AGREEMENT AND PLAN OF MERGER
DATED AS OF AUGUST 19, 1999
AMONG
XXXXXX'X ENTERTAINMENT, INC.,
HEI ACQUISITION CORP. II
AND
PLAYERS INTERNATIONAL, INC.
TABLE OF CONTENTS
ARTICLE I. THE MERGER.................................................................1
Section 1.1. The Merger.................................................................1
Section 1.2. Effective Time of the Merger...............................................2
Section 1.3. Closing....................................................................2
Section 1.4. Effect of the Merger.......................................................2
Section 1.5. Articles of Incorporation and Bylaws of the Surviving Corporation..........2
Section 1.6. Directors and Officers of the Surviving Corporation........................2
ARTICLE II. EFFECT OF THE MERGER ON SECURITIES OF THE CONSTITUENT CORPORATIONS.........3
Section 2.1. Conversion of Securities...................................................3
Section 2.2. Exchange of Certificates...................................................4
Section 2.3. Acceleration and Payment for Players Options...............................5
ARTICLE III. REPRESENTATIONS AND WARRANTIES OF PLAYERS..................................6
Section 3.1. Organization of Players and its Subsidiaries...............................6
Section 3.2. Capitalization.............................................................7
Section 3.3. Authority; No Conflict; Required Filings and Consents......................8
Section 3.4. Public Filings; Financial Statements.......................................9
Section 3.5. No Undisclosed Liabilities................................................10
Section 3.6. Absence of Certain Changes or Events......................................10
Section 3.7. Taxes.....................................................................11
Section 3.8. Real Property, Title and Related Matters..................................12
Section 3.9. Title to Personal Property; Liens.........................................13
Section 3.10. Intellectual Property.....................................................14
Section 3.11. Agreements, Contracts and Commitments.....................................14
Section 3.12. Litigation................................................................15
Section 3.13. Environmental Matters.....................................................15
Section 3.14. Employee Benefit Plans....................................................16
Section 3.15. Compliance................................................................18
Section 3.16. Labor Matters.............................................................19
Section 3.17. Insurance.................................................................20
Section 3.18. Information in Proxy Statement............................................20
Section 3.19. State Takeover Statute....................................................20
Section 3.20. Voting Requirements.......................................................20
Section 3.21. Players Rights Agreement..................................................20
Section 3.22. Year 2000.................................................................21
Section 3.23. Opinion of Financial Advisor..............................................21
Section 3.24. Brokers...................................................................21
ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF BUYER AND MERGER SUB....................21
Section 4.1. Organization of Buyer and Merger Sub......................................21
Section 4.2. Capitalization of Merger Sub..............................................22
Section 4.3. Authority; No Conflict; Required Filings and Consents.....................22
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Section 4.4. Public Filings; Financial Statements......................................23
Section 4.5. Proxy Statement...........................................................23
Section 4.6. Brokers...................................................................24
Section 4.7. Ownership of Securities...................................................24
Section 4.8. Financing.................................................................24
ARTICLE V. COVENANTS.................................................................24
Section 5.1. Conduct of Business of Players............................................24
Section 5.2. Cooperation; Notice; Cure.................................................27
Section 5.3. No Solicitation...........................................................27
Section 5.4. Proxy Statement...........................................................28
Section 5.5. Special Meeting...........................................................28
Section 5.6. Access to Information.....................................................28
Section 5.7. Governmental Approvals....................................................29
Section 5.8. Publicity.................................................................30
Section 5.9. Indemnification...........................................................30
Section 5.10. Stockholder Litigation....................................................30
Section 5.11. Employee Benefits.........................................................30
Section 5.12. Further Assurances and Actions............................................32
Section 5.13. Rights Agreement..........................................................33
ARTICLE VI. CONDITIONS TO MERGER......................................................33
Section 6.1. Conditions to Each Party's Obligation to Effect the Merger................33
Section 6.2. Additional Conditions to Obligations of Players...........................34
Section 6.3. Additional Conditions to Obligations of Buyer.............................35
ARTICLE VII. TERMINATION AND AMENDMENT.................................................35
Section 7.1. Termination...............................................................35
Section 7.2. Effect of Termination.....................................................37
Section 7.3. Fees and Expenses.........................................................37
Section 7.4. Amendment.................................................................39
Section 7.5. Extension; Waiver.........................................................39
ARTICLE VIII. MISCELLANEOUS.............................................................39
Section 8.1. Nonsurvival of Representations, Warranties and Agreements.................39
Section 8.2. Notices...................................................................39
Section 8.3. Interpretation............................................................40
Section 8.4. Counterparts..............................................................40
Section 8.5. Entire Agreement; No Third Party Beneficiaries............................40
Section 8.6. Governing Law.............................................................41
Section 8.7. Assignment................................................................41
Section 8.8. Severability; Enforcement.................................................41
Section 8.9. Specific Performance......................................................41
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TABLE OF DEFINED TERMS
TERMS CROSS REFERENCE IN AGREEMENT
------------------------------------------------- -----------------------------
1985 Plan Section 2.3
1990 Plan Section 2.3
1993 Plan Section 2.3
1994 Plan Section 2.3
Accountant Section 5.11(d)
Accountant's Report Section 5.11(d)
Acquisition Proposal Section 5.3
Agreement Preamble
Articles of Merger Section 1.2
Buyer Preamble
Buyer Disclosure Schedule Article IV
Buyer Material Adverse Effect Section 4.1
Buyer SEC Reports Section 4.4(a)
Closing Section 1.3
Closing Date Section 1.3
Code Section 2.2(f)
Confidentiality Agreement Section 5.6
DLJ Section 3.23
Effective Time Section 1.2
Employment Agreements Section 5.11(d)
Encumbrances Section 3.8(b)
Environmental Law Section 3.13(b)
ERISA Section 3.14(a)
ERISA Affiliate Section 3.14(a)
Exchange Act Section 3.3(c)
Exchange Agent Section 2.2(a)
Exchange Fund Section 2.2(a)
Executives Section 5.11(d)
GAAP Section 3.4(b)
Governmental Approvals Section 5.7(a)
Governmental Entity Section 3.3(c)
Hazardous Substance Section 3.13(c)
HSR Act Section 3.3(c)
Indebtedness Section 3.11(a)
Indemnified Parties Section 5.9(a)
IRS Section 3.7(b)
Jackpot Merger Agreement Preamble
Leased Real Property Section 3.8(b)
Liens Section 3.1
Merger Preamble
Merger Consideration Section 2.1(a)
Merger Sub Preamble
Merger Sub Common Stock Section 4.2
Multiemployer Plan Section 3.14(e)
Notifying Party Section 5.7(a)
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TERMS CROSS REFERENCE IN AGREEMENT
------------------------------------------------- -----------------------------
NRS Section 1.1
Offer Documents Section 5.12(c)
Outside Date Section 7.1(b)
Owned Real Property Section 3.8(b)
PBGC Section 3.14(f)
Players Preamble
Players Balance Sheet Section 3.4(b)
Players Common Stock Section 2.1(a)
Players Disclosure Schedule Article III
Players Employee Plans Section 3.14(a)
Players Gaming Laws Section 3.15(b)
Players Material Adverse Effect Section 3.1
Players Material Contracts Section 3.11(a)
Players Option Section 2.3
Players Permits Section 3.15(a)
Players Preferred Stock Section 3.2(a)
Players SAR Section 2.3
Players SEC Reports Section 3.4(a)
Players Special Meeting Section 5.5
Players Stock Option Plans Section 2.3
Players Stockholder Approval Section 3.20
Players Welfare Plan Section 3.14(g)
Players, Inc. Section 1.5
Permitted Encumbrances Section 3.8(b)
Perskie Option Section 2.3
Proxy Statement Section 5.4(a)
Reduced Amount Section 5.11(d)
Reimbursement Payment Section 7.3(b)
Rights Agreement Section 3.2(b)
SEC Section 3.3(c)
Securities Act Section 3.4(a)
Senior Notes Section 4.8
Software Section 3.22
Stock Option Plan for Non-Employee Directors Section 2.3
Stockholder Support Agreements Preamble
Subsidiary Section 3.1
Superior Proposal Section 5.3
Surviving Corporation Section 1.1
Taxes Section 3.7(a)
Tender Offer Section 5.12(c)
Tender Offer and Consent Solicitation Section 5.12(c)
Terminating Buyer Breach Section 7.1(h)
Terminating Players Breach Section 7.1(g)
Third Party Section 5.3
Voting Debt Section 3.2(b)
iv
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER (the "AGREEMENT"), dated as of
August 19, 1999, by and among XXXXXX'X ENTERTAINMENT, INC. a Delaware
corporation ("BUYER"), HEI ACQUISITION CORP. II, a Nevada corporation and a
wholly-owned subsidiary of Buyer ("MERGER SUB"), and PLAYERS INTERNATIONAL,
INC., a Nevada corporation ("Players").
WHEREAS, the Board of Directors of Players has determined that
the merger of Merger Sub with and into Players, upon the terms and subject to
the conditions set forth in this Agreement (the "MERGER"), is fair to, and in
the best interests of, Players and its stockholders;
WHEREAS, the Boards of Directors of Buyer and Merger Sub have
determined that the Merger is in the best interests of Buyer and Merger Sub and
their respective stockholders;
WHEREAS, the Boards of Directors of Buyer, Merger Sub and
Players have each approved and adopted this Agreement and approved the Merger
and the other transactions contemplated hereby; and
WHEREAS, concurrently with the execution and delivery of this
Agreement and as a condition and inducement to each of Buyer's and Merger Sub's
willingness to enter into this Agreement, certain stockholders of Players have
entered into Stockholder Support Agreements with Buyer, dated as of the date of
this Agreement in the forms attached hereto as Exhibit A (the "STOCKHOLDER
SUPPORT AGREEMENTS"), pursuant to which such stockholders have agreed, among
other things, to vote all voting securities of Players, beneficially owned by
them in favor of approval of the transactions contemplated by this Agreement;
WHEREAS, Players was formerly a party to an Agreement and Plan
of Merger dated as of February 8, 1999, by and among Jackpot Enterprises, Inc.,
a Nevada corporation, JEI Merger Corp, a Nevada corporation and a wholly-owned
subsidiary of Jackpot, and Players (the "JACKPOT MERGER AGREEMENT"), which has
now been terminated; and
WHEREAS, in connection with the termination of the Jackpot
Merger Agreement, Buyer paid, on Players' behalf, the $13.5 million termination
fee owed to Jackpot to terminate the Jackpot Merger Agreement;
NOW, THEREFORE, in consideration of the foregoing and the
respective representations, warranties, covenants and agreements set forth
below, the parties agree as follows:
ARTICLE I.
THE MERGER
Section 1.1. THE MERGER. Upon the terms and subject to the provisions
of this Agreement and in accordance with Chapter 92A of the Nevada Revised
Statutes (the "NRS"), at
1
the Effective Time (as defined in Section 1.2), Merger Sub shall be merged with
and into Players. As a result of the Merger, the separate corporate existence of
Merger Sub shall cease and Players shall continue as the surviving corporation
(the "SURVIVING CORPORATION").
Section 1.2. EFFECTIVE TIME OF THE MERGER. Subject to the provisions of
this Agreement (including Section 7.1 hereof), articles of merger with respect
to the Merger in such form as is required by NRS Section 92A.200 (the "ARTICLES
OF MERGER") shall be duly prepared, executed and acknowledged and thereafter
delivered to the Secretary of State of the State of Nevada for filing, as
provided in the NRS, as early as practicable on the Closing Date (as defined in
Section 1.3). The Merger shall become effective at the later of the date of
filing of the Articles of Merger or at such time within 90 days of the date of
filing as is specified in the Articles of Merger (the "EFFECTIVE TIME").
Section 1.3. CLOSING. The closing of the Merger (the "CLOSING") will
take place at such time and place to be agreed upon by the parties hereto, on a
date to be specified by Buyer and Players, which shall be no later than the
third business day after satisfaction or, if permissible, waiver of the
conditions set forth in Article VI (the "CLOSING DATE"), unless another date is
agreed to by Buyer and Players.
Section 1.4. EFFECT OF THE MERGER. Upon becoming effective, the Merger
shall have the effects set forth in the NRS. Without limiting the generality of
the foregoing, and subject thereto, at the Effective Time, all properties,
rights, privileges, powers and franchises of Merger Sub and Players shall vest
in the Surviving Corporation, and all debts, liabilities and duties of Merger
Sub and Players shall become the debts, liabilities and duties of the Surviving
Corporation.
Section 1.5. ARTICLES OF INCORPORATION AND BYLAWS OF THE SURVIVING
CORPORATION. At the Effective Time, the Articles of Incorporation and Bylaws of
the Surviving Corporation shall be amended to be identical to the Articles of
Incorporation and Bylaws, respectively, of Merger Sub as in effect immediately
prior to the Effective Time (except that the name of the Surviving Corporation
shall be "Players"), in each case until duly amended in accordance with
applicable law.
Section 1.6. DIRECTORS AND OFFICERS OF THE SURVIVING CORPORATION. The
directors of Merger Sub immediately prior to the Effective Time shall be the
initial directors of the Surviving Corporation, each to hold office in
accordance with the Articles of Incorporation and Bylaws of the Surviving
Corporation. The officers of Merger Sub immediately prior to the Effective Time
shall be the initial officers of the Surviving Corporation, each to hold office
in accordance with the Articles of Incorporation and Bylaws of the Surviving
Corporation.
2
ARTICLE II.
EFFECT OF THE MERGER ON SECURITIES OF THE CONSTITUENT CORPORATIONS
Section 2.1. CONVERSION OF SECURITIES. At the Effective Time, by
virtue of the Merger and without any action on the part of any of the parties
hereto or the holders of any of the following:
(a) PLAYERS COMMON STOCK. Each share of common stock, par value
$0.005 per share, of Players ("PLAYERS COMMON STOCK") issued and outstanding
immediately prior to the Effective Time (other than shares to be canceled in
accordance with Section 2.1(b)), together with all rights in respect thereto,
shall be converted, subject to Section 2.1(e), into the right to receive from
the Surviving Corporation a net amount of $8.50 in cash (the "MERGER
CONSIDERATION").
As of the Effective Time, all shares of Players Common Stock upon
which the Merger Consideration is payable pursuant to this Section 2.1(a) shall
no longer be outstanding and shall automatically be canceled and retired and
shall cease to exist, and each holder of a certificate representing any such
shares shall cease to have any ownership or other rights with respect thereto,
except the right to receive the Merger Consideration in exchange for such shares
upon the surrender of such certificate in accordance with Section 2.2.
(b) CANCELLATION OF TREASURY STOCK AND BUYER-OWNED STOCK. All
shares of Players Common Stock that are owned by Players as treasury stock and
any shares of Players Common Stock owned by Buyer or any wholly-owned Subsidiary
(as defined in Section 3.1) of Buyer shall be canceled and retired and shall
cease to exist and no consideration shall be delivered in exchange therefor.
(c) CAPITAL STOCK OF MERGER SUB. Each issued and outstanding
share of the common stock, par value $.01 per share, of Merger Sub shall be
converted into and become one fully paid and nonassessable share of common
stock, par value $.01 per share, of the Surviving Corporation.
(d) PLAYERS DEBT SECURITIES. Except as otherwise repaid, redeemed
or purchased in connection with the transactions contemplated hereby, all notes
and other debt instruments of Players that are outstanding at the Effective Time
shall continue to be outstanding subsequent to the Effective Time as debt
instruments of the Surviving Corporation, subject to their respective terms and
provisions.
(e) ADJUSTMENTS TO MERGER CONSIDERATION. The Merger Consideration
shall be adjusted to reflect fully the effect of any stock split, reverse split,
stock dividend (including any dividend or distribution of securities convertible
into Players Common Stock, as applicable), reorganization, recapitalization or
any other like change with respect to Players Common Stock occurring after the
date hereof and prior to the Effective Time.
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Section 2.2. EXCHANGE OF CERTIFICATES.
(a) EXCHANGE AGENT. At or prior to the Effective Time, Buyer
shall deposit with a bank or trust company designated by Buyer (the "EXCHANGE
AGENT"), for the benefit of the holders of shares of Players Common Stock
outstanding immediately prior to the Effective Time, for exchange in accordance
with this Section 2.2, through the Exchange Agent, cash in an aggregate amount
sufficient to pay the Merger Consideration (the cash so deposited being
hereinafter referred to as the "EXCHANGE FUND"). Any interest, dividends or
other income earned on the investment of cash or other property held in the
Exchange Fund shall be for the account of and payable to Buyer.
