent at the Closing
Date that no filing is required under Title II of the HSR Act with respect to
Dachis' acquisition of shares of Parent Common Stock in connection with the
Merger and shall
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provide an opinion from Fredrikson & Byron, P.A., counsel to Dachis stating that
Dachis was not and is not required to file under Title II of the HSR Act with
respect to the shares of Parent Common Stock to be acquired by Dachis in the
Merger.
Section 3.2. Confidentiality. Unless (a) otherwise expressly provided in
this Agreement, (b) required by Applicable Law or any listing agreement with, or
the rules and regulations of, any applicable securities exchange or the NASD,
(c) necessary to secure any required Consents as to which the other party has
been advised, or (d) consented to in writing by Parent, any information or
documents furnished in connection herewith shall be kept strictly confidential
by Dachis and his agents and assigns. Prior to any disclosure pursuant to the
preceding sentence, Dachis' shall consult with Parent regarding the nature and
extent of the disclosure. Nothing contained herein shall preclude disclosures to
the extent necessary to comply with accounting, SEC and other disclosure
obligations imposed by Applicable Law. In the event the Merger is not
consummated, Dachis shall return to Parent any documents furnished by the other
and all copies thereof any of them may have made (or destroy all such documents
and certify as to the complete destruction of such documents) and will hold in
absolute confidence any information obtained from Parent except to the extent
(i) Dachis is required to disclose such information by Applicable Law or such
disclosure is necessary in connection with the pursuit or defense of a claim,
(ii) such information was known by Dachis prior to such disclosure or was
thereafter developed or obtained by Dachis independent of such disclosure, or
(iii) such information is or becomes generally available to the public or is
otherwise no longer confidential. Prior to any disclosure of information
pursuant to the exception in clause (i) of the preceding sentence, Dachis shall
so notify Parent which provided the same in order that such party may seek a
protective order or other appropriate remedy should it choose to do so.
Section 3.3. Tax Treatment. Dachis will use his reasonable best efforts
to cause the Merger to qualify as a tax-free reorganization under the provisions
of Section 368(a)(1)(B) of the Code and Dachis shall not knowingly take any
action or knowingly fail to take such action that would jeopardize the treatment
of the Merger as a tax-free reorganization.
Section 3.4. Pooling. From and after the date hereof, Dachis shall not
knowingly take any action, or knowingly fail to take any action, that would
jeopardize the treatment of the Merger as a pooling of interests for accounting,
reporting and tax purposes.
Section 3.5. Affiliates Agreements. Dachis shall enter into, and Dachis
shall use his best efforts to ensure that each person who is or may be an
"affiliate" of Company within the meaning of Rule 145 promulgated under the
Securities Act including the Trust, shall enter into the Affiliate Agreements.
Section 3.6. Comply With Merger Agreement. Dachis shall use best efforts
to cause the Company and its Subsidiaries to comply with the terms and
conditions of the Merger Agreement and the Stock Option Agreement.
Section 3.7. Delivery of Certificate of Adequate Documentation. On or
before the date which is eleven (11) months from the date hereof, Dachis shall
cause Parent and Surviving Corporation to receive from Cambridge Technology or
another software consultant reasonably acceptable to Parent and Dachis
("Consultant") a certificate in form and substance reasonably satisfactory to
Parent, to the effect that documentation has been prepared and appropriate
procedures are in place to allow the Company's software and systems existing as
of the Effective Time to be used and modified in the ordinary course of business
and without undue expense by any third party that is reasonably knowledgeable
regarding systems and software of a similar nature ("Certificate of Adequate
Documentation"). Parent will promptly cause Consultant to provide to the Company
and Dachis a complete written list of the documents and procedures which, if
completed, will cause Consultant to issue such a certificate.
Section 3.8. Continuation of Indemnities: No Circular Indemnities. The
right to indemnification, if any, from the Company of Dachis as an officer or
director of the Company pursuant to the Company Charter Documents or under any
Applicable Law, shall survive the Effective Date; provided, however, that
subject to Applicable Law, (a) no indemnification shall be available to Dachis
from the Company, Parent, the Surviving Corporation or Acquisition Sub for any
claim or matter for which any Indemnified Party would be entitled to
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receive indemnification under Article V of this Agreement, and (b) no
indemnification shall be available to Dachis for any claim or matter if, with
regard to the subject matter thereof, the Company, the Parent, the Surviving
Corporation or the Acquisition Sub prevails upon a claim (at law or in equity)
against that officer or director. For purposes of the foregoing, the Company,
the Parent, the Surviving Corporation or the Acquisition Sub, as the case may
be, shall be considered to have "prevailed upon a claim" only if: (x) a final
order resolving such claim in favor of the Company, the Parent, the Surviving
Corporation or the Acquisition Sub, as the case may be, shall be issued by a
court, administrative body or other tribunal of competent jurisdiction, unless
such final order is subsequently overturned on appeal; or (y) Dachis enters into
an agreement with the Company, the Parent, the Surviving Corporation or the
Acquisition Sub, as the case may be, for the purpose of resolving such claim and
therein agrees that the Company, the Parent, the Surviving Corporation or the
Acquisition Sub, as the case may be, has prevailed upon such claim for purposes
of this Section 3.8. Notwithstanding the foregoing, Dachis may pursue such
rights as he may have under the insurance policy described in Section 7.12 of
the Merger Agreement.
ARTICLE IV
Termination, Amendment and Waiver
Section 4.1. Termination. This Agreement may be terminated at any time
prior to the Effective Time whether before or after approval of the Merger by
the Shareholders of the Company or the Acquisition Sub:
(a) by mutual written consent of Parent and Dachis;
(b) by Parent upon termination of the Merger Agreement by Parent in
accordance with the terms of Article 9 of the Merger Agreement; and/or
(c) by Dachis upon termination of the Merger Agreement by the Company
in accordance with the terms of Article 9 of the Merger Agreement.
Section 4.2. Effect of Termination or Abandonment. Nothing contained in
this Agreement shall relieve any party from any liability for any inaccuracy,
misrepresentation or breach of this Agreement, the Affiliate Agreements, the
Merger Agreement, the Stock Option Agreement or the Irrevocable Proxy Agreement
prior to termination.
ARTICLE V
Indemnification
Section 5.1. Indemnification. Dachis (the "Indemnifying Party") shall
indemnify, defend and hold harmless Parent, Acquisition Sub, Surviving
Corporation, any corporation affiliated with Parent, and any director, officer,
stockholder, employee or agent of any of them (each, an "Indemnified Party")
from and against all Indemnified Loss which may be sustained, suffered or
incurred by an Indemnified Party to the extent resulting or arising in any way
from (regardless of any investigation or inquiry by the Parent at any time,
provided, that an Indemnified Party shall not be entitled to indemnification
under this Agreement with respect to the breach of any representation or
warranty of Dachis, if the Parent had Actual Knowledge of the existence and
scope of such breach):
(a) The breach of any agreement, covenant, representation, warranty,
or other obligation of Dachis made or incurred under or pursuant to this
Agreement, the Irrevocable Proxy Agreement, the Escrow Agreement, the
Affiliate Agreement or any other agreement or document delivered pursuant
thereto or in connection herewith; and/or
(b) The liability of the Company, the Surviving Corporation or any of
its Subsidiaries for its own Taxes or its liability, if any, for Taxes of
others, but not limited to the Company or any Affiliate (for example, by
reason of transferee liability or application of Treas. Reg. Section
1.1502-6), damage or Indemnified Losses payable with respect to Taxes
claimed or assessed against the Company (i) for any taxable period ending
on or before the Effective Time or as a result of the Merger and the other
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transactions contemplated therein (including any Section 338(h)(10)
election) or (ii) for any taxable period resulting from a breach of any of
the representations or warranties contained in Section 4.19 of the Merger
Agreement.
Section 5.2. Participation in Litigation. In the event any suit or other
proceeding is initiated against an Indemnified Party with respect to which
Parent alleges Dachis is or may be obligated to indemnify an Indemnified Party
hereunder, Dachis shall be entitled to participate in such suit or proceeding,
at its expense and by counsel of its choosing, provided that (a) such counsel is
reasonably satisfactory to Parent, and (b) Parent shall retain primary control
over such suit or proceeding. Such counsel shall be afforded access to all
information pertinent to the suit or proceeding in question. Parent shall not
settle or otherwise compromise any such suit or proceeding without the prior
written consent of Dachis, which consent shall not be unreasonably withheld or
delayed, if the effect of such settlement or compromise would be to impose
liability on Dachis hereunder.
Section 5.3. Claims Procedure. In the event from time to time Parent
believes that it or any other Indemnified Party has or will suffer any
Indemnified Loss for which Dachis is obligated to indemnify it hereunder
("Indemnified Event"), it shall promptly notify Dachis in writing of the matter,
specifying therein the reason why Parent believes that Dachis is or will be
obligated to indemnify, the amount, if liquidated, to be indemnified, and the
basis on which Parent has calculated such amount; if not yet liquidated, the
notice shall so state. The failure of the Indemnified Party to give such
notification shall not affect the indemnification provided in this Agreement.
The Indemnified Party need not seek, and has sole and unfettered discretion in
seeking, indemnification from any other Person (including, without limitation,
the Company or the Surviving Corporation) before or while seeking
indemnification from the Indemnifying Party in accordance with the terms of this
Agreement, and nothing herein shall create a duty to seek indemnification from
any other Person. An Indemnified Party may not seek indemnification under this
Article V for any amounts that the Indemnified Party has actually received under
any insurance policy, unless such recovery is sought pursuant to the subrogation
rights of the insurer. Any Indemnified Party may in its sole and exclusive
discretion determine whether or not it will seek insurance payments/coverage
under such policy. The Indemnified Party shall retain sole and unfettered
discretion to submit a claim seeking coverage under a policy of insurance and
nothing herein shall create a duty to submit any such claim.
Section 5.4. Payment of Indemnified Losses. (a) Dachis shall pay all
Indemnified Loss of any Indemnified Party within ten (10) days of receipt of
notice from that Indemnified Party of an Indemnified Loss in accordance with
Section 5.7, unless Dachis has given a notice of dispute of the Indemnified Loss
to the Indemnified Party and the Escrow Agent, in which case the claim for
Indemnified Loss shall be subject to resolution in accordance with the
provisions of Article VI of this Agreement. In the event any payment for an
Indemnified Loss is made after the tenth day, it shall bear interest from (and
including) the date due (but excluding the date of payment), at an interest rate
equal to five percent (5%) above the Prime Rate in effect on the date such
payment became due, but in no event to exceed the maximum interest rate
permitted under Applicable Laws; provided, however, that no such payment shall
be due so long as it is the subject of a bona fide, reasonable contest or so
long as the delay is solely due to the administrative timing requirements of
making a distribution of the Escrowed Consideration in accordance with the terms
of the Escrow Agreement.
(b) Dachis may at any time during the Escrow Term elect to sell any of the
Escrowed Shares and notify Escrow Agent of his election to sell such shares in
accordance with the terms of the Escrow Agreement, provided, that the proceeds
from the sale of any such shares (together with any interest accrued thereon)
shall remain in escrow as part of the Escrowed Consideration and distributed in
accordance with Section 5.7 and the Escrow Agreement.
Section 5.5. Limitations on Indemnity. (a) Notwithstanding anything to
the contrary herein (except as set forth in Section 5.5(c) and Section 5.6),
Dachis shall have no obligation to indemnify any Indemnified Party from, against
or in respect of any Indemnified Loss unless the aggregate of all Indemnified
Losses incurred by all Indemnified Parties exceeds $500,000, in which case
Dachis shall be required to indemnify such Indemnified Parties for the full
amount of their losses, without deduction.
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(b) Notwithstanding anything to the contrary contained in this Agreement
(except as set forth in Section 5.5(c)), in the Merger Agreement or Escrow
Agreement, the obligations of Dachis to all Indemnified Parties for any and all
Indemnified Loss shall not in any event exceed, in the aggregate, Four Million
Five Hundred Thousand Dollars ($4,500,000) (the "Maximum Indemnification
Amount"), provided, however, that the Maximum Indemnification Amount shall not
apply to any claim of indemnification based upon (i) Section 5.6 of this
Agreement; (ii) a breach or inaccuracy of Section 2.20 (Taxes and Returns) of
this Agreement; (iii) a breach of Dachis' Employment Agreement; or (iv) a breach
of Dachis' Affiliate Agreement; and, provided further, that the Maximum
Indemnification Amount shall not apply to, and nothing in this Agreement shall
limit, the liability of Dachis to any Indemnified Party for any claim asserted
at law or in equity for fraud, intentional or willful misrepresentation or other
willful misconduct or any claim based upon any federal or state securities laws
or regulations.
(c) None of the limitations in this Section 5.5 shall apply to any matter
giving rise to a claim which, the delay or the discovery of which, is the
consequence of fraud or willful misconduct by Dachis.
Section 5.6. Special Indemnification. (a) In the event that a Certificate
of Adequate Documentation is not provided to Parent and Surviving Corporation in
accordance with Section 3.7 on or before the date which is eleven (11) months
from the date hereof, Dachis shall promptly, but in no event later than two
Business Days after the date which is eleven (11) months from the date hereof,
pay to Surviving Corporation $500,000 ("Software Fee") in accordance with
Section 5.7, to defray any expenses that the Surviving Corporation or the Parent
may incur to produce the necessary documentation and install appropriate
procedures for the Surviving Corporation's software and systems and certain
losses incurred in connection with the absence of appropriate documentation and
procedures. Payment of such Software Fee shall not operate to reduce the amount
available to any Indemnified Party pursuant to the indemnification provision of
Sections 5.4 or 5.5.
Section 5.7. Manner of Payment. In order to preserve the "pooling of
interests" treatment for the Merger as anticipated by the Merger Agreement, all
Indemnified Losses (whether to be paid pursuant to agreement by Dachis and the
Parent or pursuant to an Award in accordance with Article VI) and the Software
Fee to be paid pursuant to Section 5.6 shall be payable in the following order
and manner and in the event that Escrowed Consideration is to be disbursed, the
parties hereto should instruct the Escrow Agent in accordance with this Section:
(a) first, if a sufficient number of Escrowed Shares are available to
satisfy the Indemnified Loss or the Software Fee, as applicable, through
the surrender to Parent for cancellation of that number of Certificates
representing Parent Common Stock equal to (x) the total amount of the
Indemnified Loss or the Software Fee divided by (y) the Viad Price,
regardless of the fair market value of the Parent Common Stock on the date
of payment;
(b) second, if a sufficient number of Escrowed Shares are not
available, but sufficient Escrowed Consideration from the sale of such
Escrowed Shares is available to satisfy the Indemnified Loss or the
Software Fee, as applicable, through the distribution to Parent of such
Escrowed Consideration in lieu of such Escrowed Shares equal to the product
of (A) the balance of the total amount of the Indemnified Loss or the
Software Fee, as applicable, not paid with Escrowed Shares divided by the
Viad Price, by (B) the price per share at which the Parent Common Stock
(net of commissions) was sold by Dachis or the Escrow Agent, together with
any interest accrued on the proceeds of any sale;
(c) third, if a sufficient number of Escrowed Shares or adequate
Escrowed Consideration to satisfy the Indemnified Loss or the Software Fee,
as applicable, is not available, and Dachis is the beneficial owner of any
shares of Parent Common Stock, with the surrender for cancellation of
certificates representing that number of shares of Parent Common Stock held
by Dachis equal to the balance of the total amount of the Indemnified Loss
or the Software Fee, as applicable, not paid with Escrowed Consideration,
calculating the number of shares in accordance with Section 5.7(a); and
(d) fourth, if adequate Escrowed Consideration to satisfy the
Indemnified Loss or the Software Fee, as applicable, is not available and
Dachis is not the beneficial owner of a sufficient number of shares of
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Parent Common Stock to satisfy the Indemnified Loss or the Software Fee, as
applicable, through the payment of cash by wire transfer of immediately
available funds to an account designated by Parent of an amount equal to
the balance of the Indemnified Loss or the Software Fee, as applicable, not
paid with Escrowed Consideration or with shares of Parent Common Stock.
ARTICLE VI
Dispute Resolution
Section 6.1. Representatives. (a) Subject to Section 6.1(b), if any
dispute arises under or relates to this Agreement, at the written request of
either party each party will appoint a designated representative (the
"Representative") to meet for the purpose of resolving the dispute. The
Representatives will meet at a mutually agreeable place within 10 days after
either party makes a written request to the other for such a meeting. The
Representatives will honor reasonable requests to exchange information related
to the dispute and will make an effort to negotiate a resolution to the dispute.
Negotiations shall continue until the dispute is resolved or until either party
informs the other in writing that negotiations will not result in a mutually
acceptable resolution and a mediator should be appointed.
(b) The parties hereto agree that the circumstances in which disputes
between them will not be subject to the provisions of this Article VI is where
(i) there is an alleged breach of any provision of this Agreement relating to
Intellectual Property, confidentiality or nondisclosure, or (ii) a party makes a
good faith determination that a breach of the terms of this Agreement by the
other party is such that irreparable harm to such party may result from the
breach such that equitable or other relief in the form of a temporary
restraining order or other immediate injunctive relief is the only adequate
remedy, or (iii) the determination of the satisfaction of the conditions to the
obligations of Parent and Acquisition Sub as set forth in Section 8.3 of the
Merger Agreement. The question of damages, if any, incurred by such party as a
result of such breach will be resolved pursuant to the dispute resolution
procedures set forth in this Article VI.
Section 6.2. Mediation. In the event that the dispute is not resolved
under Section 6.1, the dispute shall be submitted to nonbinding mediation (the
"Mediation"). The parties shall appoint a mutually agreeable neutral mediator
(the "Mediator"). If the parties are unable to agree on a Mediator within 10
days after the mediation is requested, either party may refer the matter to the
office of the AAA for the limited purpose of having AAA provide a panel of seven
names from which the parties will select a Mediator. If the parties are unable
to agree on a person on the panel, the parties shall alternately strike names
from the panel until one name is left on the panel. A coin toss will determine
which party is entitled to strike the first name. Except as otherwise provided
in this Agreement or as the parties may agree otherwise at the time of the
Mediation, the Mediation shall be conducted pursuant to the Commercial Mediation
Rules of the AAA, as amended from time to time. The Mediation shall be conducted
within 30 days after the appointment of the Mediator. The parties shall share
equally the cost of the Mediation, including, but not limited to, fees of the
Mediator, the cost, if any, of obtaining a location for the Mediation and any
filing fee. If during the Mediation the parties reach a settlement of all or any
of their disputes they shall reduce the settlement to the form of a written
settlement agreement which shall be binding upon the parties. The Mediation may
be terminated only after both parties have participated in the Mediation and are
unable to agree on a settlement. Mediation discussions or opinions of the
Mediator are confidential and may not be relied upon, referred to or introduced
as evidence in any subsequent arbitration or other proceeding.
Section 6.3. Arbitration. In the event the dispute is not resolved under
Section 6.2, the parties agree that the dispute shall be resolved by a private
arbitration conducted by an arbitrator (the "Arbitrator"). Within 10 days after
the termination of such negotiations pursuant to Section 6.2, the parties shall
agree upon one arbitrator, selected from a permanent panel of no fewer than
fifteen names agreed upon by the parties (the "Permanent Panel"). The parties
shall select the arbitrator from the Permanent Panel by alternately striking
names until only one name remains on the Permanent Panel. A toss of a coin will
determine which party is to strike the first name. Neither party may choose as
its arbitrator the person who was its Representative under Section 6.2 of this
Agreement or any person who participated in the Mediation or any person who is
an officer,
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director or employee of either party or any affiliated entity of either party,
or a person who has a direct or indirect personal or financial interest in the
outcome of the arbitration.
(b) The Arbitrator shall set a hearing date for an arbitration (the
"Hearing") within 90 days from the date the Arbitrator is selected, unless
otherwise agreed by the parties, or unless otherwise ordered by the Arbitrator
at the request of either party.
