UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of the

Securities Exchange Act of 1934

 

 

Filed by the Registrant ☒

Filed by a Party other than the Registrant ☐

Check the appropriate box:

 

☐	Preliminary Proxy Statement

 

☐	Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))

 

☒	Definitive Proxy Statement

 

☐	Definitive Additional Materials

 

☐	Soliciting Material under § 240.14a-12

 

 

GALAXY GAMING, INC.

(Name of Registrant as Specified in its Charter)

N/A

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check all boxes that apply):

 

☐	No fee required

 

☒	Fee paid previously with preliminary materials

 

☐	Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a-6(i)(1) and 0-11

 

 

 

 

GALAXY GAMING, INC.

MERGER PROPOSED-YOUR VOTE IS VERY IMPORTANT

September 26, 2024

Dear Stockholders of Galaxy Gaming, Inc.:

You are cordially invited to attend a special meeting of the stockholders of Galaxy Gaming, Inc., a Nevada corporation (“Galaxy,” the “Company,” “we,” “us” or “our”), to be held virtually via live webcast on November 12, 2024, at 9:00 a.m. Pacific Time (the special meeting and any adjournments or postponements thereof, the “Special Meeting”) at www.virtualshareholdermeeting.com/GLXZ2024SM.

We have entered into an Agreement and Plan of Merger (as it may be amended from time to time, the “Merger Agreement”), dated as of July 18, 2024, with Evolution Malta Holding Limited, a company registered in Malta (“Parent” or “Evolution”), and Galaga Merger Sub, Inc., a Nevada corporation and a wholly owned subsidiary of Parent (“Merger Sub”). Pursuant to and subject to the terms and conditions of the Merger Agreement, Merger Sub will be merged with and into Galaxy, with Galaxy surviving the merger as a wholly owned subsidiary of Parent (the “Merger”). Parent and Merger Sub are each affiliated with Evolution AB (publ) (“Evolution Parent”). Evolution Parent is one of the world’s top providers of online casino games.

At the Special Meeting, you will be asked to consider and vote on a proposal to adopt the Merger Agreement (the “Merger Proposal”). The affirmative vote of the holders of a majority of the voting power of the outstanding shares of Galaxy common stock, par value $0.001 per share (the “Company Shares”) entitled to vote thereon as of the close of business on September 25, 2024 (the “Record Date”) is required to approve the Merger Proposal. At the Special Meeting, you will also be asked to consider and vote on a proposal to approve, on a non-binding, advisory basis, certain compensation that will or may be paid or become payable to Galaxy’s named executive officers that is based on or otherwise relates to the Merger (the “Merger Compensation Proposal”). The affirmative vote of the holders of a majority in voting power of the votes cast (excluding abstentions and broker non-votes, if any) at the Special Meeting by the holders present or represented by proxy at the Special Meeting and entitled to vote thereon is required to approve the Merger Compensation Proposal. At the Special Meeting, you will also be asked to consider and vote on a proposal to approve the adjournment of the Special Meeting to a later date or dates if necessary to solicit additional proxies if there are insufficient votes in person or by proxy to approve the Merger Proposal at the time of the Special Meeting (the “Adjournment Proposal”). The affirmative vote of the holders of a majority in voting power of the votes cast (excluding abstentions and broker non-votes, if any) at the Special Meeting by the holders present or represented by proxy at the Special Meeting and entitled to vote thereon is required to approve the Adjournment Proposal.

If the Merger is consummated, you will be entitled to receive $3.20 in cash, without interest and subject to any applicable withholding taxes, for each Company Share that you own (unless you have properly exercised appraisal rights, including by not voting in favor of the Merger Proposal). Such merger consideration represents a premium of approximately 124% over the Company Share closing price of $1.43 on July 17, 2024, the last trading day before the announcement of the transaction.

The Board of Directors of Galaxy (the “Board”), after considering the factors more fully described in the enclosed proxy statement, has (i) determined that the Merger Agreement and the transactions contemplated thereby, including the Merger, are advisable, fair to and in the best interests of Galaxy and Galaxy stockholders, (ii) duly authorized and approved the execution, delivery and performance by Galaxy of the Merger Agreement and the consummation by Galaxy of the transactions contemplated

thereby, (iii) declared the execution, delivery and performance by Galaxy of the Merger Agreement and the consummation of the transactions contemplated thereby, advisable, and (iv) resolved, subject to the terms and conditions set forth in the Merger Agreement, to recommend that Galaxy stockholders adopt and approve the Merger Agreement and approve the transactions contemplated thereby, including the Merger. The Board recommends that Galaxy stockholders vote “FOR” the Merger Proposal. In addition, the Board recommends that Galaxy stockholders vote “FOR” the Merger Compensation Proposal and “FOR” the Adjournment Proposal.

The enclosed proxy statement provides detailed information about the Special Meeting, the Merger Agreement and the Merger. A copy of the Merger Agreement is attached as Annex A to the proxy statement and is incorporated herein by reference. The proxy statement also describes the actions and determinations of the Board in connection with its evaluation of the Merger Agreement and the Merger. We encourage you to read the accompanying proxy statement, including all documents incorporated by reference into the proxy statement, and its annexes, including the Merger Agreement, carefully and in their entirety, as they contain important information. You may also obtain more information about Galaxy from documents we file with the Securities and Exchange Commission from time to time.

Whether or not you plan to attend the Special Meeting, please complete, sign, date and return, as promptly as possible, the enclosed proxy card in the accompanying postage prepaid envelope or grant your proxy electronically over the Internet or by telephone. Only your last-dated proxy will be counted, and any proxy may be revoked at any time prior to its exercise at the Special Meeting. If you attend the Special Meeting and vote thereat, your vote will revoke any proxy that you have previously submitted.

Your vote is very important, regardless of the number of Company Shares that you own. We cannot consummate the Merger unless the Merger Proposal is approved by the affirmative vote of the holders of a majority of the voting power of the outstanding Company Shares entitled to vote thereon as of the Record Date.

If you have questions or need assistance voting your Company Shares, please contact:

INNISFREE M&A INCORPORATED

501 Madison Avenue, 20^th Floor

New York, New York 10022

Stockholders may call toll-free: (877) 800-5185

Banks and brokers may call collect: (212) 750-5833

On behalf of the Board, I thank you for your support and appreciate your consideration of this matter.

Very truly yours,

Mark Lipparelli

Director and Chairman of the Board

Neither the Securities and Exchange Commission nor any state securities regulatory agency has approved or disapproved of the transactions described in this document, including the Merger, or determined if the information contained in this document is accurate or adequate. Any representation to the contrary is a criminal offense.

PLEASE COMPLETE, SIGN, DATE AND RETURN THE ENCLOSED PROXY CARD PROMPTLY. This proxy statement is dated September 26, 2024 and, together with the enclosed form of proxy card, is first being mailed to stockholders on or about September 26, 2024.

 

GALAXY GAMING, INC.

NOTICE OF VIRTUAL SPECIAL MEETING OF STOCKHOLDERS

TO BE HELD ON NOVEMBER 12, 2024

NOTICE IS HEREBY GIVEN that a special meeting of the stockholders of Galaxy Gaming, Inc., a Nevada corporation (“Galaxy,” the “Company,” “we,” “us” or “our”), will be held virtually via live webcast on November 12, 2024, at 9:00 a.m. Pacific Time, or at any adjournment or postponement thereof. For purposes of attendance at the Special Meeting, all references in the enclosed proxy statement to “present” or “in person” shall mean virtually present at the Special Meeting. The Special Meeting is being held for the following purposes:

 

1.

To consider and vote on a proposal to adopt the Agreement and Plan of Merger (as it may be amended from time to time, the “Merger Agreement”), dated as of July 18, 2024, by and among Evolution Malta Holding Limited, a company registered in Malta (“Parent” or “Evolution”), Galaga Merger Sub, Inc., a Nevada corporation and a wholly owned subsidiary of Parent (“Merger Sub”), and Galaxy, pursuant to which Merger Sub will be merged with and into Galaxy, with Galaxy surviving as a wholly owned subsidiary of Parent (the “Merger”);

 

2.	To consider and vote on a proposal to approve, on a non-binding, advisory basis, certain compensation that will or may be paid or become payable to Galaxy’s named executive officers that is based on or otherwise relates to the Merger; and

 

3.

To consider and vote on a proposal to approve the adjournment of the special meeting to a later date or dates if necessary to solicit additional proxies if there are insufficient votes in person or by proxy to approve the proposal to adopt the Merger Agreement at the time of the special meeting (the virtual special meeting and any adjournments or postponements thereof, the “Special Meeting”).

Only stockholders of record as of the close of business on September 25, 2024 (the “Record Date”) are entitled to notice of the Special Meeting and to vote at the Special Meeting or at any adjournment or postponement thereof.

The Board recommends that you vote:

 

1.	“FOR” the proposal to adopt the Merger Agreement (the “Merger Proposal”);

 

2.	“FOR” the proposal to approve, on a non-binding, advisory basis, certain compensation that will or may be paid or become payable to Galaxy’s named executive officers that is based on or otherwise relates to the Merger (the “Merger Compensation Proposal”); and

 

3.	“FOR” the proposal to approve the adjournment of the Special Meeting to a later date or dates if necessary to solicit additional proxies if there are insufficient votes to approve the Merger Proposal at the time of the Special Meeting (the “Adjournment Proposal”).

Your vote is very important, regardless of the number of shares of Galaxy common stock, par value $0.001 per share (“Company Shares”), that you own. Whether or not you plan to attend the Special Meeting, please complete, sign, date and return, as promptly as possible, the enclosed proxy card in the accompanying prepaid reply envelope or grant your proxy electronically over the Internet or by telephone. If you fail to return your proxy card, grant your proxy electronically over the Internet or by telephone or attend the Special Meeting, your Company Shares will not be counted for purposes of determining whether a quorum is present at the Special Meeting and, if a quorum is present, will have the same effect as a vote “AGAINST” the Merger Proposal.

Under the Nevada Revised Statutes (as amended from time to time), stockholders and beneficial owners who do not vote in favor of the Merger Proposal and who follow the procedures set forth in Sections 92A.300 through 92A.500 of the Nevada Revised Statutes will have the right to seek appraisal of the fair value of their issued and outstanding Company Shares

By Order of the Board of Directors,

Very truly yours,

Mark Lipparelli

Director and Chairman of the Board

Las Vegas, Nevada

September 26, 2024

YOUR VOTE IS VERY IMPORTANT!

If your Company Shares are registered directly in your name: If you are a stockholder of record, you may grant a proxy to vote your Company Shares through the Internet, by telephone or by mail as described below. Please help us save time and postage costs by granting a proxy through the Internet or by telephone. Each such method is generally available 24 hours a day and will ensure that your proxy to vote your Company Shares is confirmed and posted immediately. To grant a proxy to vote your Company Shares:

 

1.	BY INTERNET

 

a.	Please visit the Internet at the address on your proxy card and follow the instructions.

 

b.	To be counted, your Internet vote must be received by 11:59 p.m. Eastern Time, on November 11, 2024, the day preceding the Special Meeting.

 

2.	BY TELEPHONE

 

a.	Please call toll-free (within the U.S. or Canada) at the phone number on your proxy card and follow the instructions.

 

b.	To be counted, your telephone vote must be received by 11:59 p.m. Eastern Time, on November 11, 2024, the day preceding the Special Meeting.

 

3.

BY MAIL

 

a.	Please complete, date, sign and return the enclosed proxy card in the accompanying prepaid reply envelope.

If your Company Shares are held in the name of a bank, broker or other nominee: You will receive instructions on how to vote from the bank, broker or other nominee. You must follow the instructions of such bank, broker or other nominee in order for your Company Shares to be voted. Telephone and Internet voting instructions also may be offered to stockholders owning Company Shares through certain banks and brokers. As a beneficial owner, you have the right to direct your bank, broker or other nominee on how to vote the Company Shares in your account. Your bank, broker or other nominee cannot vote on any of the proposals to be considered at the Special Meeting, including the Merger Proposal, without your instructions.

If you fail to return your proxy card, grant your proxy electronically over the Internet or by telephone or attend the Special Meeting, your Company Shares will not be counted for purposes of determining whether a quorum is present at the Special Meeting.

To vote your Company Shares at the Special Meeting, you must attend the virtual meeting at www.virtualshareholdermeeting.com/GLXZ2024SM.

We encourage you to read the accompanying proxy statement, including all documents incorporated by reference into the accompanying proxy statement, and its annexes, carefully and in their entirety. If you have any questions concerning the Merger, the Special Meeting or the accompanying proxy statement, would like additional copies of the accompanying proxy statement or require assistance in submitting your proxy or voting your Company Shares, please contact our proxy solicitor or us by using the contact information provided below:

INNISFREE M&A INCORPORATED

501 Madison Avenue, 20^th Floor

New York, New York 10022

Stockholders may call toll-free: (877) 800-5185

Banks and brokers may call collect: (212) 750-5833

or

 

 

Galaxy Gaming, Inc.

Attn: Corporate Secretary

Email: investors@galaxygaming.com

TABLE OF CONTENTS

 

QUESTIONS AND ANSWERS			1
SUMMARY			13
THE COMPANIES			25
THE SPECIAL MEETING			26
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS			33
THE MERGER			35
THE MERGER AGREEMENT			67
PROPOSAL NO. 1: APPROVAL OF THE MERGER PROPOSAL			94
PROPOSAL NO. 2: ADVISORY VOTE ON THE MERGER COMPENSATION PROPOSAL			95
PROPOSAL NO. 3: ADJOURNMENT OF THE SPECIAL MEETING			98
MARKET PRICES AND DIVIDEND DATA			99
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT			100
FUTURE STOCKHOLDER PROPOSALS			101
WHERE YOU CAN FIND MORE INFORMATION			102
MISCELLANEOUS			104
Annex A			A-1
Annex B			B-1
Annex C			C-1
Annex D			D-1

QUESTIONS AND ANSWERS

The following questions and answers address some commonly asked questions regarding the virtual special meeting (together with any adjournments or postponements thereof, the “Special Meeting”), the Merger Agreement (as defined below) and the transactions contemplated by the Merger Agreement, pursuant to which Merger Sub (as defined below) will be merged with and into Galaxy (as defined below), with Galaxy surviving as a wholly owned subsidiary of Parent (as defined below) (the “Merger”). Please refer to the “Summary” beginning on page 13 of this proxy statement and the more detailed information contained elsewhere in this proxy statement, the annexes to this proxy statement and the documents incorporated by reference or referred to in this proxy statement, which you should read carefully and in their entirety.

Except as otherwise specifically noted in this proxy statement or as context otherwise requires, “Galaxy,” “we,” “our,” “us,” the “Company” and similar words in this proxy statement refer to Galaxy Gaming, Inc. Throughout this proxy statement we refer to Evolution Malta Holding Limited as “Parent” or “Evolution” and Galaxy Merger Sub, Inc. as “Merger Sub.” In addition, throughout this proxy statement we refer to the Agreement and Plan of Merger, dated as of July 18, 2024, as it may be amended from time to time, by and among Parent, Merger Sub and Galaxy, as the “Merger Agreement.”

 

Q.	Why am I receiving these materials?

 

A.

On July 18, 2024, Galaxy entered into the Merger Agreement providing for the merger of Merger Sub, a wholly owned subsidiary of Parent, with and into Galaxy, with Galaxy surviving the Merger as a wholly owned subsidiary of Parent. The board of directors of Galaxy (the “Board”) is furnishing this proxy statement and form of proxy card to the holders of the issued and outstanding shares of Galaxy common stock, par value $0.001 per share (the “Company Shares”), in connection with the solicitation of proxies to be voted at the Special Meeting.

 

Q.	What is the proposed transaction?

 

A.

The proposed transaction is the acquisition of Galaxy by Parent pursuant to the Merger Agreement. If the proposal to adopt the Merger Agreement (the “Merger Proposal”) is approved by the holders of a majority of the voting power of the Company Shares outstanding and entitled to vote thereon as of the Record Date (as defined below) and the other closing conditions under the Merger Agreement have been satisfied or waived, Merger Sub will be merged with and into Galaxy, with Galaxy surviving the Merger as a wholly owned subsidiary of Parent. As a result of the Merger, Company Shares will no longer be publicly traded and will be delisted from the OTCQB marketplace (“OTCQB”). In addition, Company Shares will be deregistered under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and Galaxy will no longer file periodic reports with the U.S. Securities and Exchange Commission (the “SEC”).

 

Q.	What will I receive if the Merger is consummated?

 

A.

Upon consummation of the Merger, you will be entitled to receive $3.20 in cash, without interest (the “Merger Consideration”) and subject to applicable withholding taxes, for each Company Share that you own as of the Effective Time (as defined below), unless you have properly exercised and not failed to perfect, withdrawn or otherwise lost your right to appraisal in accordance with Sections 92A.300 to 92A.500 of the Nevada Revised Statutes (as amended from time to time, the “NRS”). For example, if you own 1,000 Company Shares as of the Effective Time, you will receive $3,200.00 in cash in exchange for your Company Shares (less any applicable withholding taxes). You will not be entitled to receive shares in the surviving corporation or in Parent as a result of the Merger.