(b) EXCHANGE PROCEDURES. Promptly after the Effective Time,
Buyer will instruct the Exchange Agent to mail to each holder of record of
Players Common Stock (i) a letter of transmittal (which shall specify that
delivery shall be effected, and risk of loss and title to a Certificate shall
pass, only upon proper delivery of the Certificate to the Exchange Agent and
shall be in such form and have such other provisions as Buyer may reasonably
specify), and (ii) instructions to effect the surrender of the Certificate in
exchange for the Merger Consideration. Upon surrender of a Certificate for
cancellation to the Exchange Agent together with such letter of transmittal,
duly executed, and such other customary documents as may be required pursuant to
such instructions, the holder of such Certificate shall be entitled to receive
in exchange therefor cash in an amount equal to the Merger Consideration
multiplied by the number of shares represented by such Certificate, and the
Certificate so registered shall forthwith be canceled. In the event of a
transfer of ownership of shares of Players Common Stock which is not registered
in the transfer records of Players as of the Effective Time, the Merger
Consideration may be issued and paid in accordance with this Article II to a
transferee if the Certificate evidencing such shares of Players Common Stock is
presented to the Exchange Agent, accompanied by all documents required to
evidence and effect such transfer pursuant to this Section 2.2(b) and by
evidence that any applicable stock transfer taxes have been paid. Until so
surrendered, each outstanding Certificate that prior to the Effective Time
represented shares of Players Common Stock will be deemed from and after the
Effective Time for all corporate purposes (other than the payment of dividends
and subject to Section 2.1(e)), to evidence the right to receive the Merger
Consideration. No interest will be paid or will accrue on the cash payable upon
the surrender of any Certificate.
(c) TRANSFERS OF OWNERSHIP. At the Effective Time, the stock
transfer books of Players shall be closed, and there shall be no further
registration of transfers of Players Common Stock thereafter on the records of
Players.
(d) TERMINATION OF EXCHANGE FUND. Any portion of the Exchange
Fund which remains undistributed to the former stockholders of Players as of the
date which is twelve months after the Effective Time shall be delivered to
Buyer, upon demand, and thereafter such former stockholders of Players who have
not theretofore complied with this Section 2.2 shall be entitled to look only to
Buyer for payment of the Merger Consideration to which they are entitled
pursuant hereto.
4
(e) NO LIABILITY. None of Buyer, Merger Sub, Players or the
Exchange Agent shall be liable to any holder of Players Common Stock for any
Merger Consideration delivered to a public official pursuant to any applicable
abandoned property, escheat or similar law. If any Certificates shall not have
been surrendered immediately prior to the date on which the Merger Consideration
or any dividends or distributions with respect to Players Common Stock in
respect of such Certificate would otherwise escheat to or become the property of
any Governmental Entity, any such Merger Consideration, dividends or
distributions in respect of such Certificate shall, to the extent permitted by
applicable law, become the property of the Surviving Corporation, free and clear
of all claims or interest of any person previously entitled thereto on such date
prior to the time such escheat laws become applicable.
(f) WITHHOLDING RIGHTS. Buyer or the Exchange Agent shall be
entitled to deduct and withhold from the Merger Consideration otherwise payable
pursuant to this Agreement to any holder of Certificates which prior to the
Effective Time represented shares of Players Common Stock such amounts as Buyer
or the Exchange Agent is required to deduct and withhold with respect to the
making of such payment under the Internal Revenue Code of 1986, as amended (the
"CODE"), or any provision of state, local, or foreign tax law. To the extent
that amounts are so withheld by Buyer or the Exchange Agent and remitted to the
proper authority, such withheld amounts thereafter shall be treated for all
purposes of this Agreement as having been paid to the holder of the shares of
Players Common Stock in respect of which such deduction and withholding was made
by Buyer or the Exchange Agent.
(g) LOST, STOLEN OR DESTROYED CERTIFICATES. In the event any
Certificates shall have been lost, stolen or destroyed, the Exchange Agent shall
pay in exchange for such lost, stolen or destroyed Certificates, upon the making
of an affidavit of that fact by the holder thereof such Merger Consideration as
may be required pursuant to Section 2.2; PROVIDED, HOWEVER, that Buyer may, in
its discretion, and as a condition precedent to the issuance thereof, require
the owner of such lost, stolen or destroyed Certificates to deliver a bond in
such sum as it may reasonably direct as indemnity against any claim that may be
made against Buyer, the Surviving Corporation or the Exchange Agent with respect
to the Certificates alleged to have been lost, stolen or destroyed.
Section 2.3. ACCELERATION AND PAYMENT FOR PLAYERS OPTIONS. Following
the execution of this Agreement, the Board of Directors of Players (or, if
appropriate, any committee administering the Players Stock Option Plans (as
defined below)) shall adopt such resolutions or use its best efforts to take
such other actions as are required to provide that each then outstanding stock
option to purchase shares of Players Common Stock (a "PLAYERS OPTION")
heretofore granted under any stock option or other stock-based incentive plan,
program or arrangement of Players including (i) the 1985 Incentive Stock Option
Plan ("1985 PLAN"), (ii) the 1990 Incentive Stock Option and Non-Qualified
Option Plan ("1990 PLAN"), (iii) the Amended and Restated 1993 Stock Incentive
Plan ("1993 PLAN"), (iv) the 1994 Directors Stock Incentive Plan ("1994 PLAN"),
(v) the Stock Option Plan for Non-Employee Directors (which consists of
individual option grants in 1993 to outside directors) ("STOCK OPTION PLAN FOR
NON-EMPLOYEE DIRECTORS"), and (vi) the option granted to Xxxxxx X. Xxxxxxx
pursuant to the Retirement Agreement and General Release, dated September 30,
1996 ("PERSKIE OPTION") (with the plans referred to in
5
clauses (i)-(vi) above collectively referred to as the "PLAYERS STOCK OPTION
PLANS") shall be accelerated and canceled immediately prior to the Effective
Time in exchange for payment of an amount of cash equal to the product of (x)
the number of shares of Players Common Stock subject to such stock option
immediately prior to the consummation of the Merger and (y) the excess, if any,
of the Merger Consideration over the per share exercise price of such Stock
Option; PROVIDED, HOWEVER, that such excess shall not be less than zero.
Notwithstanding anything in this Section 2.3 to the contrary, any Players Option
or stock appreciation right ("PLAYERS SAR") granted under any stock option or
other stock-based incentive plan, program or arrangement of Players, including,
without limitation, the Players Stock Option Plans, having a per share exercise
price that is greater than the Merger Consideration, whether or not vested and
exercisable, shall be accelerated and, if not exercised before the Effective
Time, shall be canceled as of the Effective Time and shall have no further force
or effect as of the Effective Time, without regard to the fact that the holder
of such Players Option or Players SAR shall have received no payment for the
Players Option or Players SAR.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF PLAYERS
Players represents and warrants to Buyer and Merger Sub that
the statements contained in this Article III are true and correct except as set
forth herein and in the disclosure schedule delivered by Players to Buyer and
Merger Sub on or before the date of this Agreement (the "PLAYERS DISCLOSURE
SCHEDULE"). Any reference in the Merger Agreement to Players' "best knowledge,"
or "the best of Players' knowledge," or words of similar import, shall be deemed
a reference to the actual knowledge of any of the corporate officers of Players
or any of its Subsidiaries, for all purposes. The Players Disclosure Schedule
has been prepared based upon the foregoing definition.
Section 3.1. ORGANIZATION OF PLAYERS AND ITS SUBSIDIARIES. Each of
Players and its Subsidiaries (as defined below) is duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
organization and has all requisite corporate, partnership or limited liability
company power and authority to carry on its business as now being conducted and
as proposed to be conducted. Each of Players and its Subsidiaries is duly
qualified or licensed to do business and is in good standing in each
jurisdiction in which the property owned, leased or operated by it or the nature
of the business conducted by it makes such qualification or licensing necessary,
except where the failure to be so qualified, licensed or in good standing would
not have a material adverse effect on the business, properties, condition
(financial or otherwise) or results of operations of Players and its
Subsidiaries, taken as a whole (a "PLAYERS MATERIAL ADVERSE EFFECT"). Players
has delivered to Buyer a true and correct copy of the Articles of Incorporation
and Bylaws of Players, in each case as amended to the date of this Agreement.
Assuming regulatory compliance by Buyer, the respective organizational documents
of Players' Subsidiaries do not contain any provision that would limit or
otherwise restrict the ability of Buyer, following the Effective Time, from
owning or operating such Subsidiaries on the same basis as Players. Except as
set forth on the Players Disclosure Schedule, all the outstanding shares of
capital stock of, or other equity interests in, each such Subsidiary have been
validly issued and are fully paid and nonassessable and are owned directly or
indirectly by Players, free
6
and clear of all pledges, claims, liens, charges, encumbrances and security
interests of any kind or nature whatsoever (collectively, "LIENS") and free of
any other restriction (including any restriction on the right to vote, sell or
otherwise dispose of such capital stock or other ownership interests). Except as
set forth in Exhibit 21 to the Players Annual Report on Form 10-K for the year
ended March 31, 1999, neither Players nor any of its Subsidiaries directly or
indirectly owns (other than ownership interests in Players or in one or more of
its Subsidiaries) any equity or similar interest in, or any interest convertible
into or exchangeable or exercisable for, any corporation, partnership, joint
venture or other business association or entity. As used in this Agreement, the
word "SUBSIDIARY" means, with respect to any party, any corporation or other
organization, whether incorporated or unincorporated, of which (i) such party or
any other Subsidiary of such party is a general partner or (ii) at least a
majority of the securities or other interests having by their terms ordinary
voting power to elect a majority of the Board of Directors or others performing
similar functions with respect to such corporation or other organization is
directly or indirectly owned or controlled by such party or by any one or more
of its Subsidiaries, or by such party and one or more of its Subsidiaries.
Section 3.2. CAPITALIZATION.
(a) The authorized capital stock of Players consists of
90,000,000 shares of Players Common Stock, $0.005 par value per share, and
10,000,000 shares of preferred stock, with no par value per share ("PLAYERS
PREFERRED STOCK"). As of the date hereof, (i) 32,032,737 shares of Players
Common Stock were issued and outstanding, all of which are validly issued, fully
paid and nonassessable, (ii) 672,100 shares of Players Common Stock were held in
the treasury of Players or by Subsidiaries of Players, and (iii) no shares of
Players Preferred Stock are issued and outstanding. Section 3.2(a)(i) of the
Players Disclosure Schedule sets forth the number of shares of Players Common
Stock reserved for future issuance upon exercise of Players Options granted and
outstanding as of the date hereof and under the Players Stock Option Plans.
Section 3.2(a)(i) of the Players Disclosure Schedule also sets forth as of the
date hereof, for each Players Stock Option Plan, the dates on which Options and
Players SARs which are still outstanding under such plan were granted, the
number of outstanding Options and Players SARs granted on each such date and the
exercise price thereof. Except as disclosed in Section 3.2(a)(i) of the Players
Disclosure Schedule, since September 30, 1998 through the date of this
Agreement, Players has not made any grants under any of the Players Stock Option
Plans. Except as disclosed in Section 3.2(a)(i) of the Players Disclosure
Schedule with respect to Players SARs, as of the date of this Agreement, Players
has not granted any contractual rights the value of which is derived from the
financial performance of Players or from the value of shares of Players Common
Stock. Except as disclosed in Section 3.2(a)(ii) of the Players Disclosure
Schedule, there are no obligations contingent or otherwise, of Players or any of
its Subsidiaries to repurchase, redeem or otherwise acquire any shares of
Players Common Stock or the capital stock or ownership interests of any
Subsidiary or to provide funds to or make any material investment (in the form
of a loan, capital contribution or otherwise) in any such Subsidiary or any
other entity other than guarantees of bank obligations or indebtedness for
borrowed money of Subsidiaries entered into in the ordinary course of business.
All of the outstanding shares of capital stock (including shares which may be
issued upon exercise of outstanding options) or other ownership interests of
each of Players' Subsidiaries are duly authorized, validly issued,
7
fully paid and nonassessable and, except as disclosed in Section 3.2(a)(iii) of
the Players Disclosure Schedule and except as required by gaming industry
regulation, all such shares and ownership interests are owned by Players or
another Subsidiary of Players free and clear of all security interests, liens,
claims, pledges, agreements, limitations on Players' voting rights, charges or
other encumbrances or restrictions on transfer of any nature.
(b) There are no bonds, debentures, notes or other
indebtedness having voting rights (or convertible into securities having such
rights) ("VOTING DEBT") of Players or any of its Subsidiaries issued and
outstanding. Except as set forth in Section 3.2(a) or in this Section 3.2(b) or
as reserved for future grants of options under the Players Stock Option Plans
and except for the common stock purchase rights issued and issuable under the
Stockholders' Rights Plan dated as of January 27, 1997 (the "RIGHTS AGREEMENT"),
as of the date hereof, (i) there are no shares of capital stock of any class of
Players, or any security exchangeable into or exercisable for such equity
securities, issued, reserved for issuance or outstanding; (ii) except as set
forth in Section 3.2(b) of the Players Disclosure Schedule, there are no
options, warrants, equity securities, calls, rights, commitments or agreements
of any character to which Players or any of its Subsidiaries is a party or by
which it is bound obligating Players or any of its Subsidiaries to issue,
deliver or sell, or cause to be issued, delivered or sold, additional shares of
capital stock or other ownership interests (including Voting Debt) of Players or
any of its Subsidiaries or obligating Players or any of its Subsidiaries to
grant, extend, accelerate the vesting of or enter into any such option, warrant,
equity security, call, right, commitment or agreement; and (iii) there are no
voting trusts, proxies or other voting agreements or understandings with respect
to the shares of capital stock of Players. All shares of Players Common Stock
subject to issuance as specified in this Section 3.2(b) are duly authorized and,
upon issuance on the terms and conditions specified in the instruments pursuant
to which they are issuable, shall be validly issued, fully paid and
nonassessable.
Section 3.3. AUTHORITY; NO CONFLICT; REQUIRED FILINGS AND CONSENTS.
(a) Players has all requisite corporate power and authority
to enter into this Agreement and to consummate the transactions contemplated by
this Agreement. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby by Players have been duly
authorized by all necessary corporate action on the part of Players, subject
only to the approval and adoption of this Agreement and the Merger by a majority
of Players' stockholders. This Agreement has been duly executed and delivered by
Players and constitutes the valid and binding obligation of Players, enforceable
against Players in accordance with its terms.
(b) Other than as disclosed in Section 3.3(b) of the Players
Disclosure Schedule, the execution and delivery of this Agreement by Players
does not, and the consummation of the transactions contemplated hereby will not,
(i) conflict with, or result in any violation or breach of, any provision of the
Articles of Incorporation or Bylaws of Players or the comparable charter or
organizational documents of any of its Subsidiaries, (ii) result in any
violation or breach of, or constitute (with or without notice or lapse of time,
or both) a default (or give rise to a right of termination, cancellation or
acceleration of any obligation or loss of any
8
material benefit) under, or require a consent or waiver under, any of the terms,
conditions or provisions of any note, bond, mortgage, indenture, lease, contract
or other agreement, instrument or obligation to which Players or any of its
Subsidiaries is a party or by which any of them or any of their properties or
assets may be bound, or (iii) subject to the governmental filings and other
matters referred to in Section 3.3(c), conflict with or violate any permit,
concession, franchise, license, judgment, order, decree, statute, law,
ordinance, rule or regulation applicable to Players or any of its Subsidiaries
or any of its or their properties or assets, except in the case of clauses (ii)
and (iii) for any such conflicts, violations, defaults, terminations,
cancellations or accelerations which (x) are not, individually or in the
aggregate, reasonably likely to have a Players Material Adverse Effect or (y)
would not prevent or materially delay the consummation of the Merger.
(c) Except as disclosed in Section 3.3(c) of the Players
Disclosure Schedule, no consent, approval, order or authorization of, or
registration, declaration or filing with, any court, administrative agency,
commission, gaming authority or other governmental authority or instrumentality
("GOVERNMENTAL ENTITY") is required by or with respect to Players or any of its
Subsidiaries in connection with the execution and delivery of this Agreement or
the consummation of the transactions contemplated hereby, except for (i) the
filing of the pre-merger notification report under the Xxxx-Xxxxx-Xxxxxx
Antitrust Improvements Act of 1976, as amended ("HSR ACT"), (ii) the filing of
the Articles of Merger with respect to the Merger with the Secretary of State of
the State of Nevada, (iii) the filing of any Proxy Statement (as such term is
defined in Section 5.4(a) below) with the Securities and Exchange Commission
(the "SEC") in accordance with the Securities Exchange Act of 1934, as amended
(the "EXCHANGE ACT"), (iv) any approvals and filing of notices required under
any applicable gaming industry regulation, (v) such consents, approvals, orders,
authorizations, permits, filings or registrations related to, or arising out of,
compliance with statutes, rules or regulations regulating the consumption, sale
or serving of alcoholic beverages, (vi) such immaterial filings and consents as
may be required under any environmental, health or safety law or regulation
pertaining to any notification, disclosure or required approval triggered by the
Merger, and (vii) such other filings, consents, approvals, orders, registrations
and declarations as may be required under the laws of any jurisdiction in which
Players or any of its Subsidiaries conducts any business or owns any assets the
failure of which to obtain would not have a Players Material Adverse Effect.
(d) The Agreement and Plan of Merger dated as of February 8,
1999 among Jackpot, JEI Merger Corp. and Players has been duly terminated.
Section 3.4. PUBLIC FILINGS; FINANCIAL STATEMENTS.