(c) Unless otherwise agreed, within 15 days before the Hearing each party
shall submit to the Arbitrator with a copy to the other party a list of all
witnesses and exhibits which it intends to present at the Hearing.
(d) No later than 10 days before the scheduled Hearing, each party shall
provide to the Arbitrator a short (not to exceed five single-spaced pages or
such other page limit as the Arbitrator permits) a statement of its position
with regard to the dispute.
(e) At the Hearing, each party shall, unless it waives the opportunity,
make an oral opening statement, and an oral closing statement.
(f) The Arbitrator shall not be strictly bound by rules of procedure or
rules of evidence, but shall use the Federal Rules of Evidence as a guideline in
conducting the Hearing.
(g) When testimony is complete and each party has introduced its exhibits,
subject to the provisions of this Agreement, and each party has made a closing
statement pursuant the provisions of this Agreement or waived the opportunity to
do so, the Arbitrator shall declare the Hearing closed; provided, however, the
parties may submit post-hearing briefs pursuant to an agreed upon schedule or
one formulated by the Arbitrator.
(h) The Hearing shall be held at a location agreed upon by the parties and
convenient for the Arbitrator, or if the parties cannot agree upon a location,
at a location designated by the Arbitrator.
(i) The Hearing shall be conducted in private. Attendance at the Hearing
shall be limited to the following: (i) the Arbitrator; (ii) representatives of
each party; (iii) each party's attorneys and attorneys' assistants or advisors,
if any, including expert witnesses, if any; (iv) a court reporter if requested
by either party; and (v) any witnesses. The Arbitrator may sequester witnesses
upon the motion of a party.
(j) Within 30 days of the close of the Hearing or submission of the
post-hearing briefs, the Arbitrator shall issue a written opinion and award (the
"Award"), based on evidence, arguments and post-hearing briefs, if any. The
Award shall be a decision of the Arbitrator, shall resolve the parties' dispute,
and shall be final and binding on the parties. The fact that an opinion is
issued does not enlarge or restrict the authority of a court provided in the
Arbitration Act to review the arbitration proceedings or the Award. The
Arbitrator shall have the Award delivered to each Party.
(k) Except as otherwise provided in this Agreement, there shall be no ex
parte communication regarding the subject matter of the Hearing between a party
or its attorneys and the Arbitrator from the time the Arbitrator is appointed
until after the parties receive the Award.
(l) The parties may agree to submit the dispute to the Arbitrator without a
Hearing, in which event the Arbitrator will render and deliver to the parties a
written opinion and Award within 30 days of being notified that the parties
waive the Hearing.
(m) Notwithstanding any other provision of this Agreement, the Arbitrator
shall have no power to delete from, add to, nor modify the terms of this
Agreement, and may not award any remedy which effectively conflicts directly or
indirectly with any provision of this Agreement.
(n) The arbitration shall be governed by the laws of the State of
Minnesota, including without limitation the provisions of the Minnesota Uniform
Arbitration Act, except as otherwise provided in this Agreement.
(o) The parties shall share equally the costs and expenses of the
arbitration, including, but not limited to, filing fees, fees of the arbitrators
and costs, if any, of obtaining a location for the arbitration. Each party shall
bear its own witness and expert fees, and copying and travel expenses. Each
party shall bear its own attorney fees relating to the dispute.
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<PAGE> 167
ARTICLE VII
General Provisions
Section 7.1. Definitions. Capitalized terms used in this Agreement
without definition herein shall have the meaning set forth in the Merger
Agreement.
Section 7.2. Amendment and Modification. To the extent permitted by
Applicable Law, this Agreement may be amended, modified or supplemented only by
a written agreement between Dachis and Parent.
Section 7.3. Waiver. Any failure of Dachis or Parent to comply with any
obligation, covenant, agreement or condition herein may be waived by Parent, or
Dachis on the other hand, only by a written instrument signed by the party
granting such waiver, but such waiver or failure to insist upon strict
compliance with such obligation, covenant, agreement or condition shall not
operate as a waiver of, or estoppel with respect to, any subsequent or other
failure. Whenever this Agreement requires or permits consent by or on behalf of
any party hereto, such consent shall be given in writing in a manner consistent
with the requirements for a waiver of compliance as set forth in this Section
7.3.
Section 7.4. Survival. (a) Subject to Section 7.4(b), the
representations, warranties, covenants and agreements of Dachis contained herein
or in any certificates or other documents delivered prior to or at the Closing
shall survive the Closing.
(b) Subject to Section 5.5(c), the representations and warranties of Dachis
set forth in this Agreement shall survive for a period of one year following the
Closing Date, except for the representations and warranties relating to the
non-filing of any Tax Returns or the non-payment of any Taxes to any
Governmental Authority, in which case, such representations and warranties shall
survive until the expiration of the applicable statute of limitations.
Section 7.5. Notices. All notices and other communications hereunder
shall be in writing and shall be deemed to have been duly given when delivered
in person, by facsimile, receipt confirmed, or on the next business day when
sent by overnight courier or on the second succeeding business day when sent by
registered or certified mail (postage prepaid, return receipt requested) to the
respective parties at the following addresses (or at such other address for a
party as shall be specified by like notice).
(a) If to Acquisition Sub or Parent, to:
Viad Corp
1850 North Central Avenue
Phoenix, Arizona 85077
Attn: Peter Novak, Esq.
Telephone: (602) 207-5913
Facsimile: (602) 207-5480
with a copy to:
Travelers Express Company, Inc.
1550 Utica Avenue South, Mail Stop 8060
Minneapolis, Minnesota 55416
Attn: Michael Berry
Telephone: (612) 591-3820
Facsimile: (612) 591-3870
and to:
Bryan Cave LLP
2800 North Central Avenue
Phoenix, Arizona 85253
Attn: Frank M. Placenti, Esq.
Telephone: (602) 280-8451
19
<PAGE> 168
Facsimile: (602) 266-5938
(b) If to Dachis, to:
Game Financial Corporation
13705 First Avenue North
Minneapolis, Minn. 55441
Attn: Gary A. Dachis
Telephone: (612) 404-6580
Facsimile: (612) 476-8051
with a copy to:
Ravich, Meyer, Wilson, Kirkman, McGrath & Nauman, PA
4545 IDS Center
Minneapolis, Minn. 55402
Attn: Paul H. Ravich, Esq.
Telephone: (612) 332-8511
Facsimile: (612) 332-8302
and to:
Fredrikson & Byron, P.A.
1100 International Centre
900 Second Avenue South
Minneapolis, Minn. 55402-3397
Attn: Howard G. Stacker, Esq.
Telephone: (612) 347-7000
Facsimile: (612) 347-7072
Section 7.6. Binding Effect; Assignment. This Agreement and all of the
provisions hereof shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and permitted assigns. Neither this
Agreement nor any of the rights, interests or obligations hereunder shall be
assigned by any of the parties hereto prior to the Effective Time without the
prior written consent of the other party hereto, except that Parent may assign
to any other direct subsidiary of Parent, including Travelers Express Company,
Inc. and Surviving Corporation, any and all rights, interests and obligations of
Parent under this Agreement.
Section 7.7. Expenses. All costs and expenses incurred in connection with
this Agreement and the transactions contemplated hereby shall be paid by the
party incurring such costs or expenses.
Section 7.8. Governing Law. This Agreement shall be deemed to be made in,
and in all respects shall be interpreted, construed and governed by and in
accordance with the internal laws of, the State of Minnesota.
Section 7.9. Interpretation. The article and section headings contained
in this Agreement are solely for the purpose of reference, are not part of the
agreement of the parties and shall not in any way affect the meaning or
interpretation of this Agreement. The headings contained in this Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. Whenever the words "include," "includes," or
"including" are used in this Agreement, they shall be deemed to be followed by
the words "without limitation."
Section 7.10. Entire Agreement. This Agreement and the documents or
instruments referred to herein including, but not limited to, the Merger
Agreement, the Employment Agreement between Dachis and the Company, the
Irrevocable Proxy Agreement, the Escrow Agreement and the Stock Option Agreement
and their respective Exhibits and Schedules, embody the entire agreement and
understanding of the parties hereto in respect of the subject matter contained
thereof. There are no restrictions, promises, representations, warranties,
covenants, or undertakings, other than those expressly set forth or referred to
herein. This Agreement supersedes all prior agreements and understandings
between the parties with respect to such subject matter.
20
<PAGE> 169
Section 7.11. Severability. In case any provision in this Agreement shall
be held invalid, illegal or unenforceable in a jurisdiction, such provision
shall be modified or deleted, as to the jurisdiction involved, only to the
extent necessary to render the same valid, legal and enforceable, and the
validity, legality and enforceability of the remaining provisions hereof shall
not in any way be affected or impaired thereby nor shall the validity, legality
or enforceability of such provision be affected thereby in any other
jurisdiction.
Section 7.12. Specific Performance. The parties hereto agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with their specific terms or were
otherwise breached. Accordingly, the parties further agree that each party shall
be entitled to an injunction or restraining order to prevent breaches of this
Agreement and to enforce specifically the terms and provisions hereof in any
court of the United States or any state having jurisdiction, this being in
addition to any other right or remedy to which such party may be entitled under
this Agreement, at law or in equity.
Section 7.13. Disclosure Schedules. Dachis and Parent acknowledge that
the Schedules to this Agreement and the Company Disclosure Schedule (a) relate
to certain matters concerning the disclosures required and transactions
contemplated by this Agreement, (b) are qualified in their entirety by reference
to specific provisions of this Agreement, (c) are not intended to constitute and
shall not be construed as indicating that such matter is required to be
disclosed, nor shall such disclosure be construed as an admission that such
information is material with respect to Company or Parent, as the case may be,
except to the extent required by this Agreement, and (d) disclosure of the
information contained in one section of the Company or Parent Disclosure
Schedule shall not be deemed as proper disclosure for all sections of Company or
Parent Disclosure Schedule, as the case may be, unless specific cross-reference
citations are made.
Section 7.14. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original, but all of which
shall constitute one and the same agreement.
Section 7.15. Parties in Interest. This Agreement shall be binding upon
and inure solely to the benefit of each party hereto and the Surviving
Corporation (which is hereby declared to be a third party beneficiary of this
Agreement) and nothing in this Agreement or on any instrument or document
executed by any party in connection with the transactions contemplated hereby,
express or implied, is intended to confer upon any other person other than the
Surviving Corporation any rights or remedies of any nature whatsoever under this
Agreement.
[INTENTIONALLY LEFT BLANK.]
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<PAGE> 170
IN WITNESS WHEREOF, Parent and Dachis have caused this Agreement to be
signed by their respective officers thereunto duly authorized as of the date
first written above.
VIAD CORP
A Delaware Corporation
By: /s/ PHILIP W. MILNE
------------------------------------
Name: Philip W. Milne
Title: President and CEO of
Travelers Express Company, Inc.
/s/ GARY A. DACHIS
--------------------------------------
Gary A. Dachis
ACKNOWLEDGED AND ACCEPTED:
GAME FINANCIAL CORPORATION
By: /s/ GARY A. DACHIS
--------------------------------------------------------
Gary A. Dachis
Its: President
--------------------------------------------------------
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<PAGE> 171
EXHIBIT A
================================================================================
ESCROW AGREEMENT
DATED AS OF , 1997
BY AND AMONG
VIAD CORP,
GARY A. DACHIS
AND
------------------------------,
AS ESCROW AGENT
================================================================================
<PAGE> 172
TABLE OF CONTENTS
ARTICLE I.
ESCROW OF DACHIS SHARES
<TABLE>
<S> <C> <C>
Section 1.1. Escrow of Dachis Shares................................................... 1
Section 1.2. Appointment of Escrow Agent............................................... 2
Section 1.3. Distribution of the Escrowed Consideration................................ 2
Section 1.4. Concerning the Escrow Agent............................................... 2
Section 1.5. Fees...................................................................... 2
Section 1.6. Resignation............................................................... 2
Section 1.7. Duties.................................................................... 3
Section 1.8. Indemnification........................................................... 3
Section 1.9. Cash Payments; Distribution of Escrowed Consideration..................... 3
ARTICLE II.
DISBURSEMENTS AND DETERMINATIONS
Section 2.1. Claims Procedure.......................................................... 3
Section 2.2. Escrow Termination Date................................................... 4
ARTICLE III.
GENERAL PROVISIONS
Section 3.1. Definitions............................................................... 4
Section 3.2. Amendment and Modification................................................ 4
Section 3.3. Waiver.................................................................... 4
Section 3.4. Survival.................................................................. 4
Section 3.5. Notices................................................................... 4
Section 3.6. Binding Effect; Assignment................................................ 6
Section 3.7. Expenses.................................................................. 6
Section 3.8. Governing Law............................................................. 6
Section 3.9. Interpretation............................................................ 6
Section 3.10. Entire Agreement.......................................................... 6
Section 3.11. Severability.............................................................. 7
Section 3.12. Specific Performance...................................................... 7
Section 3.13. Counterparts.............................................................. 7
Section 3.14. Parties in Interest....................................................... 7
Schedule A Schedule of Escrow Fees................................................... 8
Schedule B Additional Terms and Conditions of Escrow................................. 9
</TABLE>
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<PAGE> 173
ESCROW AGREEMENT
This ESCROW AGREEMENT, dated as of , 1997 (as amended
from time to time, "Agreement"), is by and among VIAD CORP, a Delaware
corporation ("Parent"), Gary A. Dachis, a significant shareholder of Game
Financial Corporation, a Minnesota corporation ("Company"), solely in his
capacity as a shareholder and not in his capacity as an officer or director of
the Company, (together with his successors and assigns, "Dachis"), and
, as Escrow Agent ("Escrow Agent").
RECITALS:
WHEREAS, the respective Boards of Directors of the Parent and the Company
have approved the merger ("Merger") of the Company with and into Game
Acquisition Corp., a Minnesota corporation ("Acquisition Sub") pursuant to the
terms and conditions set forth in the Agreement and Plan of Merger dated as of
the date hereof, by and among Parent, Acquisition Sub and the Company ("Merger
Agreement");
WHEREAS, as a condition and inducement to Parent and Acquisition Sub
entering into the Merger Agreement, concurrently with the execution and delivery
of this Agreement, Dachis has agreed to enter into the Selling Shareholder's
Agreement which requires Dachis to deposit into escrow the Escrowed
Consideration (as defined below); and
WHEREAS, the parties wish to establish the terms and conditions upon which
the Escrow Agent will accept and hold the Escrowed Consideration and the terms
under which the Escrowed Consideration will be disbursed to the parties, all as
set forth below or as set forth in the Selling Shareholder's Agreement.
AGREEMENT:
NOW, THEREFORE, in consideration of the premises and the representations,
warranties, covenants and agreements contained herein, Parent and Dachis,
intending to be legally bound hereby, agree as follows (capitalized terms used
herein and not defined in the text hereof shall have the meanings set forth in
the Merger Agreement or if not defined therein, in the Selling Shareholder's
Agreement);
ARTICLE I
Escrow of Dachis Shares
Section 1.1. Escrow of Dachis Shares.
(a) Pursuant to the terms of Section 3.6 of the Merger Agreement and
Section 1.1 of the Selling Shareholder's Agreement, and as security for the
representations, warranties, covenants, indemnification and other obligations of
Dachis under the Selling Shareholder's Agreement, at the Effective Time,
certificates that would have otherwise been issued to Dachis in accordance with
the procedures of Section 3.1 of the Merger Agreement representing Parent Common
Stock having an aggregate value (based upon the Viad Price) equal to the sum of
the Maximum Indemnification Amount and the Software Fee, shall be deposited with
and held in escrow by the Escrow Agent ("Escrowed Shares"). All Escrowed Shares,
together with the proceeds from the sale of any Escrowed Shares and any interest
accrued from such proceeds shall be payable into and held in escrow pursuant to
the terms of this Agreement ("Escrowed Consideration"). Dachis may exercise any
voting rights that he may have with respect to the Escrowed Shares during the
term of this Agreement ("Escrow Term") and all dividends and other distribution
payable with respect to the Escrowed Shares while such Escrowed Shares are held
in escrow during the Escrow Term shall be payable to Dachis.
(b) Dachis may at any time during the Escrow Term elect to sell any of the
Escrowed Shares and Escrow Agent shall sell such shares on behalf of Dachis in
accordance with the prior written instructions of Dachis, provided, that all
proceeds from the sale of any such shares including any interest accrued on such
proceeds) shall remain in escrow as part of the Escrowed Consideration and
distributed in accordance with Section 5.7 of the Selling Shareholder's
Agreement.
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<PAGE> 174
(c) Unless otherwise specifically required herein, the Escrow Agent shall
deposit any cash received from the proceeds of the sale of any Escrowed Shares
pursuant to Section 1.1(b) in escrow in interest bearing accounts ("Escrow
Accounts") in reputable, federally insured commercial banks or in financial
instruments of the United States such as U.S. Treasury Bonds, Note and other
instruments or accounts issued by an agency of the U.S. Government or backed by
the Full Faith and Credit of the U.S. Government or an agency thereof as the
Treasurer's Department of the Parent shall choose, or in commercial paper rated
A-1, P-1, or in any other investments approved by the Vice President -- Finance
and Treasurer or the Assistant Treasurer of the Parent. Any and all interest
earned by such investments shall be reinvested and distributed in accordance
with Section 5.7 of the Merger Agreement.
Section 1.2. Appointment of Escrow Agent. Dachis and the Parent hereby
appoints , as the Escrow Agent ("Escrow Agent") and
hereby agrees to perform the duties of the Escrow Agent under this
Agreement, on the terms and conditions set forth in this Agreement and in
Schedule A to be provided by Escrow Agent and attached hereto.
Section 1.3. Distribution of the Escrowed Consideration. The Escrow Agent
shall hold the Escrowed Consideration in its possession until authorized to make
distributions thereof in accordance with Article II of this Agreement. Parent
and Dachis agree that, from time to time, they shall jointly execute and deliver
to the Escrow Agent instructions in accordance with Section 5.7 of the Selling
Shareholder's Agreement, which shall direct the Escrow Agent regarding the
distribution of the Escrowed Consideration. In the absence of either such a
jointly executed instruction by the Parent and Dachis or a final resolution of
any dispute with respect to the disposition of the Escrowed Consideration made
in accordance with Article VI of the Selling Shareholder's Agreement, no
Escrowed Consideration shall be distributed by the Escrow Agent. Prior to the
settlement or resolution of any dispute which may arise between Parent and
Dachis, the Escrow Agent is authorized and directed to retain in this
possession, without liability to anyone, that portion of the Escrowed
Consideration which are subject of such dispute.
Section 1.4. Concerning the Escrow Agent. The Escrow Agent shall be
entitled to compensation for its services hereunder as set forth in Section 1.5
below and shall also be reimbursed for all reasonable expenses, disbursements
and advances (including reasonable attorneys' fees and expenses) incurred or
made by it in performing its duties hereunder. Each of the Parent, on the one
hand, and Dachis, on the other hand, shall pay one-half of all such compensation
and reimbursements promptly following the request (which request shall not be
made more than once during any three-month period commencing with the
three-month period beginning on the date hereof) and submission by the Escrow
Agent to Parent and Dachis of a reasonably detailed itemized statements of the
amounts to be paid and/or reimbursed.
Section 1.5. Fees. Each of Parent, on the one hand, and Dachis on the
other hand, agree to pay fifty percent (50%) of the fees to the Escrow Agent set
forth in Schedule B attached hereto. All fees are to be paid in accordance with
Schedule B attached hereto.