 

1

Q.	How does the Merger Consideration compare to the market price of Company Shares prior to the public announcement that Galaxy entered into the Merger Agreement? How does the Merger Consideration compare to the market price of Company Shares as of a recent trading date?

 

A.

The Merger Consideration represents a premium of approximately 124% over the Company Share closing price of $1.43 on July 17, 2024, the last trading day before the announcement of the transaction. On September 25, 2024, the last practicable day before the printing of this proxy statement, the closing price of the Company Shares on OTCQB was $2.77 per share. You are encouraged to obtain current market quotations for Company Shares.

 

Q.	When and where is the Special Meeting?

 

A.	The Special Meeting will be held virtually at www.virtualshareholdermeeting.com/GLXZ2024SM on November 12, 2024, at 9:00 a.m. Pacific Time or at any adjournment or postponement thereof. The Special Meeting will be online only, so there is no physical meeting location.

 

Q.	What am I being asked to vote on at the Special Meeting?

 

A.	You are being asked to consider and vote on the following proposals:

 

•

To approve the Merger Proposal;

 

•

To approve, on a non-binding, advisory basis, certain compensation that will or may be paid or become payable to Galaxy’s named executive officers that is based on or otherwise relates to the Merger (the “Merger Compensation Proposal”); and

 

•

To approve the adjournment of the Special Meeting to a later date or dates if necessary to solicit additional proxies if there are insufficient votes to approve the Merger Proposal at the time of the Special Meeting (the “Adjournment Proposal”).

 

Q.	Who is entitled to vote at the Special Meeting?

 

A.

Only holders of record of Company Shares as of the close of business on September 25, 2024 (the “Record Date”) will be entitled to notice of, and to vote at, the Special Meeting. As of the close of business on the Record Date, there were 24,975,826 Company Shares issued and outstanding. Each issued and outstanding Company Share on that date will entitle its holder to one vote, in person or by proxy, on all matters to be voted on at the Special Meeting.

 

Q.	What vote is required to approve the Merger Proposal?

 

A.	The affirmative vote of the holders of a majority of the voting power of the Company Shares outstanding and entitled to vote thereon as of the Record Date is required to approve the Merger Proposal.

The failure to grant a proxy to vote your Company Shares by submitting a signed proxy card, granting a proxy electronically over the Internet or by telephone or to vote at the Special Meeting will have the same effect as a vote “AGAINST” the Merger Proposal. If you hold your Company Shares in “street name,” the failure to instruct your bank, broker or other nominee on how to vote your Company Shares on the Merger Proposal will have the same effect as a vote “AGAINST” the Merger Proposal. Abstentions will have the same effect as a vote “AGAINST” the Merger Proposal.

 

Q.	What factors did the Board consider in deciding to enter into the Merger Agreement and recommending the approval of the Merger Proposal, the Merger Compensation Proposal and the Adjournment Proposal?

 

A.	In reaching its decision to approve and adopt the Merger Agreement and the transactions contemplated thereby, including the Merger, and to recommend that our stockholders approve the Merger Proposal, the

 

2

Merger Compensation Proposal and the Adjournment Proposal, the Board consulted with our management, as well as our legal and financial advisors, and considered the terms of the proposed Merger Agreement and the transactions contemplated thereby, including the Merger, as well as other alternatives. For a more detailed description of these factors, see “The Merger-Recommendation of the Board and Reasons for the Merger” beginning on page 43 of this proxy statement.

 

Q.	What is a quorum and how many Company Shares are needed to constitute a quorum?

 

A.

A quorum of stockholders is the presence of stockholders holding the minimum number of shares necessary to transact business at the Special Meeting. The holders of at least a majority of the voting power of Company Shares entitled to vote at the Special Meeting, present or represented by proxy, will constitute a quorum at the Special Meeting. If a quorum is not present, then under our second amended and restated bylaws, the person presiding at the Special Meeting may adjourn the meeting from time to time in the manner provided under our Bylaws until a quorum is represented.

If you submit a signed proxy card, grant a proxy electronically over the Internet or by telephone, or vote at the Special Meeting (regardless of whether you indicate how you wish to vote), your Company Shares will be counted for purposes of determining the presence of a quorum. If you hold your Company Shares in “street name,” the failure to instruct your bank, broker or other nominee on how to vote your Company Shares will cause such Company Shares to not be counted for purposes of determining the presence of a quorum. However, if you hold Company Shares in “street name” and give voting instructions to your broker, bank or other nominee with respect to at least one of the proposals, but give no instruction as to one or more of the other proposals, then those Company Shares will be deemed present at the Special Meeting for purposes of establishing a quorum at the Special Meeting, will be voted as instructed with respect to any proposal as to which instructions were given, and will not be voted with respect to any other proposal. Abstentions will be counted for purposes of determining the presence of a quorum.

 

Q.	What vote is required to approve the proposal to approve certain compensation that will or may be paid or become payable to Galaxy’s named executive officers that is based on or otherwise relates to the Merger?

 

A.	The affirmative vote of the holders of a majority in voting power of the votes cast (excluding abstentions and broker non-votes, if any) at the Special Meeting by the holders entitled to vote thereon is required to approve the Merger Compensation Proposal.

The failure of any stockholder of record to submit a signed proxy card, grant a proxy electronically over the Internet or by telephone or to vote at the Special Meeting will not have any effect on the Merger Compensation Proposal. If you hold your Company Shares in “street name,” the failure to instruct your bank, broker or other nominee on how to vote your Company Shares will not have any effect on the Merger Compensation Proposal. Abstentions are not considered to be votes cast and will have no effect on the Merger Compensation Proposal.

Because the vote on the Merger Compensation Proposal is advisory only, it will not be binding on either Galaxy or Parent. Accordingly, if the Merger Proposal is approved and the Merger is completed, the compensation will be payable, subject only to the conditions applicable thereto, regardless of the outcome of the non-binding, advisory vote of Galaxy stockholders on the Merger Compensation Proposal.

 

Q.	What vote is required to approve the proposal to approve the adjournment of the Special Meeting to a later date or dates if necessary to solicit additional proxies?

 

A.	The affirmative vote of the holders of a majority in voting power of the votes cast (excluding abstentions and broker non-votes, if any) at the Special Meeting by the holders entitled to vote thereon is required to approve the Adjournment Proposal.

 

3

The failure of any stockholder of record to submit a signed proxy card, grant a proxy electronically over the Internet or by telephone or to vote at the Special Meeting will not have any effect on the Adjournment Proposal. If you hold your Company Shares in “street name,” the failure to instruct your bank, broker or other nominee on how to vote your Company Shares will not have any effect on the Adjournment Proposal. Abstentions are not considered to be votes cast and will have no effect on the Adjournment Proposal.

 

Q.	How does the Board recommend that I vote?

 

A.

The Board, after considering the various factors described under “The Merger-Recommendation of the Board and Reasons for the Merger” beginning on page 43 of this proxy statement, (i) determined that the Merger Agreement and the transactions contemplated thereby, including the Merger, are advisable, fair to and in the best interests of Galaxy and Galaxy stockholders, (ii) duly authorized and approved the execution, delivery and performance by Galaxy of the Merger Agreement and the consummation by Galaxy of the transactions contemplated thereby, (iii) declared the execution, delivery and performance by Galaxy of the Merger Agreement and the consummation of the transactions contemplated thereby, advisable, and (iv) resolved, subject to the terms and conditions set forth in the Merger Agreement, to recommend that Galaxy stockholders adopt and approve the Merger Agreement and approve the transactions contemplated thereby, including the Merger.

The Board recommends that you vote “FOR” the Merger Proposal, “FOR” the Merger Compensation Proposal and “FOR” the Adjournment Proposal.

 

Q.	What do I need to do now?

 

A.

We encourage you to read this proxy statement, the annexes to this proxy statement, including the Merger Agreement, and the documents we incorporate by reference and refer to in this proxy statement carefully and consider how the Merger affects you, and then sign, date and return, as promptly as possible, the enclosed proxy card in the accompanying reply envelope, or grant your proxy electronically on the Internet or by telephone, so that your Company Shares can be voted at the Special Meeting. If you hold your Company Shares in “street name,” please refer to the voting instruction forms provided by your bank, broker or other nominee to vote your Company Shares. Please do not send your stock certificates with your proxy card.

 

Q.	How do I vote?

 

A.	If you are a stockholder of record (that is, if your Company Shares are registered in your name with our transfer agent, Pacific Stock Transfer Company (“PST”)), there are four ways to cause your Company Shares to be voted at the Special Meeting:

 

•

by visiting the Internet at the address on your proxy card and following the instructions;

 

•

by calling toll-free (within the U.S. or Canada) at the phone number on your proxy card and following the instructions;

 

•

by completing, dating, signing and returning the enclosed proxy card in the accompanying prepaid reply envelope; or

 

•

by voting virtually at the Special Meeting at www.virtualshareholdermeeting.com/GLXZ2024SM.

If you sign, date and return your proxy card without indicating how you wish to vote, your proxy will be voted “FOR” each of the Merger Proposal, the Merger Compensation Proposal and the Adjournment Proposal.

A 16-digit control number, located on your proxy card, is designed to verify your identity and allow you to grant a proxy to vote your Company Shares, and to confirm that your voting instructions have been properly

 

4

recorded when granting a proxy electronically over the Internet or by telephone. Please be aware that, although there is no charge for granting a proxy to vote your Company Shares, if you grant a proxy electronically over the Internet or by telephone, you may incur costs such as telephone and Internet access charges for which you will be responsible. Even if you plan to attend the Special Meeting, you are strongly encouraged to grant a proxy to vote your Company Shares.

If your Company Shares are held in “street name” through a bank, broker or other nominee, you should follow the directions provided by your broker, bank or other nominee regarding how to instruct your broker, bank or other nominee to vote your Company Shares. Without those instructions, your Company Shares will not be voted, which will have the same effect as voting “AGAINST” the Merger Proposal.

 

Q.	What is the difference between holding Company Shares as a stockholder of record and as a beneficial owner?

 

A.	If your Company Shares are registered directly in your name with our transfer agent, PST, you are considered, with respect to those Company Shares, to be the “stockholder of record.” In this case, this proxy statement and your proxy card have been sent directly to you by or on behalf of Galaxy.

If your Company Shares are held through a bank, broker or other nominee, you are considered the “beneficial owner” of such Company Shares and are considered to hold them in “street name.” In that case, this proxy statement has been forwarded to you by your bank, broker or other nominee who is considered, with respect to those Company Shares, to be the stockholder of record. As the beneficial owner, you have the right to direct your bank, broker or other nominee on how to vote your shares by following their instructions for voting. You are also invited to attend the Special Meeting. However, because you are not the stockholder of record, you may not vote your Company Shares at the Special Meeting unless you request and obtain a valid “legal proxy” from your bank, broker or other nominee.

 

Q.	Will my Company Shares held in “street name” or another form of record ownership be combined for voting purposes with Company Shares I hold as the stockholder of record?

 

A.

No. Because any Company Shares you may hold in “street name” will be deemed to be held by a different stockholder than any Company Shares you hold as the stockholder of record, any Company Shares held in “street name” will not be combined for voting purposes with the Company Shares you hold as the stockholder of record. Similarly, if you own Company Shares in various registered forms, such as jointly with your spouse, as trustee of a trust or as custodian for a minor, you will receive, and will need to sign and return, a separate proxy card for those Company Shares because they are held in a different form of record ownership. Company Shares held by a corporation or business entity must be voted by an authorized officer of the entity. Company Shares held in an individual retirement account must be voted under the rules governing the account.

 

Q.	If I hold my Company Shares in “street name,” will my bank, broker or other nominee vote my Company Shares for me on the proposals to be considered at the Special Meeting?

 

A.

Not without your direction. Your bank, broker or other nominee will only be permitted to vote your Company Shares on any “non-routine” proposal if you instruct your bank, broker or other nominee on how to vote. Under applicable stock exchange rules, banks, brokers or other nominees have the discretion to vote your Company Shares on routine matters if you fail to instruct your bank, broker or other nominee on how to vote your Company Shares with respect to such matters. “Broker non-votes” occur when shares held in street name are present at a stockholder meeting at which at least one item of business is a routine proposal, but the bank, broker or other nominee is not instructed by the beneficial owner of those shares to vote on a particular proposal for which the bank, broker or other nominee does not have discretionary voting power. Under applicable stock exchange rules, the proposals in this proxy statement are non-routine matters, and therefore it is expected that there will be no broker non-votes at the Special Meeting. Accordingly, banks,

 

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brokers and other nominees cannot vote on these proposals without your instructions. Therefore, it is important that you instruct your bank, broker or other nominee on how you wish to vote your Company Shares.

You should follow the procedures provided by your bank, broker or other nominee to instruct them, as applicable, to vote your Company Shares. Without such instructions, your Company Shares will not be voted at the Special Meeting and will not be considered present and entitled to vote at the Special Meeting for the purpose of determining whether a quorum is present. If you fail to instruct your bank, broker or other nominee on how to vote your Company Shares on the Merger Proposal, it will have the same effect as if you voted “AGAINST” the Merger Proposal.

 

Q.	What happens if I do not vote?

 

A.

The required vote to approve the Merger Proposal is based on the total number of Company Shares outstanding as of the close of business on the Record Date, not just the Company Shares that are voted at the Special Meeting. If you do not vote in person or by proxy, it will have the same effect as voting “AGAINST” the Merger Proposal.

 

Q.	May I change my vote after I have mailed my signed proxy card or otherwise submitted my vote by proxy?

 

A.	Yes. If you are a stockholder of record, you may change your vote or revoke your proxy at any time by:

 

•

signing a new proxy card with a date later than the date of the previously submitted proxy card relating to the same Company Shares and returning it to us by mail;

 

•

submitting a new proxy by telephone prior to 11:59 p.m. Eastern Time on November 11, 2024, the day preceding the Special Meeting;

 

•

submitting a new proxy by Internet prior to 11:59 p.m. Eastern Time on November 11, 2024, the day preceding the Special Meeting;

 

•

sending a written notice of revocation to Galaxy at 6480 Cameron Street, Suite 305, Las Vegas, Nevada 89118, which must be received prior to 11:59 p.m. Eastern Time on November 11, 2024, the day preceding the Special Meeting; or

 

•

virtually attending the Special Meeting and voting thereat (simply attending the Special Meeting will not cause your proxy to be revoked).

Please note that if you hold your Company Shares in “street name,” and you have instructed a broker, bank or other nominee to vote your Company Shares, the above-described options for revoking your voting instructions do not apply, and instead you should contact your bank, broker or other nominee for instructions regarding how to change or revoke your vote. You may also vote at the Special Meeting via the Special Meeting website, provided you have obtained a legal proxy from your bank, broker or other nominee for the Special Meeting.

 

Q.	What is a proxy?

 

A.

A proxy is your legal designation of another person (a “proxy”) to vote your Company Shares. This written document describing the matters to be considered and voted on at the Special Meeting is called a “proxy statement.” The document used to designate a proxy to vote your Company Shares is called a “proxy card.” The Board has designated each of Matt Reback, President and Chief Executive Officer, and Steven Kopjo, Chief Financial Officer, with full power of substitution, as proxies for the Special Meeting.

 

Q.	If a stockholder gives a proxy, how are the Company Shares voted?

 

A.	Regardless of the method you choose to grant a proxy to vote your Company Shares, the individuals named on the enclosed proxy card, or your proxies, will vote your Company Shares in the way that you indicate.

 

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When completing the Internet or telephone process or the proxy card, you may specify whether your Company Shares should be voted “FOR” or “AGAINST” or to abstain from voting on all, some or none of the specific items of business to come before the Special Meeting.

If you properly sign your proxy card but do not mark the boxes showing how your Company Shares should be voted on a matter, the Company Shares represented by your properly signed proxy will be voted (i) “FOR” the Merger Proposal, (ii) “FOR” the Merger Compensation Proposal and (iii) “FOR” the Adjournment Proposal.

 

Q.	May I attend the Special Meeting and vote in person?

 

A.

All stockholders of record of Galaxy as of the Record Date may attend the Special Meeting and vote at the virtual Special Meeting. You will not be able to attend the Special Meeting physically in person. To vote your Company Shares at the Special Meeting, you must attend and vote at the virtual meeting at www. virtualshareholdermeeting.com.

Company Shares held directly in your name as a stockholder of record may be voted at the Special Meeting via the Special Meeting website. Shares held in “street name” may be voted at the Special Meeting via the Special Meeting website only if you obtain a legal proxy from your bank, broker or other nominee for the Special Meeting.

Even if you plan to attend the Special Meeting, we encourage you to complete, sign, date and return the enclosed proxy or grant a proxy electronically over the Internet or via telephone to ensure that your shares will be represented at the Special Meeting.