(a) None of Players' Subsidiaries is required to file forms,
reports and documents with the SEC. Players has filed with the SEC all reports,
schedules, forms, statements and other documents required to be filed by the
Securities Act and the Exchange Act since March 31, 1998. Except as set forth in
Section 3.4(a) of the Players Disclosure Schedule and except for matters
otherwise corrected by the subsequent filing with the SEC of an appropriate
amendment prior to the date of this Agreement, the reports, forms, documents
filed by Players with the SEC prior to the date of this Agreement (the "PLAYERS
SEC REPORTS")
9
(including any financial statements filed as a part thereof or incorporated by
reference therein) (i) at the time filed, complied in all material respects with
the applicable requirements of the Securities Act of 1933, as amended (the
"SECURITIES ACT"), and the Exchange Act, as the case may be, and (ii) did not,
at the time they were filed (or if amended or superseded by a filing prior to
the date of this Agreement, then on the date of such filing), contain any untrue
statement of a material fact or omit to state a material fact required to be
stated in such Players SEC Reports or necessary in order to make the statements
in such Players SEC Reports, in the light of the circumstances under which they
were made, not misleading.
(b) Except as set forth in Section 3.4(a), each of the
consolidated financial statements (including, in each case, any related notes)
of Players contained in the Players SEC Reports complied as to form in all
material respects with the applicable published rules and regulations of the SEC
with respect thereto, was prepared in accordance with generally accepted
accounting principles ("GAAP") applied on a consistent basis throughout the
periods involved (except as may be indicated in the notes to such financial
statements or, in the case of unaudited statements, as permitted by Form 10-Q
under the Exchange Act) and fairly presented the consolidated financial position
of Players and its consolidated Subsidiaries as of the dates and the
consolidated results of its operations and cash flows for the periods indicated,
except that the unaudited interim financial statements were or are subject to
normal and recurring year-end adjustments which, with respect to interim periods
since March 31, 1999, were not or are not expected to be material in amount. The
audited balance sheet of Players as of March 31, 1999 is referred to herein as
the "PLAYERS BALANCE SHEET."
Section 3.5. NO UNDISCLOSED LIABILITIES. Except as disclosed
in the Players SEC Reports or in Section 3.5 of the Players Disclosure Schedule,
and except for liabilities and obligations incurred since the date of the
Players Balance Sheet in the ordinary course of business consistent with past
practices, Players and its consolidated Subsidiaries do not have any liabilities
of any kind, whether accrued, contingent or otherwise (whether or not of the
type required to be reflected in financial statements, including the notes
thereto, in accordance with GAAP), and whether due or to become due, which would
be reasonably likely to have a Players Material Adverse Effect.
Section 3.6. ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as disclosed
in the Players SEC Reports or in Section 3.6 of the Players Disclosure Schedule
since the date of the Players Balance Sheet, Players and its Subsidiaries have
conducted their respective businesses only in the ordinary course consistent
with past practice, and there has not been (i) any Players Material Adverse
Effect, (ii) any declaration, setting aside or payment of any dividend or other
distribution (whether in cash, stock or property) with respect to any of
Players' capital stock, (iii) any split, combination or reclassification of any
of its capital stock or any issuance or the authorization of any issuance of any
other securities in respect of, in lieu of or in substitution for shares of its
capital stock, (iv) (w) any granting by Players or any of its Subsidiaries to
any director or officer of Players or its Subsidiaries of any increase in
compensation, except in the ordinary course of business consistent with prior
practice or as was required under employment agreements in effect as of the date
of the most recent financial statements included in the Players SEC Reports, (x)
any granting by Players or any of its Subsidiaries to any director or officer of
10
any stock options, except as was required under employment agreements in effect
as of the date of the most recent financial statements included in the Players
SEC Reports, (y) any granting by Players or any of its Subsidiaries to any
officer of any increase in severance or termination pay, except as was required
under any employment, severance or termination agreements, plans or arrangements
in effect as of the date of the most recent financial statements included in the
Players SEC Reports or (z) any entry by Players or any of its Subsidiaries into
any employment, severance or termination agreement with any officer, (v) any
change in accounting methods, principles or practices having a material adverse
effect on Players, except insofar as may have been required by a change in GAAP,
(vi) any tax election that individually or in the aggregate would have a Players
Material Adverse Effect or (vii) any settlement of pending or threatened
litigation involving Players or any of its Subsidiaries (whether brought by a
private party or a Governmental Entity) other than any settlement which is not
reasonably likely to have a Players Material Adverse Effect.
Section 3.7. TAXES.
(a) For the purposes of this Agreement, a "TAX" or,
collectively, "TAXES," means any and all federal, state, local and foreign
taxes, assessments and other governmental charges, duties, impositions and
liabilities, including taxes based upon or measured by gross receipts, income,
profits, sales, use and occupation, and value added, ad valorem, transfer,
gains, franchise, withholding, payroll, recapture, employment, excise,
unemployment insurance, social security, business license, occupation, business
organization, stamp, environmental and property taxes, together with all
interest, penalties and additions imposed with respect to such amounts. For
purposes of this Agreement, "TAXES" also includes any obligations under any
agreements or arrangements with any other person with respect to Taxes of such
other person (including pursuant to Treas. Reg. Section 1.1502-6 or comparable
provisions of state, local or foreign tax law) and including any liability for
Taxes of any predecessor entity.
(b) Players and each of its Subsidiaries (separately or as
members of an affiliated, consolidated, unitary or combined group) have (i)
filed all federal, state, local and foreign Tax returns and reports required to
be filed by them prior to the date of this Agreement (taking into account all
applicable extensions) and such Tax returns and reports (taking into account all
amendments thereto) are true, correct and complete in all material respects,
(ii) paid or accrued all Taxes due and payable, and (iii) paid or accrued all
Taxes for which a notice of assessment or collection has been received (other
than amounts being contested in good faith by appropriate proceedings with the
relevant taxing authority and for which adequate reserves in accordance with
GAAP are being maintained). Except as set forth in Section 3.7(b) of the Players
Disclosure Schedule, neither the Internal Revenue Service (the "IRS") nor any
other taxing authority has asserted any claim for Taxes, or to the actual
knowledge of the executive officers of Players, is threatening to assert any
claims for Taxes. Except as set forth in Section 3.7(b) of the Players
Disclosure Schedule, neither Players nor any of its Subsidiaries has waived any
statute of limitations with respect to Taxes or agreed to any extension of time
with respect to any Tax assessment or deficiency, and no such waivers or
extensions are pending. Players and its Subsidiaries have withheld or collected
and paid over to the appropriate
11
governmental authorities (or are properly holding for such payment) all Taxes
required by law to be withheld or collected. Neither Players nor any of its
Subsidiaries has made an election under Section 341(f) of the Code. There are no
liens for Taxes upon the assets of Players or any of its Subsidiaries (other
than liens for Taxes that are not yet due or delinquent or that are being
contested in good faith by appropriate proceedings, with the relevant taxing
authority and for which adequate reserves in accordance with GAAP are being
maintained).
(c) Neither Players nor any of its Subsidiaries is or has
been a member of an affiliated group of corporations filing a consolidated
federal income tax return (or a group of corporations filing a consolidated,
combined or unitary income tax return under comparable provisions of state,
local or foreign tax law) other than a group the common parent of which is or
was Players or any Subsidiary of Players.
(d) Neither Players nor any of its Subsidiaries has any
obligation under any agreement or arrangement with any other person with respect
to Taxes of such other person (including pursuant to Treas. Reg. Section
1.1502-6 or comparable provisions of state, local or foreign tax law) and
including any liability for Taxes of any predecessor entity.
Section 3.8. REAL PROPERTY, TITLE AND RELATED MATTERS.
(a) REAL PROPERTY. Section 3.8 (a) of the Players Disclosure
Schedule sets forth a true and complete list as of the date of this Agreement of
(i) all contracts or agreements relating to the Leased Real Property, and (ii) a
brief description of each piece of Owned Real Property currently used by Players
and its Subsidiaries in their respective businesses. Players or a Subsidiary of
Players, as the case may be, has (A) good and marketable title to all Owned Real
Property and to all fixtures thereon, free and clear of any Encumbrances, except
for Permitted Encumbrances, and (B) except as set forth in Section 3.8(a) of the
Players Disclosure Schedule, Item (I), a valid leasehold interest in and the
right to quiet enjoyment of the Leased Real Property for the full term of the
leases. Each lease or other contract referred to in Section 3.8(a) of the
Players Disclosure Schedule is a valid contract or agreement enforceable against
Players or its Subsidiary, as the case may be, in accordance with its terms and,
to the knowledge of Players, against the other parties thereto. To the knowledge
of Players, there are no rights or options of any third party to acquire any
ownership interest in such Leased Real Property or Owned Real Property. Neither
Players nor any of its Subsidiaries are in default, nor have received any
written notice alleging that it or they are in default, under the leases, ground
leases, subleases, licenses, options or other agreements set forth in Section
3.8(a) of the Players Disclosure Schedule. To the knowledge of Players, no other
party to any such leases, ground leases, licenses, options or other agreements
is in default thereunder.
(b) DEFINITIONS. As used in this Section 3.8, the following
terms shall have the following meanings:
"ENCUMBRANCES" means all leases, mortgages, liens, pledges,
charges, options, encumbrances or defects of any kind or character.
12
"LEASED REAL PROPERTY" means all of the real property
leased or subleased by Players or a Subsidiary of Players as tenant and
listed on Section 3.8(a) of the Players Disclosure Schedule, together
with, to the extent leased by Players, all buildings and other
structures, facilities or improvements currently or hereafter located
thereon, all fixtures, systems, equipment and personal property of
Players attached or appurtenant thereto, and all easements, licenses,
rights and appurtenances related to the foregoing.
"OWNED REAL PROPERTY" means all of the real property owned
by Players or any of its Subsidiaries and listed on Section 3.8(a)
of the Players Disclosure Schedule, together with all buildings and
other structures, facilities or improvements currently or hereafter
located thereon, all fixtures, systems, equipment and personal property
attached or appurtenant thereto and all easements, licenses, rights and
appurtenances relating to the foregoing.
"PERMITTED ENCUMBRANCES" means such of the following as to
which no enforcement, collection, execution, levy or foreclosure
proceeding shall have been commenced: (i) Encumbrances that are
disclosed in Section 3.8(a) of the Players Disclosure Schedule, except
for (A) any Encumbrance which would prevent the use of the subject
property for its current use, or (B) any Encumbrance which secures any
indebtedness (other than indebtedness that is otherwise permitted by
this Agreement), (ii) liens for taxes, assessments, fees, and other
governmental charges or levies which are not yet due, payable or
delinquent, (iii) such survey exceptions or reciprocal easement
agreements that do not prevent Players or its Subsidiaries, and would
not prevent the Surviving Corporation, from conducting Players'
business as currently conducted and which would not have a Players
Material Adverse Effect, (iv) the provisions of any federal, state or
local law, ordinance or regulation, PROVIDED the same are not violated
by the current use of the property, (v) Encumbrances imposed by law,
such as materialmen's, mechanics', carriers', workmen's and repairmen's
liens and other similar liens arising in the ordinary course of
business securing obligations that are not in excess of $250,000 in the
aggregate at any time, and (vi) pledges or deposits to secure
obligations under workers' compensation laws or similar legislation or
to secure public or statutory obligations.
Section 3.9. TITLE TO PERSONAL PROPERTY; LIENS. To the best knowledge
of Players, Players and each of its Subsidiaries has sufficiently good and valid
title to, or an adequate leasehold interest in, its material tangible personal
properties and assets (including all riverboats operated by Players and its
Subsidiaries) in order to allow it to conduct, and continue to conduct, its
business as and where currently conducted, except for such matters which,
individually or in the aggregate, would not be reasonably likely to have a
Players Material Adverse Effect. Except as disclosed in Section 3.9 of the
Players Disclosure Schedule, such material tangible personal assets and
properties are sufficiently free of liens to allow each of Players and its
Subsidiaries to conduct, and continue to conduct, its business as currently
conducted and to the best knowledge of Players, the consummation of the
transactions contemplated by this Agreement will not alter or impair such
ability in any respect which, individually or in the aggregate, would be
reasonably likely to have a Players Material Adverse Effect. There are no
defects in the physical condition
13
or operability of such material tangible personal properties and assets which
would impair the use of such properties and assets as such properties and assets
are currently used, except for such defects which, individually or in the
aggregate, would not be reasonably likely to have a Players Material Adverse
Effect.
Section 3.10. INTELLECTUAL PROPERTY. Section 3.10 of the Players
Disclosure Schedule lists all (i) trademark and service xxxx registrations and
applications owned by Players or any of its Subsidiaries and (ii) trademark,
service xxxx and trade name license agreements to which Players or any of its
Subsidiaries is a party. Except as disclosed in Section 3.10 of the Players
Disclosure Schedule, all material trademarks, trademark applications, trade
names, service marks, trade secrets (including customer lists and customer
databases), copyrights, patents, licenses, know-how and other proprietary
intellectual property rights used in connection with the businesses of Players
and its Subsidiaries as currently conducted are without material restrictions or
material conditions on use, and there is no conflict with the intellectual
property rights of Players and its Subsidiaries therein or any conflict by them
with the intellectual property rights of others therein which, individually or
in the aggregate, would be reasonably likely to have a Players Material Adverse
Effect.
Section 3.11. AGREEMENTS, CONTRACTS AND COMMITMENTS.
(a) Except as disclosed in the Players SEC Reports or as
disclosed in Section 3.11(a) of the Players Disclosure Schedule, as of the date
of this Agreement, neither Players nor any of its Subsidiaries is a party to any
oral or written (i) agreement, contract, indenture or other instrument relating
to Indebtedness (as defined below) in an amount exceeding $1,000,000, (ii)
partnership, joint venture or limited liability or management agreement with any
person, (iii) agreement, contract, or other instrument relating to any merger,
consolidation, business combination, share exchange, business acquisition, or
for the purchase, acquisition, sale or disposition of any material assets of
Players or any of its Subsidiaries outside the ordinary course of business, (iv)
other contract, agreement or commitment to be performed after the date hereof
which would be a material contract (as defined in Item 601(b)(10) of Regulation
S-K of the SEC), (v) agreement, contract, or other instrument relating to any
"strategic alliances" (i.e., cross-marketing, affinity relationship, etc.), (vi)
contract, agreement or commitment which materially restricts (geographically or
otherwise) the conduct of any line of business by Players or any of its
Subsidiaries, (vii) any contract, agreement or other instrument having as a
party a partnership, joint venture or limited liability company in which Players
or any of its Subsidiaries is a partner, joint venture party or member which
would otherwise satisfy the criteria in clauses (i), (iii), (iv), (v) or (vi) if
Players or any of its Subsidiaries were a party to such contract, agreement or
other instrument or (viii) any other material contract requiring annual or
remaining payments in excess of $250,000 after the date hereof and which is not
cancelable on less than 30 days' notice (collectively, the "PLAYERS MATERIAL
CONTRACTS"). "INDEBTEDNESS" means any liability in respect of (A) borrowed
money, (B) capitalized lease obligations, (C) the deferred purchase price of
property or services (other than trade payables in the ordinary course of
business) and (D) guarantees of any of the foregoing incurred by any other
person other than Players or any of its Subsidiaries.
14
(b) Except as disclosed in the Players SEC Reports filed
prior to the date of this Agreement or as disclosed in Section 3.11(b) of the
Players Disclosure Schedule, as of the date of this Agreement, (i) each of the
Players Material Contracts is valid and binding upon Players or any of its
Subsidiaries (and, to Players' best knowledge, on all other parties thereto) in
accordance with its terms and is in full force and effect, (ii) there is no
material breach or violation of or default by Players or any of its Subsidiaries
under any of the Players Material Contracts, whether or not such breach,
violation or default has been waived, and (iii) no event has occurred with
respect to Players or any of its Subsidiaries which, with the notice or lapse of
time or both, would constitute a material breach, violation or default, or give
rise to a right of termination, modification, cancellation, foreclosure,
imposition of a lien, prepayment or acceleration under any of the Players
Material Contracts, which breach, violation or default referred to in clauses
(ii) or (iii), alone or in the aggregate with other such breaches, violations or
defaults referred to in clauses (ii) or (iii), would be reasonably likely to
have a Players Material Adverse Effect.
(c) Except as disclosed in Section 3.11(c) of the Players
Disclosure Schedule and except for liabilities or obligations which,
individually or in the aggregate, would not be reasonably likely to have a
Players Material Adverse Effect, Players and its Subsidiaries have terminated,
and have no continuing liabilities or obligations under, any agreement, contract
or arrangement with any person or entity relating to the Players Island Resort
Casino Spa in Mesquite, Nevada. Any and all rights of the buyer of the Players
Island Resort Casino Spa to indemnity by Players or any of its Subsidiaries have
terminated, except for claims specifically disclosed in Section 3.11(c) of the
Players Disclosure Schedule.
Section 3.12. LITIGATION. Except as disclosed in the Players SEC
Reports or in Section 3.12 of the Players Disclosure Schedule, (a) there is no
action, suit or proceeding, claim, arbitration or investigation against or
affecting Players or any of its Subsidiaries pending, or as to which Players or
any of its Subsidiaries has received any written notice of assertion against or
affecting, Players or any of its Subsidiaries or any property or asset of
Players or any of its Subsidiaries, before any court, arbitrator, or
administrative, governmental or regulatory authority or body, domestic or
foreign that individually or in the aggregate could reasonably be expected to
(i) have a Players Material Adverse Effect or (ii) prevent or materially delay
the consummation of the transactions contemplated by this Agreement; and (b)
there is no judgment, order, injunction or decree of any Governmental Entity
outstanding against Players or any of its Subsidiaries that could reasonably be
expected to have any effect referred to in clauses (i) or (ii) above.
