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Item 1.01
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Entry into a Material Definitive Agreement.
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Merger Agreement
On November 27, 2018, Gaming Partners International Corporation,
a Nevada corporation (the “
Company
”), entered into an Agreement and Plan of Merger (the “
Merger Agreement
”)
with Angel Holdings Godo Kaisha, a company organized under the laws of Japan (“
Angel
”), and AGL Nevada Corporation,
a Nevada corporation and wholly owned subsidiary of Angel (“
Merger Sub
”), pursuant to which Angel will acquire
the Company in exchange for cash. The Merger Agreement was unanimously adopted
by a special
transaction committee of independent directors of the Board of Directors of the Company (the “
Board
”) as well
as the full Board.
Pursuant to the terms of the Merger Agreement, Merger Sub will
merge with and into the Company (the “
Merger
”), the separate existence of Merger Sub will cease, and the Company
will continue as the surviving corporation, which will be a wholly owned subsidiary of Angel (the “
Surviving Corporation
”).
The Surviving Corporation shall succeed to and assume all of the rights and obligations of Merger Sub and the Company. At the
effective time of the Merger (the “
Effective Time
”), by virtue of the Merger and without any further action
on the part of Angel, Merger Sub, the Company or the holders of any capital stock or other securities of the Company: (i)
any
shares owned immediately prior to the Effective Time by the Company (or held in the Company’s treasury), Angel or Merger
Sub or any of their respective direct or indirect wholly owned subsidiaries (the “
Excluded Shares
”) shall be
cancelled and retired and shall cease to exist; (ii) except for Excluded Shares,
each share of common stock of the Company,
$0.01 par value per share (the “
Common Stock
”), outstanding immediately prior to the Effective Time will be
automatically converted into the right to receive $13.75 in cash (the “
Merger Consideration
”);
and (iii) each share of common stock of Merger Sub, $0.01 par value per share, outstanding immediately prior to the Effective
Time shall be converted into one share of common stock of the Surviving Corporation.
The Merger Agreement provides that, at the Effective Time, any
outstanding and unexercised option to acquire Common Stock granted by the Company (an “
Option
”), as of immediately
prior to the Effective Time, whether or not then otherwise vested or exercisable, shall be cancelled in exchange for the right
of the holder of such Option to receive from the Surviving Corporation a cash amount equal to the excess of (i) the Merger Consideration,
over (ii) the exercise price per share of Common Stock subject to such Option; provided that if the exercise price per share
under any such Option is equal to or greater than the Merger Consideration, such Option shall be cancelled at the Effective Time
without any payment or other consideration being made or owed in respect thereof. The Merger Agreement provides that, at the Effective
Time, any outstanding and unexercised stock appreciation rights with respect to shares of Common Stock granted by the Company,
as of immediately prior to the Effective Time, whether or not then otherwise vested or exercisable, shall be cancelled as of the
Effective Time without any payment or other consideration being made or owed in respect thereof.
Each of Angel, Merger Sub and the Company has made customary
representations and warranties and agreed to customary covenants in the Merger Agreement. The Merger is subject to various closing
conditions, including but not limited to (i) approval of the Merger Agreement by the holders of a majority of the outstanding
shares of Common Stock, (ii) receipt by Angel of certain specified gaming licenses, (iii) if required, the expiration of the
applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and (iv) the absence of any
law, order or injunction prohibiting the Merger. Each party’s obligation to consummate the Merger is also subject to certain
additional customary conditions, including (A) subject to certain exceptions and generally subject to certain materiality
qualifiers, the accuracy of the representations and warranties of the other party and (B) performance in all material respects
by the other party of its obligations under the Merger Agreement.
During the period beginning on the date of the Merger Agreement
and continuing until 12:01 A.M. (New York City time) on February 2, 2019 (the “
No-Shop Period Start Date
”),
the Company and its representatives have the right to (i) initiate, solicit, facilitate and encourage any inquiry or the making
of any proposal or offer that constitutes, or could reasonably be expected to lead to, a competing acquisition proposal, (ii) furnish
to any person that is party to an acceptable confidentiality agreement any information which is reasonably requested by any person
in connection with such person’s potentially making a competing acquisition proposal and (iii) participate or engage in discussions
or negotiations with such person regarding a competing acquisition proposal.