 

Q.	What happens if I sell or otherwise transfer my Company Shares before consummation of the Merger?

 

A.	If you sell or transfer your Company Shares before consummation of the Merger, you will have transferred your right to receive the Merger Consideration in the Merger. In order to receive the Merger Consideration, you must hold your Company Shares through consummation of the Merger.

The Record Date for stockholders entitled to vote at the Special Meeting is earlier than the date the Merger is anticipated to be consummated. Accordingly, if you sell or transfer your Company Shares after the Record Date but before the Special Meeting, unless special arrangements (such as provision of a proxy) are made between you and the person to whom you sell or otherwise transfer your Company Shares and each of you notifies Galaxy in writing of such special arrangements, you will transfer the right to receive the Merger Consideration, if the Merger is consummated, to the person to whom you sell or transfer your Company Shares, but you will have retained your right to vote these Company Shares at the Special Meeting. Even if you sell or otherwise transfer your Company Shares after the Record Date, we encourage you to complete, date, sign and return the enclosed proxy card or grant a proxy via the Internet or telephone.

 

Q.	How will I receive the Merger Consideration to which I am entitled?

 

A.

If you hold your Company Shares in certificated form, you will receive a letter of transmittal shortly after the Merger is consummated instructing you how to surrender your stock certificates to an exchange agent to be designated by Parent in order to receive the Merger Consideration to which you are entitled. Please do not send in your stock certificates now. If you hold your Company Shares in book-entry form but not through the Depository Trust Company (“DTC”), you will receive instructions regarding delivery of an “agent’s message” with respect to such book-entry shares. If your Company Shares are held in “street name” by your broker, bank or other nominee, you may receive instructions from your broker, bank or other nominee as to what action, if any, you need to take to effect the surrender of your “street name” Company Shares in exchange for the Merger Consideration.

 

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Q.	Should I send in my stock certificate(s) now or other evidence of ownership now?

 

A.	No. Please do not send in your stock certificates or other documents evidencing ownership of Company Shares now or with your proxy card.

 

Q.	I do not know where my stock certificate is. How will I get the Merger Consideration for my Company Shares?

 

A.

If the Merger is consummated, the transmittal materials you will receive after the consummation of the Merger will include the procedures that you must follow if you cannot locate your stock certificate. This will include an affidavit that you will need to sign attesting to the loss of your stock certificate. You may also be required to post a bond as indemnity against any potential loss.

 

Q.	When do you expect the Merger to be consummated?

 

A.

Consummation of the Merger is subject to various closing conditions, including, among others, adoption of the Merger Agreement and approval of the Merger by the holders of a majority of the voting power of the Company Shares outstanding and entitled to vote thereon as of the Record Date and certain approvals from gaming authorities or under gaming laws in jurisdictions relating to the conduct of activities by Galaxy or its affiliates and the transactions contemplated by the Merger Agreement.

We currently anticipate that the Merger will be consummated in mid-2025, subject to the satisfaction or waiver of all of the conditions to the Merger. However, it is possible, including as a result of factors outside the control of Galaxy and Parent, that the Merger will be consummated at a later time or not at all.

 

Q.	What effects will the Merger have on Galaxy?

 

A.

The Company Shares are currently registered under the Exchange Act, and are listed on OTCQB under the symbol “GLXZ.” As a result of the Merger, Galaxy will cease to be a publicly traded company and will become a wholly owned subsidiary of Parent. As soon as reasonably practicable following the consummation of the Merger, the Company Shares will cease trading on and be delisted from OTCQB and will be deregistered under the Exchange Act, and Galaxy will no longer be required to file periodic reports with the SEC.

 

Q.	Why am I being asked to vote on the Merger Compensation Proposal?

 

A.	In accordance with the rules promulgated under Section 14A of the Exchange Act, we are providing you with the opportunity to cast a non-binding, advisory vote on the compensation that may be payable to our named executive officers in connection with the Merger.

 

Q.	What will happen if the stockholders do not approve the Merger Compensation Proposal at the Special Meeting?

 

A.

Approval of the Merger Compensation Proposal is not a condition to the completion of the Merger. The vote with respect to the Merger Compensation Proposal is on an advisory basis and will not be binding on Galaxy or Parent. Further, the underlying compensation plans and agreements are contractual in nature and are not, by their terms, subject to stockholder approval. Accordingly, if the Merger Proposal is approved and the Merger is completed, the compensation will be payable, subject only to the conditions applicable thereto, regardless of the outcome of the non-binding, advisory vote of Galaxy stockholders on the Merger Compensation Proposal.

 

Q.	What happens if the Merger is not consummated?

 

A.	If the Merger Agreement is not adopted by the holders of a majority of the voting power of the outstanding Company Shares entitled to vote thereon as of the Record Date or if the Merger is not consummated for any

 

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other reason, Galaxy stockholders will not receive any payment for their Company Shares pursuant to the Merger Agreement. Instead, Galaxy will remain a public company, the Company Shares will continue to be listed and traded on OTCQB and registered under the Exchange Act and we will continue to file periodic reports with the SEC.

Under specified circumstances, we may be required to pay Parent a termination fee of $2,617,339 upon the termination of the Merger Agreement (the “Company Termination Fee”), including if the Board changes its recommendation to Galaxy stockholders to vote FOR the Merger Proposal, or we enter into an alternative transaction with respect to a Superior Proposal, as further described under “The Merger Agreement-Termination Fee; Certain Expenses” beginning on page 91 of this proxy statement.

Additionally, Parent may be required to pay us a termination fee of $5,234,678 under specified circumstances (the “Parent Termination Fee”), including, under specified circumstances, due to the failure to obtain certain gaming regulatory approvals.

 

Q.	Do any directors or executive officers have interests in the Merger that may differ from those of Galaxy stockholders generally?

 

A.

In considering the recommendation of the Board with respect to the Merger Proposal, you should be aware that our directors and executive officers may have interests in the Merger that may be different from, or in addition to, your interests as a stockholder. The Board was aware of these potential interests and considered them, among other matters, in approving the Merger Agreement and the Merger and in recommending that the Merger Agreement be adopted by our stockholders. For a description of the potential interests of our directors and executive officers in the Merger, see “The Merger-Interests of the Directors and Executive Officers of Galaxy in the Merger” beginning on page 57 of this proxy statement.

 

Q.	Have any stockholders agreed to vote for the Merger Proposal?

 

A.

As an inducement to Parent entering into the Merger Agreement, on July 18, 2024, Michael Gavin Isaacs, Meredith Brill, Mark Lipparelli, Cheryl Kondra, Cheryl Kondra and Bryan W. Waters (collectively, the “Support Agreement Signatories”), who collectively beneficially own shares representing approximately 14% of the voting power of the Company Shares, entered into Support Agreements with Galaxy (collectively, the “Support Agreements”), pursuant to which the Support Agreement Signatories will, among other things, (i) cause all of their respective Company Shares to be counted as present thereat for purposes of determining a quorum; and (ii) be present (in person or by proxy) and vote (or cause to be voted if another person is the holder of record of any Company Shares beneficially owned by the Support Agreement Signatory), or deliver (or cause to be delivered) a written consent with respect to, all of his or her Company Shares (a) in favor of (1) the adoption and approval of the Merger Agreement and the approval of the Merger, (2) the approval of any proposal to adjourn or postpone such meeting (including the Special Meeting) to a later date if Galaxy or Parent proposes or requests such postponement or adjournment in accordance with the terms of the Merger Agreement, and (3) the approval of any other proposal considered and voted upon by the Galaxy stockholders at any meeting of the stockholders of Galaxy (including the Special Meeting) necessary for consummation of the Merger and the other transactions contemplated by the Merger Agreement, and (b) against any (1) Takeover Proposal, (2) change in the Board (as defined herein), (3) action or agreement that would result in a breach of any covenant, representation or warranty or any other obligation or agreement of Galaxy contained in the Merger Agreement and (4) other action that is intended or could reasonably be expected to impede or interfere with or materially delay the Merger or any other transactions contemplated by the Merger Agreement.

 

Q.	Who will count the votes obtained at the Special Meeting?

 

A.	The votes will be counted by the inspector of election appointed for the Special Meeting.

 

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Q.	Who will solicit votes for and bear the cost and expenses of this proxy solicitation?

 

A.

We will bear the cost of the solicitation of proxies. We have retained Innisfree M&A Incorporated, a proxy solicitation firm, to solicit proxies in connection with the Special Meeting at a cost of approximately $25,000, plus expenses. We will also indemnify the proxy solicitor against losses arising out of its provisions of these services on our behalf. In addition, we may reimburse banks, brokers and other nominees representing beneficial owners of Company Shares for their expenses in forwarding soliciting materials to such beneficial owners. Proxies may also be solicited by our directors, officers and employees, without additional compensation, personally or by telephone, email, fax, over the Internet or other means of communication.

 

Q.	Where can I find the voting results of the Special Meeting?

 

A.

We intend to publish final voting results in a Current Report on Form 8-K that we will file with the SEC within four business days of the Special Meeting. All reports that we file with the SEC are publicly available when filed. See “Where You Can Find More Information” beginning on page 102 of this proxy statement.

 

Q.	What are the material U.S. federal income tax consequences to Galaxy stockholders of the exchange of Company Shares for cash pursuant to the Merger?

 

A.

The exchange of Company Shares for cash pursuant to the Merger will be a taxable transaction for U.S. federal income tax purposes. A “U.S. Holder” (as defined below under “The Merger-Material U.S. Federal Income Tax Consequences of the Merger to Holders of Company Shares” beginning on page 62 of this proxy statement) generally will recognize gain or loss for U.S. federal income tax purposes in an amount equal to the difference, if any, between the amount of cash received by such U.S. Holder pursuant to the Merger and such U.S. Holder’s adjusted tax basis in the Company Shares surrendered pursuant to the Merger. A “Non-U.S. Holder” (as defined below under “The Merger-Material U.S. Federal Income Tax Consequences of the Merger to Holders of Company Shares” beginning on page 62 of this proxy statement) generally will not be subject to U.S. federal income tax with respect to the exchange of Company Shares for cash in the Merger unless such Non-U.S. Holder has certain connections to the United States. You should consult your tax advisors to determine the U.S. federal income tax consequences relating to the Merger in light of your own particular circumstances and any consequences arising under the laws of any state, local or non-U.S. taxing jurisdiction or other tax laws. A more complete description of the material U.S. federal income tax consequences of the Merger is provided under “The Merger-Material U.S. Federal Income Tax Consequences of the Merger to Holders of Company Shares” beginning on page 62 of this proxy statement.

 

Q.	What will the holders of Galaxy equity awards receive in the Merger?

 

A.

The Merger Agreement provides that, effective as of immediately prior to the Effective Time, Galaxy’s equity awards that are outstanding immediately prior thereto will be treated in the following manner in connection with the Merger. For additional information regarding the treatment of Galaxy equity awards, see “The Merger Agreement-Treatment of Equity Awards” beginning on page 69 of this proxy statement.

 

•

Treatment of Galaxy Options. Effective as of immediately prior to the Effective Time, each Galaxy stock option (the “Company Stock Options”) to purchase Company Shares with an exercise price per share less than the Merger Consideration (each, an “In-the-Money Company Stock Option”) that is outstanding and unexercised will be automatically fully vested, canceled and converted into the right to receive an amount in cash (without interest) equal to the product obtained by multiplying (1) the number of Company Shares underlying such Company Stock Option by (2) an amount equal to the Merger Consideration less the applicable per share exercise price of such Company Stock Option (such aggregate amount, the “Option Consideration”), less any applicable withholding taxes. Each Company Stock Option (whether vested or unvested) that is not an In-the-Money Company Stock Option will, at the Effective Time, be automatically canceled for no consideration.

 

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•

Treatment of Galaxy Stock Awards. Effective as of immediately prior to the Effective Time, except as described in the following paragraph, each unvested Galaxy stock award (the “Company Stock Awards”) prior to the date of the Merger Agreement that vests solely on the basis of time and that is outstanding immediately prior to the Effective Time will, at the Effective Time, be automatically fully vested, canceled and converted into the right to receive an amount in cash (without interest and subject to deduction for any required withholding under applicable law), equal to (A) the number of Company Shares underlying such Company Stock Award multiplied by (B) the Merger Consideration (the “Stock Award Consideration”).

The Company Stock Award that was issued to Matthew Reback, our Chief Executive Officer prior to the date of the Merger Agreement (his “Long-Term Incentive Stock Grant”) or any Stock Award that was granted on or after July 18, 2024 but prior to the Effective Time, and that is, in each case, outstanding immediately prior to the Effective Time, will, at the Effective Time, be automatically canceled and converted into a contingent right to receive an amount in cash (without interest and subject to deduction for any required withholding under applicable law), equal to the Stock Award Consideration with respect to the number of Company Shares still eligible to be earned and subject to such Company Stock Award as of the Effective Time (determined in the case of Mr. Reback’s performance-based award, based on maximum performance) (each, a “Contingent Cash Award”). Each Contingent Cash Award will be generally subject to the same terms and conditions (including vesting terms and any terms providing for “double-trigger” acceleration of vesting) that applied to the Company Stock Award from which it was converted as of immediately prior to the Effective Time, subject to certain adjustments to reflect the Merger, except that, with respect to Mr. Reback’s Contingent Cash Award, (a) any portion of the Contingent Cash Award that vests in accordance with its terms based on 2024, 2025, or 2026 performance, as applicable, shall be paid to him prior to March 15, 2025, 2026, or 2027, respectively, and (b) any portion of Mr. Reback’s Contingent Cash Award that vests in accordance with its terms as a result of any other vesting event (including termination of employment) shall be paid to him within 30 days following the vesting date.

For additional information regarding the treatment of Galaxy equity awards, see “The Merger Agreement-Treatment of Equity Awards” beginning on page 69 of this proxy statement.

 

Q.	Am I entitled to dissenters’ or appraisal rights instead of receiving the Merger Consideration for my Company Shares under the NRS?

 

A.

Under the NRS, stockholders and beneficial owners who do not vote in favor of the Merger Proposal and who follow the procedures set forth in Sections 92A.300 through 92A.500 of the NRS will have the right to seek appraisal of the fair value of their issued and outstanding Company Shares. A copy of the full text of Sections 92A.300 through 92A.500 of the NRS is attached to this proxy statement as Annex C and incorporated herein by reference.

 

Q.	What should I do if I receive more than one set of voting materials?

 

A.

You may receive more than one set of voting materials, including multiple copies of this proxy statement and multiple proxy cards or voting instruction cards. For example, if your Company Shares are held in more than one brokerage account or are registered differently, you will receive more than one proxy card or voting instruction card. Please complete, date, sign and return (or grant a proxy to vote via the Internet or telephone with respect to) each proxy card and voting instruction card that you receive to ensure that all of your Company Shares are voted.

 

Q.	What is householding and how does it affect me?

 

A.	The SEC permits us to send a single set of proxy materials to any household at which two or more stockholders reside, unless contrary instructions have been received, but only if we provide advance notice

 

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and follow certain procedures. In such cases, each stockholder continues to receive a separate notice of the meeting and proxy card. Certain brokerage firms may have instituted householding for beneficial owners of Company Shares held through brokerage firms. If your family has multiple accounts holding Company Shares, you may have already received householding notification from your broker. Please contact your broker directly if you have any questions or require additional copies of this proxy statement. The broker will arrange for delivery of a separate copy of this proxy statement promptly upon your written or oral request. You may decide at any time to revoke your decision to household, and thereby receive multiple copies.

 

Q.	Who can help answer my questions?

 

A.

If you have any more questions concerning the Merger, the Special Meeting or this proxy statement, would like additional copies of this proxy statement or enclosed proxy card, or require assistance in submitting your proxy or voting your Company Shares, please contact our proxy solicitor or us at the contact information provided below:

INNISFREE M&A INCORPORATED

501 Madison Avenue, 20^th Floor

New York, New York 10022

Stockholders may call toll-free: (877) 800-5185

Banks and brokers may call collect: (212) 750-5833

or

 

 

Galaxy Gaming, Inc.

Attn: Corporate Secretary

Email: investors@galaxygaming.com

If your broker, bank or other nominee holds your Company Shares, you may also call your broker, bank or other nominee for additional information.

 

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THE COMPANIES

Galaxy Gaming, Inc.

Galaxy Gaming, Inc. (“Galaxy”) is an established global gaming company specializing in the design, development, acquisition, assembly, marketing and licensing of proprietary casino table games and associated technology, platforms and systems for the casino gaming industry. Casinos use Galaxy’s proprietary products and services to enhance their gaming operations and improve their profitability, productivity and security, as well as to offer popular cutting-edge gaming entertainment content and technology to their players. Galaxy also markets its products and services to online and land-based casinos worldwide. Galaxy licenses its products and services for use solely in markets where casino gaming is not illegal. Galaxy also licenses its content and distributes content from other companies to iGaming operators throughout the world. The Company Shares are listed on OTCQB under the symbol “GLXZ.”