Section 3.13. ENVIRONMENTAL MATTERS.
(a) Except as disclosed in Section 3.13 of the Players
Disclosure Schedule, the Players SEC Reports and as would not be reasonably
likely to have a Players Material Adverse Effect: (i) Players and its
Subsidiaries have complied with all applicable Environmental Laws (as defined in
Section 3.13(b)); (ii) the properties currently owned or operated by Players and
its Subsidiaries (including soils, groundwater, surface water, buildings or
other structures) are not contaminated with any Hazardous Substances (as defined
in
15
Section 3.13(c)); (iii) neither Players nor its Subsidiaries are subject to
liability for any Hazardous Substance disposal or contamination on any third
party property; (iv) neither Players nor any of its Subsidiaries has been
associated with any release or threat of release of any Hazardous Substance; (v)
neither Players nor any of its Subsidiaries has received any notice, demand,
letter, claim or request for information alleging that Players or any of its
Subsidiaries may be in violation of or liable under any Environmental Law; (vi)
neither Players nor any of its Subsidiaries is subject to any orders, decrees,
injunctions or other arrangements with any Governmental Entity or is subject to
any indemnity or other agreement with any third party relating to liability
under any Environmental Law or relating to Hazardous Substances; and (vii) there
are no circumstances or conditions involving Players or any of its Subsidiaries
that could reasonably be expected to result in any claims, liability,
investigations, costs or restrictions on the ownership, use or transfer of any
property of Players or any of its Subsidiaries pursuant to any Environmental
Law.
(b) For purposes of this Agreement, the term "ENVIRONMENTAL
LAW" means any federal, state, local or foreign law, regulation, order, decree,
permit, authorization, opinion, common law or agency requirement relating to:
(A) the protection, investigation or restoration of the environment, health and
safety, or natural resources, (B) the handling, use, presence, disposal, release
or threatened release of any Hazardous Substance or (C) noise, odor, wetlands,
pollution, contamination or any injury or threat of injury to persons or
property.
(c) For purposes of this Agreement, the term "HAZARDOUS
SUBSTANCE" means any substance that is: (A) listed, classified or regulated
pursuant to any Environmental Law; (B) any petroleum product or by-product,
asbestos-containing material, lead-containing paint or plumbing, polychlorinated
biphenyls, radioactive materials or radon; or (C) any other substance which is
the subject of regulatory action by any Governmental Entity pursuant to any
Environmental Law.
Section 3.14. EMPLOYEE BENEFIT PLANS.
(a) Section 3.14(a) of the Players Disclosure Schedule
contains a true and complete list of all employee benefit plans (as defined in
Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA")), all employment, retention, change of control and severance
agreements, and all bonus, stock option, stock purchase, incentive, deferred
compensation, supplemental retirement, severance and other similar employee
benefit plans, programs, policies and agreements, written or otherwise, in each
case that is sponsored, maintained, contributed to or required to be contributed
to by Players or any of its Subsidiaries or any trade or business (whether or
not incorporated) which, together with Players or any of its Subsidiaries, would
be deemed a "single employer" under Section 4001(b) of ERISA (an "ERISA
Affiliate"), or to which Players, any of its Subsidiaries or any ERISA Affiliate
is a party for the benefit of any current or former employee, consultant,
director or independent contractor of Players or any of its Subsidiaries
(together, the "PLAYERS EMPLOYEE PLANS").
16
(b) Players has delivered or made available to Buyer all
material documents related to the Players Employee Plans, including, without
limitation: (i) true and complete copies of all Players Employee Plan documents
and any summary plan descriptions, summary annual reports and insurance
contracts relating thereto, (ii) detailed summaries of all unwritten Players
Employee Plans, (iii) true and complete copies of the most recent financial
statements and actuarial reports with respect to all Players Employee Plans for
which financial statements or actuarial reports are required or have been
prepared; (iv) the most recent determination letter from the IRS (if applicable)
for any such Players Employee Plan, and (v) true and complete copies of any
filing with or report to any Governmental Entity with respect to any Players
Employee Plan made by Players or any of its Subsidiaries during the twenty-four
months prior to the date of this Agreement, including, without limitation,
annual reports for Players Employee Plans, and a copy of any correspondence to
Players or any of its Subsidiaries from any Governmental Entity with respect to
any such Players Employee Plan during such period.
(c) All Players Employee Plans conform in all material
respects to, and are being administered and operated in all material respects in
compliance with, the requirements of ERISA, the Code and all other applicable
laws, including applicable laws of foreign jurisdictions. Except as set forth in
Section 3.14(c) of the Players Disclosure Schedule, there have not been any
"prohibited transactions," as such term is defined in Section 4975 of the Code
or Section 406 of ERISA, involving any of the Players Employee Plans that could
subject Players or any of its Subsidiaries to any penalties or taxes imposed
under the Code or ERISA. Section 3.14(c) of the Players Disclosure Schedule sets
forth a true and complete list of all outstanding loans from Players or any of
its Subsidiaries to any current or former director, officer, employee or
consultant.
(d) Except as set forth in Section 3.14(d) of the Players
Disclosure Schedule, any Players Employee Plan that is intended to be qualified
under Section 401 (a) of the Code and exempt from tax under Section 501 (a) of
the Code has been determined by the Internal Revenue Service to be so qualified,
has received a favorable determination letter from the IRS covering provisions
of the Tax Reform Act of 1986, and such determination remains in effect and has
not been revoked. Nothing has occurred since the date of any such determination
that is reasonably likely to affect adversely such qualification or exemption in
any material respect, or result in the imposition of material excise taxes or
income taxes on unrelated business income under the Code or ERISA with respect
to any Players Employee Plan. All contributions or other amounts payable by
Players or any of its Subsidiaries with respect to each Players Employee Plan
have been paid or accrued in accordance with GAAP, ERISA, the Code and the terms
of each such plan.
(e) Except as set forth in Section 3.14(e) of the Players
Disclosure Schedule, neither Players, any of its Subsidiaries nor any ERISA
Affiliate (i) at any time in the past has had a current or contingent obligation
to contribute to any multiemployer plan (as defined in Section 3(37) of ERISA)
("MULTIEMPLOYER PLAN") or (ii) at any time in the past has had any liability,
contingent or otherwise, under Title IV of ERISA or Section 412 of the Code. As
17
of the date of this Agreement, no Players Employee Plan is subject to Title IV
of ERISA and no Players Employee Plan is a Multiemployer Plan.
(f) There are no pending, or to Players' knowledge, any
threatened or anticipated claims by or on behalf of any Players Employee Plan,
or by or on behalf of any individual participants or beneficiaries of any
Players Employee Plan, alleging any breach of fiduciary duty on the part of
Players or any of its Subsidiaries or any of the officers, directors or
employees of Players or any of its Subsidiaries under ERISA or any other
applicable Regulations, or claiming benefit payments other than those made in
the ordinary operation of such plans, or alleging any violation of any other
applicable Laws. To the knowledge of Players or any of its Subsidiaries, the
Players Employee Plans are not the subject of any investigation, audit or action
by the Internal Revenue Service, the Department of Labor or the Pension Benefit
Guaranty Corporation ("PBGC").
(g) With respect to any Players Employee Plan that is an
employee welfare benefit plan (within the meaning of Section 3(l) of ERISA) (a
"PLAYERS WELFARE PLAN"), (i) each Players Welfare Plan for which contributions
are claimed as deductions under any provision of the Code is in compliance in
all material respects with all applicable requirements pertaining to such
deduction and (ii) any Players Employee Plan that is a group health plan (within
the meaning of Section 4980B(g)(2) of the Code) complies, and in each and every
case has complied in all material respects, with all of the requirements of
ERISA and Section 4980B of the Code. No welfare benefit fund (within the meaning
of Section 419(e)(1) of the Code) or voluntary employees' beneficiary
association (within the meaning of 501 (c)(9) of the Code) has been established
or maintained in connection with a Players Welfare Plan.
Section 3.15. COMPLIANCE.
(a) Except as disclosed in Section 3.15 of the Players
Disclosure Schedule, each of Players and its Subsidiaries, and each of their
respective directors (but with respect to non-employee directors, only to
Players' best knowledge), officers, persons performing management functions
similar to officers and, to Players' best knowledge, partners hold all permits,
registrations, findings of suitability, licenses, variances, exemptions,
certificates of occupancy, orders and approvals of all Governmental Entities
(including all authorizations under Environmental Laws, the Merchant Marine Act
of 1920 and the Shipping Act of 1916, Certificates of Inspection issued by the
US Coast Guard and permits and approvals issued by the United States Army Corps
of Engineers and Players Gaming Laws (as defined below)), necessary to conduct
the business and operations of Players and each of its Subsidiaries as currently
conducted, each of which is in full force and effect in all material respects
and no notice of revocation has been received in respect thereof, except where
the failure to hold such permits, registrations, findings of suitability,
licenses, variances, exemptions, certificates of occupancy, orders and approvals
would not, individually or in the aggregate, be reasonably likely to have a
Players Material Adverse Effect (the "PLAYERS PERMITS"). Except as disclosed in
the Players SEC Reports, as disclosed in Section 3.15 of the Players Disclosure
Schedule, or as would not be reasonably likely to have a Players Material
Adverse Effect, the businesses of Players and its Subsidiaries are not being
conducted in violation of any law, ordinance or
18
regulation of any Governmental Entity. Except as disclosed in Schedule 3.15 of
the Players Disclosure Schedule, to Players' best knowledge, no investigation or
review by any Governmental Entity with respect to Players or any of its
Subsidiaries is pending or threatened, nor has any Governmental Entity indicated
any intention to conduct the same, other than those the outcome of which would
not, individually or in the aggregate, be reasonably likely to have a Players
Material Adverse Effect.
(b) The term "PLAYERS GAMING LAWS" means any Federal, state,
local or foreign statute, ordinance, rule, regulation, permit, consent,
registration, finding of suitability, approval, license, judgment, order,
decree, injunction or other authorization, including any condition or limitation
placed thereon, governing or relating to the current or contemplated casino and
gaming activities and operations of Players or any of its Subsidiaries,
including any applicable state gaming law and any federal or state laws relating
to currency transactions.
(c) Except as disclosed in Section 3.15 of the Players
Disclosure Schedule (i) neither Players nor any of its Subsidiaries, nor any
director (but with respect to non-employee directors, only to Players' best
knowledge), officer, key employee or, to Players' best knowledge, partners of
Players or any of its Subsidiaries has received any written claim, demand
notice, complaint, court order or administrative order from any Governmental
Entity in the past three years under, or relating to any violation or possible
violation of any Players Gaming Laws which did or would be reasonably likely to
result in fines or penalties of $250,000 or more; (ii) to the best knowledge of
Players, there are no facts, which if known to the regulators under the Players
Gaming Laws could reasonably be expected to result in the revocation, limitation
or suspension of a license, finding of suitability, registration, permit or
approval of it or them, or any officer, director, other person performing
management functions similar to an officer or partner, under any Players Gaming
Laws; and (iii) neither Players nor any of its Subsidiaries has suffered a
suspension or revocation of any material license, finding of suitability,
registration, permit or approval held under the Players Gaming Laws.
Section 3.16. LABOR MATTERS. Except as disclosed in Section 3.16 of
the Players Disclosure Schedule, (i) there are no proceedings pending
between Players or any of its Subsidiaries and any of their respective employees
before the Equal Employment Opportunity Commission, Department of Labor, or any
other Governmental Entity; (ii) to the best knowledge of Players, there are no
activities or proceedings of any labor union to organize any non-unionized
employees; (iii) neither Players nor any of its Subsidiaries has received notice
of any alleged unfair labor practice charges and/or complaints pending against
Players or any of its Subsidiaries or any of their respective representatives or
employees before the National Labor Relations Board or any current union
representation questions involving employees of Players or any of its
Subsidiaries; and (iv) Players' employment policies and practices comply in all
material respects with applicable law; and (v) there is no strike, slowdown,
work stoppage, labor dispute or lockout, or, to the best knowledge of Players,
threat thereof, by or with respect to any employees of Players or any of its
Subsidiaries. Players and its Subsidiaries are not parties to any collective
bargaining agreements or other labor union contracts applicable to individuals
employed or previously employed by Players or any of its Subsidiaries and,
except as disclosed
19
in Players Disclosure Schedule 3.16, no collective bargaining agreement or labor
union contract is being negotiated by Players or any such Subsidiary.
Section 3.17. INSURANCE. All material fire and casualty, general
liability, business interruption, product liability, and sprinkler and water
damage insurance policies maintained by Players or any of its Subsidiaries are
listed on Section 3.17 of the Players Disclosure Schedule. At the Effective
Time, all such insurance policies, or replacements thereof, will be outstanding
and duly in force. To Players' knowledge, no notice of termination or
non-renewal of any such insurance policy has been received by Players.
Section 3.18. INFORMATION IN PROXY STATEMENT. The Proxy Statement, as
such term is defined in Section 5.4(a) below (or any amendment thereof or
supplement thereto), at the date mailed to Players' stockholders and at the time
of the Players Special Meeting, will not contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading; PROVIDED, HOWEVER, that
no representation is made by Players with respect to statements made therein
based on information supplied by Buyer or Merger Sub for inclusion in the Proxy
Statement. The Proxy Statement will comply in all material respects with the
provisions of the Exchange Act and the rules and regulations thereunder.
Section 3.19. STATE TAKEOVER STATUTE. The Board of Directors of Players
has approved the Merger, this Agreement and the Stockholder Support Agreements
and, assuming the accuracy of the representations contained in Section 4.7
hereof (without giving effect to the knowledge qualification therein), such
approval is sufficient to render inapplicable to the Merger, this Agreement and
the Stockholder Support Agreements and the transactions contemplated hereby and
thereby the provisions of Section 78.378 through 78.3793 of the NRS to the
extent, if any, such Sections are applicable to the Merger, this Agreement and
the Stockholder Support Agreements and the transactions contemplated hereby and
thereby.
Section 3.20. VOTING REQUIREMENTS. The affirmative vote of the holders
of a majority of the outstanding shares of Players Common Stock entitled to vote
thereon at the Players Special Meeting with respect to the approval of the
Merger (the "PLAYERS STOCKHOLDER APPROVAL") is the only vote of the holders of
any class or series of Players' capital stock necessary to approve and adopt
this Agreement and the transactions contemplated by this Agreement.
Section 3.21. PLAYERS RIGHTS AGREEMENT. The Rights Agreement has been
amended as of August 19, 1999, in the form attached hereto as Exhibit B, so as
to provide that (i) no "Distribution Date," "Stock Acquisition Date," or
"Trigger Event" thereunder shall be deemed to have occurred, (ii) none of Buyer
or any of its Subsidiaries will be an "Acquiring Person" thereunder and (iii) no
holder of rights issued thereunder shall be entitled to exercise such rights
under, or be entitled to any rights or benefits pursuant to, the Rights
Agreement, in each case solely by reason of the approval and execution of this
Agreement or the execution of the Stockholder Support Agreements, or the
consummation of the transactions contemplated hereby or thereby.
20
Section 3.22. YEAR 2000. Except as disclosed in Section 3.22 of the
Players Disclosure Schedule, as of the date hereof, all computer software
necessary for the conduct of its business (the "SOFTWARE") is (or will be, prior
to December 31, 1999, as provided in Section 3.22 of the Players Disclosure
Schedule) designed to be used prior to, during, and after December 31, 1999, and
the Software will operate during each such time period without error relating to
the year 2000, specifically including any error relating to, or the product of,
date data which represents or references different centuries or more than one
century. Players further represents and warrants that as of the date hereof, the
Software either does or will, prior to December 31, 1999 as provided in Section
3.22 of the Players Disclosure Schedule accept, calculate, sort, extract and
otherwise process date inputs and date values, and return and display date
values, in a consistent manner regardless of the dates used, whether before, on,
or after January 1, 2000.
Section 3.23. OPINION OF FINANCIAL ADVISOR. Players has received the
oral opinion of Xxxxxxxxx, Xxxxxx & Xxxxxxxx Securities Corporation ("DLJ") as
of the date of this Agreement, to the effect that the Merger Consideration is
fair to the holders of Players Common Stock from a financial point of view.
Section 3.24. BROKERS. None of Players, any of its Subsidiaries, or any
of their respective officers, directors or employees have employed any broker,
financial advisor or finder or incurred any liability for any brokerage fees,
commissions, finder's or other fees in connection with the transactions
contemplated by this Agreement, except that Players has retained DLJ as its
financial advisor.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF BUYER AND MERGER SUB
Buyer and Merger Sub represent and warrant to Players that
the statements contained in this Article IV are true and correct except as set
forth herein and in the disclosure schedule delivered by Buyer and Merger Sub to
Players on or before the date of this Agreement (the "BUYER DISCLOSURE
SCHEDULE"), or as otherwise expressly contemplated by this Agreement. Any
reference in the Merger Agreement to Buyer's "best knowledge," or "the best of
Buyer's knowledge," or words of similar import, shall be deemed a reference to
the actual knowledge of any of the corporate officers of Buyer or any of its
Subsidiaries, for all purposes. The Buyer Disclosure Schedule has been prepared
based upon the foregoing definition.