On the No-Shop Period Start Date, the Company will cease such
activities, and will be subject to further restrictions, including that it will not (i) solicit proposals or offers that constitute,
or could reasonably be expected to lead to, a competing acquisition proposal or (ii) engage in any discussions or negotiations
regarding a competing acquisition proposal. However, prior to obtaining stockholder approval, the Company may engage in the foregoing
activities with any third party that has provided the Company with a competing acquisition proposal after the execution of the
Merger Agreement and prior to the No-Shop Period Start Date, which acquisition proposal the Board determines in good faith is or
would reasonably be expected to lead to a superior proposal. Furthermore, the Company can also engage in such activities with any
third party that provides to the Company an unsolicited bona fide written competing acquisition proposal, if, subject to compliance
with certain other conditions, the Board determines in good faith that such acquisition proposal constitutes, or is reasonably
likely to result in, a superior proposal.
Prior to the approval of the Merger Agreement by the Company’s
stockholders, the Board may change its recommendation that the Company’s stockholders approve the Merger Agreement if the Board
receives a superior acquisition proposal or upon the occurrence of certain types of intervening events, but only if certain conditions
are satisfied with respect thereto and the Company complies with its obligations in respect thereof under the Merger Agreement.
The Merger Agreement provides certain mutual termination rights
for both the Company and Angel, including the right of either party to terminate the Merger Agreement if (i) if the Merger is not
consummated by December 31, 2019 (as may be extended under certain circumstances relating to the receipt of gaming licenses) (the
“
Termination Date
”), (ii) the approval of the Merger Agreement by the holders of a majority of the outstanding
shares of Common Stock has not been obtained at the meeting of such stockholders convened for such purpose and (iii) an order permanently
restraining, enjoining or otherwise prohibiting consummation of the Merger becomes final and non-appealable.
The Merger Agreement also provides certain other termination
rights for the Company and Angel, respectively, including (i) the right of the Company, prior to the approval of the Merger Agreement
by the Company’s stockholders, to terminate the Merger Agreement in order to enter into an agreement with respect to a superior
proposal, so long as the Company complies with certain notice and other requirements set forth in the Merger Agreement, in which
case the Company must pay Angel a termination fee of $4 million, (ii) the right of Angel to terminate the Merger Agreement due
to a change of recommendation by the Board, in which case the Company must pay Angel a termination fee of $4 million and (iii)
the right of either party to terminate the Merger Agreement in the event of an uncured or incurable material breach thereof by
the other party. In the event of termination by either party for an unintentional material breach of the Merger Agreement, the
breaching party must pay the other party a termination fee of $4 million. In the event of termination by either party for
an intentional material breach of the Merger Agreement by the other party, the breaching party must pay the other party a termination
fee of $15 million.
The Merger Agreement also provides that if the Merger Agreement
is terminated by either party due to the Merger Agreement not being consummated by the Termination Date, then if within the twelve
(12) month period following such termination certain specified events occur (including the entry by the Company into a definitive
agreement with respect to an alternative acquisition proposal) the Company must pay Angel a termination fee of $4 million.
The Company expects to incur a minimum of $1.0 million in additional
legal and investment banking expenses in the fourth quarter of 2018 related to the Merger Agreement.
The Merger Agreement is attached hereto as Exhibit 2.1
and is incorporated into this Item 1.01 by reference. The foregoing summary of the Merger Agreement is qualified in its entirety
by the terms and conditions of the Merger Agreement. It is not intended to provide any other factual information about the Company,
Angel or their respective subsidiaries and affiliates. The Merger Agreement contains representations and warranties by each of
the parties to the Merger Agreement, which were made only for purposes of the Merger Agreement and as of the dates specified therein.
The representations, warranties and covenants in the Merger Agreement were made solely for the benefit of the parties to the Merger
Agreement and may be subject to limitations agreed upon by the parties thereto. Investors should not rely on the representations,
warranties and covenants or any descriptions thereof as characterizations of the actual state of facts or condition of the Company,
Angel or any of their respective subsidiaries or affiliates. Moreover, information concerning the subject matter of the representations,
warranties and covenants may change after the date of the Merger Agreement, which subsequent information may or may not be fully
reflected in the Company’s public disclosures.
Voting Agreement
As an inducement to the parties entering into the Merger Agreement,
on November 27, 2018, certain stockholders of the Company, beneficially owning, in the aggregate, approximately 51% of the outstanding
shares of Common Stock entered into a Voting Agreement (the “
Voting Agreement
”), pursuant to which, among other
things, such stockholders agreed to vote to approve the Merger Agreement and to take certain other actions in furtherance of the
Merger, as described above, in each case subject to the terms and conditions set forth therein.