Additional information about Galaxy is contained in certain of its public filings that are incorporated by reference herein. See “Where You Can Find More Information” beginning on page 102 of this proxy statement.

Evolution Malta Holding Limited

Evolution Malta Holding Limited (“Parent” or “Evolution”) is a direct, wholly owned subsidiary of Evolution AB (publ) (“Evolution Parent”), a Swedish public limited company founded in 2006 that develops, produces, markets and licenses fully-integrated business-to-business online casino solutions to gaming operators. Evolution Parent’s customers include 800 operators including the majority of tier one online operators and several land-based casinos. Evolution Parent’s principal executive offices are located at Hamngatan 11, SE-111 47 Stockholm, Sweden. Evolution Parent’s common stock is listed and traded on Stockholm Stock Exchange under the symbol “EVO.”

Galaxy Merger Sub, Inc.

Galaga Merger Sub, Inc. (“Merger Sub”) is a Nevada corporation and an indirect wholly owned subsidiary of Evolution Parent, with registered office located at 701 South Carson Street, Suite 200, Carson City, Nevada 89701. Merger Sub was formed solely for the purpose of effecting the Merger and the other transactions contemplated by the Merger Agreement and has not engaged in any business to date except for activities incidental to its incorporation and activities undertaken in connection with the Merger and the other transactions contemplated by the Merger Agreement. Upon completion of the Merger, Merger Sub will merge with and into Galaxy, with Galaxy surviving as a wholly owned subsidiary of Evolution.

 

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THE SPECIAL MEETING

We are furnishing this proxy statement to Galaxy stockholders as part of the solicitation of proxies by the Board for use at the Special Meeting or any adjournment or postponement thereof.

Date, Time and Place of the Special Meeting

This proxy statement is being furnished to our stockholders as part of the solicitation of proxies by the Board for use at the Special Meeting to be held virtually at www.virtualshareholdermeeting.com/GLXZ2024SM on November 12, 2024, at 9:00 a.m. Pacific Time or at any adjournment or postponement thereof.

Company Shares held directly in your name as a stockholder of record may be voted at the Special Meeting at www.virtualshareholdermeeting.com/GLXZ2024SM. Shares held in “street name” may be voted at the Special Meeting at www.virtualshareholdermeeting.com/GLXZ2024SM. 

Purpose of the Special Meeting

At the Special Meeting, we will ask our stockholders of record as of the Record Date to vote on (i) the Merger Proposal, (ii) the Merger Compensation Proposal and (iii) the Adjournment Proposal. If holders of Company Shares fail to adopt the Merger Agreement by approving the Merger Proposal, the Merger will not occur. A copy of the Merger Agreement is attached to this proxy statement as Annex A and incorporated herein by reference, and the material provisions of the Merger Agreement are described under “The Merger Agreement” beginning on page 67 of this proxy statement.

This proxy statement and the enclosed form of proxy are first being mailed to our stockholders on or about September 26, 2024.

Record Date; Shares Entitled to Vote; Quorum

Only stockholders of record as of the close of business on September 25, 2024, the Record Date for the Special Meeting, are entitled to notice of and to vote at the Special Meeting or at any adjournments or postponements thereof.

As of the Record Date, there were 24,975,826 Company Shares issued and outstanding and entitled to be voted at the Special Meeting.

A quorum of stockholders is necessary to transact business at the Special Meeting. Our second amended and restated bylaws provide that the presence at the Special Meeting, in person or by proxy, of the holders of a majority of the voting power of our issued and outstanding Company Shares entitled to vote at the Special Meeting will constitute a quorum for Galaxy to transact business at the Special Meeting. In general, Company Shares that were issued and outstanding as of the Record Date and are represented by a properly signed and returned proxy card will be counted as Company Shares present and entitled to vote at the Special Meeting for purposes of determining a quorum. Company Shares represented by proxies received but marked “ABSTAIN” will be included in the calculation of the number of Company Shares considered to be present at the Special Meeting for purposes of determining a quorum. Broker non-votes, if any, will not be included in the calculation of the number of Company Shares considered to be present at the Special Meeting for purposes of determining a quorum. However, if a beneficial owner of Company Shares held in street name gives voting instructions to the bank, broker or other nominee with respect to at least one of the proposals, but gives no instruction as to one or more of the other proposals, then those Company Shares will be deemed present at the Special Meeting and for purposes of establishing a quorum at the Special Meeting, will be voted as instructed with respect to any proposal as to which instructions were given, and will not be voted with respect to any other proposal.

 

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In the event that a quorum is not present at the Special Meeting, it is expected that the Special Meeting would be adjourned to a later date to solicit additional proxies, and a quorum will have to be established at such adjourned date.

Vote Required; Abstentions and Broker Non-Votes

Each Company Share issued and outstanding as of the close of business on the Record Date is entitled to one vote at the Special Meeting.

Approval of the Merger Proposal requires the affirmative vote of the holders of a majority of the voting power of the Company Shares that are outstanding as of the Record Date and entitled to vote thereon. Adoption of the Merger Agreement by our stockholders is a condition to the Closing.

Approval of the Merger Compensation Proposal requires the affirmative vote of the holders of a majority in voting power of the votes cast (excluding abstentions and broker non-votes) at the Special Meeting by the holders entitled to vote thereon.

Approval of the Adjournment Proposal requires the affirmative vote of the holders of a majority in voting power of the votes cast (excluding abstentions and broker non-votes) at the Special Meeting by the holders entitled to vote thereon.

If a Galaxy stockholder fails to vote, it will have the same effect as if the stockholder voted “AGAINST” the Merger Proposal, but it will have no effect on the Merger Compensation Proposal or the Adjournment Proposal.

If a Galaxy stockholder abstains from voting, it will have the same effect as if the stockholder voted “AGAINST” the Merger Proposal, but will not be considered to be a vote cast on, and will have no effect on, the Merger Compensation Proposal or the Adjournment Proposal.

If you hold your Company Shares in “street name,” the failure to instruct your bank, broker or other nominee on how to vote your Company Shares will have the same effect as a vote “AGAINST” the Merger Proposal, but will have no effect on the Merger Compensation Proposal or the Adjournment Proposal.

Company Shares Held by Directors and Executive Officers

As of the close of business on the Record Date, directors and executive officers of Galaxy and their affiliates beneficially owned and were entitled to vote, in the aggregate, 4,523,007 Company Shares, which represented approximately 18.11% of the Company Shares issued and outstanding on that date. Our directors and executive officers have informed us that they currently intend to vote all of their Company Shares (i) “FOR” the Merger Proposal, (ii) “FOR” the Merger Compensation Proposal and (iii) “FOR” the Adjournment Proposal, although none of them is obligated to do so.

Voting; Proxies

Voting at the Special Meeting

You can vote at the virtual Special Meeting, which will be held on November 12, 2024, at 9:00 a.m. Pacific Time at www.virtualshareholdermeeting.com/GLXZ2024SM (unless the Special Meeting is adjourned or postponed).

You may also authorize the persons named as proxies on the proxy card to vote your shares by returning the proxy card in advance by mail, over the Internet or by telephone. If you are not a stockholder of record, but instead hold your Company Shares in “street name” through a bank, broker or other nominee, you may vote at www.virtualshareholdermeeting.com/GLXZ2024SM.

 

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Providing Voting Instructions

To ensure that your Company Shares are voted at the Special Meeting, we recommend that you submit your proxy or provide voting instructions for your Company Shares held in “street name” to your bank, broker or other nominee promptly, even if you plan to attend the Special Meeting.

Company Shares Held by Record Holders

If you are a stockholder of record and your Company Shares are registered in your name with our transfer agent, PST, you may submit your proxy using one of the methods described below.

Submit a Proxy by Telephone or via the Internet. This proxy statement is accompanied by a proxy card with instructions for submitting a proxy. You can grant a proxy by telephone, until 11:59 p.m. Eastern Time on November 11, 2024, the day preceding the Special Meeting, by calling the toll-free number as specified on the enclosed proxy card or via the Internet, until 11:59 p.m. Eastern Time on November 11, 2024, the day preceding the Special Meeting, by accessing the Internet address as specified on the enclosed proxy card. Your Company Shares will be voted as you direct, and in the same manner as if you had completed, signed, dated and returned your proxy card, as described below. You must have the enclosed proxy card available, and follow the instructions on the proxy card, in order to submit a proxy electronically over the Internet or by telephone.

Submit a Proxy Card. If you complete, sign, date and return the enclosed proxy card by mail so that it is received prior to the Special Meeting, your Company Shares will be voted in the manner directed by you on your proxy card.

Voting instructions are included on your proxy card. All Company Shares represented by properly executed proxies received in time for the Special Meeting will be voted at the Special Meeting in accordance with the instructions of the stockholder. If you sign, date and return your proxy card without indicating how you wish to vote, such Company Shares represented by your properly signed proxy will be voted “FOR” each of the Merger Proposal, the Merger Compensation Proposal and the Adjournment Proposal. If you fail to return your proxy card and you are a holder of record as of the close of business on the Record Date, unless you attend the Special Meeting, your Company Shares will not be considered present at the Special Meeting for purposes of determining whether a quorum is present, and your failure to vote will have the same effect as a vote “AGAINST” the Merger Proposal and will have no effect on the vote regarding the Merger Compensation Proposal or the Adjournment Proposal.

Company Shares Held in “Street Name”

If your Company Shares are held in “street name” through a bank, broker or other nominee, your bank, broker or other nominee will send you instructions as to how to provide voting instructions for your Company Shares. You may cause your Company Shares to be voted through your bank, broker or other nominee by completing and returning the voting form provided by your bank, broker or other nominee, or by the Internet or telephone through your bank, broker or other nominee by following the instructions provided to you by them if such a service is available, or by attending the Special Meeting and voting using your control number, or, if you did not obtain a control number, by contacting your bank, broker or other nominee to obtain a control number so that you may vote.

Under applicable stock exchange rules, banks, brokers or other nominees have the discretion to vote your Company Shares on “routine” matters if you fail to instruct your bank, broker or other nominee on how to vote your Company Shares with respect to such matters. “Broker non-votes” occur when shares held in street name are present at a stockholder meeting at which at least one item of business is a routine proposal, but the bank, broker or other nominee is not instructed by the beneficial owner of those shares to vote on a particular proposal for which the bank, broker or other nominee does not have discretionary voting power. Under applicable stock

 

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exchange rules, the Merger Proposal, the Merger Compensation Proposal and the Adjournment Proposal described in this proxy statement are “non-routine” matters, and therefore it is expected that there will be no broker non-votes at the Special Meeting. Accordingly, your bank, broker or other nominee cannot vote on these proposals without your instructions. Therefore, if you do not return your bank’s, broker’s or other nominee’s voting form, do not provide voting instructions via the Internet or telephone through your bank, broker or other nominee, if applicable, or do not attend the Special Meeting and vote with a “legal proxy” from your bank, broker or other nominee, your Company Shares will not be voted at the Special Meeting and will not be considered present and entitled to vote at the Special Meeting for the purpose of determining whether a quorum is present. Broker non-votes, if any, will not be considered present at the Special Meeting for purposes of determining whether a quorum is present at the Special Meeting, will have the same effect as if you voted “AGAINST” the Merger Proposal and will have no effect on the Merger Compensation Proposal or the Adjournment Proposal. However, if a beneficial owner of shares of common stock held in street name gives voting instructions to the bank, broker or other nominee with respect to at least one of the proposals, but gives no instruction as to one or more of the other proposals, then those shares will be deemed present at the Special Meeting and for purposes of establishing a quorum at the Special Meeting, will be voted as instructed with respect to any proposal as to which instructions were given, and will not be voted with respect to any other proposal.

Revocability of Proxies

Any person giving a proxy pursuant to this solicitation has the power to revoke and change it any time before it is voted at the Special Meeting. If you are a stockholder of record, you may change your vote or revoke your proxy by:

 

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signing a new proxy card with a date later than the date of the previously submitted proxy card relating to the same Company Shares and returning it to us by mail;

 

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submitting a new proxy by telephone prior to 11:59 p.m. Eastern Time on November 11, 2024, the day preceding the Special Meeting;

 

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submitting a new proxy by Internet prior to 11:59 p.m. Eastern Time on November 11, 2024, the day preceding the Special Meeting;

 

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sending a written notice of revocation to Galaxy at 6480 Cameron Street, Suite 305, Las Vegas, Nevada 89118, which must be received prior to 11:59 p.m. Eastern Time on November 11, 2024, the day preceding the Special Meeting; or

 

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attending the Special Meeting and voting thereat (simply attending the Special Meeting will not cause your proxy to be revoked).

Please note, however, that only your last-dated proxy will count. Attending the Special Meeting without taking one of the actions described above will not in itself revoke your proxy. Please note that if you want to revoke your proxy by mailing a new proxy card to Galaxy or by sending a written notice of revocation to Galaxy, you should ensure that you send your new proxy card or written notice of revocation in sufficient time for it to be received by Galaxy before the Special Meeting. Please note that to be effective, your new Internet voting instructions, telephonic voting instructions or written notice of revocation must be received by our Corporate Secretary prior to 11:59 p.m. Eastern Time on November 11, 2024, the day preceding the Special Meeting.

If you hold your Company Shares in “street name,” you should contact your bank, broker or other nominee for instructions regarding how to change your vote or submit new voting instructions. You may also vote at the Special Meeting with your control number, or, if you did not obtain a control number, by contacting your bank, broker or other nominee to obtain a control number. Any adjournment or postponement of the Special Meeting for the purpose of soliciting additional proxies will allow Galaxy stockholders who have already sent in their proxies to revoke them at any time prior to their use at the Special Meeting, as adjourned or postponed.

 

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Abstentions

An abstention occurs when a stockholder attends a meeting, either in person or by proxy, but abstains from voting. Abstentions will be included in the calculation of the number of Company Shares represented at the Special Meeting for purposes of determining whether a quorum has been achieved. Abstaining from voting will have the same effect as a vote “AGAINST” the Merger Proposal, but will have no effect on the Merger Compensation Proposal or the Adjournment Proposal.

Adjournments and Postponements

Although it is not currently expected, subject to certain restrictions in the Merger Agreement, the Special Meeting may be adjourned or postponed, among other reasons, for the purpose of soliciting additional proxies. If a quorum is not present, then under our second amended and restated bylaws, (i) the person presiding at the Special Meeting or (ii) a majority in voting power of the stockholders entitled to vote thereon, present at the Special Meeting or represented by proxy, shall have power to adjourn the Special Meeting until a quorum is represented, and notice need not be given of the adjourned meeting if the time and place thereof are announced at the Special Meeting at which the adjournment is taken. However, our amended and restated bylaws provide that if any such adjournment is for more than 60 days, or if after an adjournment a new record date for determining stockholders entitled to vote is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the adjourned meeting as of the record date for determining the stockholders entitled to notice of the adjourned meeting.

If the Special Meeting is adjourned or postponed to solicit additional proxies, stockholders who have already submitted their proxies will be able to revoke them at any time prior to their use at the Special Meeting as adjourned or postponed.

In the event that there is present at the Special Meeting, in person or by proxy, sufficient favorable voting power to secure the vote of our stockholders necessary to adopt the Merger Agreement by approving the Merger Proposal, we do not currently anticipate that we will adjourn or postpone the Special Meeting.

Board Recommendation

The Board, after considering the various factors more fully described under “The Merger-Recommendation of the Board and Reasons for the Merger” beginning on page 43 of this proxy statement, (i) determined that the Merger Agreement and the transactions contemplated thereby, including the Merger, are advisable, fair to and in the best interests of Galaxy and Galaxy stockholders, (ii) approved and declared advisable the execution, delivery and performance by Galaxy of the Merger Agreement and the consummation by Galaxy of the transactions contemplated thereby, (iii) declared the execution, delivery and performance by Galaxy of the Merger Agreement and the consummation of the transactions contemplated thereby, advisable, and (iv) resolved, subject to the terms and conditions set forth in the Merger Agreement, to recommend that Galaxy stockholders adopt and approve the Merger Agreement and approve the transactions contemplated thereby, including the Merger (the matters described in clauses (i) through (iv), the “Company Board Recommendation”).

The Board recommends that you vote (i) “FOR” the Merger Proposal, (ii) “FOR” the Merger Compensation Proposal and (iii) “FOR” the Adjournment Proposal.

Solicitation of Proxies

The Board is soliciting your proxy, and we will bear the cost of the solicitation of proxies.

We have retained Innisfree M&A Incorporated, a proxy solicitation firm, to solicit proxies in connection with the Special Meeting at a cost of approximately $25,000, plus expenses. We will also indemnify the proxy

 

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solicitor against losses arising out of its provisions of these services on our behalf. In addition, we may reimburse banks, brokers and other nominees representing beneficial owners of Company Shares for their expenses in forwarding soliciting materials to such beneficial owners. Proxies may also be solicited by our directors, officers and employees, personally or by telephone, email, fax, over the Internet or other means of communication. No additional compensation will be paid for such services.