Section 4.1. ORGANIZATION OF BUYER AND MERGER SUB. Each of Buyer and
Merger Sub is duly organized, validly existing and in good standing under the
laws of the jurisdiction of its organization and has all requisite corporate,
partnership or limited liability company power and authority to carry on its
business as now being conducted and as proposed to be conducted. Each of Buyer
and Merger Sub is duly qualified or licensed to do business and is in good
standing in each jurisdiction in which the property owned, leased or operated by
it or the nature of the business conducted by it makes such qualification or
licensing necessary, except where the failure to be so qualified, licensed or in
good standing would not have a material adverse effect on the business,
properties, condition (financial or otherwise) or results of operations of Buyer
21
and its Subsidiaries, taken as a whole (a "BUYER MATERIAL ADVERSE EFFECT").
Buyer has delivered to Players a true and correct copy of the Certificate of
Incorporation and Bylaws of Buyer, in each case as amended to the date of this
Agreement.
Section 4.2. CAPITALIZATION OF MERGER SUB.
The authorized capital stock of Merger Sub consists of 2,500
shares of common stock, par value $.01 per share ("MERGER SUB COMMON STOCK"), of
which 1,000 shares are issued and outstanding. Buyer owns directly all the
outstanding shares of Merger Sub Common Stock. The outstanding shares of Merger
Sub Common Stock are duly authorized, validly issued, fully paid and assessable
and free of any preemptive rights.
Section 4.3. AUTHORITY; NO CONFLICT; REQUIRED FILINGS AND CONSENTS.
(a) Buyer and Merger Sub have all requisite corporate power
and authority to enter into this Agreement and to consummate the transactions
contemplated by this Agreement. The execution and delivery of this Agreement and
the consummation of the transactions contemplated hereby by Buyer and Merger Sub
have been duly authorized by all necessary corporate action on the part of Buyer
and Merger Sub. This Agreement has been duly executed and delivered by Buyer and
Merger Sub and constitutes the valid and binding obligation of Buyer and Merger
Sub, enforceable against each of them in accordance with its terms.
(b) Other than as disclosed in Section 4.3(b) of the Buyer
Disclosure Schedule, the execution and delivery of this Agreement by Buyer and
Merger Sub does not, and the consummation of the transactions contemplated
hereby will not, (i) conflict with, or result in any violation or breach of, any
provision of the Certificate of Incorporation or Bylaws of Buyer or the
comparable charter or organizational documents of any of its Subsidiaries, (ii)
result in any violation or breach of, or constitute (with or without notice or
lapse of time, or both) a default (or give rise to a right of termination,
cancellation or acceleration of any obligation or loss of any material benefit)
under, or require a consent or waiver under, any of the terms, conditions or
provisions of any note, bond, mortgage, indenture, lease, contract or other
agreement, instrument or obligation to which Buyer or any of its Subsidiaries is
a party or by which any of them or any of their properties or assets may be
bound, or (iii) subject to the governmental filings and other matters referred
to in Section 4.3(c), conflict with or violate any permit, concession,
franchise, license, judgment, order, decree, statute, law, ordinance, rule or
regulation applicable to Buyer or any of its Subsidiaries or any of its or their
properties or assets, except in the case of clauses (ii) and (iii) for any such
conflicts, violations, defaults, terminations, cancellations or accelerations
which (x) are not, individually or in the aggregate, reasonably likely to have a
Buyer Material Adverse Effect or (y) would not impair or materially delay the
consummation of the Merger.
(c) Except as disclosed in Section 4.3(c) of the Buyer
Disclosure Schedule, no consent, approval, order or authorization of, or
registration, declaration or filing with, any Governmental Entity is required by
or with respect to Buyer or any of its Subsidiaries in connection with the
execution and delivery of this Agreement or the consummation of the
22
transactions contemplated hereby, other than (i) the filing of the pre-merger
notification report under the HSR Act, (ii) the filing of the Articles of Merger
with respect to the Merger with the Secretary of State of the State of Nevada,
(iii) any approvals and filing of notices required under any applicable gaming
industry regulation, (iv) such consents, approvals, orders, authorizations,
permits, filings or registrations related to, or arising out of, compliance with
statutes, rules or regulations regulating the consumption, sale or serving of
alcoholic beverages, (v) such immaterial filings and consents as may be required
under any environmental, health or safety law or regulation pertaining to any
notification, disclosure or required approval triggered by the Merger or the
transactions contemplated by this Agreement, and (vi) such other filings,
consents, approvals, orders, registrations and declarations as may be required
under the laws of any jurisdiction in which Buyer or any of its Subsidiaries
conducts any business or owns any assets the failure of which to obtain would
not have a Buyer Material Adverse Effect.
Section 4.4. PUBLIC FILINGS; FINANCIAL STATEMENTS.
(a) Buyer and its Subsidiaries that are required to file
forms, reports or other document with the SEC (the "BUYER REPORTING
SUBSIDIARIES") have filed and made available to Buyer all forms, reports and
documents required to be filed by Buyer and the Buyer Reporting Subsidiaries
with the SEC since January 1, 1995 (collectively, the "BUYER SEC REPORTS"). The
Buyer SEC Reports (including any financial statements filed as part thereof or
incorporated by reference therein) (i) at the time filed, complied in all
material respects with the applicable requirements of the Securities Act and the
Exchange Act, as the case may be, and (ii) did not, at the time they were filed
(or if amended or superseded by a filing prior to the date of this Agreement,
then on the date of such filing), contain any untrue statement of a material
fact or omit to state a material fact required to be stated in such Buyer SEC
Reports or necessary in order to make the statements in such Buyer SEC Reports,
in the light of the circumstances under which they were made, not misleading.
(b) Each of the consolidated financial statements (including,
in each case, any related notes) of Buyer contained in the Buyer SEC Reports
complied as to form in all material respects with the applicable published rules
and regulations of the SEC with respect thereto, was prepared in accordance with
GAAP applied on a consistent basis throughout the period involved (except as may
be indicated in the notes to such financial statements or, in the case of
unaudited statements, as permitted by Form 10-Q under the Exchange Act) and
fairly presented the consolidated financial position of Buyer and its
consolidated Subsidiaries as of the dates and the consolidated results of its
operations and cash flows for the periods indicated, except that the unaudited
interim financial statements were or are subject to normal and recurring
year-end adjustments which, with respect to interim periods since December 31,
1998, were not or are not expected to be material in amount.
Section 4.5. PROXY STATEMENT. The information supplied by Buyer for
inclusion or incorporation by reference in the Proxy Statement (as defined in
Section 5.4(a) below) shall not, on the date the Proxy Statement is first mailed
to stockholders of Players, at the time of the Players Special Meeting (as
provided for in Section 5.5) and at the Effective Time, contain any statement
which, at such time and in light of the circumstances under which it shall be
made, is
23
false or misleading with respect to any material fact, omit to state
any material fact necessary in order to make the statements made in the Proxy
Statement not false or misleading, or omit to state any material fact necessary
to correct any statement in any earlier communication with respect to the
solicitation of proxies for the Players Special Meeting which has become false
or misleading.
Section 4.6. BROKERS. None of Buyer, any of its Subsidiaries, or any of
their respective officers, directors or employees have employed any broker,
financial advisor or finder or incurred any liability for any brokerage fees,
commissions, finder's or other fees in connection with the transactions
contemplated by this Agreement, except that Buyer has retained Deutsche Bank
Alex. Xxxxx and Xxxxxx Xxxxxxx & Co. as Buyer's financial advisors.
Section 4.7. OWNERSHIP OF SECURITIES. As of the date hereof, neither
Buyer nor, to Buyer's knowledge, any of its affiliates or associates (as such
terms are defined under the Exchange Act), (i) beneficially owns, directly or
indirectly, or (ii) is party to an agreement, arrangement or understanding
(other than this Agreement) for the purpose of acquiring, holding or disposing
of, in each case, shares of Players Common Stock representing at least 20% of
the total number of outstanding shares of Players Common Stock.
Section 4.8. FINANCING. Buyer and its Subsidiaries will have available,
to the extent required as of the Closing Date, sufficient funds to enable Buyer
and its Subsidiaries to (i) pay the Merger Consideration, (ii) purchase any of
Players' outstanding 10 7/8% Senior Notes due 2005 (the "SENIOR NOTES") required
to be purchased pursuant to the change of control provisions contained in the
indenture governing such indebtedness and (iii) consummate any tender offer
and/or consent solicitation for the Senior Notes required to be consummated
pursuant to 5.12(c).
ARTICLE V.
COVENANTS
Section 5.1. CONDUCT OF BUSINESS OF PLAYERS.
Except as disclosed in Section 5.1 of the Players Disclosure
Schedule during the period from the date of this Agreement and continuing until
the earlier of the termination of this Agreement or the Effective Time, Players
agrees as to itself and its respective Subsidiaries (except to the extent that
Buyer shall otherwise consent in writing) to carry on its business in the usual,
regular and ordinary course in substantially the same manner as previously
conducted, to pay its debts and taxes when due subject to good faith disputes
over such debts or taxes, to pay or perform its other obligations when due, and,
to the extent consistent with such business, use all commercially reasonable
efforts consistent with past practices and policies to preserve intact its
present business organization, keep available the services of its present
officers and key employees and preserve its relationships with customers,
suppliers, distributors, and others having business dealings with it. Without
limiting the generality of the foregoing, during the period from the date of
this Agreement until the Effective Time, Players agrees (except as otherwise
contemplated by this Agreement or to the extent that Buyer shall otherwise
consent in writing) as follows:
24
(a) DIVIDENDS; CHANGES IN STOCK. Players shall not and shall
cause its Subsidiaries not to, other than dividends and distributions by a
direct or indirect wholly owned Subsidiary of Players to its parent (x) declare,
set aside or pay any dividends on, or make any other distributions (whether in
cash, stock or property), in respect of, any of its capital stock, (y) split,
combine, subdivide or reclassify any of its capital stock or issue or authorize
the issuance of any other securities in respect of, in lieu of or in
substitution for shares of its capital stock (other than the issuance of shares
of Players Common Stock upon the exercise of Players Options outstanding on the
date of this Agreement and in accordance with their present terms) or (z)
purchase, redeem or otherwise acquire any shares of capital stock of Players or
any of its Subsidiaries or any other securities thereof or any rights, warrants
or options to acquire any such shares or other securities.
(b) ISSUANCE OF SECURITIES. Players shall not and shall cause
its Subsidiaries not to issue, deliver, sell, pledge or otherwise encumber any
shares of its capital stock, any other voting securities or any securities
convertible into, or any rights, warrants or options to acquire, any such
shares, voting securities or convertible securities (other than the issuance of
shares of Players Common Stock upon the exercise of Players Options outstanding
on the date of this Agreement and in accordance with their present terms).
(c) GOVERNING DOCUMENTS. Players shall not and shall cause
its Subsidiaries not to amend its Certificate of Incorporation, By-Laws or other
comparable charter or organizational documents.
(d) NO ACQUISITIONS. Players shall not and shall cause its
Subsidiaries not to acquire or agree to acquire (including, without limitation,
by merger, consolidation or acquisition of stock or assets) any business,
including through the acquisition of any interest in any corporation,
partnership, joint venture, association or other business organization or
division thereof.
(e) NO DISPOSITIONS. Players shall not and shall cause its
Subsidiaries not to sell, lease, license, mortgage or otherwise encumber or
otherwise dispose of any of its material properties or assets, other than in the
ordinary course of business consistent with past practice.
(f) INDEBTEDNESS. Players shall not and shall cause its
Subsidiaries not to (y) incur any indebtedness for borrowed money or guarantee
any such indebtedness of another person, issue or sell any debt securities or
warrants or other rights to acquire any debt securities of Players or any of its
Subsidiaries, or guarantee any debt securities of another person, other than
short-term bank financing in the ordinary course of business consistent with
past practice or (z) make any loans, advances or capital contributions to, or
investments in, any other person, other than in the ordinary course of business
consistent with past practice.
(g) EMPLOYEE BENEFITS. Players shall not and shall cause its
Subsidiaries not to, except as required by applicable law or, with respect to
the limitations contained in subclauses (C) and (G) of this Section 5.1(b)(vii),
agreements, plans or arrangements existing on the date hereof, (A) adopt, enter
into, terminate or amend any
25
employment, severance, retention or similar agreement or contract; (B) negotiate
or enter into any collective bargaining agreement or labor union contract; (C)
increase, in any manner, the compensation or fringe benefits of, or pay any
bonus to, any director, officer or employee (except for normal increases of cash
compensation or cash bonuses in the ordinary course of business consistent with
past practice); (D) adopt or establish any new benefit plan; or amend any
existing benefit plan, including, without limitation, the Players Employee Plans
and the Players Welfare Plan, except as required by law; or pay any benefit not
provided for under any Players Employee Plan or Players Welfare Plan; (E) adopt,
establish or amend any severance pay plan; or increase in any manner the
severance or termination pay of any officer or employee; (F) modify the
provisions of any Players Stock Option Plan; or adjust or modify the terms of
any outstanding Players Options; or take any action to accelerate the vesting
of, or cash out rights associated with, any Players Option or Players SAR,
except as contemplated by the Employment Agreements; or remove existing
restrictions in any Players Stock Option Plan or other plan or arrangement; (G)
grant any new awards under any Players Stock Option Plan or other bonus,
incentive, performance or compensation plan or arrangement, including the grant
of Players Options, Players SARs, stock-based or stock-related awards,
performance units or restricted stock; (H) take any action to fund or, in any
other way secure, the payment of compensation or benefits under any Players
Employee Plan, Players Welfare Plan or other employee plan, agreement, contract
or arrangement; or (i) hire any individual as an employee, independent
contractor or consultant who will be paid an annual base salary that equals or
exceeds $100,000, without the prior written consent of Buyer.
(h) MATERIAL CONTRACTS. Players shall not and shall cause its
Subsidiaries not to (a) enter into any agreement of a nature that would be
required to be filed as an exhibit to Form 10-K under the Exchange Act or (b)
modify, amend or terminate any existing agreement of such type or waive, release
or assign any material rights or claims contained therein, except in the
ordinary course of business consistent with past practice.
(i) ACCOUNTING MATTERS. Players shall not and shall cause its
Subsidiaries not to make any material change in accounting methods, principles
or practices except as required by GAAP, or the applicable regulations under the
Securities Act and the Exchange Act.
(j) TAX MATTERS. Players shall not and shall cause its
Subsidiaries not to make any material tax election or enter into any settlement
or compromise with respect to any material income tax liability.
(k) SETTLEMENT. Players shall not and shall cause its
Subsidiaries not to settle any pending or threatened litigation involving
Players or any of its Subsidiaries (whether brought by a private party or a
Government Entity), except for settlements that, in the aggregate, involve
payments, not covered by insurance, by Players or any Subsidiaries of less than
$250,000 and which settle entire claims or causes of action arising out of the
same or similar facts and circumstances or do not impose any material
restrictions on the business or operations of Players or any of its
Subsidiaries.
26
(l) CAPITAL EXPENDITURES. Players together with its
Subsidiaries shall not make capital expenditures in excess of $250,000
individually or $1,000,000 in the aggregate.
(m) GENERAL. Players shall not and shall cause its
Subsidiaries not to authorize any of, or commit or agree to take any of, the
foregoing actions.
Section 5.2. COOPERATION; NOTICE; CURE. Subject to compliance with
applicable law, from the date hereof until the Effective Time, each of Buyer and
Players shall confer on a regular and frequent basis with one or more
representatives of the other party to report on the general status of ongoing
operations. Each of Players and Buyer shall promptly notify the other in writing
of, and will use all commercially reasonable efforts to cure before the Closing
Date, any event, transaction or circumstance, as soon as practical after it
becomes known to such party, that causes or will cause any covenant or agreement
of Players or Buyer under this Agreement to be breached in any material respect
or that renders or will render untrue in any material respect any representation
or warranty of Players or Buyer contained in this Agreement.
Section 5.3. NO SOLICITATION. From and after the date hereof, Players
shall not, directly or indirectly, through any officer, director, employee,
financial advisor, representative or agent of such party (i) solicit, initiate,
or encourage (including by way of furnishing information) or take any other
action to facilitate knowingly any inquiries or proposals that constitute, or
could reasonably be expected to lead to, a proposal or offer for a merger,
consolidation, business combination, sale of substantial assets, sale of shares
of capital stock (including without limitation by way of a tender or exchange
offer) or similar transaction involving Players or any of its Subsidiaries,
other than the transactions contemplated by this Agreement (any of the foregoing
inquiries or proposals being referred to in this Agreement as an "ACQUISITION
PROPOSAL"), (ii) engage in negotiations or discussions with any person (or group
of persons) other than Buyer or its respective affiliates (a "THIRD PARTY")
concerning, or provide any non-public information to any person or entity
relating to, any Acquisition Proposal, or (iii) agree to or recommend any
Acquisition Proposal; PROVIDED, however, that until approval of the Merger at
the Players Special Meeting (as defined below), nothing contained in this
Agreement shall prevent Players or its Board of Directors, from furnishing
non-public information to, or entering into discussions or negotiations with,
any person or entity in connection with an unsolicited bona fide written
Acquisition Proposal by such person or entity or modifying or withdrawing its
recommendation with respect to the transactions contemplated hereby or
recommending an unsolicited bona fide written Acquisition Proposal to the
stockholders of Players, if the Board of Directors of Players reasonably
believes in good faith that (i) such Acquisition Proposal, after consultation
with and receipt of advice from DLJ, is reasonably capable of being completed on
substantially the terms proposed and is superior from a financial point of view
to the holders of Players Common Stock than the transactions contemplated by
this Agreement and (ii) after receipt of advice to such effect from outside
legal counsel (who may be Players' regularly engaged outside legal counsel),
determines in good faith that such action is required for the Board of Directors
of Players to comply with its duties to holders of Players Common Stock imposed
by applicable law (a "SUPERIOR PROPOSAL").