Section 1.6. Resignation. The Escrow Agent, or any successor to it
hereafter appointed, may resign at any time by giving ninety (90) days' prior
written notice of such resignation to the parties in accordance with this
Agreement specifying the date when such resignation shall take effect, and shall
thereupon be discharged from its duties hereunder upon the appointment and
acceptance of the successor Escrow Agent as hereinafter provided. Upon such
notice, a successor Escrow Agent shall be appointed with the consent of the
Parent and Dachis or, if such parties are unable to agree upon a successor
Escrow Agent within thirty (30) days after the notice of resignation, the Escrow
Agent shall be entitled, at its option, to appoint its own successor, which
shall be a national bank or trust company based in the United States, having
assets of at least $500 million. Any successor Escrow Agent appointed hereunder
shall deliver to the parties a written instrument accepting such appointment
hereunder, and thereupon it shall succeed to all of the rights and duties of the
Escrow Agent hereunder and shall be entitled to receive in escrow the Escrowed
Consideration from the Escrow Agent. The Escrow Agent shall continue to serve
until its successor accepts the escrow and receives the Escrowed Consideration.
The Parent and Dachis shall have the right at any time upon the unanimous
consent to substitute a new Escrow Agent by giving notice thereof to the Escrow
Agent then acting.
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Section 1.7. Duties. The Escrow Agent undertakes to perform only such
duties as are specifically set forth herein and may conclusively rely upon and
shall be protected in acting or refraining from acting on any written notice,
instrument or signature believed by it in good faith to be genuine and to have
been signed or presented by the proper party or parties duly authorized to do
so. The Escrow Agent shall have no responsibility for the contents of any
writing contemplated herein and may rely without liability upon the contents
thereof. The Escrow Agent shall not be liable for any action taken or omitted by
it in good faith and believed by it to be authorized hereby or within the rights
or powers conferred upon it hereunder, for any action taken or omitted by it in
good faith in accordance with advice of counsel, or any mistake of fact or law
or error of judgment or for anything which it may do or refrain from doing in
connection herewith, in each case, except for its own misconduct or negligence.
Section 1.8. Indemnification. Parent shall indemnify the Escrow Agent and
hold the Escrow Agent harmless against any and all liabilities incurred by the
Escrow Agent as a result of the consequences of the actions of Parent. Dachis
shall indemnify the Escrow Agent and hold the Escrow Agent harmless against any
and all liabilities incurred by the Escrow Agent as a consequence of the actions
of Dachis or as a result of the action of the Company prior to the Closing.
Section 1.9. Cash Payments; Distribution of Escrowed Consideration. All
cash payments hereunder to Parent or to Dachis shall be made by wire transfer of
immediately available funds to such banks and for the credit to such accounts as
may be specified in writing to the Escrow Agent from time to time by the
parties. All distributions of Escrowed Consideration of Parent Common Stock
shall be delivered to the party entitled to receive the Escrowed Consideration
in person or by overnight express courier at the address of that party set forth
in Section 3.5 below, as it may be amended from time to time by written notice
to the parties to this Agreement.
ARTICLE II
Disbursements and Determinations
Section 2.1. Claims Procedure. (a) In the event that, from time to time,
an Indemnified Party believes that it or any other Indemnified Party has or will
suffer any Indemnified Loss for which Dachis has or will have indemnity
obligations pursuant to Section V of the Selling Shareholder's Agreement
("Indemnified Event"), the Indemnified Party shall promptly notify Dachis and
Escrow Agent in writing of the Indemnified Event, specifying therein the reason
why the Indemnified Party believes that Dachis is or will be obligated to
indemnify the Indemnified Party, the amount, if liquidated, to be indemnified,
and the basis upon which the Indemnified Party has calculated such amount; and
if not yet liquidated, the notice shall so state. In the event that the
Indemnified Party and Dachis are able to agree on the number of Escrowed Shares
to be surrendered to Parent for cancellation and other Escrowed Consideration to
be disbursed to Parent pursuant to the terms of Article V of the Selling
Shareholder's Agreement as a result of the Indemnified Event, Parent and Dachis
shall issue a joint written instruction to the Escrow Agent regarding the
distribution of such Escrowed Consideration to the Parent.
(b) In the event that a Certificate of Adequate Documentation is not
provided to Parent and Surviving Corporation in accordance with Section 3.7 of
the Selling Shareholder's Agreement, Parent shall provide written notice and
instructions to the Escrow Agent (with a copy to Dachis) to pay the Parent or
Surviving Corporation the Software Fee of $500,000 in accordance with Section
5.7 of the Selling Shareholder's Agreement ("Software Claim"). Unless the Escrow
Agent receives a written notice from Dachis (with a copy to Parent) certifying
that there was proper and timely delivery of the Certificate of Adequate
Documentation, together with a copy of such Certificate of Adequate
Documentation (which shall be in form and substance reasonably satisfactory to
the Parent), Escrow Agent shall promptly, but in no event later than five
Business Days after the receipt of the Parent's written instructions, pay the
Software Fee of $500,000 to the Indemnified Party.
(c) In the event that the Indemnified Party and Dachis are unable to agree
regarding the number of Escrowed Shares and other Escrowed Consideration to be
surrendered by the Escrow Agent to Parent, or the
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<PAGE> 176
payment of the Software Fee, the matter shall be treated as a matter subject to
the dispute resolution procedures of Article VI of the Selling Shareholder's
Agreement and the Escrow Agent shall continue to hold all Escrowed Shares and
other Escrowed Consideration subject to dispute pending its receipt of either a
joint written instruction from Parent and Dachis or a final Award by the
Arbitrator in accordance with Article VI of the Selling Shareholder's Agreement.
Section 2.2. Escrow Termination Date.
(a) The escrow provided for herein shall terminate on the later of (i)
the date which is one (1) year from the Effective Time; or (ii) if Escrow
Agent has received a notice of an Indemnification Event or notice of a
Software Claim, the date on which all Escrowed Consideration has been
distributed pursuant to Section 2.2(b)(i) or (ii).
(b) On the date which is one (1) year from the Closing Date, the
Escrow Agent shall deliver to Dachis all certificates for Escrowed Shares
of Parent Common Stock and other Escrowed Consideration held in escrow on
that date to Dachis unless it shall have received from an Indemnified Party
prior to that date a notice of an Indemnified Event or a notice of a
Software Claim, in which case all Escrowed Shares and other Escrowed
Consideration then in escrow shall continue to be held in escrow pending
Escrow Agent's receipt of either a (i) joint written instruction from
Parent and Dachis regarding the distribution of the Escrowed Shares and
other Escrowed Consideration; or (ii) a final Award issued by an Arbitrator
pursuant to the provisions of Article VI of the Selling Shareholder's
Agreement regarding the distribution of the Escrowed Shares and other
Escrowed Consideration.
ARTICLE III
General Provisions
Section 3.1. Definitions. Capitalized terms used in this Agreement without
definition herein shall have the meaning set forth in the Merger Agreement or if
not defined therein, in the Selling Shareholder's Agreement.
Section 3.2. Amendment and Modification. To the extent permitted by
applicable law, this Agreement may be amended, modified or supplemented only by
a written agreement among Dachis, Parent and Escrow Agent.
Section 3.3. Waiver. Any failure of Dachis or Parent to comply with any
obligation, covenant, agreement or condition herein may be waived by Parent or
Dachis, respectively, only by a written instrument signed by the party granting
such waiver, but such waiver or failure to insist upon strict compliance with
such obligation, covenant, agreement or condition shall not operate as a waiver
of, or estoppel with respect to, any subsequent or other failure. Whenever this
Agreement requires or permits consent by or on behalf of any party hereto, such
consent shall be given in writing in a manner consistent with the requirements
for a waiver of compliance as set forth in this Section 3.3.
Section 3.4. Survival. The respective covenants and agreements of the
parties contained herein or in any certificates or other documents delivered
prior to or at the Closing shall survive the execution and delivery of the
Merger.
Section 3.5. Notices. All notices and other communications hereunder shall
be in writing and shall be deemed to have been duly given when delivered in
person, by facsimile, receipt confirmed, or on the next business day when sent
by overnight courier or on the second succeeding business day when sent by
registered
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or certified mail (postage prepaid, return receipt requested) to the respective
parties at the following addresses (or at such other address for a party as
shall be specified by like notice).
(a) If to Acquisition Sub or Parent, to:
Viad Corp
1850 North Central Avenue
Phoenix, AZ 85077
Attn: Peter Novak, Esq.
Telephone: (602) 207-5913
Facsimile: (602) 207-5480
with copies to:
Travelers Express Company, Inc.
1550 Utica Avenue South, Mail Stop 8060
Minneapolis, MN 55416
Attn: Michael Berry
Telephone: (612) 591-3820
Facsimile: (612) 591-3870
and to:
Bryan Cave LLP
2800 North Central Avenue
Phoenix, AZ 85253
Attn: Frank M. Placenti, Esq.
Telephone: (602) 280-8451
Facsimile: (602) 266-5938
(b) If to Dachis, to:
Game Financial Corporation
P.O. Box 26000
Minneapolis, MN 55426
Attn: Gary A. Dachis
Telephone: (612) 404-6580
Facsimile: (612) 476-8051
with a copy to:
Ravich, Meyer, Wilson, Kirkman,
McGrath & Nauman, PA
4595 IDS Center
Minneapolis, MN 55402
Attn: Paul H. Ravich, Esq.
Telephone: (612) 332-8511
Facsimile: (612) 332-8302
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and to:
Fredrikson & Byron, P.A.
1100 International Centre
900 Second Avenue South
Minneapolis, MN 55402-3397
Attn: Howard G. Stacker, Esq.
Telephone: (612) 347-7000
Facsimile: (612) 347-7077
(c) If to the Escrow Agent, to:
-----------------------------------------------------
-----------------------------------------------------
-----------------------------------------------------
-----------------------------------------------------
with a copy to:
-----------------------------------------------------
-----------------------------------------------------
-----------------------------------------------------
-----------------------------------------------------
Section 3.6. Binding Effect; Assignment. This Agreement and all of the
provisions hereof shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and permitted assigns. Neither this
Agreement nor any of the rights, interests or obligations hereunder shall be
assigned by any of the parties hereto prior to the Effective Time without the
prior written consent of the other party hereto, except that Parent may assign
to any other direct subsidiary of Parent, including Travelers Express Company,
Inc., and the Surviving Corporation any and all rights, interests and
obligations of Parent under this Agreement.
Section 3.7. Expenses. All costs and expenses incurred in connection with
this Agreement and the transactions contemplated hereby shall be paid by the
party incurring such costs or expenses.
Section 3.8. Governing Law. This Agreement shall be deemed to be made in,
and in all respects shall be interpreted, construed and governed by and in
accordance with the internal laws of, the State of Minnesota.
Section 3.9. Interpretation. The article and section headings contained in
this Agreement are solely for the purpose of reference, are not part of the
agreement of the parties and shall not in any way affect the meaning or
interpretation of this Agreement. The headings contained in this Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. Whenever the words "include," "includes," or
"including" are used in this Agreement, they shall be deemed to be followed by
the words "without limitation."
Section 3.10. Entire Agreement. This Agreement and the documents or
instruments referred to herein or entered simultaneously herewith including, but
not limited to, the Merger Agreement, the Employment Agreements between Dachis
and the Company, the Selling Shareholder's Agreement, the Irrevocable Proxy
Agreement and the Stock Option Agreement and their respective Exhibits and
Schedules embody the entire agreement and understanding of the parties hereto in
respect of the subject matter thereof. There are no restrictions, promised,
representations, warranties, covenants, or undertakings, other than those
expressly set forth or referred to herein. This Agreement supersedes all prior
agreements and the understandings between the parties with respect to such
subject matter.
6
<PAGE> 179
Section 3.11. Severability. In case any provision in this Agreement shall
be held invalid, illegal or unenforceable in a jurisdiction, such provision
shall be modified or deleted, as to the jurisdiction involved, only to the
extent necessary to render the same valid, legal and enforceable, and the
validity, legality and enforceability of the remaining provisions hereof shall
not in any way be affected or impaired thereby nor shall the validity, legality
or enforceability of such provision be affected thereby in any other
jurisdiction.
Section 3.12. Specific Performance. The parties hereto agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with their specific terms or were
otherwise breached. Accordingly, the parties further agree that each party shall
be entitled to an injunction or restraining order to prevent breaches of this
Agreement and to enforce specifically the terms and provisions hereof in any
court of the United States or any state having jurisdiction, this being in
addition to any other right or remedy to which such party may be entitled under
this Agreement, at law or in equity.
Section 3.13. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original, but all of which
shall constitute one and the same agreement.
Section 3.14. Parties in Interest. This Agreement shall be binding upon
and inure solely to the benefit of each party hereto, together with the
Surviving Corporation (which is hereby declared to be a third party beneficiary
hereof), and nothing in this Agreement or on any instrument or document executed
by any party in connection with the transactions contemplated hereby, express or
implied, is intended to confer upon any other person (other than the Surviving
Corporation) any rights or remedies of any nature whatsoever under this
Agreement.
IN WITNESS WHEREOF, Parent, Dachis and Escrow Agent have caused this
Agreement to be signed by their respective officers thereunto duly authorized as
of the date first written above.
VIAD CORP
A Delaware Corporation
By:
------------------------------------
Name:
Title:
--------------------------------------
Gary A. Dachis
[ESCROW AGENT, as Escrow Agent]
By:
------------------------------------
Name:
Title:
ACKNOWLEDGED AND AGREED:
GAME FINANCIAL CORPORATION
By:
--------------------------------------------------------
Name:
Title:
7
<PAGE> 180
SCHEDULE A
SCHEDULE OF ESCROW FEES
8
<PAGE> 181
SCHEDULE B
ADDITIONAL TERMS AND CONDITIONS OF ESCROW
9
<PAGE> 182
APPENDIX IV
IRREVOCABLE PROXY AGREEMENT
This IRREVOCABLE PROXY AGREEMENT ("Proxy Agreement"), dated as of September
24, 1997, is by and among Viad Corp, a Delaware corporation (the "Parent") and
certain holders of common stock of Game Financial Corporation, a Minnesota
corporation (the "Company"), whose names are set forth on Appendix 1 to this
Proxy Agreement (hereinafter collectively called the "Sellers" and individually
called a "Seller").
RECITALS:
WHEREAS, the Company and the Parent have determined that their best
interests and the best interests of their respective shareholders would be
served by combining their businesses and operations and, for such purpose, the
Company and the Parent concurrently herewith are entering into an Agreement and
Plan of Merger of even date herewith (the "Merger Agreement") providing for the
merger (the "Merger") of the Company with a subsidiary of the Parent;
WHEREAS, the Sellers are the owners of shares of the Company's common stock
(the "Company Common Stock") as set forth on Appendix 1 (the "Shares"). As used
herein, "Shares" shall also include any shares of Common Stock or any other
voting stock of Company acquired by the Sellers after the date of this Proxy
Agreement;
WHEREAS, as a condition to the Parent's willingness to enter into the
Merger Agreement, Parent has requested that the Sellers agree, and, subject to
the terms and conditions set forth in this Proxy Agreement, each of the Sellers
hereby agrees, to grant to Parent an irrevocable proxy to vote those Shares on
certain matters relating to the Merger, as more fully set forth herein.
AGREEMENT:
NOW THEREFORE, in order to induce Parent to enter into the Merger
Agreement, and in consideration of the foregoing recitals and the mutual
covenants and agreements set forth herein, the parties, intending to be legally
bound hereby, agree as follows (capitalized terms used herein without definition
having the meanings set forth in the Merger Agreement):
Section 1. Covenants, Representations and Warranties of Sellers. Sellers
jointly and severally covenant, represent and warrant to the Parent that:
(a) Each Seller has full power and capacity to execute and deliver
this Proxy Agreement.
(b) This Proxy Agreement has been duly executed and delivered by each
Seller, and assuming due execution and delivery hereof by Parent, this
Proxy Agreement is a valid and binding obligation of each Seller,
enforceable in accordance with its terms, except as enforcement may be
limited by bankruptcy, insolvency, moratorium or other similar laws
affecting creditors' rights generally or by the principles
governing the availability of equitable remedies.
(c) On the date hereof, each Seller has, and through the Closing Date
each Seller will have, full record and beneficial ownership of the Shares
listed opposite each Seller's name on Appendix 1, free and clear of all
liens, encumbrances, security interests, rights, claims or equities of any
nature whatsoever (including without limitation any voting rights granted
to any third party with respect to such Shares).
(d) No Seller will grant to any person or entity (other than to
Parent) any proxy with respect to voting of the Shares.
(e) If, for any reason whatsoever, the proxy granted hereby is
ineffective, or upon written request by Parent, each Seller agrees to vote
all of such Seller's Shares in favor of the Merger Agreement and the
transactions contemplated thereby.
1
<PAGE> 183
(f) Neither the execution and delivery of this Proxy Agreement nor the
consummation of the transactions contemplated hereby will violate or result
in any violation of, or be in conflict with or constitute a default under,
or require the consent of any person under any agreement, instrument,
judgment, decree, order, statute, rule or governmental regulation
applicable to such Seller. No consent, approval, order or authorization of,
or registration, declaration or filing with, any governmental authority is
required in connection with the execution and delivery of this Proxy
Agreement by such Seller or the performance by such Seller of its
obligations hereunder.
(g) In connection with the Merger Agreement, each Seller will furnish
to the Parent information with respect to such Seller as may be reasonably
requested by Parent and as may be required to comply with Applicable Laws.
Each Seller shall comply with, and use its best efforts to cause the
Company to comply with, all of their respective covenants and obligations
under the Merger Agreement, including, without limitation, the provisions
set forth in Articles VI and VII and Section 9.2 of the Merger Agreement.
(h) Except as required by Applicable Law, no Seller will, in any
capacity, make any public announcement regarding this Proxy Agreement or
the Merger without the written consent of Parent.
(i) Each Seller will promptly take such steps, if any, as may be
required insofar as such Seller is concerned with respect to filings under
the HSR Act and will promptly furnish such additional materials and
information as the Federal Trade Commission ("FTC") or the Antitrust
Division of the Department of Justice ("Antitrust Division") may require.
Each Seller will promptly furnish to the Parent copies of all
communications to such Seller from, or from such Seller to, the FTC or the
Antitrust Division, or any other governmental agency or authority in
respect of this Proxy Agreement or the Merger, and shall promptly advise
the Parent of any material oral communications with any such agencies.
(j) From and after the date of this Proxy Agreement and unless and
until this Proxy Agreement is terminated, none of the Sellers will:
(i) Solicit or initiate, directly or indirectly, any inquiries or
acquisition proposals, or participate in any negotiations concerning, or
provide any information in connection with, any proposal concerning a
merger or other business combination involving the Company, or the
acquisition of any equity interest in or a substantial portion of the
assets of, the Company, other than the acquisition contemplated by this
Proxy Agreement and the Merger Agreement, provided, however, that Gary
A. Dachis may assist the Company in furnishing information in connection
with an unsolicited Third Party Offer in accordance with Section 7.2(c)
of the Merger Agreement; or
(ii) Engage in any course of conduct, execute any documents or
otherwise act in such manner as to impede or render more difficult the
consummation of this Proxy Agreement or the Merger, provided, however,
that nothing herein shall limit Seller's rights solely in its capacity
as a shareholder of the Company.
(l) Each of the Sellers will give prompt written notice to the Parent
upon acquisition of knowledge or receipt of notice of any of the following:
(i) Any written or oral communication from any third party alleging
that the consent of such third party is or may be required in connection
with any of the transactions contemplated by this Proxy Agreement or the
Merger Agreement;
(ii) Any written or oral communication from any third party
challenging the legality or fairness of any of the transactions
contemplated by this Proxy Agreement or the Merger Agreement; and
(iii) The occurrence of any event or the failure of any event to
occur which involves or results in a breach of any representation or
warranty by any other Seller hereunder or by the Company under the
Merger Agreement or any failure by any other Seller to comply with any
covenant, condition or agreement hereunder, or any failure by the
Company to comply with any material covenant, condition or agreement
under the Merger Agreement.
2
<PAGE> 184
(m) Each Seller will fully cooperate with the Parent and the Company
to consummate the Merger Agreement and execute and deliver all documents
and perform all acts necessary or appropriate to assure the successful
completion of such agreement, subject, however, to the satisfaction of the
conditions to Parent's obligations set forth in the Merger Agreement.