Anticipated Date of Consummation of the Merger

We currently anticipate that the Merger will be consummated in mid-2025, assuming satisfaction or waiver of all of the conditions to the Merger. However, the Merger is subject to various conditions, and it is possible, including as a result of factors outside the control of Galaxy and Parent, that the Merger will be consummated at a later time or not at all.

Appraisal Rights

Under the NRS, stockholders and beneficial owners who do not vote in favor of the Merger Proposal and who follow the procedures set forth in Sections 92A.300 through 92A.500 of the NRS will have the right to seek appraisal of the fair value of their issued and outstanding Company Dissenting Shares. Company Dissenting Shares will not be converted into a right to receive the Merger Consideration, but will instead be entitled to only such rights as are granted by Sections 92A.300 through 92A.500 of the NRS. However, if, after the Effective Time, a holder of Company Dissenting Shares fails to perfect, withdraws or loses such holder’s right to appraisal pursuant to Sections 92A.300 through 92A.500 of the NRS or if a court of competent jurisdiction determines that such holder is not entitled to the relief provided by Sections 92A.300 through 92A.500 of the NRS, such holder’s Company Dissenting Shares shall be treated as if they had been converted as of the Effective Time into the right to receive the Merger Consideration upon surrender of the Certificate formerly representing such Company Dissenting Shares or transfer of the Book-Entry Shares, as applicable. A copy of the full text of Sections 92A.300 through 92A.500 of the NRS is attached to this proxy statement as Annex C and incorporated herein by reference.

Householding of Special Meeting Materials

Unless we have received contrary instructions, we may send a single copy of this proxy statement to any household at which two or more stockholders reside if we believe the stockholders are members of the same family. Each stockholder in the household will continue to receive a separate proxy card. This process, known as “householding,” reduces the volume of duplicate information received at your household and helps to reduce our expenses.

We will promptly deliver a separate copy of our proxy statement to any stockholder without charge upon a written request or verbal request to Galaxy Gaming, Inc., Attention: Corporate Secretary, email: investors@galaxygaming.com. Stockholders sharing an address that are receiving multiple copies of this proxy statement can request delivery of a single copy of the proxy materials by contacting their broker, bank or other intermediary or sending a written request to Galaxy Gaming, Inc. at the address above.

Questions and Additional Information

If you have more questions about the Merger or how to submit your proxy, or if you need additional copies of this proxy statement or the enclosed proxy card or voting instructions, please contact our proxy solicitor or us:

 

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INNISFREE M&A INCORPORATED

501 Madison Avenue, 20^th Floor

New York, New York 10022

Stockholders may call toll-free: (877) 800-5185

Banks and brokers may call collect: (212) 750-5833

or

 

 

Galaxy Gaming, Inc.

Attn: Corporate Secretary

Email: investors@galaxygaming.com

If your broker, bank or other nominee holds your Company Shares, you may also call your broker, bank or other nominee for additional information.

 

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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This proxy statement, and the documents to which we refer you in this proxy statement, as well as information included in oral statements or other written statements made or to be made by us or on our behalf, contain “forward-looking statements” within the meaning of the federal securities laws. Forward-looking statements relate to expectations, beliefs, projections, future plans and strategies, anticipated events or trends and similar expressions concerning matters that are not historical facts. In some cases, you can identify forward-looking statements by the use of forward-looking terminology such as “may,” “will,” “should,” “expects,” “intends,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” or “potential” or the negative of these words and phrases or similar words or phrases which are predictions of or indicate future events or trends and which do not relate solely to historical matters. Stockholders are cautioned that any such forward-looking statements are not guarantees of future performance and may involve significant risks and uncertainties, and that actual results may vary materially from those in the forward-looking statements. These risks and uncertainties include, but are not limited to, the risks detailed in our filings with the SEC, including in our most recent Annual Report on Form 10-K and Quarterly Reports on Form 10-Q, factors and matters described or incorporated by reference in this proxy statement, and the following factors:

 

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the ability to complete the proposed transaction on the proposed terms or on the anticipated timeline, or at all, including risks and uncertainties related to securing the necessary stockholder approval and satisfaction of other closing conditions to consummate the proposed transaction;

 

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the occurrence of any event, change or other circumstance that could give rise to the termination of the merger agreement relating to the proposed transaction;

 

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the risks that the proposed transaction disrupts the Company’s current plans and operations or diverts the attention of the Company’s management or employees from ongoing business operations;

 

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the risk of potential difficulties with the Company’s ability to retain and hire key personnel and maintain relationships with customers and other third parties as a result of the proposed transaction;

 

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the risk that the proposed transaction may involve unexpected costs and/or unknown or inestimable liabilities;

 

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the risk that the Company’s business may suffer as a result of uncertainty surrounding the proposed transaction;

 

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the risk that stockholder litigation in connection with the proposed transaction may affect the timing or occurrence of the proposed transaction or result in significant costs of defense, indemnification and liability;

 

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the effects relating to the announcement of the transaction or any further announcements or the consummation of the transaction on the market price of the Company’s common stock;

 

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the effect of the restrictions placed on our business activities and the limitations on our ability to pursue alternatives to the Merger during the pendency of the Merger, pursuant to the Merger Agreement;

 

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the nature, cost and outcome of any litigation and other legal proceedings, including any such proceedings related to the Merger and instituted against us and others;

 

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the fact that receipt of the all-cash Merger Consideration would be taxable to our stockholders that are treated as U.S. Holders for U.S. federal income tax purposes;

 

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Galaxy’s ability to implement its business strategy, including the fact that our stockholders would forego the opportunity to realize the potential long-term value of the successful execution of our current strategy as an independent public company; and

 

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the risks related to the potential impact of general economic, political and market factors on the parties to the proposed Merger.

 

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Consequently, no forward-looking statements may be guaranteed and there can be no assurance that the actual results or developments anticipated by such forward-looking statements will be realized or, even if substantially realized, that they will have the expected consequences to, or effects on, Galaxy or its businesses or operations. No assurance can be given that these are all of the factors that could cause actual results to vary materially from the forward-looking statements. The foregoing review of risks and uncertainties that could cause actual events to differ from expectations should not be construed as exhaustive and should be read in conjunction with statements that are included herein and elsewhere, including the risk factors included in Galaxy’s most recent Annual Report on Form 10-K and Quarterly Reports on Form 10-Q, factors and matters described or incorporated by reference in this proxy statement and other reports filed with the SEC.

Any forward-looking statement made in this proxy statement speaks only as of the date on which it is made. Galaxy can give no assurance that the conditions to the Merger will be satisfied. You should not put undue reliance on any forward-looking statements. Galaxy undertakes no obligation, and expressly disclaims any obligation, to update, alter or otherwise revise any forward-looking statement, whether written or oral, that may be made from time to time, whether as a result of new information, future developments or otherwise, except as may be required by law. If Galaxy does update one or more forward-looking statements, no inference should be drawn that it will make additional updates with respect to those or other forward-looking statements.

 

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THE MERGER

This discussion of the Merger does not purport to be complete and is qualified in its entirety by reference to the Merger Agreement, which is attached to this proxy statement as Annex A and incorporated by reference into this proxy statement. You should read the entire Merger Agreement carefully as it is the legal document that governs the Merger.

Certain Effects of the Merger on Galaxy

If the Merger Agreement is adopted by Galaxy stockholders and the other conditions to the Closing are either satisfied or waived, Merger Sub will be merged with and into Galaxy, with Galaxy continuing as the surviving corporation and a wholly owned subsidiary of Parent.

At the Effective Time, each Company Share issued and outstanding immediately prior to the Effective Time (other than Company Shares held as treasury stock or otherwise by Parent, Merger Sub, Galaxy or any of their respective wholly owned subsidiaries (“Canceled Company Shares”) and Company Dissenting Shares) will be canceled and extinguished and automatically converted into the right to receive the Merger Consideration.

The Company Shares are listed and trade on the OTCQB under the symbol “GLXZ.” As a result of the Merger, Galaxy will cease to be a publicly traded company and will become a wholly owned subsidiary of Parent. Prior to the Effective Time, we will use our reasonable best efforts to cooperate with Parent to delist the Company Shares from the OTCQB and deregister the Company Shares under the Exchange Act, provided that such delisting and termination will not be effective until after the Effective Time. Upon such delisting and deregistration, we will no longer be a publicly traded company and will no longer be required to file periodic reports with the SEC, in each case in accordance with applicable law, rules and regulations. If the Merger is consummated, you will not own any shares of the capital stock of the surviving corporation or Parent.

Effect on Galaxy if the Merger Is Not Consummated

If the Merger Agreement is not adopted by the holders of a majority of the voting power of the outstanding Company Shares entitled to vote thereon as of the Record Date or if the Merger is not consummated for any other reason, Galaxy stockholders will not receive any payment for their Company Shares pursuant to the Merger Agreement. Instead, Galaxy will remain a public company, the Company Shares will continue to be listed and traded on the OTCQB and registered under the Exchange Act, and we will continue to file periodic reports with the SEC.

Furthermore, if the Merger is not consummated, depending on the circumstances that caused the Merger not to be consummated, the price of the Company Shares may decline significantly. If that were to occur, it is uncertain when, if ever, the price of the Company Shares would return to the price at which it trades as of the date of this proxy statement.

Accordingly, if the Merger is not consummated, there can be no assurance as to the effect of these risks and opportunities on the future value of your Company Shares. If the Merger is not consummated, the Board will continue to evaluate and review our business operations, assets, operating results, financial condition, prospects and business strategy, among other things, and make such changes as are deemed appropriate and continue to seek to enhance stockholder value. If the Merger Agreement is not adopted by the holders of a majority of the voting power of the outstanding Company Shares entitled to vote thereon as of the Record Date or if the Merger is not consummated for any other reason, there can be no assurance that any other transaction acceptable to Galaxy will be offered or that our business, prospects or results of operations will not be adversely impacted.

In addition, upon termination of the Merger Agreement, under specified circumstances, Galaxy may be required to pay Parent a termination fee, and under other specified circumstances, Parent may be required to pay Galaxy the Parent Termination Fee, in each case, as further described under “The Merger Agreement-Termination Fee; Certain Expenses” beginning on page 91 of this proxy statement.

 

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Merger Consideration

In the Merger, each Company Share issued and outstanding immediately prior to the Effective Time (other than (i) Company Dissenting Shares or (ii) Company Shares to be canceled as described in the immediately succeeding paragraph) will be automatically canceled and extinguished and automatically converted into the right to receive the Merger Consideration.

Each Company Share issued and outstanding immediately prior to the Effective Time that is held by (i) Galaxy or any wholly owned subsidiary of Galaxy as treasury stock or otherwise or (ii) Parent, Merger Sub or any other wholly owned subsidiary of Parent will automatically be canceled and extinguished and no consideration shall be delivered in exchange therefor at the Effective Time.

“Company Dissenting Shares” refers to each Company Share outstanding immediately prior to the Effective Time (other than Company Shares canceled as described in the immediately preceding paragraph) and held by a Galaxy stockholder who has not voted in favor of adoption of the Merger Agreement or consented thereto in writing and who has properly exercised appraisal rights of such shares in accordance with the applicable provisions of Sections 92A.300 through 92A.500 of the NRS. Company Dissenting Shares shall not be converted into, or represent the right to receive the Merger Consideration. Please see “The Merger-Appraisal Rights” beginning on page 62 of this proxy statement for more information.

Effective as of immediately prior to the Effective Time, each In-the-Money Company Stock Option that is outstanding and unexercised will be automatically fully vested, canceled and converted into the right to receive an amount in cash (without interest) equal to the Option Consideration, less any applicable withholding taxes. Each Company Stock Option (whether vested or unvested) that is not an In-the-Money Company Stock Option will, at the Effective Time, be automatically canceled for no consideration.

Effective as of immediately prior to the Effective Time, except as described in the following paragraph, each unvested Company Stock Award that vests solely on the basis of time and that is outstanding immediately prior to the Effective Time will, at the Effective Time, be automatically fully vested, canceled and converted into the right to receive an amount in cash (without interest and subject to deduction for any required withholding under applicable law), equal to the Stock Award Consideration.

Mr. Reback’s Long-Term Incentive Stock Grant and each other Company Stock Award that was granted on or after July 18, 2024, but prior to the Effective Time, in each case, and that is outstanding immediately prior to the Effective Time, will, at the Effective Time, be automatically canceled and converted into a Contingent Cash Award. Each Contingent Cash Award will generally be subject to the same terms and conditions (including vesting terms and any terms providing for “double-trigger” acceleration of vesting) that applied to the Company Stock Award from which it was converted as of immediately prior to the Effective Time, subject to certain adjustments to reflect the Merger, except that, with respect to Mr. Reback’s Contingent Cash Award, (a) any portion of the Contingent Cash Award that vests in accordance with its terms based on 2024, 2025, or 2026 performance, as applicable, shall be paid to him prior to March 15, 2025, 2026, or 2027, respectively, and (b) any portion of a Contingent Cash Award that vests in accordance with its terms as a result of any other vesting event (including termination of employment) shall be paid to him within 30 days following the vesting date.

After the Merger is consummated, under the terms of the Merger Agreement, you will have the right to receive the Merger Consideration, but you will no longer have any rights as a Galaxy stockholder as a result of the Merger (except that any holder of Company Dissenting Shares will have those rights granted under the applicable provisions of Sections 92A.300 through 92A.500 of the NRS), nor will you be entitled to receive any shares in Parent or the surviving corporation.

Each of the Parent, surviving corporation, their respective affiliates, and the paying agent will be entitled to deduct and withhold from any amounts payable under the Merger Agreement such amounts as are required to be

 

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deducted and withheld therefrom under applicable tax laws. To the extent amounts are withheld or deducted and paid over to the appropriate governmental authority, such amounts shall be treated for all purposes under the Merger Agreement as having been paid to the person in respect of which such deduction and withholding were made.

Background of the Merger

The terms of the Merger are the result of arm’s-length negotiations between Galaxy and Evolution. The following is a summary of the events leading up to the entry into the Merger Agreement and the key meetings, negotiations, discussions and actions between Galaxy and Evolution and their respective advisors that preceded the public announcement of the Merger.

From time to time, the Board, together with Galaxy’s management, has reviewed and evaluated Galaxy’s prospects and various opportunities to maximize stockholder value, including, among others, internal growth strategies, potential divestitures and acquisitions, and potential business combinations involving Galaxy. The Board has also periodically reviewed with members of Galaxy’s management and external advisors, including Macquarie Capital (USA) Inc. (“Macquarie”), Galaxy’s financial advisor since 2018, the economic environment, industry dynamics, and potential strategic alternatives available to Galaxy.

Prior to May 2023, members of Galaxy’s management and the Board had, from time to time, met with representatives of Evolution through the course of Evolution’s relationship as a key customer of Galaxy. In the two years prior to Evolution’s initial proposal to acquire Galaxy made on February 21, 2024 Galaxy and Evolution did not have any discussions regarding a potential strategic transaction involving the acquisition of Galaxy.

In April 2023, Martin Carlesund, Evolution’s Chief Executive Officer, contacted Mark Lipparelli, the Chairman of the Board, and Todd Cravens, Galaxy’s former President and Chief Executive Officer, to request a meeting between Messrs. Lipparelli and Cravens and Mr. Carlesund to discuss Galaxy’s business and a potential strategic transaction between Galaxy and Evolution.

On May 8, 2023, Messrs. Lipparelli and Cravens met with Mr. Carlesund in person in Las Vegas, Nevada. During this meeting, Mr. Carlesund expressed Evolution’s interest in a potential strategic transaction with Galaxy, including the possibility of an outright acquisition of Galaxy. No specific pricing terms of a potential transaction were discussed as part of that meeting. Promptly following the discussion, Mr. Lipparelli informed the other members of the Board, who expressed support for Mr. Lipparelli engaging in further discussions with Evolution related to Evolution’s potential interest in exploring a strategic transaction.

On May 23, 2023, Mr. Lipparelli contacted Mr. Carlesund to indicate that Galaxy would be interested in further discussing a potential strategic transaction with Evolution if Evolution was receptive, and Mr. Carlesund indicated that they would continue to evaluate the opportunity based on publicly available information and will keep him informed if they have further interest.

On August 6, 2023, Mr. Carlesund contacted Mr. Lipparelli telephonically to reiterate Evolution’s interest in evaluating a potential strategic transaction with Galaxy, and to request that the parties meet on August 23, 2023, in Las Vegas, Nevada. On that call, the parties discussed potentially entering into a confidentiality agreement to facilitate further discussions, if the Board was supportive.