27
Section 5.4. PROXY STATEMENT.
(a) As promptly as practicable after the execution of this
Agreement, Players shall either (i) prepare and file with the SEC an amendment
to the proxy statement of Players dated July 22, 1999 that Players mailed to its
stockholders, in connection with the proposed merger of a subsidiary of Jackpot
Enterprises, Inc. with and into Players, which amendment will modify such proxy
statement so that it can be used to send to Players' stockholders in connection
with, and for their consideration of, this Agreement and the Merger or (ii)
prepare and file with the SEC, in preliminary form, a new proxy statement to be
sent to Players' stockholders in connection with, and for their consideration
of, this Agreement and the Merger (in either case, the "PROXY STATEMENT").
(b) Players and Buyer shall make all necessary filings with
respect to the Merger under the Securities Act, the Exchange Act, applicable
state blue sky laws and the rules and regulations thereunder.
Section 5.5. SPECIAL MEETING. Players shall either (i) duly adjourn the
stockholder meeting it called for September 14, 1999 to such other date that is
the first practicable date on which Players can reasonably hold such stockholder
meeting for the purpose of allowing such stockholders to vote upon this
Agreement and the Merger, or (ii) cancel the stockholder meeting currently
scheduled for September 14, 1999 and instead duly call, give notice of, convene
and hold a new special meeting of its stockholders for the purpose of voting
upon this Agreement and the Merger to be held as promptly as reasonably
practicable after the date hereof (in either case, the "PLAYERS SPECIAL
MEETING"). Except as expressly otherwise PROVIDED in Section 5.3 hereof, Players
shall, through its Board of Directors, recommend to its stockholders adoption
and approval of this Agreement and the Merger.
Section 5.6. ACCESS TO INFORMATION. Upon reasonable notice, Players
(and each of their respective Subsidiaries) shall afford to Buyer and its
officers, employees, accountants, counsel and other representatives, reasonable
access, during normal business hours during the period prior to the Effective
Time, to all of Players' personnel, properties, books, contracts, commitments
and records and, during such period, Players shall, and shall cause each of its
respective Subsidiaries to, furnish promptly to the other (a) copies of monthly
financial reports and development reports, (b) a copy of each report, schedule,
registration statement and other documents filed or received by it during such
period pursuant to the requirements of federal or state securities laws and (c)
all other information concerning its business, properties and personnel as Buyer
may reasonably request. Buyer will hold any such information furnished to it by
Players in confidence in accordance with the confidentiality agreements between
the parties (collectively, the "CONFIDENTIALITY AGREEMENT"). No information or
knowledge obtained in any investigation pursuant to this Section 5.6 shall
affect or be deemed to modify any representation or warranty contained in this
Agreement or the conditions to the obligations of the parties to consummate the
Merger. Paragraphs 5 and 6 of the Confidentiality Agreement binding Buyer shall
be terminated and be without effect upon any termination of this Agreement
pursuant to Sections 7.1(e) or 7.1(f).
28
Section 5.7. GOVERNMENTAL APPROVALS.
(a) The parties hereto shall cooperate with each other and
use all commercially reasonable efforts to promptly prepare and file all
necessary documentation, to effect all applications, notices, petitions and
filings, to obtain as promptly as practicable without conditions, restrictions
or limitations that are more restrictive than those conditions, restrictions and
limitations applicable to Players on the date hereof, all permits,
registrations, licenses, findings of suitability, consents, variances,
exemptions, orders, approvals and authorizations of all third parties and
Governmental Entities which are necessary or advisable to consummate the
transactions contemplated by this Agreement ("GOVERNMENTAL APPROVALS"). Each of
the parties hereto and their respective officers, directors and affiliates shall
file within thirty (30) days after the date hereof, all required initial
applications and documents in connection with obtaining the Governmental
Approvals and shall act reasonably and promptly thereafter in responding to
additional requests in connection therewith. Players and Buyer shall have the
right to review in advance, and to the extent practicable each will consult the
other on, in each case subject to applicable laws relating to the exchange of
information, all the information relating to Players or to Buyer, as the case
may be, and any of their respective Subsidiaries, directors, officers and
stockholders which appear in any filing made with, or written materials
submitted to, any third party or any Governmental Entity in connection with the
transactions contemplated by this Agreement. Without limiting the foregoing,
each of Players and Buyer (the "NOTIFYING PARTY") will notify the other
reasonably promptly of the receipt of material comments or requests from
Governmental Entities relating to Governmental Approvals, and will supply the
other party with copies of all material correspondence between the Notifying
Party or any of its representatives and Governmental Entities with respect to
Governmental Approvals; PROVIDED, however, that it shall not be required to
supply the other party with copies of correspondence relating to the personal
applications of individual applicants except for evidence of filing.
(b) Players and Buyer shall promptly advise each other upon
receiving any communication from any Governmental Entity whose consent or
approval is required for consummation of the transactions contemplated by this
Agreement which causes such party to believe that there is a reasonable
likelihood that any approval needed from a Governmental Entity will not be
obtained or that the receipt of any such approval will be materially delayed.
Players and Buyer shall take any and all actions reasonably necessary to
vigorously defend, lift, mitigate and rescind the effect of any litigation or
administrative proceeding adversely affecting this Agreement or the transactions
contemplated hereby or thereby, including, limitation, promptly appealing any
adverse court or administrative order or injunction to the extent reasonably
necessary for the foregoing purposes.
(c) Notwithstanding any other provision of this Agreement
(but without limiting the obligations set forth in Sections 5.7(a) and (b)),
Buyer shall have no obligation or affirmative duty under this Section 5.7 to
cease or refrain from the ownership of any assets or properties (including any
of the assets and properties to be acquired from Players) or the association
with any person or entity which association is material to the operations of
Buyer, whether on the date hereof or at any time in the future.
29
Section 5.8. PUBLICITY. Players and Buyer shall agree on the form and
content of the initial press release regarding the transactions contemplated
hereby and thereafter shall consult with each other before issuing, and use all
reasonable efforts to agree upon, any press release or other public statement
with respect to any of the transactions contemplated hereby and shall not issue
any such press release or make any such public statement prior to such
consultation, except as may be required by law.
Section 5.9. INDEMNIFICATION.
(a) From and after the Effective Time, Buyer agrees that it
will, and will cause the Surviving Corporation to, indemnify and hold harmless
each present and former director and officer of Players (the "INDEMNIFIED
PARTIES"), against any costs or expenses (including attorneys' fees), judgments,
fines, losses, claims, damages, liabilities or amounts paid in settlement
incurred in connection with any claim, action, suit, proceeding or
investigation, whether civil, criminal, administrative or investigative, arising
out of or pertaining to matters existing or occurring at or prior to the
Effective Time, whether asserted or claimed prior to, at or after the Effective
Time, to the fullest extent that Players would have been permitted under Nevada
law and its Articles of Incorporation or Bylaws in effect on the date hereof to
indemnify such Indemnified Party.
(b) For a period of three years after the Effective Time,
Buyer shall maintain or shall cause the Surviving Corporation to maintain in
effect a directors' and officers' liability insurance policy covering those
persons who are currently covered by Players' directors' and officers' liability
insurance policy (copies of which have been heretofore delivered by Players to
Buyer) with coverage in amount and scope at least as favorable as Players'
existing coverage; PROVIDED that in no event shall Buyer or the Surviving
Corporation be required to expend in the aggregate in excess of 200% of the
annual premium currently paid by Players for such coverage; and if such premium
would at any time exceed 200% of the such amount, then Buyer or the Surviving
Corporation shall maintain insurance policies which provide the maximum and best
coverage available at an annual premium equal to 200% of such amount.
(c) The provisions of this Section 5.9 are intended to be an
addition to the rights otherwise available to the current officers and directors
of Players by law, charter, statute, bylaw or agreement, and shall operate for
the benefit of, and shall be enforceable by, each of the Indemnified Parties,
their heirs and their representatives.
Section 5.10. STOCKHOLDER LITIGATION. Players shall give Buyer the
reasonable opportunity to participate in the defense or settlement of any
stockholder litigation against Players and its directors relating to the
transactions contemplated hereby, PROVIDED, HOWEVER, that no such settlement
shall be agreed to without Buyer's consent.
Section 5.11. EMPLOYEE BENEFITS.
(a) Buyer shall cause the Surviving Corporation to honor all
written employment, severance and termination agreements (including change in
control provisions) of
30
the employees of Players and its Subsidiaries provided to Buyer on or prior to
the date of this Agreement and which are identified on Players Disclosure
Schedule 3.14(a).
(b) For purposes of determining eligibility for participation
and vesting under any employee benefit plan or arrangement of Buyer or the
Surviving Corporation, employees of Players and its Subsidiaries as of the
Effective Time shall receive service credit for service with Players and any of
its Subsidiaries to the same extent such service was granted under the Employee
Plans but not for purposes of determining benefit accruals. This Section 5.11
shall not obligate the Buyer or Surviving Corporation to provide benefits to
employees of Players and its Subsidiaries that are comparable to the benefits
provided under any Players Employee Plan under which any such employee may
previously have been covered.
(c) Nothing in this Agreement is intended to create any right
of employment for any person or to create any obligation for Buyer or the
Surviving Corporation to continue any Plan of Players following the Effective
Time.
(d) Buyer acknowledges that Xxxxxx X. Xxxxxxxx, Xxxxx X.
Xxxxxx and Xxxxxxx Xxxxxxx, Xx. have terminated employment with Players prior to
the date hereof. Players shall obtain and deliver to Buyer prior to the Closing
Date a written resignation letter from Xxxx Xxxxx (together with Xxxxxx X.
Xxxxxxxx, Xxxxx X. Xxxxxx and Xxxxxxx Xxxxxxx, Xx. hereinafter collectively
referred to as the "EXECUTIVES") which shall be effective as of the Effective
Time, and Buyer agrees that it will, and will cause the Surviving Corporation
to, (i) treat the Merger as a "Change of Control" and each Executive's
termination of employment as a "Termination Upon a Change of Control" for
purposes of each Executive's employment agreement, change of control agreement
or other termination agreement with Players governing the terms of each
Executive's employment and severance from employment with Players, and for
purposes of all related option and other agreements affecting the terms and
conditions of such Executive's employment (collectively, the "EMPLOYMENT
AGREEMENTS"), and (ii) pay at Closing the amounts, and provide the benefits,
required to be paid or provided to each such Executive upon a Termination Upon a
Change of Control under the applicable Employment Agreement, in each case,
without the need for any further action by any Executive. To the extent
permitted by and in accordance with the Employment Agreements, Buyer shall
reduce the amounts required to be paid to each Executive due to a Termination
Upon Change of Control or otherwise (the "REDUCED AMOUNT") to the extent
necessary to avoid any limitation of the Buyer's federal income tax deduction
under Section 280G of the Code and the rulings and regulations thereunder. The
Reduced Amount shall represent the maximum severance payment that an Executive
may receive without causing such payment to be subject to an excise tax and the
limitations on deductions under Section 280G of the Code. To the extent
necessary to avoid any limitation on the Buyer's deductions under Section 280G
of the Code, after determination of the Reduced Amount, the Buyer may also cause
an Executive's "parachute payments" (within the meaning of Code Section 280G) to
be reduced to the Reduced Amount, after consulting with each affected Executive
to determine which payments shall be reduced. At least sixty days before the
Closing Date, a report (the "ACCOUNTANT'S REPORT"), setting forth the Reduced
Amount, as described in Section 5.11(d) hereof, for each Executive, prepared by
Ernst & Young (the "ACCOUNTANT") shall be delivered to Buyer for its review.
31
(e) Buyer agrees that employees of Players who are employees
on the Closing Date shall be entitled to receive the bonus that they would
otherwise receive in accordance with Players' bonus compensation programs
consistent with prior practice as in effect on the date of this Agreement, pro
rated from April 1, 1999 to the Closing Date. For purposes of this Subsection
(e), Xxxxxx X. Xxxxxxxx, Xxxxx X. Xxxxxx and Xxxxxxx Xxxxxxx, Xx. shall not be
treated as employees on the Closing Date, any provision in Subsection (d) hereof
to the contrary notwithstanding.
(f) Players shall, prior to the Closing Date, take all
corporate actions to terminate Players' 401(k) plan effective immediately prior
to the Effective Time in conformity with the requirements of the Internal
Revenue Code and ERISA.
Section 5.12. FURTHER ASSURANCES AND ACTIONS.
(a) Subject to the terms and conditions herein, each of the
parties hereto agrees to use its reasonable best efforts to take, or cause to be
taken, all appropriate action, and to do, or cause to be done, all things
necessary, proper or advisable under applicable laws and regulations to
consummate and make effective the transactions contemplated by this Agreement,
including, without limitation, (i) using their respective reasonable best
efforts to obtain all licenses, permits, consents, approvals, authorizations,
qualifications and orders of Governmental Entities and parties to contracts with
each party hereto as are necessary for consummation of the transactions
contemplated by this Agreement, and (ii) to fulfill all conditions precedent
applicable to such party pursuant to this Agreement.
(b) In case at any time after the Effective Date any further
action is necessary or desirable to carry out the purposes of this Agreement or
to vest the Surviving Corporation with full title to all properties, assets,
rights, approvals, immunities, franchises of any of the parties to the Merger,
the proper officers and/or directors of Buyer, Players and the Surviving
Corporation shall take all such necessary action.
(c) Notwithstanding the foregoing, if Buyer reasonably
determines that it is necessary or desirable to consummate the Merger or any of
the other transactions contemplated by this Agreement, Buyer (or any Subsidiary
of Buyer) or, at Buyer's request, Players shall commence an offer (the "TENDER
OFFER") to purchase all of the outstanding Senior Notes and a solicitation of
consents to eliminate substantially all of the restrictive covenants contained
in the indenture governing the Senior Notes (collectively, the "TENDER OFFER AND
CONSENT SOLICITATION"), which Tender Offer and Consent Solicitation shall be
commenced in sufficient time in advance of the Closing Date so that the Tender
Offer can be consummated on the Closing Date and shall be on such terms as are
reasonably designed to result in the acceptance of such offer and consent by the
holder of the Senior Notes representing at least 66 2/3% of the aggregate
principal amount of Senior Notes outstanding at the time the Tender Offer and
Consent Solicitation is consummated. If Players commences the Tender Offer and
Consent Solicitation, Players shall prepare, subject to advice and comments of
Buyer, an offer to purchase and consent solicitation for the Senior Notes and
forms of related letters of transmittal (collectively, the "OFFER TO PURCHASE")
and summary advertisement, as well as all other
32
information and exhibits (collectively, the "OFFER DOCUMENTS"). All mailings to
the holder of the Senior Notes in connection with the Tender Offer and Consent
Solicitation shall be subject to prior review, comment and approval of Buyer.
Players will use commercially reasonable efforts to cause the Offer Documents to
be mailed to the holders of the Senior Notes as promptly as practicable
following receipt of the request from Buyer to do so. Players agrees to promptly
correct any information in the Offer Documents that shall or have become false
or misleading in any material respect. Players shall waive any of the conditions
to the Tender Offer and Consent Solicitation and make any other changes in the
terms and conditions of the Tender Offer and Consent Solicitation as may be
reasonably requested by Buyer; PROVIDED that the Tender Offer and Consent
Solicitation are not required to be consummated unless the Merger is
consummated. If Players commences the Tender Offer and Consent Solicitation at
Buyer's request pursuant to this Section 5.12(c) and this Agreement is
subsequently terminated under circumstances in which Buyer is entitled to
neither the Termination Fee pursuant to Section 7.3(b) nor reimbursement of
expenses pursuant to Section 7.3(c), then Buyer shall reimburse Players for all
its expenses related thereto.
(d) If necessary to cause the Merger not to violate the
covenants contained in the indenture governing the Senior Notes, the parties
shall, at Buyer's option, amend this Agreement to the extent necessary to
provide that Players will merge with and into a direct or indirect wholly-owned
subsidiary of Buyer with such subsidiary as the surviving corporation.
Section 5.13. RIGHTS AGREEMENT. Prior to the Effective Date and at
Buyer's request, Players shall take all necessary action (i) to redeem, for .005
per Right (as defined in the Rights Agreement), all of the outstanding Rights
under the Rights Agreement, effective immediately prior to the Effective Time,
and to ensure that after such redemption (A) neither Buyer nor Merger Sub shall
have any obligations under the Rights or the Rights Agreement and (B) none of
the holders of the Rights shall have any rights under the Rights Agreement or
(ii) to amend the Rights Agreement to provide that the Rights expire without any
payment in respect thereof immediately prior to the Effective Time.
ARTICLE VI.