(n) Each Seller acknowledges and agrees that if such Seller's proxy is
voted in favor of the Merger, such Seller will not be eligible to exercise
any right as a dissenting Shareholder with respect to the Merger or any
related transaction.
Section 3. Irrevocable Proxy.
From the date hereof and for one (1) year thereafter, each Seller hereby
irrevocably appoints the Parent or any nominee of Parent, with full power of
substitution, as proxy for such Seller, which proxy is coupled with an interest
in their respective Shares, to vote all Shares which such Seller is entitled to
vote, for and in the name, place and stead of such Seller with respect to the
Merger, at any annual, special or other meeting of the holders of Common Stock
or other voting stock of the Company and at any adjournment thereof or pursuant
to any written consent in lieu of a meeting, or otherwise called to vote with
respect to the Merger. Parent's termination of the Merger Agreement in
accordance with its terms shall operate to terminate the foregoing proxy unless
such termination is based upon a breach of such Agreement by the Company or
Seller.
This appointment shall revoke all prior powers of attorney and proxies
appointed by any Seller at any time with respect to their respective Shares and
no subsequent powers of attorney or proxies will be appointed by any Seller, or
be effective, with respect thereto during the term of this Agreement.
Each Seller agrees to perform such further acts and execute such further
documents and instruments as may reasonably be required to vest in the Parent
the power to carry out and give effect to the provisions of this Proxy
Agreement.
Section 4. Specific Performance.
Parent hereby advises the Sellers that the transactions contemplated by
this Proxy Agreement and the Merger Agreement represent a unique opportunity for
the Parent to acquire the business and operations of the Company; and that such
acquisition presents a unique opportunity for the Parent to strengthen its
financial condition so as to permit the Parent to expand its current operations
and possibly to acquire additional businesses, and to improve its future
earnings. The Sellers recognize that their failure to carry out the terms of
this Proxy Agreement could result in financial injury to Parent which would be
substantial, irreparable and not susceptible of measurement. Accordingly, the
Sellers agree that Parent shall be entitled to (i) require each of the Sellers
specifically to perform its respective obligations under this Proxy Agreement
and (ii) sue in any court of competent jurisdiction to obtain such specific
performance and to enjoin any transaction inconsistent therewith to which any
Seller may, directly or indirectly, have become or propose to become a party.
The Sellers further agree to waive any requirement for a bond and not to contest
any of the matters set forth in the first sentence of this Section, in the event
of any attempt by Parent to seek any such remedy.
Section 5. Miscellaneous.
(a) Payment of Expenses. Each party hereto shall pay its own
expenses incurred in connection with this Proxy Agreement.
(b) Amendments; Assignability. This Proxy Agreement may not be
modified, amended, altered or supplemented except upon the execution and
delivery of a written agreement executed by the party or parties sought to
be affected. No party to this Proxy Agreement may assign any of its rights
or obligations under this Proxy Agreement without the prior written consent
of the other parties; provided, however that Parent may assign any of its
rights or obligations to any Subsidiary or Affiliate of Parent without such
prior written consent. This Proxy Agreement does not create or confer any
rights in favor of any third person or entity which is not a party to this
Proxy Agreement or the Merger Agreement. Each Seller, by executing this
Proxy Agreement, hereby authorizes Parent to act as its agent with respect
to all matters in this Proxy Agreement relating to such Seller, including
any amendments or waivers to or matters required to be taken in connection
with, and receipt of notices under, this Proxy Agreement.
3
<PAGE> 185
(c) Binding Effect. This Proxy Agreement shall be binding upon,
inure to the benefit of and be enforceable by, each of the Sellers, the
Parent, the Company and such Seller's, the Company's or the Parent's
respective heirs, beneficiaries, executors, successors, representatives and
permitted assigns, as the case may be. The proxy granted under Section 3
may be exercised by the Parent, notwithstanding any such Seller's
intervening death, dissolution or incompetency.
(d) Notices. All notices and other communications hereunder shall be
in writing and shall be deemed to have been duly given when delivered in
person, by facsimile, receipt confirmed, or on next business day when sent
by overnight carrier or on the second succeeding business day when sent by
registered or certified mail (postage prepaid, return receipt requested) to
the respective parties at the following address (or such other address for
such party as shall be specified by like notice.
(i) If to Parent, to:
Viad Corp
1850 North Central Avenue
Phoenix, Arizona 85077
Attn: Peter Novak, Esq.
Telephone: (602) 207-5913
Fax: (602) 207-5480
with copies to:
Travelers Express Co.
1550 Utica Avenue South
Mail Stop 8060
Minneapolis, Minnesota 55416
Attn: Michael Berry
Telephone: (612) 591-3820
Fax: (612) 591-3870
and to:
Bryan Cave LLP
2800 North Central Avenue
Phoenix, AZ 85004
Attn: Frank M. Placenti, Esq.
Telephone: (602) 280-8451
Fax: (602) 266-5938
(ii) If to any of the Sellers, at their respective addresses set
forth on Appendix l, with a copy to:
Fredrikson & Byron, P. A.,
1100 International Centre
900 Second Avenue South
Minneapolis, MN 55402-3397
Attn: Howard G. Stacker, Esq.
Telephone: (612) 347-7000
Fax: (612) 347-7077
(e) Counterparts. This Proxy Agreement may be executed in two or more
counterparts, each of which will be deemed to be an original, but all of
which together will constitute one and the same instrument.
4
<PAGE> 186
(f) Governing Law; Jurisdiction. This Proxy Agreement shall be
governed by and construed in accordance with the internal laws of the State
of Arizona applicable to contracts made and to be performed therein. Each
Seller (i) hereby irrevocably submits to the jurisdiction of, and agrees
that any suit by it shall be brought only in, the state and federal courts
located in the City of Phoenix and State of Arizona for the purpose of any
suit, action or other proceeding arising out of or based upon this Proxy
Agreement or the transactions contemplated hereby, and (ii) hereby waives
to the extent not prohibited by applicable law, and agrees not to assert,
by way of motion, as a defense or otherwise, in any such proceeding, any
claim that it is not subject personally to the jurisdiction of the
above-named courts, that its property is exempt or immune from attachment
or execution, that any such proceeding brought in one of the above-named
courts is improper, or that this Proxy Agreement, or the transactions
contemplated hereby, may not be enforced in or by such court. Each Seller
hereby irrevocably designates and appoints Viad Corp as its authorized
agent to receive service of process on its behalf in connection with any
legal matters or proceedings pertaining to this Proxy Agreement or the
transactions contemplated hereby and hereby consents to service of process
in any such proceeding by registered or certified mail, return receipt
requested, at such address. As an alternative method of service, each
Seller also irrevocably consents to the service of process in any such
matter or proceeding by the delivery of copies of such process to such
Seller to the address provided in Section 5(d). Nothing contained in this
Section shall affect the right of the Parent to serve process in any other
manner permitted by law or commence legal proceedings or otherwise proceed
against the Sellers in any other jurisdiction. In the event the Sellers
should commence or maintain any action arising out of or related to this
Proxy Agreement in a forum other than the state and federal courts located
in the City of Phoenix and State of Arizona, the Parent shall be entitled
to request the dismissal of such action, and such Seller stipulates that
such action shall be dismissed.
(g) Entire Agreement. This Agreement and the documents or instruments
referred to herein including, but not limited to, the Merger Agreement, the
Selling Shareholder's Agreement, the Escrow Agreement and the Stock Option
Agreement and their respective Exhibits and Schedules, embody the entire
agreement and understanding of the parties hereto in respect of the subject
matter contained thereof. There are no restrictions, promises,
representations, warranties, covenants, or undertakings, other than those
expressly set forth or referred to herein. This Agreement supersedes all
prior agreements and understandings between the parties with respect to
such subject matter.
[INTENTIONALLY LEFT BLANK.]
5
<PAGE> 187
IN WITNESS WHEREOF, this Proxy Agreement has been duly executed and
delivered by Parent and the Seller whose names appear below as of the day and
year first above written.
VIAD CORP, a Delaware corporation
By:
------------------------------------
Name:
Title:
SELLER:
--------------------------------------
Gary A. Dachis
ACKNOWLEDGED AND ACCEPTED:
GAME FINANCIAL CORPORATION,
a Minnesota corporation
By:
----------------------------------
Name:
Title:
6
<PAGE> 188
APPENDIX 1
TO IRREVOCABLE PROXY AGREEMENT
<TABLE>
<CAPTION>
SHAREHOLDER NUMBER OF SHARES ADDRESS
- ----------------------------------- ---------------- -----------------------------------------
<S> <C> <C>
Gary A. Dachis..................... 2,050,170
</TABLE>
7
<PAGE> 189
APPENDIX V
IRREVOCABLE PROXY AGREEMENT
This IRREVOCABLE PROXY AGREEMENT ("Proxy Agreement"), dated as of
, 1997, is by and between Viad Corp, a Delaware corporation
(the "Parent") and the holder of common stock of Game Financial Corporation, a
Minnesota corporation (the "Company"), whose name is set forth on Appendix 1 to
this Proxy Agreement (the "Seller").
RECITALS:
WHEREAS, the Company and the Parent have determined that their best
interests and the best interests of their respective shareholders would be
served by combining their businesses and operations and, for such purpose, the
Company and the Parent concurrently herewith are entering into an Agreement and
Plan of Merger of even date herewith (the "Merger Agreement") providing for the
merger (the "Merger") of the Company with a subsidiary of the Parent;
WHEREAS, the Seller is the owner of shares of the Company's common stock
(the "Company Common Stock") as set forth on Appendix 1 (the "Shares"). As used
herein, "Shares" shall also include any shares of Common Stock or any other
voting stock of Company acquired by the Seller after the date of this Proxy
Agreement;
WHEREAS, as a condition to the Parent's willingness to enter into the
Merger Agreement, Parent has requested that the Seller agree, and, subject to
the terms and conditions set forth in this Proxy Agreement, the Seller hereby
agrees, to grant to Parent an irrevocable proxy to vote those Shares on certain
matters relating to the Merger, as more fully set forth herein.
AGREEMENT:
NOW THEREFORE, in order to induce Parent to enter into the Merger
Agreement, and in consideration of the foregoing recitals and the mutual
covenants and agreements set forth herein, the parties, intending to be legally
bound hereby, agree as follows (capitalized terms used herein without definition
having the meanings set forth in the Merger Agreement):
Section 1. Covenants, Representations and Warranties of Seller. Seller
covenants, represents and warrants to the Parent that:
(a) Seller has full power and capacity to execute and deliver this
Proxy Agreement.
(b) This Proxy Agreement has been duly executed and delivered by
Seller, and assuming due execution and delivery hereof by Parent, this
Proxy Agreement is a valid and binding obligation of Seller, enforceable in
accordance with its terms, except as enforcement may be limited by
bankruptcy, insolvency, moratorium or other similar laws affecting
creditors' rights generally or by the principles governing the availability
of equitable remedies.
(c) On the date hereof, Seller has, and through the Closing Date
Seller will have, full record and beneficial ownership of the Shares listed
opposite Seller's name on Appendix 1, free and clear of all liens,
encumbrances, security interests, rights, claims or equities of any nature
whatsoever (including without limitation any voting rights granted to any
third party with respect to such Shares).
(d) Seller will not grant to any person or entity (other than to
Parent) any proxy with respect to voting of the Shares.
(e) If, for any reason whatsoever, the proxy granted hereby is
ineffective, or upon written request by Parent, Seller agrees to vote all
of Seller's Shares in favor of the Merger Agreement and the transactions
contemplated thereby.
1
<PAGE> 190
(f) Neither the execution and delivery of this Proxy Agreement nor the
consummation of the transactions contemplated hereby will violate or result
in any violation of, or be in conflict with or constitute a default under,
or require the consent of any person under any agreement, instrument,
judgment, decree, order, statute, rule or governmental regulation
applicable to Seller. No consent, approval, order or authorization of, or
registration, declaration or filing with, any governmental authority is
required in connection with the execution and delivery of this Proxy
Agreement by Seller or the performance by Seller of its obligations
hereunder.
(g) In connection with the Merger Agreement, Seller will furnish to
the Parent information with respect to Seller as may be reasonably
requested by Parent and as may be required to comply with Applicable Laws.
(h) Except as required by Applicable Law, Seller will not, in any
capacity, make any public announcement regarding this Proxy Agreement or
the Merger without the written consent of Parent.
(i) Seller will promptly take such steps, if any, as may be required
insofar as Seller is concerned with respect to filings under the HSR Act
and will promptly furnish such additional materials and information as the
Federal Trade Commission ("FTC") or the Antitrust Division of the
Department of Justice ("Antitrust Division") may require. Seller will
promptly furnish to the Parent copies of all communications to Seller from,
or from Seller to, the FTC or the Antitrust Division, or any other
governmental agency or authority in respect of this Proxy Agreement or the
Merger, and shall promptly advise the Parent of any material oral
communications with any such agencies.
(j) From and after the date of this Proxy Agreement and unless and
until this Proxy Agreement is terminated, Seller will not:
(i) Solicit or initiate, directly or indirectly, any inquiries or
acquisition proposals, or participate in any negotiations concerning, or
provide any information in connection with, any proposal concerning a
merger or other business combination involving the Company, or the
acquisition of any equity interest in or a substantial portion of the
assets of, the Company, other than the acquisition contemplated by this
Proxy Agreement and the Merger Agreement; or
(ii) Engage in any course of conduct, execute any documents or
otherwise act in such manner as to impede or render more difficult the
consummation of this Proxy Agreement or the Merger, provided, however,
that nothing herein shall limit Seller's rights solely in its capacity
as a shareholder of the Company.
(k) Seller will give prompt written notice to the Parent upon
acquisition of knowledge or receipt of notice of any of the following:
(i) Any written or oral communication from any third party alleging
that the consent of such third party is or may be required in connection
with any of the transactions contemplated by this Proxy Agreement or the
Merger Agreement; and
(ii) Any written or oral communication from any third party
challenging the legality or fairness of any of the transactions
contemplated by this Proxy Agreement or the Merger Agreement.
(l) Seller will fully cooperate with the Parent and the Company to
consummate the Merger Agreement and execute and deliver all documents and
perform all acts necessary or appropriate to assure the successful
completion of such agreement, subject, however, to the satisfaction of the
conditions to Parent's obligations set forth in the Merger Agreement.
(m) Seller acknowledges and agrees that if Seller's proxy is voted in
favor of the Merger, Seller will not be eligible to exercise any right as a
dissenting Shareholder with respect to the Merger or any related
transaction.
2
<PAGE> 191
Section 2. Irrevocable Proxy.
From the date hereof and for one (1) year thereafter, Seller hereby
irrevocably appoints the Parent or any nominee of Parent, with full power of
substitution, as proxy for Seller, which proxy is coupled with an interest in
Seller's Shares, to vote all Shares which Seller is entitled to vote, for and in
the name, place and stead of Seller with respect to the Merger, at any annual,
special or other meeting of the holders of Common Stock or other voting stock of
the Company and at any adjournment thereof or pursuant to any written consent in
lieu of a meeting, or otherwise called to vote with respect to the Merger.
Parent's termination of the Merger Agreement in accordance with its terms shall
operate to terminate the foregoing proxy unless such termination is based upon a
breach of such Agreement by the Company.
This appointment shall revoke all prior powers of attorney and proxies
appointed by Seller at any time with respect to its Shares and no subsequent
powers of attorney or proxies will be appointed by Seller, or be effective, with
respect thereto during the term of this Agreement.
Seller agrees to perform such further acts and execute such further
documents and instruments as may reasonably be required to vest in the Parent
the power to carry out and give effect to the provisions of this Proxy
Agreement.
Section 3. Specific Performance.
Parent hereby advises the Seller that the transactions contemplated by this
Proxy Agreement and the Merger Agreement represent a unique opportunity for the
Parent to acquire the business and operations of the Company; and that such
acquisition presents a unique opportunity for the Parent to strengthen its
financial condition so as to permit the Parent to expand its current operations
and possibly to acquire additional businesses, and to improve its future
earnings. The Seller recognizes that its failure to carry out the terms of this
Proxy Agreement could result in financial injury to Parent which would be
substantial, irreparable and not susceptible of measurement. Accordingly, the
Seller agrees that Parent shall be entitled to (i) require Seller specifically
to perform its respective obligations under this Proxy Agreement and (ii) sue in
any court of competent jurisdiction to obtain such specific performance and to
enjoin any transaction inconsistent therewith to which Seller may, directly or
indirectly, have become or propose to become a party. The Seller further agrees
not to contest any of the matters set forth in the first sentence of this
Section, in the event of any attempt by Parent to seek any such remedy.
Section 4. Miscellaneous.
(a) Payment of Expenses. Each party hereto shall pay its own expenses
incurred in connection with this Proxy Agreement.
(b) Amendments; Assignability. This Proxy Agreement may not be modified,
amended, altered or supplemented except upon the execution and delivery of a
written agreement executed by the party or parties sought to be affected. No
party to this Proxy Agreement may assign any of its rights or obligations under
this Proxy Agreement without the prior written consent of the other parties;
provided, however that Parent may assign any of its rights or obligations to any
Subsidiary or Affiliate of Parent without such prior written consent. This Proxy
Agreement does not create or confer any rights in favor of any third person or
entity which is not a party to this Proxy Agreement or the Merger Agreement.
Seller, by executing this Proxy Agreement, hereby authorizes Parent to act as
its agent with respect to all matters in this Proxy Agreement relating to
Seller, including any amendments or waivers to or matters required to be taken
in connection with, and receipt of notices under, this Proxy Agreement;
provided, however, that Parent shall promptly give notice to Seller of any
actions taken or notices received by Parent as Seller's agent hereunder.
(c) Binding Effect. This Proxy Agreement shall be binding upon, inure to
the benefit of and be enforceable by, the Seller, the Parent, the Company and
Seller's, the Company's or the Parent's respective heirs, beneficiaries,
executors, successors, representatives and permitted assigns, as the case may
be. The proxy granted under Section 2 may be exercised by the Parent,
notwithstanding Seller's intervening death, dissolution or incompetency.
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<PAGE> 192
(d) Notices. All notices and other communications hereunder shall be in
writing and shall be deemed to have been duly given when delivered in person, by
facsimile, receipt confirmed, or on the next business day when sent by overnight
carrier or on the second succeeding business day when sent by registered or
certified mail (postage prepaid, return receipt requested) to the respective
parties at the following address (or such other address for such party as shall
be specified by like notice):
(i) If to Parent, to:
Viad Corp
1850 North Central Avenue
Phoenix, Arizona 85077
Attn: Peter Novak, Esq.
Telephone: (602) 207-5913
Fax: (602) 207-5480
with copies to:
Travelers Express Co.
1550 Utica Avenue South
Mail Stop 8060
Minneapolis, Minnesota 55416
Attn: Michael Berry
Telephone: (612) 591-3820
Fax: (612) 591-3870
and to:
Bryan Cave LLP
2800 North Central Avenue
Phoenix, AZ 85004
Attn: Frank M. Placenti, Esq.
Telephone: (612) 280-8451
Fax: (602) 266-5938
(ii) If to Seller, at its address set forth on Appendix 1
(e) Counterparts. This Proxy Agreement may be executed in two or more
counterparts, each of which will be deemed to be an original, but all of which
together will constitute one and the same instrument.
(f) Governing Law; Jurisdiction. This Proxy Agreement shall be governed by
and construed in accordance with the internal laws of the State of Arizona
applicable to contracts made and to be performed therein. Seller (i) hereby
irrevocably submits to the jurisdiction of, and agrees that any suit by it shall
be brought only in, the state and federal courts located in the City of Phoenix
and State of Arizona for the purpose of any suit, action or other proceeding
arising out of or based upon this Proxy Agreement or the transactions
contemplated hereby, and (ii) hereby waives to the extent not prohibited by
applicable law, and agrees not to assert, by way of motion, as a defense or
otherwise, in any such proceeding, any claim that it is not subject personally
to the jurisdiction of the above-named courts, that its property is exempt or
immune from attachment or execution, that any such proceeding brought in one of
the above-named courts is improper, or that this Proxy Agreement, or the
transactions contemplated hereby, may not be enforced in or by such court.