On August 11, 2023, the Board held its quarterly meeting with members of Galaxy’s management present. Given Galaxy’s existing relationship with Macquarie and Macquarie’s experience within the gaming industry, the Board and members of Galaxy’s management reaffirmed Macquarie’s suitability to continue to serve as Galaxy’s financial advisor in connection with a potential strategic transaction with Evolution. At the meeting, Mr. Lipparelli updated the Board regarding Evolution’s continued interest in a strategic transaction with Galaxy, and Mr. Carlesund’s request to meet Mr. Lipparelli on August 23,

 

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2023. The Board discussed the potential benefits and drawbacks of a potential strategic transaction with Evolution, including the potential synergies that could be achieved as a result of a combination of the companies, supporting an ability for Evolution to maximize its offer price. The Board also considered the fact that Evolution is a significant customer of Galaxy, Galaxy’s other strategic alternatives and its prospects as a stand-alone company, the limited universe of potential other bidders that might be interested in acquiring Galaxy based on management’s and Macquarie’s understanding of the industry, Galaxy’s prior interactions with other parties, the complex regulatory environment that would potentially impact timing, operational constraints related to both the gaming industry and Evolution’s existing customer relationship with Galaxy, Evolution’s reputation and profile, and the risks inherent in engaging in a potential strategic transaction. After discussion, the Board indicated its support for Mr. Lipparelli to meet with Mr. Carlesund regarding the potential transaction with Evolution and authorized Galaxy’s management to negotiate and execute a confidentiality agreement to facilitate the sharing of certain nonpublic information in connection with Evolution’s due diligence, and instructed Mr. Lipparelli and Galaxy’s management to keep the Board apprised of the status of discussions.

On August 22, 2023, Galaxy entered into a customary confidentiality agreement with Evolution (the “Evolution Confidentiality Agreement”) related to the potential strategic transaction, which included customary standstill provisions restricting Evolution from, among other things, making public proposals with respect to the acquisition of Galaxy without Galaxy’s prior consent until the earlier of one year from the date the Evolution Confidentiality Agreement was entered and the Effective Time (which restrictions would terminate upon the occurrence of, among other things, Galaxy’s execution of a definitive written agreement providing for any acquisition of a majority of the voting securities of Galaxy and its subsidiaries by any person or group). The Evolution Confidentiality Agreement also contained a “don’t ask don’t waive” provision prohibiting Evolution from requesting that Galaxy release Evolution from its standstill restrictions.

On August 23, 2023, Messrs. Lipparelli and Carlesund met in person in Las Vegas, Nevada, at which meeting Mr. Carlesund reiterated Evolution’s interest in continuing to explore a potential strategic transaction with Galaxy. Messrs. Lipparelli and Carlesund discussed the key workstreams that would be necessary to further the discussions between the parties, including price, transaction structure and regulatory considerations (including gaming regulatory approvals). Mr. Carlesund indicated that Evolution and its advisors would commence their preliminary financial and legal due diligence based on the information provided by Galaxy to Evolution.

From August 23, 2023, through January 2024, Evolution conducted preliminary regulatory diligence with its legal counsel and advisors to assess the viability of a potential transaction with Galaxy, including how to structure a potential transaction and the scope of regulatory approvals (including gaming regulatory approvals) that may be necessary in connection with a strategic transaction with, or acquisition of, Galaxy. Evolution also engaged with local advisors in the various jurisdictions in which Galaxy operated, both to assess the potential scope of required gaming regulatory approvals, and the nature of such approvals.

On October 12, 2023, Mr. Lipparelli informed Jesper von Bahr, Evolution’s Director of Mergers and Acquisitions, that Macquarie would be acting as financial advisor to Galaxy and coordinating an initial meeting with Evolution’s financial advisor, J.P. Morgan.

On January 30, 2024, Mr. Lipparelli contacted Mr. Carlesund to request an update on Evolution’s preliminary diligence and regulatory analysis to date. Mr. Lipparelli also indicated that the Board was weighing various strategic options for the upcoming year and encouraged Evolution to provide a written proposal if it was interested in continuing to explore a potential strategic transaction with the Company.

On February 1, 2024, at the instruction of Galaxy’s management, representatives of Macquarie shared with representatives of J.P. Morgan a summary of Galaxy’s financial performance for the fiscal year ended 2023, as well as certain projected financial data for fiscal years ending 2024 and 2025.

 

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On February 21, 2024, Mr. Carlesund sent Mr. Lipparelli a written non-binding indication of interest to acquire all of the outstanding equity interests of Galaxy in an all-cash transaction to be priced at a premium to Galaxy’s share price that would be customary for transactions of this nature and consistent with market practice (the “February 21 Letter”). The February 21 Letter did not contain specific pricing terms.

On February 22, 2024, the Board held a meeting with members of Galaxy’s management and representatives of Macquarie in attendance. Mr. Lipparelli led discussions with the Board and Galaxy’s advisors regarding the diligence and analysis performed by Evolution to date, Galaxy’s recent communications with Evolution, and the February 21 Letter (including the potential interpretations of “customary” premia for transactions of the nature proposed by Evolution). The Board also discussed with members of Galaxy’s management and its advisors potential responses to Evolution, including the relative risks and benefits of continuing discussions. After these discussions, members of the Board indicated their support for continuing to explore the proposed transaction with Evolution, but instructed management and its advisors to communicate to Evolution and its advisors that the Company was only willing to continue these discussions if Evolution provided a proposed price that the Board could evaluate.

On February 25, 2024, at the instruction of Galaxy’s management, representatives of Macquarie delivered to representatives of J.P. Morgan information relating to the potential cost synergies that Evolution could realize from a potential acquisition of Galaxy.

On March 22, 2024, the Board held a meeting with members of Galaxy’s management in attendance. The Board discussed the communications between Galaxy and Evolution since the prior Board meeting, including potential next steps. Additionally, Bruce Benson of Howard & Howard Attorneys PLLC, outside counsel to Galaxy, provided the Board with an overview of its fiduciary duties under applicable Nevada law and confidentiality obligations in connection with a potential acquisition of Galaxy.

On March 24, 2024, Evolution submitted a revised written non-binding indication of interest to acquire all of the outstanding equity interests of Galaxy in an all-cash transaction at a proposed purchase price of $2.19 per share (the “March 24 Offer”). The purchase price reflected in the March 24 Offer implied a 38% premium to the Galaxy closing stock price as of March 22, the last trading day prior to the March 24 Offer.

On March 27, 2024, the Board held a meeting with members of Galaxy’s management and representatives of Macquarie in attendance to discuss the March 24 Offer. During this meeting, the Board discussed with management and its advisors their perspectives on the March 24 Offer, including consideration of Galaxy’s strategic alternatives, including its prospects as a stand-alone company, the historical trading price of its common stock, and other topics. The Board also discussed with management and its advisors potential responses to Evolution. Following these discussions, the Board instructed management and its advisors to communicate to Evolution and its advisors that the March 24 Offer would not provide Galaxy’s stockholders with sufficient value in order to move forward with the potential transaction.

On April 19, 2024, Evolution submitted a revised offer to acquire all of the outstanding equity interests of Galaxy in an all-cash transaction at a proposed purchase price of $2.62 per share (the “April 19 Offer”). The purchase price reflected in the April 19 Offer implied a 100% premium to the Galaxy closing stock price as of April 18, 2024, the last trading day prior to the April 19 Offer.

On April 20, 2024, the Board held a meeting with members of Galaxy’s management and representatives of Macquarie in attendance to discuss the April 19 Offer. During this meeting, representatives of Macquarie reviewed certain financial aspects relating to the April 19 Offer and financial information and other data relating to Galaxy, and the Board discussed with management and its advisors their perspectives on the April 19 Offer, including consideration of Galaxy’s strategic alternatives, including its prospects as a stand-alone company, the historical trading price of its common stock, and other topics. Following discussion and review of the April 19 Offer, the Board expressed its belief that the April 19 Offer would not provide Galaxy’s stockholders with

 

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sufficient value relative to its prospects as a stand-alone company, and discussed with management and its advisors potential strategies for encouraging Evolution to increase its proposed purchase price. After discussion, the Board directed management and its advisors to communicate to Evolution its position that the proposed price set forth in the April 19 Offer was inadequate, and to provide additional due diligence to support that belief, including Galaxy’s financial performance, growth trajectory and other due diligence topics, and representatives of Macquarie subsequently communicated the same to representatives of J.P. Morgan.

On April 24, 2024, Mr. Lipparelli delivered a written response to Mr. Carlesund communicating the Board’s views and encouraging Evolution to engage in further due diligence to improve its proposed purchase price. Later that day, Mr. Carlesund spoke to Mr. Lipparelli and verbally agreed to engage in further due diligence, with a focus on financial due diligence, regarding Galaxy’s value. Messrs. Carlesund and Lipparelli directed their respective financial advisors to coordinate a meeting among members of their respective senior management and the financial advisors, which was later scheduled for May 13, 2024, in New York, New York.

On May 10, 2024, the Board held a meeting with members of Galaxy’s management in attendance to discuss the recent interactions between Galaxy and Evolution and their respective advisors, including the communications between Messrs. Carlesund and Lipparelli following Galaxy’s written response to the April 19 Offer and the upcoming meeting scheduled for May 13, 2024.

On May 13, 2024, Matt Reback, Galaxy’s President and Chief Executive Officer, and Harry Hagerty, strategic advisor to Galaxy and Galaxy’s former Chief Financial Officer, met with Mr. von Bahr in New York, New York with representatives of Macquarie and J.P. Morgan in attendance. At this meeting, Messrs. Reback and Hagerty presented financial information supportive of the Board’s views that Evolution should be willing to pay a higher per share price, and answered questions from Mr. von Bahr and J.P. Morgan regarding Galaxy’s business and operations. Mr. von Bahr indicated that Evolution was interested in continuing discussions and receiving additional due diligence information to potentially support a higher valuation and encouraged Galaxy to provide a counterproposal to the April 19 Offer.

On May 14, 2024, Mr. Lipparelli and members of Galaxy’s management met with representatives of Macquarie and Latham & Watkins LLP (“Latham”), legal advisor to Galaxy, to discuss recent interactions between Galaxy and Evolution and the upcoming meeting of the Board to discuss the potential transaction with Evolution and the possibility of a making a counterproposal to Evolution.

On May 17, 2024, and May 20, 2024, the Board held meetings with members of Galaxy’s management and representatives from Macquarie and Latham in attendance to discuss the meetings that took place on May 13 in New York, New York. At the beginning of the meeting, as previously discussed with the Board, one of the members of the Board, Mr. Gavin Isaacs, reminded the Board of his current service on the board of directors of a competitor to Evolution, and recused himself from subsequent meetings relating to, and any deliberations and decisions regarding, the potential transaction with Evolution to avoid the appearance of any possible conflict of interest. Representatives of Macquarie reviewed a history of the proposals submitted by Evolution to Galaxy in connection with the potential transaction and strategies for encouraging Evolution to increase its proposed purchase price. The Board then discussed potential strategies to respond to Evolution’s request for a counterproposal, including the Board’s and Macquarie’s perspectives on value, precedent transactions, historical trading prices, and future prospects, as well as the benefits and drawbacks of making a specific counterproposal, and the timing thereof. Following these discussions, the Board instructed management to continue to provide additional due diligence to help support an improved valuation, and to communicate to Evolution a counterproposal at $3.50 per share.

On May 30, 2024, Messrs. Lipparelli and Carlesund met in person in London multiple times over the course of the day to negotiate certain key terms of the potential transaction, including price, and discuss additional due diligence requests. During these meetings, Mr. Lipparelli communicated to Mr. Carlesund Galaxy’s counterproposal at $3.50 per share. Mr. Carlesund indicated that he did not believe that Evolution would be

 

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prepared to consummate the transaction at that price, but, based on the due diligence performed to date, indicated that Evolution may be willing to provide a counterproposal, which would be their final offer.

Later in the day on May 30, 2024, Evolution submitted a revised non-binding indication of interest with a proposed price per share of $3.20 (the “May 30 Offer”). The May 30 Offer represented a 100% premium to the Galaxy closing stock price as of May 29, the last trading day prior to the May 30 Offer.

On May 31, 2024, the Board held a meeting with members of Galaxy’s management and representatives of Macquarie and Latham in attendance to discuss the May 30 Offer. At this meeting, representatives of Macquarie reviewed certain financial aspects relating to the May 30 Offer and financial information and other data relating to Galaxy, and the Board discussed with management and its advisors their perspectives on the May 30 Offer, including consideration of Galaxy’s strategic alternatives, including its prospects as a stand-alone company, the historical trading price of its common stock, and other topics, including management’s expectation that the May 30 Offer would be Evolution’s final offer. The Board also discussed the benefits and risks relating to seeking to engage other bidders to solicit competing offers, including the limited universe of likely bidders that would be willing and able to submit a proposal that would be superior to the May 30 Offer based on management’s and Macquarie’s understanding of the industry, Galaxy’s prior interactions with other parties, the complex regulatory environment and other operational constraints related to the gaming industry and Evolution’s existing customer relationship with Galaxy, and the availability to negotiate for fiduciary protections in public mergers that would still enable Galaxy to terminate an agreement or change its recommendation for certain competitive proposals. The Board also discussed with management and its advisors the reputation, financial capacity and motivations of Evolution, as well as the risks related to a transaction with Evolution, including potential regulatory requirements (including the potential timing of obtaining such approvals, and the risks related thereto), deal certainty, the potential risk to other business relationships that Galaxy has with Evolution’s primary competitors, the potential risk to Galaxy’s existing relationship with Evolution if no transaction with Evolution were to happen and the harm that would be caused to Galaxy if such a transaction were announced but not consummated. Following the discussions, the Board instructed Mr. Lipparelli to express to Mr. Carlesund Galaxy’s willingness to continue negotiations based on the proposed terms of the May 30 Offer, but to indicate that the Board’s willingness to approve a transaction would remain subject to the satisfactory resolution of certain other key terms related to deal certainty and protections available to Galaxy, including the scope of required gaming regulatory approvals and providing for and maximizing a reverse termination fee payable by Evolution under certain circumstances.

On June 6, 2024, representatives of Latham and Macquarie met with members of Galaxy’s management to discuss key legal terms and conditions of the potential transaction, including potential gaming regulatory considerations, related to a potential transaction with Evolution and Evolution’s outstanding due diligence requests.

Later in the day on June 6, 2024, representatives of Kirkland & Ellis LLP (“Kirkland”), legal advisor to Evolution, sent representatives of Latham an initial draft of the Merger Agreement, which proposed, among other things, (i) the nature and scope of the efforts required by Evolution to obtain the regulatory approvals required to consummate the Merger and (ii) a termination fee equal to 5.5% of Galaxy’s equity value payable by Galaxy to Evolution under certain circumstances. The initial draft of the Merger Agreement did not make a proposal with respect to a reverse termination fee payable by Evolution to Galaxy or a proposal with respect to the outside date.

On June 7, 2024, representatives of Kirkland and Evolution were provided access to the virtual data room to complete remaining confirmatory due diligence.

Beginning on June 6, 2024, and over the course of the following weeks, representatives of Evolution, Kirkland, J.P. Morgan, KPMG and other of Evolution’s professional advisors engaged in extensive due diligence, including participating in multiple telephonic due diligence calls with members of Galaxy’s management and representatives of Macquarie and Latham, and submitting multiple rounds of supplemental due diligence

 

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requests, and engaged in multiple rounds of negotiations regarding the key legal terms of the Merger Agreement, including with respect to (i) regulatory approvals (and the requisite efforts standards the parties must take with respect to obtaining applicable regulatory approvals, including actions with respect to obtaining required gaming approvals), (ii) the outside date (and related extensions thereto), (iii) whether Evolution should be obligated to pay a reverse termination fee to Galaxy (and the circumstances requiring payment of such fee), (iv) the sizes of the termination fee and the reverse termination fee, (v) certain interim operating covenants (and related monetary thresholds) and (vi) certain employment and compensation matters. During this period, members of Galaxy’s management and members of the Board engaged in and provided feedback on the negotiations, including the importance of improving the terms and maximizing the amount of the reverse termination fee payable by Evolution under certain circumstances, as well as seeking to reduce the size of the termination fee payable by Galaxy and otherwise improving the terms of the fiduciary outs, reducing the conditionality risks related to regulatory approvals and financing, in each case, and further described in “The Merger Agreement”.

On June 12, 2024, representatives of Kirkland delivered a proposed draft of a Support Agreement, pursuant to which it was proposed that certain members of Galaxy’s management and the Board agree to vote their respective shares of common stock in favor of the Merger, in each case, subject to the terms thereof.

On June 20, 2024, the Board held a meeting with members of Galaxy’s management and representatives of Macquarie in attendance. At this meeting, the Board was updated as to the progress of negotiations and deliberations between the parties, including key open issues in the Merger Agreement. The Board provided their perspectives on the open terms of the Merger Agreement and, following these discussions, instructed management and its advisors to keep the Board apprised as to the status of negotiations.

On July 15, 2024, Galaxy provided a five-year forecast (the “Galaxy Projections”) to representatives of Macquarie, which was made available to Evolution and its advisors via the online data room. Further, members of Galaxy’s management reviewed the Galaxy Projections and directed Macquarie to use the Galaxy Projections for purposes of providing financial analyses in connection with the Board’s evaluation of the potential transaction with Evolution, including preparing its opinion referenced below.