CONDITIONS TO MERGER
Section 6.1. CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE
MERGER. The respective obligations of each party to this Agreement to effect the
Merger shall be subject to the satisfaction or waiver by each party prior to the
Effective Time of the following conditions:
(a) STOCKHOLDER APPROVAL. This Agreement and the Merger shall
have been approved by the stockholders of Players in the manner required under
the NRS and the Articles of Incorporation of Players.
(b) NO INJUNCTIONS. No Governmental Entity shall have
enacted, issued, promulgated, enforced or entered any order, executive order,
stay, decree, judgment or injunction or statute, rule, regulation which is in
effect and which has the effect of making the Merger illegal or otherwise
prohibiting consummation of the Merger.
33
(c) GOVERNMENTAL APPROVALS. All Governmental Approvals
required to consummate the transactions contemplated by this Agreement shall
have been obtained, all such approvals shall remain in full force and effect,
all statutory waiting periods in respect thereof (including, without limitation,
under the HSR Act) shall have expired and no such approval shall contain any
conditions, limitations or restrictions which Buyer reasonably determines in
good faith will have or would reasonably be expected to have a Players Material
Adverse Effect or a Buyer Material Adverse Effect. Without limiting the
generality of the foregoing, Players shall have obtained the issuance or renewal
by the Louisiana Gaming Control Board of licenses or permits for Players to
operate its Lake Xxxxxxx casino riverboats for the statutory maximum period
without (i) any conditions, limitations or restrictions which Buyer reasonably
determines in good faith will or would reasonably be expected to materially
interfere with or impede Players' ability to operate its Lake Xxxxxxx casino
riverboats and (ii) imposition of any fines, penalties or other payments by one
or more gaming regulatory authorities against Players and/or any of its current
or former directors, officers, employees, agents or representatives (to the
extent that Players is responsible for any such fines, penalties or other
payments and such fines, penalties or other payments are not covered by
insurance policies of Players) relating to the actions of Players and/or its
current or former officers, directors, agents or representatives relative to the
allegations of impropriety by Xxxx Xxxxxxx and former Louisiana Governor Xxxxxxx
in an aggregate amount that would reasonably be expected to have a material
adverse effect on the business of Players' Lake Xxxxxxx casino (with materiality
determined with respect to the enterprise value of such business).
Section 6.2. ADDITIONAL CONDITIONS TO OBLIGATIONS OF PLAYERS. The
obligation of Players to effect the Merger is subject to the satisfaction of
each of the following conditions prior to the Effective Time, any of which may
be waived in writing exclusively by Players:
(a) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of Buyer and Merger Sub set forth in this Agreement shall be true and
correct in all material respects (except for those qualified as to materiality
or a Buyer Material Adverse Effect, which shall be true and correct) as of the
date of this Agreement and, except to the extent such representations speak as
of an earlier date, as of the Closing Date as though made on and as of the
Closing Date, except for changes contemplated by this Agreement; PROVIDED that,
notwithstanding anything contained herein, no condition involving the accuracy
of representations and warranties made by Buyer shall be deemed not fulfilled if
the respects in which the representations and warranties are inaccurate, in the
aggregate, are not materially adverse to the business, financial condition or
results of operations of Buyer and its Subsidiaries, taken as a whole. Players
shall have received a certificate signed on behalf of Buyer by the Chief
Executive Officer and the Chief Financial Officer of Buyer to such effect.
(b) PERFORMANCE OF OBLIGATIONS OF BUYER. Buyer shall have
performed in all material respects all material obligations required to be
performed by it under this Agreement at or prior to the Closing Date, and
Players shall have received a certificate signed on behalf of Buyer by the Chief
Executive Officer and the Chief Financial Officer of Buyer to such effect.
34
Section 6.3. ADDITIONAL CONDITIONS TO OBLIGATIONS OF BUYER. The
obligations of Buyer and Merger Sub to effect the Merger are subject to the
satisfaction of each of the following conditions prior to the Effective Time,
any of which may be waived in writing exclusively by Buyer:
(a) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of Players set forth in this Agreement shall be true and correct in
all material respects (except for those qualified as to materiality or a Players
Material Adverse Effect, which shall be true and correct) as of the date of this
Agreement and, except to the extent such representations and warranties speak as
of an earlier date, as of the Closing Date as though made on and as of the
Closing Date, except for changes contemplated by this Agreement; PROVIDED that,
notwithstanding anything contained herein, no condition involving the accuracy
of representations and warranties made by Players shall be deemed not fulfilled
if the respects in which the representations and warranties are inaccurate, in
the aggregate, are not materially adverse to the business, financial condition
or results of operations of Players and its Subsidiaries, taken as a whole.
Buyer shall have received a certificate signed on behalf of Players by the Chief
Executive Officer and the Chief Financial Officer of Players to such effect.
(b) PERFORMANCE OF OBLIGATIONS OF PLAYERS. Players shall have
performed in all material respects all material obligations required to be
performed by it under this Agreement at or prior to the Closing Date. Buyer
shall have received a certificate signed on behalf of Players by the Chief
Executive Officer and the Chief Financial Officer of Players to each such
effect.
(c) NO TRIGGER OF RIGHTS AGREEMENT. No event shall have
occurred that has or would result in the triggering of any right or entitlement
of stockholders of Players under the Rights Agreement, or will occur as a result
of the consummation of the Merger, or Players shall have redeemed all of the
Rights issued under the Rights Agreement or amended such agreement to provide
for the expiration of such rights, in each case in the manner contemplated in
Section 5.13.
ARTICLE VII.
TERMINATION AND AMENDMENT
Section 7.1. TERMINATION. This Agreement may be terminated at any time
prior to the Effective Time (with respect to Sections 7.1(b) through 7.1(j), by
written notice by the terminating party to the other party), whether before or
after approval of the matters presented in connection with the Merger by
Players' stockholders:
(a) by mutual written consent of Players and Buyer; or
(b) by either Buyer or Players if the Merger shall not have
been consummated by October 31, 1999 (the "OUTSIDE DATE"); PROVIDED that either
Buyer or Players may extend the Outside Date to January 31, 2000 by providing
written notice thereof to the other party within five (5) business days prior to
and including October 31, 1999 if (i) the Merger shall not have been consummated
by such date because one or more of the conditions set forth in
35
Article VI have not been satisfied and such party continues to use its
reasonable best efforts to cause such conditions to be satisfied, (ii) the party
requesting such extension has not violated any of its obligations under this
Agreement in a manner that was the cause of or resulted in the failure of the
Merger to occur on or before October 31, 1999, and (iii) it is reasonably
probable, that the unsatisfied conditions can be satisfied during such extension
period; PROVIDED FURTHER that the right to terminate this Agreement under this
Section 7.1(b) shall not be available to any party whose failure to fulfill any
obligation under this Agreement has been the cause or resulted in the failure of
the Merger to occur on or before such date; or
(c) by either Buyer or Players if a court of competent
jurisdiction or other Governmental Entity shall have issued an order, decree or
ruling or taken any other final action not subject to appeal, in each case
having the effect of permanently restraining, enjoining or otherwise prohibiting
the Merger; or
(d) by either Buyer or Players, if, at the Players Special
Meeting (including any adjournment or postponement), the requisite vote of the
stockholders of Players in favor of the approval and adoption of this Agreement
and the Merger shall not have been obtained; or
(e) by Buyer, if the Board of Directors of Players shall have
(i) withdrawn or modified its recommendation of this Agreement or the Merger,
(ii) recommended an Acquisition Proposal to the stockholders of Players, or
(iii) failed to reaffirm its recommendation of this Agreement and the Merger
upon the request of Buyer at any time; or
(f) by Players, in accordance with Section 5.3; PROVIDED that
no termination under this Section 7.1(f) shall be effective until (i) the
termination fee required by Section 7.3(b) shall be paid and (ii) at least three
Business Days shall have elapsed after delivery to Buyer of a written notice
from Players providing a complete and accurate description of material terms of
the Superior Proposal, including the identity of all parties thereto; or
(g) by Buyer, upon breach of any material representation,
warranty, covenant or agreement on the part of Players set forth in this
Agreement, or if any representation or warranty of Players shall have become
untrue, in either case such that the conditions set forth in Section 6.3 would
not be satisfied ("TERMINATING PLAYERS BREACH"); PROVIDED, HOWEVER, that, if
such Terminating Players Breach is curable by Players through best efforts
within 30 days and for so long as Players continues to exercise such best
efforts during such 30 day period, Buyer may not terminate this Agreement under
this Section 7.1(g); PROVIDED FURTHER that Buyer shall not be permitted to
terminate this Agreement pursuant to this Section 7.1(g) solely on account of
the continued pendency of any litigation filed by Jackpot or any stockholders of
either Jackpot or Players in connection with the termination of the Agreement
and Plan of Merger dated as of February 8, 1999 among Jackpot, JEI Merger Corp.
and Players; or
(h) by Players, upon breach of any material representation,
warranty, covenant or agreement on the part of Buyer set forth in this
Agreement, or if any representation or warranty of Buyer shall have become
untrue, in either case such that the conditions set forth in
36
Section 6.2 would not be satisfied ("TERMINATING BUYER BREACH"); PROVIDED,
HOWEVER, that, if such Terminating Buyer Breach is curable by Buyer through best
efforts within 30 days and for so long as Buyer continues to exercise such best
efforts during such 30 day period, Players may not terminate this Agreement
under this Section 7.1(h); or
(i) by Players, if Buyer has not filed all required initial
applications and documents in connection with obtaining the Governmental
Approvals within 30 days after the date of this Agreement, as further set forth
in Section 5.7; PROVIDED, HOWEVER, that Players shall not be permitted to
terminate Agreement pursuant to this Section 7.1(i) if Buyer has filed all such
required initial applications and documents; or
(j) by Buyer, if (A) the Louisiana Gaming Control Board
revokes Players' licenses or permits to operate its Lake Xxxxxxx casino
riverboats or (B) one or more gaming regulatory authorities imposes fines or
penalties against, or requires other payments by, Players and/or any of its
current or former directors, officers, employees, agents or representatives (to
the extent that Players is responsible for any such fines, penalties or other
payments and such fines, penalties or other payments are not covered by
insurance policies of Players) relating to the actions of Players and/or its
current or former directors, officers, agents or representatives relative to the
allegations of impropriety by Xxxx Xxxxxxx and former Louisiana Governor Xxxxxxx
in an aggregate amount that would reasonably be expected to have a material
adverse effect on the business of Players' Lake Xxxxxxx casino (with materiality
determined with respect to the enterprise value of such business).
Section 7.2. EFFECT OF TERMINATION. In the event of termination of this
Agreement as provided in Section 7.1, this Agreement shall immediately become
void and there shall be no liability or obligation on the part of Buyer, Merger
Sub or Players, or their respective officers, directors, stockholders or
Affiliates, except as set forth in Section 7.3 and except that such termination
shall not limit liability for (i) a willful breach of this Agreement or (ii) a
breach by Buyer or Merger Sub of its obligations pursuant to the second sentence
of Section 5.7(a); PROVIDED that the provisions of this Section 7.2 and Section
7.3 of this Agreement and the Confidentiality Agreement shall remain in full
force and effect and survive any termination of this Agreement.
Section 7.3. FEES AND EXPENSES.
(a) Except as set forth in this Section 7.3 and the last
sentence of Section 5.12(c), all fees and expenses incurred in connection with
this Agreement and the transactions contemplated hereby shall be paid by the
party incurring such expenses, whether or not the Merger is consummated. Fees
and expenses payable under this Section 7.3 to any party hereunder shall include
all costs of collection and interest from the date such payment is due at a rate
per annum of the London Interbank Offered Rate plus 2%.
(b) Players shall pay Buyer a termination fee of $13,500,000
via wire transfer of same-day funds on the date of the earliest to occur of the
following events:
37
(i) the termination of this Agreement by Buyer or
Players pursuant to Section 7.1(d), if an Acquisition Proposal
involving Players shall have been publicly announced and be pending at
the time of the Special Meeting;
(ii) the termination of this Agreement by Buyer pursuant
to Section 7.1(e); or
(iii) the termination of this Agreement by Players
pursuant to Section 7.1(f).
Except as provided in Section 7.3(c) below, Players' payment
of a termination fee pursuant to this subsection shall be the sole and exclusive
remedy of Buyer against Players and any of its Subsidiaries and their respective
directors, officers, employees, agents, advisors or other representatives with
respect to the occurrences giving rise to such payment; PROVIDED that this
limitation shall not apply in the event of a willful breach of this Agreement by
Players.
(c) In addition to the provisions of Sections 7.3(b) and (d),
(i) if (A) Buyer or Players terminates this Agreement pursuant to Section
7.1(d), (B) Buyer terminates this Agreement pursuant to Section 7.1(e), (C)
Players terminates this Agreement pursuant to Section 7.1(f), (D) Buyer
terminates this Agreement pursuant to Section 7.1(g), or (E) Buyer terminates
this Agreement pursuant to Section 7.1(j), Players will pay to Buyer a cash
reimbursement payment of $13,500,000; and (ii) if (A) Players or Buyer
terminates this Agreement pursuant to Section 7.1(b) or (B) Players or Buyer
terminates this Agreement pursuant to Section 7.1(c), Players will pay to Buyer
a cash reimbursement payment of $6,750,000; in each case together with interest
thereon, at a rate equal to the London Interbank Offered Rate plus 1%, from the
date hereof to the date such payment is due pursuant to this Agreement (the
"REIMBURSEMENT PAYMENT"), reflecting reimbursement of the amount paid by Buyer
to Jackpot on Players' behalf on the date hereof to pay the termination fee owed
to Jackpot under the Jackpot Merger Agreement (which amount, in the event of
termination of this Agreement, will be paid only on the terms set forth in this
Section 7.3(c)).
(d) In addition to the provisions of Sections 7.3(b) and (c),
if (i) Buyer or Players terminates the Agreement pursuant to Section 7.1(d) (and
a termination fee is not otherwise payable pursuant to Section 7.3(b)(i)), (ii)
Buyer terminates this Agreement pursuant to Section 7.1(g), (iii) Buyer
terminates this Agreement pursuant to Section 7.1(j), or (iv) Players or Buyer
terminates this Agreement pursuant to Section 7.1(b) and the condition specified
in Section 6.1(c) shall not have been satisfied because of facts or
circumstances relating to Players, its employees or operations not previously
disclosed to Buyer by Players, Players shall immediately thereafter reimburse
Buyer and Merger Sub all fees and expenses incurred in connection with this
Agreement and the transactions contemplated hereby up to an amount equal to
$1,000,000 plus, in the case of (i) above, a termination fee of $3,000,000.
(e) If (i) Players terminates this Agreement pursuant to
Section 7.1(i), (ii) Players terminates this Agreement pursuant to Section
7.1(h) or (iii) Players or Buyer terminates this Agreement pursuant to Section
7.1(b) and the condition specified in Section 6.1(c) shall not have been
satisfied because of facts or circumstances relating to Buyer,
38
its employees or operations, Buyer shall immediately thereafter reimburse
Players all fees and expenses incurred in connection with this Agreement and the
transactions contemplated hereby up to an amount equal to $1,000,000.
Section 7.4. AMENDMENT. This Agreement may be amended by the parties
hereto, by action taken or authorized by their respective Boards of Directors,
at any time before or after approval of the matters presented in connection with
the Merger by the stockholders of Players, but, after any such approval, no
amendment shall be made which by law requires further approval by such
stockholders without such further approval. This Agreement may not be amended
except by an instrument in writing signed on behalf of each of the parties
hereto.
Section 7.5. EXTENSION; WAIVER. At any time prior to the Effective
Time, the parties hereto, by action taken or authorized by their respective
Boards of Directors, may, to the extent legally allowed (i) extend the time for
the performance of any of the obligations or other acts of the other parties
hereto, (ii) waive any inaccuracies in the representations and warranties
contained herein or in any document delivered pursuant hereto and (iii) waive
compliance with any of the agreements or conditions contained here. Any
agreement on the part of a party hereto to any such extension or waiver shall be
valid only if set forth in a written instrument signed on behalf of such party.
ARTICLE VIII.
MISCELLANEOUS
Section 8.1. NONSURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS.
None of the representations, warranties, covenants and agreements in this
Agreement or in any instrument delivered pursuant to this Agreement shall
survive the Effective Time, except for the agreements contained in Sections 1.4,
1.5, 1.6, 2.1, 2.2, 2.3, 5.9, and 5.11 and Article VIII. The Confidentiality
Agreement shall survive the execution and delivery of this Agreement.
Section 8.2. NOTICES. Any and all notices, demands or other
communications required or desired to be given hereunder by any party shall be
in writing and shall be validly given or made to another party if served
personally, or by facsimile or air courier, or deposited in the United States
mail, certified or registered, postage prepaid, return receipt requested. If
such notice, demand or other communications be served personally, or by
facsimile or air courier, service shall be conclusively deemed made at the time
of such service. If such notice, demand or other communications be given by
mail, it shall be conclusively deemed given three (3) days after the deposit
thereof in the United States mail, addressed to the party to whom such notice,
demand or other communication is to be given as hereinafter set forth:
(a) if to Players, to
Players International, Inc.
Attention: Chief Executive Officer
0000 Xxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxx Xxxx, XX 00000
39
with a copy to
Xxxxxx, Xxxxx & Bockius LLP
Attention: Xxxxx X. Xxxxxxx, Esq.