Seller hereby irrevocably consents to the service of process in connection with
any legal matters or proceedings pertaining to this Proxy Agreement or the
transactions contemplated hereby, by the delivery of copies of such process by
registered or certified mail, return receipt requested, to Seller to the address
provided in Section 4(d). Nothing contained in this Section shall affect the
right of the Parent to serve process in any other manner permitted by law or
commence legal proceedings or otherwise proceed against the Seller in any other
jurisdiction. In the event the Seller should commence or maintain any action
arising out of or related to
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<PAGE> 193
this Proxy Agreement in a forum other than the state and federal courts located
in the City of Phoenix and State of Arizona, the Parent shall be entitled to
request the dismissal of such action, and Seller stipulates that such action
shall be dismissed.
(g) Entire Agreements. This Agreement embodies the entire agreement and
understanding of the parties hereto in respect of the subject matter hereof.
There are no restrictions, promises, representations, warranties, covenants, or
undertakings, other than those expressly set forth or referred to herein. This
Agreement supersedes all prior agreements and understandings between the parties
with respect to such subject matter.
IN WITNESS WHEREOF, this Proxy Agreement has been duly executed and
delivered by Parent and the Seller whose names appear below as of the day and
year first above written.
VIAD CORP, a Delaware corporation
By:
------------------------------------
Name:
Title:
SELLER:
--------------------------------------
ACKNOWLEDGED:
GAME FINANCIAL CORPORATION,
a Minnesota corporation
By:
--------------------------------------------------------
Name:
Title:
5
<PAGE> 194
STATE OF MINNESOTA
County of Hennepin
The foregoing instrument was acknowledged before me this ___ day of
________, 1997, by ____________________
--------------------------------------
NOTARY PUBLIC
My Commission Expires:
- ---------------------------------------------------------
STATE OF MINNESOTA
County of Hennepin
The foregoing instrument was acknowledged before me this ___ day of
________, 1997, by ____________________
--------------------------------------
NOTARY PUBLIC
My Commission Expires:
- ---------------------------------------------------------
ss.
ss.
<PAGE> 195
APPENDIX 1
TO IRREVOCABLE PROXY AGREEMENT
<TABLE>
<CAPTION>
NUMBER OF
SHAREHOLDER SHARES ADDRESS
- --------------------------------- --------------- -----------------------------------------------
<S> <C> <C>
</TABLE>
7
<PAGE> 196
APPENDIX VI
STOCK OPTION AGREEMENT
This STOCK OPTION AGREEMENT ("Agreement"), dated as of September 24, 1997,
is by and among Viad Corp, a Delaware corporation (the "Parent") and Game
Financial Corporation, a Minnesota corporation (the "Company").
RECITALS:
WHEREAS, the Company and the Parent have determined that their respective
best interests and the best interests of their respective shareholders would be
served by combining their businesses and operations and, for such purpose, the
Company and the Parent concurrently herewith are entering into an Agreement and
Plan of Merger of even date herewith (the "Merger Agreement") providing for the
merger of a subsidiary of the Parent with and into the Company (the "Merger");
WHEREAS, as a condition to the Parent's willingness to enter into the
Merger Agreement, Parent has requested and Company hereby agrees, subject to the
terms and conditions set forth in this Agreement, to grant to Parent an
irrevocable option to purchase One Million Five Hundred Thousand (1,500,000)
shares of the Company's Common Stock ("Shares"), as more fully set forth herein.
AGREEMENT:
NOW, THEREFORE, in order to induce Parent to enter into the Merger
Agreement, and in consideration of the premises and the representations,
warranties, covenants and agreements set forth herein, the parties, intending to
be legally bound hereby, agree as follows (capitalized terms used herein without
definition having the meanings set forth in the Merger Agreement):
Section 1. Option to Purchase Shares.
(a) Subject to the terms and conditions contained in this Agreement, the
Company hereby grants to Parent an irrevocable option to purchase one million
five hundred thousand (1,500,000) shares of the Company's Common Stock (the
"Option Shares").
(b) The purchase price of each Option Share to be purchased by the Parent
pursuant to the option provided for in this Agreement (the "Option") shall be
$10.00 per share (the "Purchase Price"), to be paid in cash ("Purchase
Consideration").
Section 2. Representations and Warranties of Company.
Company represents and warrants to Parent that:
(a) The Company has full power and capacity to execute and deliver this
Agreement.
(b) This Agreement, the grant of the Option, the issuance of the Option
Shares and the consideration to be received by the Company for the Option Shares
have been duly approved by all corporate action required under the Company's
Articles and Bylaws and by the laws of the Company's state of incorporation, and
any other Applicable Laws.
(c) This Agreement has been duly executed and delivered by the Company, and
assuming due execution and delivery hereof by Parent, this Agreement is a valid
and binding obligation of the Company, enforceable in accordance with its terms,
except as enforcement may be limited by bankruptcy, insolvency, moratorium or
other similar laws affecting creditors' rights generally or by the principles
governing the availability of equitable remedies.
(d) Neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby will violate or result in
any violation of, or be in conflict with or constitute a default under, or
require the consent of any person under any agreement, instrument, judgment,
decree, order, statute,
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rule or governmental regulation applicable to the Company. No consent, approval,
order or authorization of, or registration, declaration or filing with, any
governmental authority is required in connection with the execution and delivery
of this Agreement by the Company or the performance by the Company of its
obligations hereunder, except for compliance with the HSR Act.
(e) The Company has sufficient authorized and unissued Common Stock and/or
issued Common Stock held in treasury to enable it to issue the full number of
Option Shares.
(f) The representations and warranties of the Company set forth in the
Merger Agreement are true and correct and are incorporated herein by this
reference as is fully set forth herein.
Section 3. Representations and Warranties of the Parent.
The Parent represents and warrants to the Company that:
(a) The Parent is acquiring the Option and, upon exercise of the Option,
the Parent would be purchasing the Option Shares for its own account and not
with a view toward distribution and will not distribute, resell or offer the
Option or the Option Shares or any part thereof or any interest therein unless
registered pursuant to the provisions of the Securities Act or unless an
exemption from registration is available thereunder.
(b) This Agreement has been duly executed and delivered by the Parent, and
has been duly authorized by the Parent by all necessary corporate action and,
assuming due authorization, execution and delivery hereof by each other party
hereto, is a valid and binding obligation of the Parent enforceable in
accordance with its terms, except as such enforcement may be limited by
bankruptcy, insolvency, moratorium or other similar laws affecting creditors'
rights generally or by the principles governing the availability of equitable
remedies.
(c) The representations of the Parent set forth in the Merger Agreement are
true and correct and are incorporated herein by this reference.
Section 4. Covenants of Company.
Company covenants and agrees as follows:
(a) The Company will, at all times, during the term of this Agreement
reserve and keep available, free from preemptive rights, out of the authorized
but unissued Common Stock or its issued Common Stock held in treasury, or both,
the full number of Option Shares deliverable upon exercise of the Option.
(b) Except as required by Applicable Law, Company will not, in any
capacity, make any public announcement regarding this Agreement or the Merger
without the prior written consent of Parent.
(c) Company will promptly take such steps, if any, as may be required
insofar as the Company is concerned with respect to filings under the HSR Act
and will promptly furnish such additional materials and information as the
Federal Trade Commission ("FTC") or the Antitrust Division of the Department of
Justice ("Antitrust Division") may require. The Company will promptly furnish to
the Parent copies of all communications to Company from, or from such Seller to,
the FTC or the Antitrust Division, or any other governmental agency or authority
in respect of this Agreement or the Merger, and shall promptly advise Parent of
any material oral communications with any such agencies.
Section 5. Exercise of Option and Closing Date.
(a) Provided that no preliminary or permanent injunction or other order
against the delivery of Shares covered by the Option has been issued by any
court of competent jurisdiction in the United States and remains in effect,
Parent may exercise the Option, in whole or in part, at any time and from time
to time from the date hereof until the Option Termination Date.
(b) In the event Parent wishes to exercise the Option, it shall send to
Company written notice (the date of which being herein referred to as the
"Notice Date") specifying the total number of Option Shares it intends to
purchase from the Company pursuant to such exercise. If prior notification to or
approval of any governmental regulatory agency is required in connection with
such purchase, Company shall cooperate with Parent in the filing of the required
notice or application for approval and the obtaining of such approval and
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<PAGE> 198
the Closing (as defined below) (or Closings, if Parent exercises the Option in
part on multiple occasions) shall occur immediately following such regulatory
approvals (and any mandatory waiting periods). Any exercise of the Option shall
be deemed to occur on the Notice Date relating thereto.
(c) Upon the exercise of the Option by the Parent, the closing (the
"Closing") of the transactions contemplated herein and the delivery of the
Option Shares and the consideration therefor shall occur within three Business
Days or earlier if Parent so elects. If any law or regulation shall not permit
the purchase of the Shares to be consummated as set forth above, the date for
the Closing shall be as soon as practicable following the cessation of such
restriction on consummation, but in any event within two Business Days after
such cessation. Upon the exercise of the Option by the Parent, the date the
Closing occurs is referred to herein as the "Closing Date." The Closing shall
occur on the Closing Date at 10:00 A.M. Phoenix time at the offices of counsel
to the Parent or at such other time and place as the Parent and the Company may
agree.
(d) On the Closing Date, upon the exercise of the Option by the Parent, the
Company shall deliver to the Parent certificates representing all the Option
Shares, and any opinions of counsel or other documents required by the transfer
agent of the Company to permit the transfer of the Option Shares to the Parent.
As consideration for the delivery of each Option Share, Parent shall pay on the
Closing Date the Purchase Consideration, payable by wire transfer of immediately
available funds to the account of the Company (in accordance with written
instructions to be provided by Company).
(e) Upon the giving by Parent to Company of the written notice of exercise
of the Option and the payment of the Parent Consideration to the Company, Parent
shall be deemed to be the holder of record of the Option Shares of such Company
Common Stock fully paid for, notwithstanding that the stock transfer books of
Company shall then be closed or that certificates representing such Option
Shares shall not then be actually delivered to Parent. Company shall pay all
expenses, and any and all United States federal, state, and local taxes and
other charges that may be payable in connection with the preparation, issuance
and delivery of stock certificates pursuant to this Agreement in the name of
Parent or its assignee, transferee, or designee.
Section 6. Conditions to Obligations of the Parent.
Upon providing notice of Parent's interest in exercising the Option, the
obligations of Parent to consummate the purchase of the Option Shares are, at
the option of Parent, subject to the conditions that on or before the Closing
Date:
(a) The representations and warranties contained in this Agreement
shall be true and correct in all material respects on the date when made
and on and as of the Closing Date as if made on and as of such date and the
Company shall have performed in all material respects its covenants and
obligations contained in this Agreement;
(b) The representations and warranties of Company contained in the
Merger Agreement and of Gary A. Dachis in the Selling Shareholder's
Agreement shall be true and correct in all material respects on the date
when made and on and as of the Closing Date as if made on and as of such
date;
(c) No injunction or other order issued by any federal or state court
preventing the consummation of the Merger or this Agreement shall be in
effect; and
(d) There shall have occurred no Company Material Adverse Effect.
Section 7. Conditions to Obligations of Company.
The obligations of the Company to consummate the sale of the Option Shares
are, at the option of the Company, subject to the conditions that on or before
the Closing Date:
(a) The representations and warranties of the Parent contained in this
Agreement shall be true and correct in all material respects on the date
when made and at and as of the Closing Date as if then made and the Parent
shall have performed in all material respects its covenants and obligations
contained in this Agreement;
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<PAGE> 199
(b) No injunction or other order issued by any federal or state court
preventing the consummation of this Agreement shall be in effect; and
(c) The Merger Agreement shall not have been terminated by the Company
in accordance with Section 9.1 of the Merger Agreement.
Section 8. Registration Rights.
(a) Demand Registration Rights. Subject to the conditions of 8(c) below,
Company shall on no more than two occasions, if requested by Parent, including
Parent and any permitted transferee acquiring at least 10% of the shares of
Company Common Stock represented by the Option on the date hereof (each, a
"Selling Shareholder"), as expeditiously as possible prepare and file a
registration statement under the Securities Act if such registration is
necessary in order to permit the sale or other disposition of any or all Option
Shares or other securities that have been acquired by the Selling Shareholders
upon exercise of the Option in accordance with the intended method of sale or
other disposition stated by the Selling Shareholder in such request, including
without limitation a "shelf" registration statement under Rule 415 under the
Securities Act or any successor provision, and Company shall use its best
efforts to qualify such shares or other securities for sale under any applicable
state securities laws, provided, however, that Company shall not be required to
consent to general jurisdiction or qualify to do business in any state where it
is not otherwise required to so consent to such jurisdiction or to so qualify to
do business.
(b) Additional Registration Rights. If Company at any time after the
exercise of the Option proposes to register any shares of Company Common Stock
under the Securities Act, Company will promptly give written notice to the
Selling Shareholders of its intention to do so and, upon the written request of
any Selling Shareholder given within thirty (30) days after receipt of any such
notice (which request shall specify the number of shares of Company Common Stock
intended to be included in such public offering by the Selling Shareholder),
Company will cause all such shares for which a Selling Shareholder requests
participation in such registration, to be so registered and included in such
public offering, provided, however, that Company may elect to not cause any such
shares to be so registered (i) if such public offering is to be underwritten and
the underwriters in good faith object for valid business reasons, or (ii) in the
case of a registration solely to implement an employee benefit plan or a
registration filed on Form S-4 of the Securities Act or any successor form. If
some but not all the shares of Company Common Stock, with respect to which
Company shall have received requests for registration pursuant to this Section
8(b), shall be excluded from such registration, Company shall make appropriate
allocation of shares to be registered among the Selling Shareholders desiring to
register their shares pro rata in the proportion that the number of shares
requested to be registered by each such Selling Shareholder bears to the total
number of shares requested to be registered by all such Selling Shareholders
then desiring to have Company Common Stock registered for sale.
(c) Conditions to Required Registration. Company shall use all reasonable
efforts to cause each registration statement referred to in Section 8(a) above
to become effective and to obtain all consents or waivers of other parties which
are required therefor and to keep such registration statement effective;
provided, however, that Company may delay any registration of Option Shares
required pursuant to Section 8(a) above for a period not exceeding ninety (90)
days provided Company shall in good faith determine that any such registration
would adversely affect Company (provided that this right may not be exercised
more than once during any twelve month period).
In addition, Company shall not be required to maintain the effectiveness of
any registration statement after the expiration of six (6) months from the
effective date of such registration statement. Company shall use all reasonable
efforts to make any filings, and take all steps, under all applicable state
securities laws to the extent necessary to permit the sale or other disposition
of the Option Shares so registered in accordance with the intended method of
distribution for such shares; provided, however, that Company shall not be
required to consent to general jurisdiction or qualify to do business in any
state where it is not otherwise required to so consent to such jurisdiction or
to so qualify to do business.
(d) Expenses. Except where applicable state law prohibits such payments,
Company will pay all expenses (including without limitation registration fees,
qualification fees, blue sky fees and expenses
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<PAGE> 200
(including the fees and expenses of counsel), legal expenses, including the
reasonable fees and expenses of one counsel to the holders whose Option Shares
are being registered, printing expenses and the costs of special audits or "cold
comfort" letters, expenses of underwriters, excluding discounts and commissions
but including liability insurance if Company so desires or the underwriters so
require, and the reasonable fees and expenses of any necessary special experts)
in connection with each registration pursuant to Section 8(a) or 8(b) above
(including the related offerings and sales by holders of Option Shares) and all
other qualifications, notifications or exemptions pursuant to Section 8(a) or
8(b) above.
(e) Indemnification. In connection with any registration under Section
8(a) or 8(b) above, Company hereby indemnifies the Selling Shareholders, and
each underwriter thereof, including each person, if any, who controls such
underwriter within the meaning of Section 15 of the Securities Act, against all
expenses, losses, claims, damages and liabilities caused by any untrue, or
alleged untrue, statement of a material fact contained in any registration
statement or prospectus or notification or offering circular (including any
amendments or supplements thereto) or any preliminary prospectus, or caused by
any omission, or alleged omission, to state therein a material fact required to
be stated therein or necessary to make the statements therein not misleading,
except insofar as such expenses, losses, claims, damages or liabilities of such
indemnified party are caused by any untrue statement or alleged untrue statement
that was included by Company in any such registration statement or prospectus or
notification or offering circular (including any amendments or supplements
thereto) in reliance upon and in conformity with, information furnished in
writing to Company by such indemnified party expressly for use therein, and
Company and each officer, director and controlling person of Company shall be
indemnified by such Selling Shareholders, or by such underwriter, as the case
may be, for all such expenses, losses, claims, damages and liabilities caused by
any untrue, or alleged untrue, statement, that was included by Company in any
such registration statement or prospectus or notification or offering circular
(including any amendments or supplements thereto) in reliance upon, and in
conformity with, information furnished in writing to Company by or on behalf of
such Selling Shareholder or such underwriter, as the case may be, expressly for
such use.
Promptly upon receipt by a party indemnified under this Section 8(e) of
notice of the commencement of any action against such indemnified party in
respect of which indemnity or reimbursement may be sought against any
indemnifying party under this Section 8(e), such indemnified party shall notify
the indemnifying party in writing of the commencement of such action, but the
failure so to notify the indemnifying party shall not relieve it of any
liability which it may otherwise have to any indemnified party under this
Section 8(e) except to the extent the indemnified party is materially prejudiced
thereby. In case notice of commencement of any such action shall be given to the
indemnifying party as above provided, the indemnifying party shall be entitled
to participate in and, to the extent it may wish, jointly with any other
indemnifying party similarly notified, to assume the defense of such action at
its own expense, with counsel chosen by it and reasonably satisfactory to such
indemnified party. The indemnified party shall have the right to employ separate
counsel in any such action and participate in the defense thereof, but the fees
and expenses of such counsel (other than reasonable costs of investigation)
shall be paid by the indemnified party unless (i) the indemnifying party either
agrees to pay the same, (ii) the indemnifying party fails to assume the defense
of such action with counsel reasonably satisfactory to the indemnified party, or
(iii) the indemnified party has been advised by counsel that one or more legal
defenses may be available to the indemnifying party that may be contrary to the
interest of the indemnified party, in which case the indemnifying party shall be
entitled to assume the defense of such action notwithstanding its obligation to
bear fees and expenses of such counsel. No indemnifying party shall be liable
for any settlement entered into without its consent, which consent may not be
unreasonably withheld.
If the indemnification provided for in this Section 8(e) is unavailable to
a party otherwise entitled to be indemnified in respect of any expenses, losses,
claims, damages or liabilities referred to herein, then the indemnifying party,
in lieu of indemnifying such party otherwise entitled to be indemnified, shall
contribute to the amount paid or payable by such party to be indemnified as a
result of such expenses, losses, claims, damages or liabilities in such
proportion as is appropriate to reflect the relative benefits received by
Company, the Selling Shareholders and the underwriters from the offering of the
securities and also the relative fault of Company, the Selling Shareholders and
the underwriters in connection with the statements or omissions
5
<PAGE> 201
which resulted in such expenses, losses, claims, damages or liabilities, as well
as any other relevant equitable considerations. The amount paid or payable by a
party as a result of the expenses, losses, claims, damages and liabilities
referred to above shall be deemed to include any legal or other fees or expenses
reasonably incurred by such party in connection with investigating or defending
any action or claim, provided, however, that in no case shall any Selling
Shareholder be responsible, in the aggregate, for any amount in excess of the
net offering proceeds attributable to its Option Shares included in the
offering. Any obligation by any Selling Shareholder to indemnify shall be
several and not joint with other holders.