On July 16, 2024, the Board held a meeting with representatives of Macquarie and Latham and members of Galaxy’s management in attendance. At this meeting, members of Galaxy’s management and representatives of Latham reviewed with the Board the outcome of the negotiations on the terms in the Merger Agreement and the other transaction documents, including the proposed Support Agreements. Representatives of Macquarie reviewed and discussed its preliminary financial analyses, including the Galaxy Projections, with respect to the Merger. The Board then discussed the various reasons to approve or not approve the Merger. For a detailed description of the various reasons considered by the Board, please see the section titled “The Merger-Recommendation of the Board and Reasons for the Merger.” The Board provided their perspectives on the terms of the Merger Agreement, including the remaining open issues, and, following these discussions, instructed management and its advisors to finalize the remaining open issues, and agreed to reconvene to consider the final proposal. Also on this date, representatives of Macquarie provided the Board with customary disclosure regarding its relationships with Galaxy and Evolution.

On July 16, 2024, and through the morning of July 17, representatives of the parties, including Latham and Kirkland, finalized the open issues related to the Merger Agreement and other transactional documents, which included, with respect to the Merger Agreement, among other things, (i) certain actions that must be taken by Evolution in connection with obtaining required gaming approvals and (ii) the list of required gaming approvals, including the core gaming approval jurisdictions where approvals must be obtained and the methodology for obtaining additional approvals based on a Galaxy revenue threshold.

On July 18, 2024, the Board held a meeting, with members of Galaxy’s management and representatives of Macquarie and Latham in attendance. At this meeting, representatives of Latham reviewed with the Board the proposed terms in the Merger Agreement and the other transaction documents, including the proposed Support

 

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Agreements, and provided a review of the Board’s fiduciary duties with respect to its consideration of the Merger. Representatives of Macquarie reviewed and discussed its preliminary financial analyses with respect to the Merger and the merger consideration to be received by Galaxy’s stockholders. The Board then discussed the various reasons to approve or not approve the Merger, including such matters as further described in the section titled “The Merger-Recommendation of the Board and Reasons for the Merger.” At the request of the Board, representatives of Macquarie rendered its oral opinion to the Board (which was subsequently confirmed in writing by delivery of Macquarie’s written opinion dated the same date) as to, as of July 18, 2024 and subject to the various assumptions made, procedures followed, matters considered, and qualifications and limitations on the review undertaken by Macquarie as set forth in its written opinion, the fairness, from a financial point of view, to the holders of Galaxy common stock (other than Parent and its affiliates) of the merger consideration to be received by such holders in the Merger pursuant to the Merger Agreement. Following that discussion the Board (i) determined that the Merger Agreement and the transactions contemplated thereby, including the Merger, are advisable, fair to and in the best interests of Galaxy and Galaxy’s stockholders, (ii) duly authorized and approved the execution, delivery and performance by Galaxy of the Merger Agreement and the consummation by Galaxy of the transactions contemplated thereby, (iii) declared the execution, delivery and performance by Galaxy of the Merger Agreement and the consummation of the transactions contemplated thereby, advisable, and (iv) resolved, subject to the terms and conditions set forth in the Merger Agreement, to recommend that Galaxy’s stockholders adopt and approve the Merger Agreement and approve the transactions contemplated thereby, including the Merger.

Later in the day on July 18, 2024, following the Board’s approval of the Merger Agreement and transactions contemplated thereby, Galaxy and Evolution executed and delivered the Merger Agreement, and the various stockholders executed the Support Agreements. Thereafter, Galaxy issued a joint press release with Evolution announcing the entry into the Merger Agreement.

Recommendation of the Board and Reasons for the Merger

Recommendation of the Board

The Board has: (i) determined that the Merger Agreement and the transactions contemplated thereby, including the Merger, are advisable, fair to and in the best interests of Galaxy and Galaxy stockholders, (ii) approved and declared advisable the execution, delivery and performance by Galaxy of the Merger Agreement and the consummation by Galaxy of the transactions contemplated thereby, (iii) declared the execution, delivery and performance by Galaxy of the Merger Agreement and the consummation of the transactions contemplated thereby, advisable, and (iv) resolved, subject to the terms and conditions set forth in the Merger Agreement, to recommend that Galaxy stockholders adopt and approve the Merger Agreement and approve the transactions contemplated thereby, including the Merger.

The Board recommends that Galaxy stockholders vote “FOR” the Merger Proposal, “FOR” the Merger Compensation Proposal and “FOR” the Adjournment Proposal.

Reasons for the Merger

In evaluating the Merger Agreement and the transactions contemplated thereby, the Board consulted with members of Galaxy’s senior management, representatives of Galaxy’s legal advisor, Latham & Watkins LLP, and representatives of Galaxy’s financial advisors, Macquarie Capital. In the course of reaching its determination and recommendation, the Board reviewed, evaluated and considered a significant amount of information and numerous factors and benefits, including those listed below (which are not listed in any relative order of importance), all of which the Board viewed as supporting its (i) determination that the Merger Agreement and the transactions contemplated thereby, including the Merger, are advisable, fair to and in the best interests of Galaxy and Galaxy stockholders, (ii) approval and declaration that the execution, delivery and performance by Galaxy of the Merger Agreement and the consummation by Galaxy of the transactions contemplated thereby is advisable,

 

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(iii) declaration that the execution, delivery and performance by Galaxy of the Merger Agreement and the consummation of the transactions contemplated thereby, is advisable, and (iv) resolution, subject to the terms and conditions set forth in the Merger Agreement, to recommend that Galaxy stockholders adopt and approve the Merger Agreement and approve the transactions contemplated thereby, including the Merger:

 

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Premium to Market Price. The Board considered the relationship of the Merger Consideration to the price of the Company Shares immediately prior to the execution of the Merger Agreement and the recent historical market price and volatility of the Company Shares, including the fact that the Merger Consideration represents (i) a premium of approximately 124% to the $1.43 closing price per Company Share on OTCQB on July 17, 2024, the last trading day prior to the announcement of the transaction; and (ii) a premium of approximately 124% to the 30-day volume-weighted average price per share of $1.43 as of July 17, 2024. The Board believed that the Merger Consideration represents the highest value reasonably obtainable for the Company Shares for the foreseeable future, taking into account the Board’s familiarity with the business strategy, assets and prospects of Galaxy on a standalone basis and the recent historical market price of the Company Shares.

 

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Certainty of Value. The Board considered the all-cash nature of the Merger Consideration to be received by Galaxy stockholders in the Merger, which would provide liquidity and certainty of value to our stockholders while avoiding exposure to long-term business and execution risk, as well as risks related to the financial markets and other macro-economic headwinds facing Galaxy and its industry more generally. Taking into account the business, operations, prospects, strategic and short and long term operating plans, assets, liabilities and financial condition of Galaxy, the Board weighed the certainty of realizing compelling value for Company Shares by virtue of the Merger against the uncertain prospect that the trading value of Company Shares would approach the Merger Consideration in the foreseeable future and the risks and uncertainties associated with our business generally, including those described below and those discussed in Galaxy’s public filings with the SEC. See “Where You Can Find More Information” beginning on page 102 of this proxy statement.

 

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Full and Fair Value. The Board believed that the Merger Consideration of $3.20 per Company Share represents full and fair value for our Company Shares, taking into account the Board’s familiarity with the business strategy, assets and prospects of Galaxy on a standalone basis and the relative certainty of the cash consideration payable in the Merger as compared to the risks and uncertainties of continuing on a standalone basis as an independent public company.

 

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Highest Value Reasonably Obtainable. The Board believed that the Merger Consideration of $3.20 per Company Share represents the highest value reasonably obtainable for our Company Shares for the foreseeable future, taking into account the business, operations, prospects, business strategy, assets, liabilities and general financial condition of Galaxy. The Board also considered the progress and the outcome of Galaxy’s negotiations with Parent, including the increase in the consideration offered by Parent from the time of its initial offer to the end of the negotiations and a number of changes in the terms and conditions of the Merger Agreement from the version initially proposed by Parent that were favorable to Galaxy. Further, the Board believed, based on these negotiations, that the Merger Consideration was the highest price per share that Parent or any other potential bidder was willing to pay and that the Merger Agreement contained the most favorable terms to Galaxy to which Parent was willing to agree.

 

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Likelihood of Consummation. The Board considered the anticipated timing of the consummation of the transactions contemplated by the Merger Agreement, including the likelihood of consummation, based upon the scope of the conditions to the consummation of the Merger, the relative likelihood of obtaining required gaming regulatory approvals in certain jurisdictions, the remedies available to Galaxy under the Merger Agreement in the event of various breaches by Parent, including specific performance, and Parent’s reputation in the casino gaming industry, its relationships with Galaxy and the inherent synergies available to Parent by consummating the Merger, and its financial capacity to complete an acquisition of this size, which the Board believed supported the conclusion that a

 

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transaction with Parent could be completed relatively expeditiously and in an orderly manner. The Board also considered the substantial Parent Termination Fee payable to Galaxy if the Merger Agreement is terminated in certain circumstances, and Galaxy’s right under the Merger Agreement to seek specific performance and require Parent to complete the Merger and the other transactions contemplated by the Merger Agreement under certain circumstances;

 

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Macquarie Capital’s Opinion and Related Analysis. The Board considered the opinion of Macquarie Capital rendered to the Board on July 18, 2024, which was subsequently confirmed by delivery of a written opinion dated July 18, 2024, to the effect that, as of such date and based upon and subject to the assumptions made, procedures followed, matters considered, and qualifications and limitations upon the review undertaken by Macquarie Capital in preparing its opinion, the Merger Consideration to be received by the holders of Company Shares (other than Parent and its affiliates) pursuant to the Merger Agreement was fair, from a financial point of view, to such holders, as more fully described below under the caption “Opinion of Macquarie Capital.”

 

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Value Relative to Other Strategic Alternatives. The Board considered its view that Evolution was the potential transaction partner most likely to offer the best combination of value and certainty to Galaxy stockholders. The Board considered that there existed no alternative offers from third parties to acquire Galaxy and few other potential third parties who had the ability to acquire Galaxy on terms as favorable as those set forth in the Merger Agreement, or on the timeline contemplated thereby, particularly in light of Evolution’s extensive existing commercial relationships with Galaxy and its significance to Galaxy’s business (including the fact that, in the trailing twelve months ended June 30, 2024, revenues from Evolution represented approximately 21% of Galaxy’s total consolidated revenues), as well as the competitive landscape in our business and the current capital markets uncertainties.

 

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Arms’ Length Transaction. The Board considered the fact the Merger Agreement and the terms thereof was the result of arm’s-length negotiation between the parties.

 

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Stockholder Approval. The Board considered the fact that the Merger is subject to Galaxy’s receipt of stockholder approval, and that Galaxy stockholders are free to vote against the Merger for any reason, including if a Superior Proposal were to be made prior to the special meeting (subject to certain limitations).

 

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Terms of the Merger Agreement. The Board considered the terms and conditions of the Merger Agreement, which was the product of arm’s-length negotiations between the parties with the assistance of Galaxy’s advisors, including the structure of the transaction, the all-cash form of the Merger Consideration, the limited scope of the conditions to the consummation of the Merger, and the customary nature of the representations, warranties, and the covenants and agreements of the parties. For the reasons noted below, the Board believed that the provisions of the Merger Agreement were advisable and fair to, and in the best interests of, Galaxy and our stockholders. In particular:

 

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No Financing Condition. The Board considered the representation of Parent that Parent would have available sufficient funds for the satisfaction of all of its obligations under the Merger Agreement and to pay all related fees and expenses required to be paid by Parent or Merger Sub pursuant to the terms of the Merger Agreement, and that the consummation of the Merger is not subject to a financing condition.

 

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No Solicitation Covenants and Fiduciary Outs. The Board considered the non-solicitation covenants and “fiduciary out” provisions of the Merger Agreement, which, subject to the terms and conditions thereof and limitations set forth therein, permit Galaxy to furnish information to, and to engage in discussions with, third parties that make unsolicited Takeover Proposals meeting certain criteria, permit the Board to change its recommendation to stockholders regarding the Merger Agreement under certain circumstances and permit Galaxy to terminate the Merger Agreement in order to enter into a definitive agreement relating to a Superior Proposal, subject to, among other things, payment of a termination fee to Parent of $2,617,339.00, representing

 

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approximately 3% of the transaction equity value. The Board further considered its ability to change its recommendation to stockholders regarding the Merger Agreement in response to an Intervening Event if the failure to do so would reasonably be expected to be inconsistent with the fiduciary duties of the Board under applicable law. The Board further considered the fact that the Company Termination Fee, in the opinion of the Board, (i) is reasonable in light of the overall terms of the Merger Agreement and the benefits of the Merger, (ii) is consistent with the amount of such fees payable in comparable transactions on a relative basis, and (iii) would not be a substantial impediment or preclude another party from making a competing proposal to acquire Galaxy.

 

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Outside Date. The Board considered the fact that the Outside Date under the Merger Agreement, on which either party, subject to certain exceptions, can terminate the Merger Agreement, allows for sufficient time to consummate the transactions contemplated by the Merger Agreement, but also prevents the Merger Agreement from being extended for an unreasonable amount of time, which could adversely impact Galaxy’s operations.

 

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Right to a Parent Termination Fee. The Board considered the fact that Parent would be required to pay Galaxy a termination fee equal to $5,234,678.00, representing 6% of the transaction equity value, under specified circumstances, including due to the failure to obtain certain gaming regulatory approvals.

 

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Enforcement. The Board considered Galaxy’s ability to obtain specific enforcement of the obligations of Parent and Merger Sub under the Merger Agreement, thereby ensuring that Galaxy has an appropriate remedy in the event Parent and Merger Sub were to decline to comply with their obligations under the Merger Agreement.

 

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Stockholder Approval; Appraisal Rights. The Board considered that the adoption of the Merger Agreement would be subject to the approval of our stockholders, that stockholders would be free to vote against the adoption of the Merger Agreement, and that stockholders who do not vote to adopt the Merger Agreement and who properly exercise their appraisal rights under Nevada law will be entitled to such appraisal rights in connection with the Merger.

 

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Conditions to Closing; Interim Operations. The Board considered the fact that the terms and conditions of the Merger Agreement minimize, to the extent reasonably practical, the risk that a condition to consummation of the Merger would not be satisfied and also provide reasonable flexibility to operate Galaxy’s business during the pendency of the Merger.

In the course of its deliberations, the Board, in consultation with members of Galaxy’s senior management and representatives of Galaxy’s outside financial and legal advisors, also considered a variety of uncertainties, risks and other potentially negative factors concerning the Merger Agreement and the transactions contemplated by the Merger Agreement, including, but not limited to, the following (which are not listed in any relative order of importance):

 

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No Stockholder Participation in Future Earnings or Growth. The Board considered that the nature of the Merger as a cash transaction means that, if the Merger is consummated, our stockholders will not participate in future earnings or growth of Galaxy and will not benefit from any appreciation in the value of Galaxy’s business, the success of any of Galaxy’s product candidates or any appreciation in the shares of the surviving corporation.

 

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Risk Associated with Failure to Consummate the Merger. The Board considered the possibility that the transactions contemplated by the Merger Agreement, including the Merger, might not be consummated, and that consummation of the Merger is subject to the satisfaction of certain conditions that may not be within our control, including receipt of the necessary regulatory clearances and approvals and that no Material Adverse Effect with respect to Galaxy has occurred that is continuing. The Board considered the fact that there can be no assurance that all conditions to the parties’

 

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obligations to consummate the Merger will be satisfied and, as a result, it is possible that the Merger may not be consummated even if the Merger Agreement is adopted by our stockholders. The Board considered the fact that if the Merger is not consummated (i) Galaxy will have incurred significant transaction and opportunity costs, including the possibility of (a) disruption to our operations, (b) diversion of management and employee attention, (c) employee attrition and (d) a negative effect on our business and customer relationships (including as discussed below with respect to the effect of a transaction announcement), (ii) the trading price of the Company Shares could be adversely affected, and (iii) the market’s perceptions of our prospects could be adversely affected.

 

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Interim Operating Covenants. The Board considered the restrictions on the conduct of our business during the pendency of the Merger, which may delay or prevent Galaxy from undertaking potential business opportunities that may arise, may have a material adverse effect on our ability to respond to changing market and business conditions in a timely manner (or at all), or may negatively affect our ability to attract, retain and motivate key personnel. The Board also considered that the focus and resources of Galaxy’s management may become diverted from other important business opportunities and operational matters while working to consummate the Merger, which could adversely affect our business.