000 Xxxxx Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxxxxx, XX 00000
(b) if to Buyer or Merger Sub, to
Xxxxxx'x Entertainment, Inc.
Attention: Xxxxx X. Xxxx
0000 Xxxx Xxxxxx
Xxx Xxxxx, XX 00000
with a copy to:
Xxxxxx & Xxxxxxx
Attention: Xxxxx X. Xxxxxxx
000 X. 0xx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxx, XX 00000
Section 8.3. INTERPRETATION. When a reference is made in this Agreement
to Sections, such reference shall be to a Section of this Agreement unless
otherwise indicated. The table of contents and headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement. Whenever the words "include,"
"includes" or "including" are used in this Agreement they shall be deemed to be
followed by the words "without limitation." The phrase "made available" in this
Agreement shall mean that the information referred to has been made available if
requested by the party to whom such information is to be made available. The
phrases "the date of this Agreement," "the date hereof," and terms of similar
import, unless the context otherwise requires, shall be deemed to refer to
August 19, 1999.
Section 8.4. COUNTERPARTS. This Agreement may be executed in two or
more counterparts, all of which shall be considered one and the same agreement
and shall become effective when two or more counterparts have been signed by
each of the parties and delivered to the other parties, it being understood that
all parties need not sign the same counterpart.
Section 8.5. ENTIRE AGREEMENT; NO THIRD PARTY BENEFICIARIES. This
Agreement and all documents and instruments referred to herein (a) constitute
the entire agreement and supersedes all prior agreements and understandings,
both written and oral, among the parties with respect to the subject matter
hereof, and (b) except as provided in Section 5.9, are not intended to confer
upon any person other than the parties hereto any rights or remedies hereunder;
provided that the Confidentiality Agreements shall survive the execution and
delivery of this Agreement. Each party hereto agrees that, except for the
representations and warranties contained in this Agreement, none of Buyer,
Merger Sub or Players makes any other representations or warranties,
40
and each hereby disclaims any other representations and warranties made by
itself or any of its officers, directors, employees, agents, financial and legal
advisors or other representatives, with respect to the execution and delivery of
this Agreement or the transactions contemplated hereby, notwithstanding the
delivery or disclosure to any of them or their respective representatives of any
documentation or other information with respect to any one or more of the
foregoing.
Section 8.6. GOVERNING LAW. This Agreement shall be governed and
construed in accordance with the laws of the State of Nevada without regard to
any applicable conflicts of law.
Section 8.7. ASSIGNMENT. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any of the parties
hereto (whether by operation of law or otherwise) without the prior written
consent of the other party, except that Merger Sub may assign its rights and
obligations hereunder to any direct or indirect wholly-owned subsidiary of
Buyer; PROVIDED that no such assignment shall relieve Buyer of its obligations
hereunder. Subject to the preceding sentence, this Agreement will be binding
upon, inure to the benefit of and be enforceable by the parties and their
respective successors and assigns.
Section 8.8. SEVERABILITY; ENFORCEMENT. Except to the extent that the
application of this Section 8.8 would have a Buyer Material Adverse Effect with
respect to Buyer or a Players Material Adverse Effect with respect to Players,
the invalidity of any portion hereof shall not affect the validity, force or
effect of the remaining portions hereof. If it is ever held that any covenant
hereunder is too broad to permit enforcement of such covenant to its fullest
extent, each party agrees that a court of competent jurisdiction may enforce
such covenant to the maximum extent permitted by law, and each party hereby
consents and agrees that such scope may be judicially modified accordingly in
any proceeding brought to enforce such covenant.
Section 8.9. SPECIFIC PERFORMANCE. Except as provided in Section
7.3(b), the parties hereto agree that the remedy at law for any breach of this
Agreement will be inadequate and that any party by whom this Agreement is
enforceable shall be entitled to specific performance in addition to any other
appropriate relief or remedy. Such party may, in its sole discretion, apply to a
court of competent jurisdiction for specific performance or injunctive or such
other relief as such court may deem just and proper in order to enforce this
Agreement or prevent any violation hereof and, to the extent permitted by
applicable laws, each party hereto waives any objection to the imposition of
such relief.
SIGNATURES BEGIN NEXT PAGE
41
IN WITNESS WHEREOF, Buyer, Merger Sub and Players have caused
this Agreement to be signed by their respective duly authorized officers as of
the date first written above.
XXXXXX'X ENTERTAINMENT, INC.
/s/ Xxxxx X. Xxxx
----------------------------------------
By: Xxxxx X. Xxxx
Its: Chief Financial Officer
HEI ACQUISITION CORP. II
/s/ Xxxxx X. Xxxx
----------------------------------------
By: Xxxxx X. Xxxx
Its: Chief Financial Officer
PLAYERS INTERNATIONAL, INC.
/s/ Xxxx Xxxxx
----------------------------------------
By: Xxxx Xxxxx
Its: President, Chief Executive Officer
and Chief Operating Officer
42
EXHIBIT A
FORM OF STOCKHOLDER SUPPORT AGREEMENT
STOCKHOLDER SUPPORT AGREEMENT, dated as of ____________, 1999
(this "AGREEMENT"), by _______________ ("STOCKHOLDER") to and for the benefit of
Xxxxxx'x Entertainment, Inc., a Delaware corporation ("XXXXXX'X"). Capitalized
terms used and not otherwise defined herein shall have the respective meanings
assigned to them in the Merger Agreement referred to below.
WHEREAS, as of the date hereof, Stockholder owns of record and
beneficially ________ shares (such shares, together with any other voting or
equity securities of Players International, Inc., a Nevada corporation
("PLAYERS"), hereafter acquired by Stockholder prior to the termination of this
Agreement, being referred to herein collectively as the "SHARES") of common
stock, par value $0.005 per share ("PLAYERS COMMON STOCK");
WHEREAS, concurrently with the execution of this Agreement,
Xxxxxx'x, HEI Acquisition Corp. II, a Nevada corporation and indirect
wholly-owned subsidiary of Xxxxxx'x ("MERGER SUB"), and Players are entering
into an Agreement and Plan of Merger, dated as of the date hereof (the "MERGER
AGREEMENT"), pursuant to which, upon the terms and subject to the conditions
thereof, Merger Sub will be merged with and into Players such that Players will
become an indirect wholly-owned subsidiary of Xxxxxx'x (the "MERGER"); and
WHEREAS, as a condition to the willingness of Players, Xxxxxx'x
and Merger Sub to enter into the Merger Agreement, Xxxxxx'x has requested the
Stockholder agree, and in order to induce Xxxxxx'x and Merger Sub to enter into
the Merger Agreement, the Stockholder is willing to agree to vote in favor of
adopting the Merger Agreement and approving the Merger, upon the terms and
subject to the conditions set forth herein.
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements contained herein, and intending to be legally bound
hereby, the parties hereby agree, severally and not jointly, as follows:
Section 1. VOTING OF SHARES. Until the termination of this
Agreement in accordance with the terms hereof, Stockholder hereby agrees that,
at the Special Meeting (as defined in the Merger Agreement) or any other meeting
of the stockholders of Players, however called, and in any action by written
consent of the stockholders of Players, Stockholder will vote all of his or her
respective Shares (a) in favor of adoption of the Merger Agreement and approval
of the Merger and the other transactions contemplated by the Merger Agreement,
and (b) in favor of any other matter necessary to the consummation of the
transactions contemplated by the Merger Agreement and considered and voted upon
by the stockholders of Players (or any class thereof). Stockholder acknowledges
receipt and review of a copy of the Merger Agreement.
Section 2. TRANSFER OF SHARES. Until the termination of this
Agreement in accordance with the terms hereof, Stockholder will not, directly or
indirectly, (a) sell, assign,
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transfer, pledge, encumber or otherwise dispose of any of the Shares, (b)
deposit any of the Shares into a voting trust or enter into a voting agreement
or arrangement with respect to the Shares or grant any proxy or power of
attorney with respect thereto which is inconsistent with this
Agreement or (c) enter into any contract, option or other arrangement or
undertaking with respect to the direct or indirect sale, assignment, transfer
(including by merger, testamentary disposition, interspousal disposition
pursuant to a domestic relations proceeding or otherwise by operation of law) or
other disposition of any Shares; PROVIDED, HOWEVER, that Stockholder may
transfer the Shares to family members or to a trust so long as such trust or
family member takes such Shares subject to the obligations and restrictions
contained in this Agreement.
Section 3. REPRESENTATIONS AND WARRANTIES OF STOCKHOLDER.
Stockholder hereby represents and warrants to Xxxxxx'x with respect to himself
or herself and his or her ownership of the Shares as follows:
(a) OWNERSHIP OF SHARES. On the date hereof, the Shares are
owned of record and beneficially by Stockholder. Stockholder has sole voting
power, without restrictions, with respect to all of the Shares.
(b) POWER, BINDING AGREEMENT. Stockholder has the legal
capacity, power and authority to enter into and perform all of his or her
obligations under this Agreement. The execution, delivery and performance of
this Agreement by Stockholder will not violate any other agreement to which
Stockholder is a party, including, without limitation, any voting agreement,
stockholders' agreement, partnership agreement or voting trust. This Agreement
has been duly and validly executed and delivered by Stockholder and constitutes
a valid and binding obligation of Stockholder, enforceable against Stockholder
in accordance with its terms, subject to applicable bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and similar laws affecting
creditors' rights and remedies generally and subject, as to enforceability, to
general principles of equity (regardless of whether enforcement is sought in a
proceeding at law or in equity).
(c) NO CONFLICTS. The execution and delivery of this
Agreement do not, and the consummation of the transactions contemplated hereby
will not, conflict with or result in any violation of, or default (with or
without notice or lapse of time, or both) under, or give rise to a right of
termination, cancellation or acceleration of any obligation or to loss of a
material benefit under, any provision of any loan or credit agreement, note,
bond, mortgage, indenture, lease, or other agreement, instrument, permit,
concession, franchise, license, judgment, order, decree, statute, law,
ordinance, rule or regulation applicable to Stockholder or any of his or her
properties or assets, other than such conflicts, violations or defaults or
terminations, cancellations or accelerations which individually or in the
aggregate do not materially impair the ability of Stockholder to perform his or
her obligations hereunder. No consent, approval, order or authorization of, or
registration, declaration, or filing with, any governmental entity is required
by or with respect to the execution and delivery of this Agreement by
Stockholder and the consummation by Stockholder of the transactions contemplated
hereby.
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Section 4. NO SOLICITATION. Prior to the termination of this
Agreement in accordance with its terms, except as otherwise expressly permitted
by the Pledge Agreement, Stockholder agrees that (i) he or she will not, nor
will he or she authorize or permit any of his or her employees, agents and
representatives to, directly or indirectly, (a) initiate, solicit or encourage
any inquiries or the making of any Acquisition Proposal (as defined in the
Merger Agreement), (b) enter into any agreement with respect to any Acquisition
Proposal, or (c) participate in any discussions or negotiations regarding, or
furnish to any person any information with respect to, or take any other action
to facilitate any inquiries or the making of any proposal that constitutes, or
may reasonably be expected to lead to, any Acquisition Proposal, and (ii) he or
she will notify Xxxxxx'x as soon as possible if any such inquiries or proposals
are received by, any information or documents is requested from, or any
negotiations or discussions are sought to be initiated or continued with, him or
her or any of his or her affiliates.
Section 5. TERMINATION. This Agreement shall terminate upon
the earliest to occur of (i) the Effective Time (as such term is defined in the
Merger Agreement) or (ii) any termination of the Merger Agreement in accordance
with the terms thereof; PROVIDED that the provisions of Section 8 of this
Agreement shall survive any termination of this Agreement; and PROVIDED FURTHER
that no such termination shall relieve any party of liability for a breach
hereof prior to termination.
Section 6. SPECIFIC PERFORMANCE. The parties hereto agree
that irreparable damage would occur in the event any provision of this Agreement
was not performed in accordance with the terms hereof and that the parties shall
be entitled to specific performance of the terms hereof, in addition to any
other remedy at law or in equity.
Section 7. FIDUCIARY DUTIES. Notwithstanding anything in this
Agreement to the contrary, the covenants and agreements set forth herein shall
not prevent Stockholder from serving on Players' Board of Directors and from
taking any action, subject to the applicable provisions of the Merger Agreement,
while acting in such designee's capacity as a director of Players.
Section 8. MISCELLANEOUS.
(a) This Agreement constitutes the entire agreement
between the parties hereto with respect to the subject matter hereof and
supersedes all prior agreements and understandings, both written and oral,
between the parties with respect thereto. This Agreement may not be amended,
modified or rescinded except by an instrument in writing signed by each of the
parties hereto.
(b) If any term or other provision of this Agreement
is invalid, illegal or incapable of being enforced by any rule of law, or public
policy, all other conditions and provisions of this Agreement shall nevertheless
remain in full force and effect. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties hereto
shall negotiate in good faith to modify this Agreement so as to effect the
original intent of the parties as closely as possible to the fullest extent
permitted by applicable
A-3
law in a mutually acceptable manner in order that the terms of this Agreement
remain as originally contemplated to the fullest extent possible.
(c) This Agreement shall be governed by and construed
in accordance with the laws of the State of Nevada without regard to the
principles of conflicts of law thereof.
(d) This Agreement may be executed in counterparts,
each of which shall be deemed an original and all of which together shall
constitute one and the same instrument.
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be signed by their respective duly authorized officers as of the
date first written above.
STOCKHOLDER
----------------------------------------
Agreed and Acknowledged:
XXXXXX'X ENTERTAINMENT, INC.
------------------------------------
By:
Its:
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EXHIBIT B
AMENDMENT NO. 2 TO RIGHTS AGREEMENT
AMENDMENT, dated as of August ___, 1999, to the Rights
Agreement, dated as of January 27, 1997 (the "Rights Agreement"), between
Players International, Inc., a Nevada corporation ("the Company"), and Interwest
Transfer Co., Inc., as Rights Agent (the "Rights Agent"), as amended to date.
WHEREAS, the Company and the Rights Agent have heretofore
executed and entered into the Rights Agreement;
WHEREAS, pursuant to Section 26 of the Rights Agreement, the
Company and the Rights Agent may from time to time supplement or amend the
Rights Agreement; and
WHEREAS, all acts and things necessary to make this Amendment
a valid agreement, enforceable according to its terms, have been done and
performed, and the execution and delivery of this Amendment by the Company and
the Rights Agent have been in all respects duly authorized by the Company and
the Rights Agent.
NOW, THEREFORE, in consideration of the foregoing and the
mutual agreements set forth herein, and intending to be legally bound hereby,
the parties hereto agree as follows:
1. The definition of "Acquiring Person" in Section I of the
Rights Agreement is hereby amended by adding the following additional sentence
to the end of such definition:
Notwithstanding the foregoing, neither Xxxxxx'x
Entertainment, Inc., a Delaware corporation ("Xxxxxx'x"),
nor HEI Acquisition Corp. II., a Nevada corporation and a
wholly-owned subsidiary of Xxxxxx'x ("Merger Sub"), shall
be deemed to be an "Acquiring Person" TO THE EXTENT OF THE
ACQUISITION BY Xxxxxx'x or Merger Sub of Common Shares
pursuant to the terms of the Agreement and Plan of Merger,
dated as of August ___, 1999 (the "Merger Agreement"), by
and among the Company, Xxxxxx'x and Merger Sub.
2. The definition of "Section 11 (a)(ii) Event" contained in
Section I of the Rights Agreement is hereby amended by adding the following
additional sentence to the end of such definition:
Notwithstanding the foregoing, the acquisition by Xxxxxx'x or
Merger Sub of Common Shares pursuant to the terms of the Merger Agreement, the
consummation of the transactions contemplated by the Merger Agreement and the
execution by Xxxxxx'x and Merger
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Sub of the Merger Agreement with the Company shall not in any case be deemed to
be a "Section 11 (a)(ii) Event."
3. The definition of "Section 13 Event" contained in Section I
of the Rights Agreement is hereby amended by adding the following additional
sentence to the end of such definition:
Notwithstanding the foregoing, the acquisition by Xxxxxx'x or
Merger Sub of Common Shares pursuant to the terms of the Merger Agreement, the
consummation of the transactions contemplated by the Merger Agreement and the
execution by Xxxxxx'x and Merger Sub of the Merger Agreement with the Company
shall not in any case be deemed to be a "Section 13 Event."
4. Unless otherwise defined herein, the terms used herein
shall have the meanings ascribed to them in the Rights Agreement.
5. This Amendment to the Rights Agreement may be executed in
any number of counterparts. It shall not be necessary that the signature of or
on behalf of each party appears on each counterpart, but it shall be sufficient
that the signature of or on behalf of each party appears on one or more
counterparts. All counterparts shall collectively constitute a single agreement.
6. Except as expressly set forth herein, this Amendment to the
Rights Agreement shall not by implication or otherwise alter, modify, amend or
in any way effect any of the terms, conditions, obligations, covenants or
agreements contained in the Rights Agreement, all of which are ratified and
affirmed in all respects and shall continue in full force and effect.
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be duly executed as of the date first above written.
PLAYERS INTERNATIONAL, INC.
Attest:
----------------------------------------
By:
Its:
INTERWEST TRANSFER CO., INC.
Attest:
----------------------------------------
By:
Its:
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