In connection with any registration pursuant to Section 8(a) or 8(b) above,
Company and each Selling Shareholder (other than Parent) shall enter into an
agreement containing the indemnification provisions of this Section 8(e). In the
event of an underwritten public offering pursuant to Section 8(b), the Company
and the Selling Shareholders shall enter into an underwriting agreement
containing customary terms and provisions; provided that the indemnification
provisions as they relate to Selling Shareholders shall contain substantially
the same limitations as the provisions set forth herein.
(f) Miscellaneous Reporting. Company shall comply with all reporting
requirements and will do all such other things as may be necessary to permit the
expeditious sale at any time of any Option Shares by the Selling Shareholder
thereof in accordance with and to the extent permitted by any rule or regulation
promulgated by the SEC from time to time, including, without limitation, Rule
144. Company shall at its expense provide Selling Shareholders with any
information necessary in connection with the completion and filing of any
reports or forms required to be filed by them under the Securities Act or the
Exchange Act, or required pursuant to any state securities laws or the rules of
any stock exchange.
Section 9. No Brokerage Fee.
The parties represent and warrant to each other that, as a result of the
consummation of transactions contemplated by this Agreement, no broker, finder
or investment banker is entitled to any brokerage, finder's or other fee or
commission in connection with the transactions contemplated by (i) this
Agreement; or (ii) the Merger Agreement (except as disclosed therein).
Section 10. Specific Performance.
Parent hereby advises the Company that the transactions contemplated by
this Agreement and the Merger Agreement represent a unique opportunity for the
Parent to acquire the business and operations of Company; and that such
acquisition presents a unique opportunity for the Parent to strengthen its
financial condition so as to permit the Parent to expand its current operations
and possibly to acquire additional businesses, and to improve its future
earnings. Company recognizes that its failure to carry out the terms of this
Agreement could result in financial injury to Parent which would be substantial,
irreparable and not susceptible of measurement. Accordingly, Company agrees that
Parent shall be entitled to (i) require the Company specifically to perform its
obligations under this Agreement and (ii) sue in any court of competent
jurisdiction to obtain such specific performance and to enjoin any transaction
inconsistent therewith to which Company may, directly or indirectly, have become
or propose to become a party. Company further agree to waive any requirement for
a bond and not to contest any of the matters set forth in the first sentence of
this Section, in the event of any attempt by Parent to seek any such remedy.
Section 11. Termination of Stock Option Agreement and Option.
This Agreement and the Option shall automatically terminate on the Option
Termination Date. Subject to Applicable Laws, the Option Termination Date shall
be the earlier of (i) the Effective Date, if the Merger is consummated, (ii) the
termination date of the Merger Agreement, if the Merger Agreement is terminated
pursuant to Section 9.1(a), 9.1(b)(iii) or 9.1(b)(iv) (unless the failure to
close was due to failure of Company to perform its obligations under the Merger
Agreement, in which case the Option will terminate pursuant to subparagraph
(iii) of this Section 11), or 9.1(c)(iv), 9.1(c)(v) (unless the failure to
qualify as a pooling of interest was due to the actions or inactions of the
Company or Dachis), or 9.1(d)(i), 9.1(d)(ii), 9.1(d)(iii), 9.1(d)(iv) (if the
failure to qualify as a tax-free reorganization was due to the actions or
inactions of Parent or Acquisition Sub) of the Merger Agreement, or (iii)
January 31, 1999, unless the Termination
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<PAGE> 202
Date is extended by the agreement of the parties to the Merger Agreement, in
which case the Option Termination Date under subsection (iii) shall be one year
from the Termination Date.
Section 12. Miscellaneous.
(a) Payment of Expenses. Each party hereto shall pay its own expenses
incurred in connection with this Agreement.
(b) Amendments; Assignability. This Agreement may not be modified,
amended, altered or supplemented except upon the execution and delivery of a
written agreement executed by the party or parties sought to be affected. No
party to this Agreement may assign any of its rights or obligations under this
Agreement without the prior written consent of the other parties; provided,
however, that Parent may assign its rights to purchase the Shares pursuant to
this Agreement to any subsidiary or affiliate of Parent without such prior
written consent. This Agreement does not create or confer any rights in favor of
any third person or entity which is not a party to this Agreement. The Company,
by executing this Agreement, hereby authorizes Ravich, Meyer, Wilson, Kirkman,
McGrath & Nauman, P.A. to act as its agent with respect to all matters in this
Agreement relating to the Company, including any amendments or waivers to or
matters required to be taken in connection with, and receipt of notices under,
this Agreement.
(c) Binding Effect. This Agreement shall be binding upon, inure to the
benefit of and be enforceable by, the Parent and the Company and their
respective successors, representatives and permitted assigns, as the case may
be.
(d) Notices. All notices and other communications hereunder shall be in
writing and shall be deemed to have been duly given when delivered in person, by
facsimile, receipt confirmed, or on the next business day when sent by overnight
courier or on the second succeeding business day when sent by registered or
certified mail (postage prepaid, return receipt requested) to the respective
parties at the following addresses (or at such other address for a party as
shall be specified by like notice).
(i) If to Parent, to:
Viad Corp
1850 North Central Avenue
Phoenix, Arizona 85077
Attn: Peter Novak, Esq.
Telephone: (602) 207-5913
Fax: (602) 203-5480
with copies to :
Travelers Express Company, Inc.
1550 Utica Avenue South
Mail Stop 8060
Minneapolis, Minnesota 55416
Attn: Michael Berry
Telephone: (612) 591-3820
Fax: (612) 591-3870
and to:
Bryan Cave LLP
2800 North Central Avenue
Phoenix, AZ 85004
Attn: Frank M. Placenti, Esq.
Telephone: (602) 280-8451
Fax: (602) 266-5938
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(ii) If to the Company, to:
Game Financial Corporation
13705 First Avenue North
Minneapolis, Minnesota 55441
Attn: Gary A. Dachis
Telephone: (612) 404-6580
Fax: (612) 476-8071
with copies to:
Ravich, Meyer, Wilson, Kirkman, McGrath & Nauman, P.A.
4545 IDS Center
Minneapolis, Minnesota 55402
Attn: Paul H. Ravich, Esq.
Telephone: (612) 332-8511
Fax: (612) 332-8302
or to such other address as the person to whom notice is to be given may
have previously furnished to the others in writing in the manner set forth above
(provided that notice of any change of address shall be effective only upon
receipt thereof).
(e) Counterparts. This Agreement may be executed in two or more
counterparts, each of which will be deemed to be an original, but all of which
together will constitute one and the same instrument.
(f) Governing Law; Jurisdiction. This Agreement shall be governed by and
construed in accordance with the internal laws of the State of Minnesota
applicable to contracts made and to be performed therein. Each Seller and the
Company (i) hereby irrevocably submits to the jurisdiction of, and agrees that
any suit by it shall be brought only in, the state and federal courts located in
the City of Minneapolis and State of Minnesota for the purpose of any suit,
action or other proceeding arising out of or based upon this Agreement or the
transactions contemplated hereby, and (ii) hereby waives to the extent not
prohibited by applicable law, and agrees not to assert, by way of motion, as a
defense or otherwise, in any such proceeding, any claim that it is not subject
personally to the jurisdiction of the above-named courts, that its property is
exempt or immune from attachment or execution, that any such proceeding brought
in one of the above-named courts is improper, or that this Agreement, or the
transactions contemplated hereby, may not be enforced in or by such court. The
Company hereby irrevocably designates and appoints Ravich, Meyer, Wilson,
Kirkman, McGrath & Nauman, P.A., who has agreed to accept process on behalf of
the Company, as its authorized agent to receive service of process on its behalf
in connection with any legal matters or proceedings pertaining to this Agreement
or the transactions contemplated hereby and hereby consents to service of
process in any such proceeding by registered or certified mail, return receipt
requested, at such address. As an alternative method of service, the Company
also irrevocably consents to the service of process in any such matter or
proceeding by the delivery of copies of such process to the Company as provided
by Section 12(d). Nothing contained in this Section shall affect the right of
the Parent to serve process in any other manner permitted by law or commence
legal proceedings or otherwise proceed against the Company in any other
jurisdiction. In the event the Company should commence or maintain any action
arising out of or related to this Agreement in a forum other than the state and
federal courts located in the City of Minneapolis and State of Minnesota, the
Parent shall be entitled to request the dismissal of such action, and the
Company stipulates that such action shall be dismissed.
Section 13. Entire Agreement.
This Agreement and the documents or instruments referred to herein
including, but not limited to, the Merger Agreement, the Selling Shareholder's
Agreement, the Irrevocable Proxy Agreement, the Escrow Agreement and the Stock
Option Agreement and their respective Exhibits and Schedules, embody the entire
agreement and understanding of the parties hereto in respect of the subject
matter contained hereof. There are no restrictions, promises, representations,
warranties, covenants, or undertakings relating to the subject matter
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hereof, other than those expressly set forth or referred to herein and therein.
This Agreement supersedes all prior agreements and the understandings between
the parties with respect to such subject matter.
IN WITNESS WHEREOF, this Agreement has been duly executed and delivered by
Parent and the Company as of the day and year first above written.
VIAD CORP, a Delaware corporation
By:
------------------------------------
Name:
Title:
GAME FINANCIAL CORPORATION,
a Minnesota corporation
By:
------------------------------------
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APPENDIX VII
September 23, 1997
The Board of Directors
Game Financial Corporation
13705 First Avenue North
Minneapolis, MN 55441
Gentlemen:
You have engaged us pursuant to the engagement letter, dated as of August
11, 1997, between Game Financial Corporation ("Game Financial" or the "Company")
and Ladenburg Thalmann & Co. Inc. ("Ladenburg"). Specifically, you have
requested our opinion as to whether or not the consideration to be paid to the
stockholders of the Company in connection with the possible sale of the Company
to Viad Corp (the "Transaction") is fair, from a financial point of view, to the
stockholders of Game Financial.
The Agreement and Plan of Merger by and among Viad Corp, Game Acquisition
Corp. (a subsidiary of Viad Corp, together, "Viad") and Game Financial (the
"Merger Agreement"), provides that at the closing of the Transaction, each share
of common stock, par value $.01 per share, of the Company issued and outstanding
shall be converted in to the right to receive that number of validly issued,
fully paid and nonassessable shares of common stock, $1.50 par value, of Viad
equal to $10.75 divided by the average of the closing sale price of Viad Common
Stock as listed on the New York Stock Exchange for the 30 trading day period
ended four trading days prior to the Closing Date (the "Exchange Ratio").
In connection with rendering our opinion, we have reviewed such information
as we have deemed necessary or appropriate for the purpose of stating the
opinions expressed herein. We have reviewed information including, but not
limited to, the following: (i) the draft of the Merger Agreement dated as of
September 16, 1997 governing the sale of Game Financial to Viad; (ii) the
Company's audited financial statements for the three fiscal years ended December
31, 1994, 1995 and 1996; (iii) the Company's unaudited financial statements for
the fiscal quarters ended March 31, 1997, June 30, 1997 and the same periods in
1996; (iv) the Company's five-year projected financial statements; (v) the
Company's common stock price and volume trading history; (vi) Viad's audited
financial statements for the three fiscal years ended December 31, 1994, 1995
and 1996; (vii) Viad's unaudited financial statements for the fiscal quarters
ended March 31, 1997, June 30, 1997 and the same periods in 1996; (viii) Viad's
common stock price and volume trading history; (ix) Viad's dividend history; (x)
available research reports on Viad; and (xi) publicly available market
information regarding the industry, Viad, Game Financial and its competitors. In
addition, we discussed the historical and prospective industry environment and
operating results of the Company with the management of Game Financial.
In rendering our opinion, we have assumed and relied upon the accuracy,
completeness and fairness, without assuming any responsibility for the
independent verification of, all financial and other information that was
available to us from public sources, that was provided to us by the Company or
Viad, or that was otherwise reviewed by us. We have not made or been provided
with an independent evaluation or appraisal of the assets or liabilities
(contingent or otherwise) of the Company or Viad, and we do not assume any
responsibility for verifying any of the information reviewed by us. Our opinion
is necessarily based upon information available to us, and financial, stock
market and other conditions and circumstances existing and disclosed to us, as
of the date hereof.
In conducting our investigation and analyses and in arriving at our opinion
expressed herein, we have taken into account such accepted financial and
investment banking procedures and considerations as we have deemed relevant,
including: (i) historical revenues, operating earnings, net income and
capitalization of the Company and certain other publicly held companies in
businesses we believe to be comparable to the Company's; (ii) acquisition
multiples that have historically been paid for other companies in businesses we
believe to be comparable to the Company's; (iii) projected revenues, operating
earnings and net income of the Company in a discounted cash flow analysis; (iv)
the premium per share to be paid by Viad for the common
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The Board of Directors
Game Financial Corporation
September 23, 1997
Page 2
stock of the Company as compared to the premium per share paid by acquirors of
public targets since January 1, 1997; (v) the current financial and market
position and results of operations of the Company; and (vi) the general
condition of the securities market.
Ladenburg, as part of its investment banking services, is regularly engaged
in the valuation of businesses and securities in connection with mergers,
acquisitions, underwritings, sales and distributions of listed and unlisted
securities, private placements and valuations for estate, corporate or other
purposes. Ladenburg has been retained by the Board of Directors of Game
Financial to provide this opinion and has received fees and indemnification
against certain liabilities for the services rendered pursuant to this
engagement. Ladenburg has also provided financial advisory services to Game
Financial with respect to the Transaction.
In the ordinary course of business, we actively trade securities for our
own account and for the accounts of our customers and, accordingly, may at any
time hold a long or short position in the debt or equity securities of the
Company.
Based upon and subject to the foregoing, our experience as investment
bankers, our work as described above and other factors we deemed relevant, we
are of the opinion that, as of the date hereof, the Consideration to be paid in
the Transaction is fair, from a financial point of view, to the stockholders of
Game Financial.
Very truly yours,
LADENBURG THALMANN & CO. INC.
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APPENDIX VIII
MINNESOTA BUSINESS CORPORATION ACT, SEC.302A.471 AND SEC.302A.473
(RIGHTS OF DISSENTING SHAREHOLDERS)
Set forth below are Sections 302A.471 and 302A.473 of the Minnesota
Business Corporation Act, which provide that shareholders may dissent from, and
obtain payment for the fair value of their shares in the event of, certain
corporate actions, and establish procedures for the exercise of such dissenters'
rights.
302A.471. RIGHTS OF DISSENTING SHAREHOLDERS
SUBDIVISION 1. ACTIONS CREATING RIGHTS. A shareholder of a corporation
may dissent from, and obtain payment for the fair value of the shareholder's
shares in the event of, any of the following corporate actions:
(a) An amendment of the articles that materially and adversely affects the
rights or preferences of the shares of the dissenting shareholder in that it:
(1) alters or abolishes a preferential right of the shares;
(2) creates, alters, or abolishes a right in respect of the redemption
of the shares, including a provision respecting a sinking fund for the
redemption or repurchase of the shares;
(3) alters or abolishes a preemptive right of the holder of the shares
to acquire shares, securities other than shares, or rights to purchase
shares or securities other than shares;
(4) excludes or limits the right of a shareholder to vote on a matter,
or to cumulate votes, except as the right may be excluded or limited
through the authorization or issuance of securities of an existing or new
class or series with similar or different voting rights; except that an
amendment to the articles of an issuing public corporation that provides
that section 302A.671 does not apply to a control share acquisition does
not give rise to the right to obtain payment under this section;
(b) A sale, lease, transfer, or other disposition of all or substantially
all of the property and assets of the corporation, but not including a
transaction permitted without shareholder approval in section 302A.661,
Subdivision 1, or a disposition in dissolution described in section 302A.725,
Subdivision 2, or a disposition pursuant to an order of a court, or a
disposition for cash on terms requiring that all or substantially all of the net
proceeds of disposition be distributed to the shareholders in accordance with
their respective interests within one year after the date of disposition;
(c) A plan of merger, whether under this chapter or under chapter 322B, to
which the corporation is a party, except as provided in Subdivision 3;
(d) A plan of exchange, whether under this chapter or under chapter 322B,
to which the corporation is a party as the corporation whose shares will be
acquired by the acquiring corporation, if the shares of the shareholder are
entitled to be voted on the plan; or
(e) Any other corporate action taken pursuant to a shareholder vote with
respect to which the articles, the bylaws, or a resolution approved by the board
directs that dissenting shareholders may obtain payment for their shares.
SUBD. 2. BENEFICIAL OWNERS. (a) A shareholder shall not assert
dissenters' rights as to less than all of the shares registered in the name of
the shareholder, unless the shareholder dissents with respect to all the shares
that are beneficially owned by another person but registered in the name of the
shareholder and discloses the name and address of each beneficial owner on whose
behalf the shareholder dissents. In that event, the rights of the dissenter
shall be determined as if the shares as to which the shareholder has dissented
and the other shares were registered in the names of different shareholders.
(b) The beneficial owner of shares who is not the shareholder may assert
dissenters' rights with respect to shares held on behalf of the beneficial
owner, and shall be treated as a dissenting shareholder under the
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terms of this section and section 302A.473, if the beneficial owner submits to
the corporation at the time of or before the assertion of the rights a written
consent of the shareholder.
SUBD. 3. RIGHTS NOT TO APPLY. Unless the articles, the bylaws, or a
resolution approved by the board otherwise provide, the right to obtain payment
under this section does not apply to a shareholder of the surviving corporation
in a merger, if the shares of the shareholder are not entitled to be voted on
the merger.
SUBD. 4. OTHER RIGHTS. The shareholders of a corporation who have a right
under this section to obtain payment for their shares do not have a right at law
or in equity to have a corporate action described in Subdivision 1 set aside or
rescinded, except when the corporate action is fraudulent with regard to the
complaining shareholder or the corporation.
302A.473. PROCEDURES FOR ASSERTING DISSENTERS' RIGHTS
SUBDIVISION 1. DEFINITIONS. (a) For purposes of this section, the terms
defined in this Subdivision have the meanings given them.
(b) "Corporation" means the issuer of the shares held by a dissenter before
the corporate action referred to in section 302A.471, Subdivision 1 or the
successor by merger of that issuer.
(c) "Fair value of the shares" means the value of the shares of a
corporation immediately before the effective date of the corporate action
referred to in section 302A.471, Subdivision 1.
(d) "Interest" means interest commencing five days after the effective date
of the corporate action referred to in section 302A.471, Subdivision 1, up to
and including the date of payment, calculated at the rate provided in section
549.09 for interest on verdicts and judgments.
SUBD. 2. NOTICE OF ACTION. If a corporation calls a shareholder meeting
at which any action described in section 302A.471, Subdivision 1 is to be voted
upon, the notice of the meeting shall inform each shareholder of the right to
dissent and shall include a copy of section 302A.471 and this section and a
brief description of the procedure to be followed under these sections.
SUBD. 3. NOTICE OF DISSENT. If the proposed action must be approved by
the shareholders, a shareholder who wishes to exercise dissenters' rights must
file with the corporation before the vote on the proposed action a written
notice of intent to demand the fair value of the shares owned by the shareholder
and must not vote the shares in favor of the proposed action.
SUBD. 4. NOTICE OF PROCEDURE; DEPOSIT OF SHARES. (a) After the proposed
action has been approved by the board and, if necessary, the shareholders, the
corporation shall send to all shareholders who have complied with Subdivision 3
and to all shareholders entitled to dissent if no shareholder vote was required,
a notice that contains:
(1) The address to which a demand for payment and certificates of
certificated shares must be sent in order to obtain payment and the date by
which they must be received;
(2) Any restrictions on transfer of uncertificated shares that will
apply after the demand for payment is received;
(3) A form to be used to certify the date on which the shareholder, or
the beneficial owner on whose behalf the shareholder dissents, acquired the
shares or an interest in them and to demand payment; and
(4) A copy of section 302A.471 and this section and a brief
description of the procedures to be followed under these sections.
(b) In order to receive the fair value of the shares, a dissenting
shareholder must demand payment and deposit certificated shares or comply with
any restrictions on transfer of uncertificated shares within 30 days after the
notice required by paragraph (a) was given, but the dissenter retains all other
rights of a shareholder until the proposed action takes effect.
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SUBD. 5. PAYMENT; RETURN OF SHARES. (a) After the corporate action takes
effect, or after the corporation receives a valid demand for payment, whichever
is later, the corporation shall remit to each dissenting shareholder who has
complied with Subdivisions 3 and 4 the amount the corporation estimates to be
the fair value of the shares, plus interest, accompanied by:
(1) The corporation's closing balance sheet and statement of income
for a fiscal year ending not more than 16 months before the effective date
of the corporate action, together with the latest available interim
financial statements;
(2) An estimate by the corporation of the fair value of the shares and
a brief description of the method used to reach the estimate; and
(3) A copy of section 302A.471 and this section, and a brief
description of the procedure to be followed in demanding supplemental
payment.
(b) The corporation may withhold the remittance described in paragraph (a)
from a person who was not a shareholder on the date the action dissented from
was first announced to the public or who is dissenting on behalf of a person who
was not a beneficial owner on that date. If the dissenter has complied with
Subdivisions 3 and 4, the corporation shall forward to the dissenter the
materials described in paragraph (a), a statement of the reason for withholding
the remittance, and an offer to pay to the dissenter the amount listed in the
materials if the dissenter agrees to accept that amount in full satisfaction.
The dissenter may decline the offer and demand payment under Subdivision 6.
Failure to do so entitles the dissenter only to the amount offered. If the
dissenter makes demand, Subdivisions 7 and 8 apply.
(c) If the corporation fails to remit payment within 60 days of the deposit
of certificates or the imposition of transfer restrictions on uncertificated
shares, it shall return all deposited certificates and cancel all transfer
restrictions. However, the corporation may again give notice under Subdivision 4
and require deposit or restrict transfer at a later time.
SUBD. 6. SUPPLEMENTAL PAYMENT; DEMAND. If a dissenter believes that the
amount remitted under Subdivision 5 is less than the fair value of the shares
plus interest, the dissenter may give written notice to the corporation of the
dissenter's own estimate of the fair value of the shares, plus interest, within
30 days after the corporation mails the remittance under Subdivision 5, and
demand payment of the difference. Otherwise, a dissenter is entitled only to the
amount remitted by the corporation.
SUBD. 7. PETITION; DETERMINATION. If the corporation receives a demand
under Subdivision 6, it shall, within 60 days after receiving the demand, either
pay to the dissenter the amount demanded or agreed to by the dissenter after
discussion with the corporation or file in court a petition requesting that the
court determine the fair value of the shares, plus interest. The petition shall
be filed in the county in which the registered office of the corporation is
located, except that a surviving foreign corporation that receives a demand
relating to the shares of a constituent domestic corporation shall file the
petition in the county in this state in which the last registered office of the
constituent corporation was located. The petition shall name as parties all
dissenters who have demanded payment under Subdivision 6 and who have not
reached agreement with the corporation. The corporation shall, after filing the
petition, serve all parties with a summons and copy of the petition under the
rules of civil procedure. Nonresidents of this state may be served by registered
or certified mail or by publication as provided by law. Except as otherwise
provided, the rules of civil procedure apply to this proceeding. The
jurisdiction of the court is plenary and exclusive. The court may appoint
appraisers, with powers and authorities the court deems proper, to receive
evidence on and recommend the amount of the fair value of the shares. The court
shall determine whether the shareholder or shareholders in question have fully
complied with the requirements of this section, and shall determine the fair
value of the shares, taking into account any and all factors the court finds
relevant, computed by any method or combination of methods that the court, in
its discretion, sees fit to use, whether or not used by the corporation or by a
dissenter. The fair value of the shares as determined by the court is binding on
all shareholders, wherever located. A dissenter is entitled to judgment in cash
for the amount by which the fair value of the shares as determined by the court,
plus interest, exceeds the amount, if any, remitted under Subdivision 5, but
shall not be liable to the
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corporation for the amount, if any, by which the amount, if any, remitted to the
dissenter under Subdivision 5 exceeds the fair value of the shares as determined
by the court, plus interest.
SUBD. 8. COSTS; FEES; EXPENSES. (a) The court shall determine the costs
and expenses of a proceeding under Subdivision 7, including the reasonable
expenses and compensation of any appraisers appointed by the court, and shall
assess those costs and expenses against the corporation, except that the court
may assess part or all of those costs and expenses against a dissenter whose
action in demanding payment under Subdivision 6 is found to be arbitrary,
vexatious, or not in good faith.
(b) If the court finds that the corporation has failed to comply
substantially with this section, the court may assess all fees and expenses of
any experts or attorneys as the court deems equitable. These fees and expenses
may also be assessed against a person who has acted arbitrarily, vexatiously, or
not in good faith in bringing the proceeding, and may be awarded to a party
injured by those actions.
(c) The court may award, in its discretion, fees and expenses to an
attorney for the dissenters out of the amount awarded to the dissenters, if any.
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=========================================================
NO PERSON HAS BEEN AUTHORIZED IN CONNECTION WITH THE OFFER OF VIAD COMMON STOCK
TO BE ISSUED IN CONNECTION WITH THE MERGER TO GIVE ANY INFORMATION OR TO MAKE
ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS AND, IF GIVEN
OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING
BEEN AUTHORIZED BY VIAD GAME, OR ANY OTHER PERSON. NEITHER THE DELIVERY OF THIS
PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE
ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF VIAD SINCE THE
DATE HEREOF OR THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY DATE
SUBSEQUENT TO THE DATE HEREOF. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO
SELL OR A SOLICITATION OF AN OFFER TO BUY ANY OF THE SECURITIES OFFERED HEREBY
BY ANYONE IN ANY JURISDICTION IN WHICH IT IS UNLAWFUL TO MAKE SUCH OFFER OR
SOLICITATION.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information.................... 2
Incorporation of Documents by
Reference.............................. 3
Table of Contents........................ 4
List of Appendices....................... 6
Cautionary Notice Regarding
Forward-Looking Statements............. 7
Summary.................................. 7
Market Prices............................ 14
Comparative Per Share Data............... 16
VIAD Selected Historical Financial
Data................................... 18
GAME Selected Historical Financial
Data................................... 20
The Special Meeting...................... 21
The Merger............................... 26
Certain Related Transactions............. 53
Information Regarding VIAD............... 53
Description of VIAD Capital Stock........ 55
Information Regarding GAME............... 60
Comparative Rights of Shareholders....... 62
Legal Matters............................ 68
Experts.................................. 68
</TABLE>
------------------------
=========================================================
=========================================================
VIAD CORP
2,800,000
SHARES
OF
COMMON STOCK
------------------------
PROSPECTUS
------------------------
, 1997
=========================================================
<PAGE> 212
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS
DELAWARE LAW.
Section 145 of the DGCL empowers a Delaware corporation to 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 such corporation) by reason of the fact that such person is or was a
director, officer, employee or agent of such corporation, or is or was serving
at the request of such corporation as a director, officer, employee or agent of
another corporation or enterprise. A corporation may indemnify such person
against expenses (including attorneys' fees), judgments, fines and amounts paid
in settlement actually and reasonably incurred by such person in connection with
such action, suit or proceeding if he or she acted in good faith and in a manner
reasonably believed to be in or not opposed to the best interests of the
corporation, and, with respect to any criminal action or proceeding, has no
reasonable cause to believe his or her conduct was unlawful. A corporation may,
in advance of the final disposition of any civil, criminal, administrative or
investigative action, suit or proceeding, pay the expense (including attorneys'
fees) incurred by any officer or director in defending such action, provided
that the director or officer undertakes to repay such amount if it shall
ultimately be determined that he or she is not entitled to be indemnified by the
corporation.
A Delaware corporation may indemnify officers and directors in an action by
or in the right of the corporation to procure a judgment in its favor under the
same conditions, except that no indemnification is permitted without judicial
approval if the officer or director is adjudged to be liable to the corporation.
Where an officer or director is successful on the merits or otherwise in the
defense of any action referred to above, the corporation must indemnify him or
her against the expenses (including attorneys' fees) which he or she actually or
reasonably incurred in connection therewith. The indemnification provided is not
deemed to be exclusive of any other rights to which an officer or director may
be entitled under any corporation's bylaw, agreement, vote or otherwise.
The indemnification provided for by the DGCL is not exclusive of any other
rights of indemnification, and a corporation may maintain insurance against
liabilities for which indemnification is not expressly provided by the DGCL.
CERTIFICATE OF INCORPORATION AND BYLAWS.
The Certificate of Incorporation of Viad provides that each person who is
or was or had agreed to become a director or officer of Viad, or each such
person who is or was serving or who had agreed to serve at the request of the
Viad Board of Directors or an officer of Viad as an employee or agent of Viad or
as a director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise (including the heirs, executors,
administrators or estate of such person), will be indemnified by Viad, in
accordance with the Viad Bylaws, to the full extent permitted from time to time
by Delaware 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 Viad
to provide broader indemnification rights than said law permitted Viad to
provide prior to such amendment) or any other applicable laws as presently or
hereafter in effect. In addition, Viad may enter into one or more agreements
with any person providing for indemnification greater or different than that
provided in the Certificate of Incorporation of Viad.
The Viad Bylaws provide that each person who was or is made a party or is
threatened to be made a party to or is involved in any action, suit, or
proceeding, whether civil, criminal, administrative or investigative (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, officer or employee of
Viad or is or was serving at the request of Viad as a director, officer,
employee or agent of another corporation or of a partnership, joint venture,
trust or other enterprise, including service with respect to employee benefit
plans, whether the basis of such Proceeding is alleged action in an
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official capacity as a director, officer, employee or agent or in any other
capacity while serving as a director, officer, employee or agent, will be
indemnified and held harmless by Viad to the fullest extent authorized by
Delaware law as the same exists or may in the future be amended (but, in the
case of any such amendment, only to the extent that such amendment permits Viad
to provide broader indemnification rights than said law permitted Viad to
provide prior to such amendment), against all expense, liability and loss
(including attorneys, fees, judgments, fines, ERISA excise taxes or penalties
and amounts paid in settlement) reasonably incurred or suffered by such person
in connection therewith and such indemnification will continue as to a person
who has ceased to be a director, officer, employee or agent and will inure to
the benefit of his or her heirs, executors and administrators; however, except
as described in the following paragraph with respect to Proceedings to enforce
rights to indemnification, Viad will indemnify any such person seeking
indemnification in connection with a Proceeding (or part thereof) initiated by
such person only if such Proceeding (or part thereof) was authorized by the Viad
Board of Directors.
Pursuant to the Viad Bylaws, if a claim described in the preceding
paragraph is not paid in full by Viad within thirty days after a written claim
has been received by Viad, the claimant may at any time thereafter bring suit
against Viad to recover the unpaid amount of the claim, and, if successful in
whole or in part, the claimant will be entitled to be paid also the expense of
prosecuting such claims. The Viad Bylaws provide that it will be a defense to
any such action (other than an action brought to enforce a claim for expenses
incurred in defending any Proceeding in advance of its final disposition where
the required undertaking, if any is required, has been tendered to Viad) that
the claimant has not met the standards of conduct which make it permissible
under the DGCL for Viad to indemnify the claimant for the amount claimed, but
the burden of proving such defense will be on Viad. The Certificate of
Incorporation of Viad and the Viad Bylaws provide that any such determination
will be made by independent legal counsel selected by the claimant, approved by
the Viad Board of Directors (which approval may not be unreasonably withheld)
and retained by the Board on behalf of Viad. Neither the failure of Viad
(including the Board, independent legal counsel or stockholders) to have made a
determination prior to the commencement of such action that indemnification of
the claimant is proper in the circumstances because he or she has met the
applicable standard of conduct set forth in the DGCL, nor an actual
determination by Viad (including the Board, independent legal counsel or
stockholders) that the claimant has not met such applicable standard of conduct,
will be a defense to the action or create a presumption that the claimant has
not met the applicable standard of conduct.
The Viad Bylaws provide that the right to indemnification and the payment
of expenses incurred in defending a Proceeding in advance of its final
disposition conferred in the Viad Bylaws will not be exclusive of any other
right which any person may have or may in the future acquire under any statute,
provision of the Certificate of Incorporation of Viad, the Viad Bylaws,
agreement, vote of stockholders or disinterested directors or otherwise. The
Viad Bylaws permit Viad to maintain insurance, at its expense, to protect itself
and any director, officer, employee or agent of Viad or another corporation,
partnership, joint venture, trust or other enterprise against any expense,
liability or loss, whether or not Viad would have the power to indemnify such
person against such expense, liability or loss under the DGCL. Viad has obtained
directors and officers liability insurance providing coverage to its directors
and officers. In addition, the Viad Bylaws authorize Viad, to the extent
authorized from time to time by the Board, to grant rights to indemnification,
and rights to be paid by Viad the expenses incurred in defending any Proceeding
in advance of its final disposition, to any agent of Viad to the fullest extent
of the provisions of the Viad Bylaws with respect to the indemnification and
advancement of expenses of directors, officers and employees of Viad.
The Viad Bylaws provide that the right to indemnification conferred therein
is a contract right and includes the right to be paid by Viad the expenses
incurred in defending any such Proceeding in advance of its final disposition,
except that if Delaware law requires, the payment of such expenses incurred by a
director or officer in his or her capacity as a director or officer (and not in
any other capacity in which service was or is rendered by such person while a
director or officer, including, without limitation, service to an employee
benefit plan) in advance of the final disposition of a Proceeding will be made
only upon delivery to Viad of an undertaking by or on behalf of such director or
officer to repay all amounts so advanced if it is ultimately determined that
such director or officer is not entitled to be indemnified under the Viad Bylaws
or otherwise.
II-2
<PAGE> 214
Viad has entered into indemnification agreements with each of Viad's
directors. The indemnification agreements, among other things, require Viad to
indemnify the officers and directors to the fullest extent permitted by law, and
to advance to the directors all related expenses, subject to reimbursement if it
is subsequently determined that indemnification is not permitted. Viad must also
indemnify and advance all expenses incurred by directors seeking to enforce
their rights under the indemnification agreements, and cover directors under
Viad's directors' liability insurance. Although the form of indemnification
agreement offers substantially the same scope of coverage afforded by provisions
in the Certificate of Incorporation of Viad and the Viad Bylaws, it provides
greater assurance to directors that indemnification will be available, because,
as a contract, it cannot be modified unilaterally in the future by the Board or
by the stockholders to eliminate the rights it provides, an action that is
possible with respect to the relevant provisions of the Viad Bylaws, at least as
to prospective elimination of such rights.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers or persons controlling the registrant
pursuant to the foregoing provisions, the registrant has been informed that in
the opinion of the SEC such indemnification is against public polity as
expressed in the Act and is therefore unenforceable.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) LIST OF EXHIBITS.
See Exhibit Index.
(b) FINANCIAL STATEMENT SCHEDULES.
Not Applicable.
ITEM 22. UNDERTAKINGS.
(a) The Registrant hereby undertakes:
(1) That prior to any public reoffering of the securities registered
hereunder through use of a prospectus which is a part of this Registration
Statement by any person or party who is deemed to be an underwriter within
the meaning of Rule 145(c), the issuer undertakes that such reoffering
prospectus will contain the information called for by the applicable
registration form with respect to reofferings by persons who may be deemed
underwriters, in addition to the information called for by the other Items
of the applicable form.
(2) That every prospectus (i) that is filed pursuant to paragraph (1)
immediately preceding, or (ii) that purports to meet the requirements of
Section 10(a)(3) of the Securities Act and is used in connection with an
offering of securities subject to Rule 415 will be filed as a part of an
amendment to the registration statement and will not be used until such
amendment is effective, and that, for purposes of determining any liability
under the Securities Act, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities
offering therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
(3) To respond to requests for information that is incorporated by
reference into the prospectus pursuant to Item 4, 10(b), 11, or 13 of this
form, within one business day of receipt of such request, and to send the
incorporated documents by first class mail or other equally prompt means.
This includes information contained in documents filed subsequent to the
effective date of the registration statement through the date of responding
to the request.
(4) To supply by means of a post-effective amendment all information
concerning a transaction, and the company being acquired involved therein,
that was not the subject of and included in the registration statement when
it became effective.
II-3
<PAGE> 215
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Phoenix, State of Arizona
on October , 1997.
VIAD CORP
--------------------------------------
By: Robert H. Bohannon
(Chairman of the Board, President
and Chief Executive Officer)
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURES TITLE DATE
- ------------------------------------------ -------------------------------- -----------------
<C> <S> <C>
/s/ ROBERT H. BOHANNON Director; Chairman of the Board, October , 1997
- ------------------------------------------ President and Chief Executive
Robert H. Bohannon Officer (Principal Executive
Officer)
/s/ RONALD G. NELSON Vice President -- Finance and October , 1997
- ------------------------------------------ Treasurer (Principal Financial
Ronald G. Nelson Officer)
/s/ RICHARD C. STEPHAN Vice President -- Controller October , 1997
- ------------------------------------------ (Principal Accounting Officer)
Richard C. Stephan
/s/ JESS HAY Director October , 1997
- ------------------------------------------
Jess Hay
/s/ JUDITH K. HOFER Director October , 1997
- ------------------------------------------
Judith K. Hofer
/s/ JACK F. REICHERT Director October , 1997
- ------------------------------------------
Jack F. Reichert
/s/ LINDA JOHNSON RICE Director October , 1997
- ------------------------------------------
Linda Johnson Rice
/s/ DOUGLAS L. ROCK Director October , 1997
- ------------------------------------------
Douglas L. Rock
</TABLE>
II-4
<PAGE> 216
<TABLE>
<CAPTION>
SIGNATURES TITLE DATE
- ------------------------------------------ -------------------------------- -----------------
<C> <S> <C>
/s/ JOHN C. TOLLESON Director October , 1997
- ------------------------------------------
John C. Tolleson
/s/ TIMOTHY R. WALLACE Director October , 1997
- ------------------------------------------
Timothy R. Wallace
</TABLE>
II-5
<PAGE> 217
EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT PAGE OR
NUMBER DESCRIPTION METHOD OF FILING
------- --------------------------------------- ---------------------------------------
<C> <S> <C>
2.1 Agreement and Plan of Merger, dated as Included herein as Appendix II to the
of September 24, 1997, by and among Proxy Statement/Prospectus.
Viad Corp, Game Acquisition Corp. and
Game Financial Corporation.
2.2 Selling Shareholder's Agreement, dated Included herein as Appendix III to the
as of September 24, 1997, by and Proxy Statement/Prospectus.
between Viad Corp and Gary A. Dachis.
2.3 Irrevocable Proxy Agreement, dated as Included herein as Appendix IV to the
of September 24, 1997, by and among Proxy Statement/Prospectus.
Viad Corp and certain holders of common
stock of Game Financial Corporation
(Dachis).
2.4 Irrevocable Proxy Agreement, dated as Included herein as Appendix V to the
of September 24, 1997, by and between Proxy Statement/Prospectus.
Viad Corp and the holder of common
stock of Game Financial Corporation
(Other Significant Game Shareholders).
2.5 Stock Option Agreement, dated as of Included herein as Appendix VI to the
September 24, 1997, by and among Viad Proxy Statement/Prospectus.
Corp and Game Financial Corporation.
2.6 Affiliate Agreement, dated as of Included herein as Exhibit D to Merger
September 24, 1997, by Gary A. Dachis. Agreement included as Appendix II to
the Proxy Statement/Prospectus.
3.1(i) Copy of Restated Certificate of Incorporated by reference to Exhibit
Incorporation of Viad, as amended No. 3.A to the Viad's 1996 Form 10-K.
through August 15, 1996.
3.1(ii) Copy of Bylaws of Viad Corp, as amended Incorporated by reference to Exhibit
through February 20, 1997. No. 3.B to Viad's 1996 Form 10-K.
4.1 Instruments with respect to issues of
long-term debt have not been filed as
exhibits to this Proxy
Statement/Prospectus if the authorized
principal amount of any one of such
issues does not exceed 10% of total
assets of Viad and its subsidiaries on
a consolidated basis. Viad agrees to
furnish a copy of each such instrument
to the SEC upon request.
4.2 Copy of Amended and Restated Credit Incorporated by reference to Exhibit
Agreement dated as of July 24, 1996, 4.B to Viad's 1996 Form 10-K.
among Viad, the Banks parties thereto,
Citicorp USA, Inc., as Administrative
Agent, and Bank of America National
Trust and Savings Association as
Documentation Agent.
5 Opinion of Bryan Cave LLP Regarding To be filed by amendment.
Legality of Securities Issued By Viad.
8 Opinion re Tax Matters To be filed by amendment.
</TABLE>
<PAGE> 218
<TABLE>
<CAPTION>
EXHIBIT PAGE OR
NUMBER DESCRIPTION METHOD OF FILING
------- --------------------------------------- ---------------------------------------
<C> <S> <C>
10.1.1 Copy of Employment Agreement between Incorporated by reference to Form 10.A
Viad Corp and John W. Teets dated June to Viad's Second Quarter 1995 Form
20, 1995. 10-Q.
10.1.2 Copy of Consulting Agreement between Incorporated by reference to Exhibit
Viad Corp and John W. Teets effective 10.A2 to Viad's 1996 Form 10-K.
January 1, 1997.
10.2 Sample forms of Contingent Agreements Incorporated by reference to Exhibit
relating to funding of Supplemental (10)(T) to Viad's 1989 Form 10-K.
Executive Pensions.
10.3 Copy of Viad Corp Supplemental Pension Incorporated by reference to Exhibit
Plan, amended and restated as of (10)(F) to Viad's 1986 Form 10-K.
January 1, 1987.
10.3.1 Copy of amendment dated February 21, Incorporated by reference to Exhibit
1991, to Viad's Supplemental Pension (10)(G)(i) to Viad's 1990 Form 10-K.
Plan.
10.3.2 Copy of amendment dated August 18, Incorporated by reference to Exhibit
1993, to Viad's Supplemental Pension 10.C to Viad's Second Quarter 1995 Form
Plan. 10-Q.
10.4 Copy of Viad Corp Deferred Compensation Incorporated by reference to Exhibit
Plan for Directors, as Amended and 10.D to Viad's 1996 Form 10-K.
Restated July 25, 1996
10.5.1 Copy of Viad Corp Management Incentive Incorporated by reference to Exhibit
Plan. 10.E to Viad's First Quarter 1995 Form
10-Q.
10.5.2 Copy of Viad Corp 1997 Management Incorporated by reference to Exhibit
Incentive Plan 10.E2 to Viad's 1996 Form 10-K.
10.6.1 Copy of form of Executive Severance Incorporated by reference to Exhibit
Agreement between Viad and three (10)(G)(i) to Viad's 1991 Form 10-K.
executive officers.
10.6.2 Copy of forms of Viad Corp Executive Incorporated by reference to Exhibit
Severance Plans covering certain (10)(G)(ii) to Viad's 1992 Form 10-K.
executive officers.
10.7 Copy of Travelers Express Company, Inc. Incorporated by reference to Exhibit
Supplemental Pension Plan amended and 10.G to Viad's Third Quarter 1995 Form
restated on June 12, 1995. 10-Q.
10.8.1 Copy of Viad Corp 1983 Stock Option and Incorporated by reference to Exhibit
Incentive Plan. (28) to Viad's Registration Statement
on Form S-8 (Registration No.
33-41870).
10.8.2 Copy of amendment, effective August 1, Incorporated by reference to Exhibit
1994, to Viad Corp 1983 Stock Option 10.H2 to Viad's 1994 Form 10-K.
and Incentive Plan.
10.9.1 Copy of Viad Corp 1992 Stock Incentive Incorporated by reference to Exhibit
Plan. (10)(j) to Viad's 1991 Form 10-K.
10.9.2 Copy of amendment, effective August 1, Incorporated by reference to Exhibit
1994, to Viad Corp 1992 Stock Incentive 10.I2 to Viad's 1994 Form 10-K.
Plan.
10.10 Copy of 1997 Viad Corp Omnibus Incorporated by reference to Exhibit
Incentive Plan. 10.J to Viad's 1996 Form 10-K.
10.11 Description of Spousal Income Incorporated by reference to Exhibit
Continuation Plan. 10(Q) to Viad's 1985 Form 10-K.
</TABLE>
<PAGE> 219
<TABLE>
<CAPTION>
EXHIBIT PAGE OR
NUMBER DESCRIPTION METHOD OF FILING
------- --------------------------------------- ---------------------------------------
<C> <S> <C>
10.12 Copy of Viad Corp Performance Unit Incorporated by reference to Exhibit
Incentive Plan. 10.L to Viad's First Quarter 1995 Form
10-Q.
10.12.1 Copy of Viad Corp 1997 Performance Unit Incorporated by reference to Exhibit
Incentive Plan 10.L1 to Viad's 1996 form 10-K.
10.13 Copy of Viad Supplemental TRIM Plan. Incorporated by reference to Exhibit
10.M to Viad's 1994 Form 10-K.
10.14 Copy of Employment Agreement between Incorporated by reference to Exhibit
GES Exposition Services and Norton (10)(O) to Viad's 1992 Form 10-K.
Rittmaster dated May 20, 1982.
10.15 Copy of Employment Agreement between Incorporated by reference to Exhibit
Viad Corp and Paul Mullen dated April 10.0 to Viad's 1996 Form 10-K.
25, 1996
10.16 Copy of Viad Corp Performance-Based Incorporated by reference to Exhibit
Stock Plan 10.P to Viad's 1993 Form 10-K.
10.17 Copy of Viad Corp Deferred Compensation Incorporated by reference to Exhibit
Plan. 10.Q to Viad's 1993 Form 10-K.
10.18 Copy of form of Viad Corp 1983 Stock Incorporated by reference to Exhibit
Option and Incentive Plan Amended and 10.R to Viad's 1994 Form 10-K.
Restated Restricted Stock Agreements
dated August 12, 1994, between Viad and
certain executive officers.
10.19 Copy of form of Viad Corp 1992 Stock Incorporated by reference to Exhibit
Incentive Plan Restricted Stock 10.S to Viad's 1994 Form 10K.
Agreements dated August 12, 1994,
between Viad and certain executive
officers.
10.20 Copy of Viad Corp Director's Charitable Incorporated by reference to Exhibit
Award Program as amended through March 10.T to Viad's 1995 Form 10-K.
15, 1996.
10.21 Copy of Employment Agreement between Incorporated by reference to Exhibit
Viad Corp and Robert H. Bohannon dated 10.U to Viad's 1996 Form 10-K.
January 1, 1997
10.22 Copy of GES Exposition Services, Inc. Incorporated by reference to Exhibit
Supplemental Executive retirement Plan 10.V to Viad's 1995 Form 10-K.
effective August 1, 1995.
21 List of Subsidiaries of Viad Page
23.1 Consent of Ladenburg Thalmann & Co. Page
Inc.
23.2 Consent of Deloitte & Touche LLP Page
23.3 Consent of Ernst & Young LLP Page
23.4 Consent of Lurie, Besikof, Lapidus & Page
Co., LLP
23.5 Consent of Robins, Kaplan, Miller & To be by provided by amendment
Ciresi L.L.P.
23.6 Consent of Bryan Cave LLP To be provided by amendment.
24 Power of Attorney signed by Directors Page
of Viad
99 Form of Proxy Page
</TABLE>
<PAGE> 1
EXHIBIT 21
VIAD CORP
(DELAWARE)
ACTIVE AND INACTIVE (I) SUBSIDIARIES AND AFFILIATES* AS OF JUNE 30, 1997
AIRLINE CATERING AND SERVICES
AIRCRAFT SERVICE INTERNATIONAL, INC. (Delaware)
ASII Holding GmbH (Germany)
Bahamas Airport Services Limited (Bahama)
Freeport Flight Services Limited (Bahama)
Dispatch Services, Inc. (Florida)
Florida Aviation Fueling Company, Inc. (Florida)
Greyhound-Dobbs Incorporate d (Delaware)
DOBBS INTERNATIONAL SERVICES, INC. (Delaware)
Dobbs Houses International, Inc. (Delaware)
CONVENTION SERVICES
EXG, Inc. (Delaware)
Giltspur Exhibits of Canada, Inc. (Ontario)
David H. Gibson Company, Inc. (Texas)
Longchamp International Inc. (Delaware)
GES EXPOSITION SERVICES, INC. (Nevada)
Concourse Graphics, Inc. (Delaware)
Expo-Tech Electrical & Plumbing Services, Inc. (California)
Shows Unlimited, Inc. (Nevada)
United Exposition Service Redevelopment Corporation (Missouri)
Las Vegas Convention Service Co. (Nevada)
Panex Show Services Ltd. (Canada)
Exposervice Standard Inc. (Canada)
Clarkson-Conway Inc. (Canada)
Stampede Display and Convention Services Ltd. (Alberta)
CORPORATE AND OTHER
The Dial Corp (International) (Arizona)
Essex Place Inc. (Arizona)
GCMC Inc. (Arizona)
Viad Realty Corporation (Arizona)
Greyhound Realty of Texas Inc. (Texas)
VRC Realty, Inc. (Delaware)
VREC, Inc. (Delaware)
<PAGE> 2
TRAVEL AND LEISURE AND PAYMENT SERVICES
Crystal Holidays, Inc. (Colorado)
Faber Enterprises, Inc. (Delaware)
GREYHOUND LEISURE SERVICES, INC. (Florida)
European Cruise Shops Limited (Cayman Islands) (51%)
Greyhound-ANA Venture Company (Florida) (51%)
International Cruise Shops, Ltd. (Cayman Islands)
Greyhound Support Services, Inc. (Delaware) (I)
Greyhound Maintenance, Inc. (Arizona)
Greyhound World Travel GmbH (Germany)
JETSAVE INC. (Florida)
RESTAURA, INC. (Michigan)
Glacier Park, Inc. (Arizona) (80%)
Waterton Transport Company, Limited (Alberta)
TRANSPORTATION LEASING CO. (California) --
GCCP, Inc. (Delaware) --
Greyhound Canada Holdings, Inc. (Alberta) --
Brewster Tours Inc. (Canada)
BREWSTER TRANSPORT COMPANY LIMITED (Alberta)
Cascade Holdings (Banff) Inc. (Alberta)
TRAVELERS EXPRESS COMPANY, INC. (Minnesota)
CAG Inc. (Nevada)
FSMC, Inc. (Minnesota)
Moneyline Express, Inc. (Wisconsin)
Travelers Express Co. (P.R.) Inc. (Puerto Rico)
Viad Service Companies Limited (United Kingdom)
Aircraft Service Limited (United Kingdom)#
Crystal Holidays, Limited (United Kingdom)
Crystal Dial Limited (United Kingdom)
Guernsey Travel Service Limited (United Kingdom)
Jersey Travel Service Limited (United Kingdom)
Seejersey Limited (United Kingdom)
Dobbs International (U.K.) Limited (United Kingdom)#
Charles Grimsey Associates Limited (United Kingdom)
Greyhound World Travel Limited (United Kingdom)
Irish Group Travel Limited (Ireland)
Jetsave Limited (United Kingdom)
American Holidays (N.I.) Limited (Northern Ireland)
Jetsave Transatlantic Limited (United Kingdom)
Airborne Travel (Holdings) Limited (United Kingdom)
Tropical Places Limited (United Kingdom)
- ---------------
<TABLE>
<S> <C>
# Indicates an Airline Catering and Services Group Subsidiary
- -- Indicates a Corporate and Other Subsidiary
* Parent-subsidiary or affiliate relationships are shown by marginal indentation. State,
province or country of incorporation and ownership percentage are shown in parentheses
following name, except that no ownership percentage appears for subsidiaries owned 100%
(in the aggregate) by Viad Corp. List does not include companies in which the aggregate
direct and indirect interest of Viad Corp is less than 51%.
</TABLE>
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INVESTMENT BANKERS
LADENBURG THALMANN & CO. INC. LETTERHEAD
October , 1997
Gentlemen:
We consent to the use, quotation and summarization in the Registration
Statement on Form S-4 of our fairness opinion dated September 23, 1997, rendered
to the Board of Directors of Game Financial Corporation in connection with the
acquisition of Game Financial Corporation by Viad Corp, or a wholly-owned
subsidiary of Viad Corp and to the use of our name, and the statements with
respect to us, appearing in the Registration Statement.
LADENBURG THALMANN & CO. INC.
<PAGE> 1
EXHIBIT 23.2
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration Statement
of Viad Corp on Form S-4 of our report dated February 21, 1997 (which expresses
an unqualified opinion and includes an explanatory paragraph relating to Viad
Corp's change in the method of accounting for impairment of long-lived assets in
1995) appearing in the Annual Report on Form 10-K of Viad Corp for the year
ended December 31, 1996 and to the reference to us under the heading "Experts"
in the Proxy Statement/Prospectus, which is part of this Registration Statement.
DELOITTE & TOUCHE LLP
Phoenix, Arizona
October 3, 1997
<PAGE> 1
EXHIBIT 23.3
CONSENT OF INDEPENDENT AUDITOR
We consent to the reference to our firm under the caption "Experts" and
"Certain Limited States Federal Income Tax Consequences" in the Registration
Statement (Form S-4) and related Prospectus of Viad Corp for the registration of
its common stock and to the incorporation by reference therein of our report
dated February 12, 1997, with respect to the consolidated financial statements
of Game Financial Corporation included in its Annual Report (Form 10-KSB) for
the year ended December 31, 1996, filed with the Securities and Exchange
Commission.
ERNST & YOUNG LLP
Minneapolis, Minnesota
October 7, 1997
<PAGE> 1
EXHIBIT 23.4
INDEPENDENT AUDITOR'S CONSENT
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement (Form S-4) and related prospectus of Viad Corp for the
registration of its Common Stock and to the incorporation by reference therein
of our report dated February 2, 1996, appearing in the Annual Report on Form
10-KSB of Game Financial Corporation for the year ended December 31, 1996.
LURIE, BESIKOF, LAPIDUS & CO., LLP
Minneapolis, Minnesota
October 8, 1997
<PAGE> 1
Exhibit 24
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below hereby authorizes and appoints Robert H. Bohannon, and Richard C. Stephan,
and each of them severally, his or her true and lawful attorneys-in-fact and
agents, with full power of substitution and resubstitution, for him or her and
in his or her name, place and stead, in any and all capacities, to sign the
Registration Statement on Form S-4 dated October 8, 1997, and any and all
amendments and post-effective amendments thereto, and to file the same, with all
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing requisite or necessary to be done in and about the premises,
as fully to all intents and purposes as he or she might or could do in person,
hereby ratifying and confirming all that said attorneys-in-fact and agents or
either of them, or their or his or her substitutes or substitute, may lawfully
do or cause to be done by virtue hereof.
<TABLE>
<CAPTION>
SIGNATURES TITLE DATE
- ------------------------------------------ -------------------------------- -----------------
<C> <S> <C>
/s/ ROBERT H. BOHANNON Director; Chairman of the Board, October 8, 1997
- ------------------------------------------ President and Chief Executive
Robert H. Bohannon Officer (Principal Executive
Officer)
/s/ RONALD G. NELSON Vice President -- Finance and October 8, 1997
- ------------------------------------------ Treasurer (Principal Financial
Ronald G. Nelson Officer)
/s/ RICHARD C. STEPHAN Vice President -- Controller October 8, 1997
- ------------------------------------------ (Principal Accounting Officer)
Richard C. Stephan
/s/ JESS HAY Director October 8, 1997
- ------------------------------------------
Jess Hay
/s/ JUDITH K. HOFER Director October 8, 1997
- ------------------------------------------
Judith K. Hofer
/s/ JACK F. REICHERT Director October 8, 1997
- ------------------------------------------
Jack F. Reichert
/s/ LINDA JOHNSON RICE Director October 8, 1997
- ------------------------------------------
Linda Johnson Rice
/s/ DOUGLAS L. ROCK Director October 8, 1997
- ------------------------------------------
Douglas L. Rock
/s/ JOHN C. TOLLESON Director October 8, 1997
- ------------------------------------------
John C. Tolleson
/s/ TIMOTHY R. WALLACE Director October 8, 1997
- ------------------------------------------
Timothy R. Wallace
</TABLE>
<PAGE> 1
EXHIBIT 99
GAME FINANCIAL CORPORATION
PROXY SOLICITED BY BOARD OF DIRECTORS
FOR SPECIAL MEETING OF STOCKHOLDERS
DECEMBER , 1997
The undersigned hereby appoints Gary A. Dachis and Stephen P. Weisbrod, or
either of them, as proxies with full power of substitution, to vote all shares
of stock of Game Financial Corporation of record in the name of the undersigned
at the close of business on November , 1997 at a Special Meeting of
Stockholders (the "Special Meeting") to be held on December , 1997, or at any
adjournments or postponements thereof, hereby revoking all prior proxies, on the
items set forth on the reverse side hereof, as described in the accompanying
Proxy Statement/Prospectus and upon such other business as may properly come
before the Special Meeting including any matters which the Board of Directors
did not know, a reasonable time before mailing this solicitation, would be
presented at the Special Meeting; and matters incident to the conduct of the
Special Meeting.
Please mark
your votes
like this [X]
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE FOLLOWING PROPOSAL:
1. A proposal to approve and adopt the Agreement and Plan of Merger dated
September 24, 1997, by and among Game, Viad Corp ("Viad Corp") and Game
Acquisition Corp., a wholly-owned subsidiary of Viad (the "Merger Agreement")
and the transactions contemplated thereby. Pursuant to the Merger Agreement,
among other things, (a) Game Acquisition Corp. will be merged with and into
Game (the "Merger"), with Game as the surviving corporation of the Merger,
and (b) each outstanding share of common stock, par value $.01 per share, of
Game (the "Game Common Stock") will be converted into the right to receive
shares of common stock, par value $1.50 per share, of Viad (the "Viad Common
Stock") equal to $10.75 divided by the Viad Price, as defined below (with
cash or whole shares paid in lieu of fractional shares at the sole discretion
of Viad), except shares of Game Common Stock as to which statutory
dissenters' rights have been exercised and not effectively withdrawn or
otherwise lost. The "Viad Price" is defined under the Merger Agreement as the
average of the closing sales prices of Viad Common Stock as listed on the New
York Stock Exchange for the 30-trading day period ending four trading days
prior to the Closing Date.
<TABLE>
<S> <C> <C>
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
</TABLE>
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE FOLLOWING PROPOSAL:
2. A proposal to transact such other business as may properly come before the
Special Meeting or any adjournments or postponements thereof, including a
motion to adjourn to a later date to permit further solicitation of proxies
if necessary.
<TABLE>
<S> <C> <C>
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
</TABLE>
THIS PROXY WILL BE VOTED AS DIRECTED, BUT IF NO INSTRUCTIONS ARE SPECIFIED, THIS
PROXY WILL BE VOTED FOR EACH OF THE PROPOSALS STATED. IF ANY OTHER BUSINESS IS
PRESENTED AT THE SPECIAL MEETING, THIS PROXY WILL BE VOTED BY THOSE NAMED IN
THIS PROXY IN THEIR BEST JUDGMENT. AT THE PRESENT TIME, THE BOARD OF DIRECTORS
KNOWS OF NO OTHER BUSINESS TO BE PRESENTED AT THE SPECIAL MEETING.
Date: ---------------------, 1997
---------------------------------
Signature of Stockholder
---------------------------------
Signature of Stockholder
Please sign your name exactly as
it appears at left. In the case
of shares owned in joint tenancy
or as tenants in common, all
should sign. When signing as
attorney, executor,
administrator, trustee or
guardian, please give your full
title.