 

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No Solicitation Covenants and Termination Fee. The Board considered the fact that, subject to certain exceptions, the Merger Agreement precludes Galaxy and its representatives from soliciting, or entering into or participating in discussions or negotiations relating to, alternative acquisition proposals, and requires Galaxy to pay to Parent the Company Termination Fee if the Merger Agreement is terminated under certain circumstances, including a termination of the Merger Agreement by Galaxy to enter into a definitive agreement for a Superior Proposal, as described in “The Merger Agreement-Termination Fee; Certain Expenses” beginning on page 91 of this proxy statement. The Board also considered, but did not consider preclusive of a potential Superior Proposal, the fact that the right afforded to Parent under the Merger Agreement to propose amendments or modifications to the terms and conditions of the Merger Agreement in response to a Superior Proposal may discourage other parties that might otherwise have an interest in a business combination with, or an acquisition of, Galaxy. The Board also considered that the amount of the Company Termination Fee, as compared to termination fees in transactions of a similar size, in the opinion of the Board, was reasonable and would not likely deter competing bids. The Board also recognized that the provisions in the Merger Agreement relating to non-solicitation and the Company Termination Fee were required by Parent as conditions to entering into the Merger Agreement. The Board also considered the fact that Evolution’s existing relationships with Galaxy could discourage other potential bidders from submitting competing proposals.

 

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Effect of Transaction Announcement. The Board considered the potential effect of the announcement of the Merger Agreement and Galaxy’s significant existing commercial arrangements with Evolution, including effects on our stock price and operations, including our relationships with suppliers, distributors, vendors, collaborators and employees, and our ability to attract and retain key personnel during the pendency of the transactions contemplated by the Merger Agreement. The Board considered the potential adverse consequences of the announcement of the Merger Agreement on Galaxy’s existing relationships with other customers, including the fact that it might discourage such customers from continuing or expanding their relationships with Galaxy, as well as the fact that any termination fee payable to Galaxy may be inadequate to cover the costs and harm incurred by Galaxy in connection with such announcement.

 

•

Transaction Costs. The Board considered the fact that we have incurred and will continue to incur significant transaction costs and expenses in connection with the Merger, regardless of whether the Merger is consummated, including the expenses relating to potential Merger-related stockholder litigation.

 

•

Regulatory Approvals. The Board considered the risk that the parties may incur significant costs and material delays resulting from seeking gaming regulatory approvals necessary for consummation of the Merger.

 

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•

Support Agreements. The Board considered the fact that (i) certain members of the Board, who will be receiving the same consideration as Galaxy stockholders in their capacity as Galaxy stockholders, supported the Merger and agreed to enter into Support Agreements and the Company Shares beneficially owned by them in the aggregate represent approximately 14% of the outstanding Company Shares, as of July 18, 2024 and (ii) the Support Agreements will terminate automatically, without any notice or other action by any person, upon the first to occur of (i) the valid termination of the Merger Agreement in accordance with its terms, (ii) the Effective Time, (iii) the Board or any committee thereof makes an Adverse Recommendation Change as a result of an Intervening Event, and (iv) the mutual written consent of all the parties thereto.

 

•

Taxable Transaction. The Board considered that receipt of the all-cash Merger Consideration would be taxable to our stockholders that are treated as U.S. Holders (as defined in “The Merger-Material U.S. Federal Income Tax Consequences of the Merger to Holders of Company Shares” beginning on page 62 of this proxy statement) for U.S. federal income tax purposes.

 

•

Interests of Directors and Executive Officers. The Board considered the possibility that Galaxy’s directors and executive officers may have interests in the transactions contemplated by the Merger Agreement that may be different from, or in addition to, those of Galaxy stockholders generally. See “The Merger-Interests of the Directors and Executive Officers of Galaxy in the Merger” beginning on page 57 of this proxy statement.

After considering the foregoing potentially negative factors, the Board concluded that the potential benefits of the Merger substantially outweighed the risks or potential negative consequences.

The foregoing discussion of the information and factors considered by the Board is intended to be illustrative and not exhaustive, but includes the material reasons and factors considered by the Board in reaching its conclusions and recommendation in relation to the Merger, the Merger Agreement and the transactions proposed thereby. In light of the variety of reasons and factors considered and the complexity of these matters, the Board did not find it practicable to, and did not, quantify or otherwise assign relative weights to the specific reasons or factors considered in reaching their determinations and recommendations. The Board based its recommendation on the totality of the information presented, including thorough discussions with, and questioning of, members of our senior management and representatives of our outside financial advisors and legal counsel. Individual directors may have given differing weights to different factors or may have had different reasons for their ultimate determination. In addition, the Board did not reach any specific conclusion with respect to any of the factors or reasons considered. Instead, the Board conducted an overall analysis of the factors and reasons described above and determined in its business judgment that, in the aggregate, the potential benefits of the Merger to the stockholders of Galaxy outweighed the risks or potential negative consequences. It should be noted that this explanation of the reasoning of the Board and certain information presented in this section is forward-looking in nature and should be read in light of the factors set forth in “Cautionary Statement Regarding Forward-Looking Statements” beginning on page 33 of this proxy statement.

Opinion of Macquarie Capital

Galaxy engaged Macquarie Capital as its financial advisor in connection with the proposed merger. On July 18, 2024, Macquarie Capital rendered its oral opinion to the Board (which was subsequently confirmed in writing by delivery of Macquarie Capital’s written opinion addressed to the Board dated the same date) as to, as of July 18, 2024, and subject to the various assumptions made, procedures followed, matters considered, and qualifications and limitations on the review undertaken by Macquarie Capital as set forth in its written opinion, the fairness, from a financial point of view, to the holders of Company Shares (other than Parent and its affiliates) of the merger consideration to be received by such holders in the merger pursuant to the merger agreement.

The full text of Macquarie Capital’s written opinion, which describes, among other things, the assumptions made, procedures followed, matters considered and qualifications and limitations on the

 

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review undertaken, is attached as Annex D to this proxy statement. The description of Macquarie Capital’s opinion contained in this proxy statement is qualified in its entirety by reference to the full text of the opinion. Macquarie Capital’s opinion was directed to the Board, in its capacity as such, and addressed only the fairness, from a financial point of view and as of the date of such opinion, to the holders of Company Shares (other than Parent and its affiliates) of the merger consideration to be received by such holders in the Merger pursuant to the Merger Agreement. Macquarie Capital’s opinion did not address any other terms, aspects or implications of the Merger. Macquarie Capital’s opinion did not address the underlying business decision of the Board or Galaxy to effect the Merger or the relative merits of the Merger as compared to any alternative business strategies or transactions available to Galaxy. Macquarie Capital’s opinion is not intended to be and does not constitute a recommendation to the Board, Galaxy or any securityholder of Galaxy, or any other person, as to how to act or vote with respect to any matter relating to the merger or otherwise.

In arriving at its opinion, Macquarie Capital, among other things:

 

•

reviewed an execution version of the merger agreement furnished to Macquarie Capital on July 18, 2024;

 

•

reviewed certain publicly available business and financial information regarding Galaxy;

 

•

reviewed certain other information relating to Galaxy, including financial projections prepared by the management of Galaxy (and approved for Macquarie Capital’s use by the management of Galaxy) relating to Galaxy for the fiscal years ending December 31, 2024 through December 31, 2029 (referred to in this section as the “Galaxy Projections”);

 

•

discussed the merger and the business, operations, financial condition and prospects of Galaxy with members of the management of Galaxy;

 

•

reviewed certain financial data with respect to Galaxy and compared that data with similar data for other companies with publicly traded equity securities that Macquarie Capital deemed relevant;

 

•

reviewed, to the extent publicly available, the financial terms of certain other transactions that Macquarie Capital deemed relevant; and

 

•

performed such other financial analyses and considered such other information and factors that Macquarie Capital deemed appropriate for purposes of its opinion.

Macquarie Capital did not undertake any responsibility for independently verifying, and did not independently verify, any of the foregoing information and Macquarie Capital assumed and relied upon the accuracy and completeness of all such information. Management of Galaxy advised Macquarie Capital, and Macquarie Capital assumed, that the Galaxy Projections had been reasonably prepared in good faith on bases reflecting such management’s best currently available estimates and judgments as to the future financial performance and condition of Galaxy. Galaxy advised Macquarie Capital and Macquarie Capital assumed that the Galaxy Projections are a reasonable basis upon which to evaluate Galaxy and the Merger and, at Galaxy’s direction, Macquarie Capital used and relied upon the Galaxy Projections for purposes of its analyses and opinion. Macquarie Capital expressed no view or opinion as to the Galaxy Projections or the assumptions upon which they are based. Further, Macquarie Capital assumed, without independent verification, that there had been no change in the business, assets, liabilities, financial condition, results of operations, cash flows or prospects of Galaxy since the respective dates of the most recent financial statements and other information, financial or otherwise, provided to Macquarie Capital that would be material to Macquarie Capital’s analyses or opinion, and that there is no information or any facts that would make any of the information reviewed by Macquarie Capital incomplete or misleading. In connection with Macquarie Capital’s opinion, Macquarie Capital had not made, nor assumed any responsibility for making, any physical inspection or independent evaluation or appraisal of any of the assets or liabilities (contingent or otherwise) of Galaxy, nor had Macquarie Capital been furnished with any such evaluations or appraisals.

 

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Macquarie Capital relied upon and assumed that the representations and warranties of each party in the merger agreement are true and correct, that each party will fully and timely perform all of the covenants and agreements required to be performed by it under the merger agreement, that all of the conditions to the consummation of the Merger will be satisfied in accordance with the merger agreement, and that the Merger would be consummated in a timely manner in accordance with the terms set forth in the merger agreement without waiver, modification or amendment of any terms or provisions thereof. Macquarie Capital further assumed, with Galaxy’s consent, that the Merger would be effected in a manner that complies in all respects with all applicable federal, state and other statutes, rules and regulations and that all governmental, regulatory, third-party and other consents, approvals or releases necessary for the effectiveness of the merger would be obtained without any delay, limitation, restriction or condition that would have an adverse effect on Galaxy or the Merger. In addition, Macquarie Capital assumed that the final form of the Merger Agreement, when executed, would not differ from the draft of the Merger Agreement reviewed by Macquarie Capital in any respect material to Macquarie Capital’s analyses or opinion.

Macquarie Capital’s opinion did not address the underlying business decision of the Board or Galaxy to effect the merger or the relative merits of the merger as compared to any alternative business strategies or transactions available to Galaxy. Macquarie Capital’s opinion is necessarily based on information made available to Macquarie Capital as of the date thereof and financial, economic, market and other conditions as they existed and could be evaluated on the date thereof. Macquarie Capital did not have any obligation to update, revise, reaffirm or withdraw its opinion or to otherwise comment on or consider events occurring or coming to its attention after the date thereof.

Macquarie Capital’s opinion only addressed the fairness, from a financial point of view, to the holders of Galaxy common stock (other than Parent and its affiliates) of the merger consideration to be received by such holders in the merger pursuant to the merger Agreement and does not address any other aspect or implication of the merger or any consent, agreement, arrangement or understanding provided or entered into in connection therewith or otherwise including, without limitation, the fairness of the amount or nature of, or any other aspect relating to, any compensation or merger consideration to be paid or payable to any officers, directors or employees of any parties to the merger, or any class of such persons, relative to the merger consideration or otherwise. Macquarie Capital did not provide any advice or opinion as to matters that require legal, regulatory, accounting, insurance, executive compensation, tax or other similar professional advice. Macquarie Capital assumed that Galaxy had obtained or would obtain such advice or opinions from appropriate professional sources. Furthermore, Macquarie Capital relied upon the accuracy and completeness of the assessments by Galaxy and its advisors with respect to all legal, regulatory, accounting, insurance, executive compensation and tax matters.

In preparing its opinion, Macquarie Capital performed a variety of financial and comparative analyses, including those described below. The summary of the analyses below is not a complete description of Macquarie Capital’s opinion or the analyses underlying, and factors considered in connection with, Macquarie Capital’s opinion. The preparation of a financial opinion is a complex analytical process involving various determinations as to the most appropriate and relevant methods of financial analysis and the application of those methods to the particular circumstances and, therefore, a financial opinion is not readily susceptible to summary description. Macquarie Capital arrived at its ultimate opinion based on the results of all analyses and factors assessed as a whole, and it did not draw, in isolation, conclusions from or with regard to any one factor or method of analysis. Accordingly, Macquarie Capital believes that the analyses must be considered as a whole and in context and that selecting portions of its analyses and factors or focusing on information presented in tabular format, without considering all analyses and factors or the narrative description of the analyses, could create a misleading or incomplete view of the processes underlying such analyses and its opinion.

In its analyses, Macquarie Capital considered business, economic, industry and market conditions, financial and otherwise, and other matters as they existed on, and could be evaluated as of, the date of its opinion. No company, business or transaction used in Macquarie Capital’s analyses for comparative purposes is identical to

 

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Galaxy or the proposed merger. While the results of each analysis were taken into account in reaching its overall conclusion with respect to the fairness, from a financial point of view, of the merger consideration (to the extent expressly specified in Macquarie Capital’s opinion), Macquarie Capital did not make separate or quantifiable judgments regarding individual analyses. The reference ranges indicated by Macquarie Capital’s financial analyses are illustrative and not necessarily indicative of actual values nor predictive of future results or values, which may be significantly more or less favorable than those suggested by the analyses. In addition, any analyses relating to the value of assets, businesses or securities do not purport to be appraisals or to reflect the prices at which businesses or securities actually may be sold, which may depend on a variety of factors, many of which are beyond Galaxy’s control and the control of Macquarie Capital. Much of the information used in, and accordingly the results of, Macquarie Capital’s analyses are inherently subject to substantial uncertainty.

Macquarie Capital was selected by Galaxy to act as its financial advisor based on Macquarie Capital’s qualifications, experience and reputation. Macquarie Capital was not requested to, and it did not, recommend or determine the specific consideration payable in the merger or opine that any specific consideration constituted the only appropriate consideration for the merger. The type and amount of consideration payable in the merger were determined through negotiations between Galaxy and Parent and the decision of Galaxy to enter into the merger agreement was solely that of the Board. The issuance of Macquarie Capital’s opinion was approved by an internal opinion committee of Macquarie Capital.

Macquarie Capital’s opinion to the Board was one of many factors taken into consideration by the Board in deciding to consider, approve and declare the advisability of the merger agreement and the transactions contemplated thereby and to recommend the approval of the merger by the holders of Galaxy common stock. Consequently, the analyses described above should not be viewed as determinative of the opinion of the Board with respect to the merger consideration or of whether the Board or management would have been willing to agree to a different merger consideration.

Summary of Financial Analyses of Macquarie Capital

The following is a summary of the material financial analyses performed by Macquarie Capital in connection with its oral opinion and the preparation of its written opinion to the Board, both provided as of July 18, 2024. The following summary is not a complete description of the financial analyses performed and factors considered by Macquarie Capital in connection with its opinion, nor does the order of analyses described represent the relative importance or weight given to those analyses. Except as otherwise noted, the following quantitative information, to the extent that it is based on market data, is based on market data as it existed on or before July 17, 2024. Some of these summaries of financial analyses include information presented in tabular format. In order to fully understand the financial analyses used by Macquarie Capital, the tables must be read together with the text of each summary. The tables alone do not constitute a complete description of the financial analyses. The analyses listed in the tables and described below must be considered as a whole. Assessing any portion of such analyses and of the factors reviewed, without considering all analyses and factors, could create a misleading or incomplete view of the process underlying Macquarie Capital’s opinion. Furthermore, mathematical analysis is not in itself a meaningful method of using the data referred to below.

Selected Public Companies Trading Analysis

Macquarie Capital performed for Galaxy a selected public companies trading analysis for which Macquarie Capital reviewed certain financial and stock market information relating to the selected publicly traded companies listed below that Macquarie Capital deemed comparable to Galaxy in one or more respects.

For the selected companies noted below, Macquarie Capital considered, among other things, the ratio of enterprise value (defined as market capitalization plus net debt) to (i) 2024 and 2025 estimated Adjusted EBITDA (calculated as earnings before interest, taxes, depreciation, and amortization adjusted for certain non-recurring items, “Adj. EBITDA”) and (ii) 2024 and 2025 estimated Adj. EBITDA minus estimated capital

 

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expenditures (“CapEx”), in each case based on research consensus estimates. For purposes of Macquarie Capital’s analyses, in deriving ranges of implied values for Galaxy, Macquarie Capital used the estimates reflected in the Galaxy Projections for the applicable financial data for Galaxy.

The selected companies (and their corresponding multiples) considered by Macquarie Capital for its analysis of Galaxy were:

 

Selected Companies

Enterprise Value / 2024E Adj. EBITDA

Enterprise Value / 2025E Adj. EBITDA

Enterprise Value / 2024E Adj. EBITDA less CapEx

Enterprise Value / 2025E Adj. EBITDA less CapEx

Inspired Entertainment Inc.

5.6x

5.1x

8.1x

6.6x

Ainsworth Game Technology Limited

6.0x

5.2x

13.3x

9.8x

Everi Holdings Inc.

4.3x

4.2x

7.7x

5.5x

Based upon the application of its professional judgment and experience, Macquarie Capital applied the multiple ranges of (i) 4.8x to 6.3x to Galaxy’s estimated 2024E Adj. EBITDA (based on the Galaxy Projections), (ii) 4.4x to 5.9x to Galaxy’s estimated 2025E Adj. EBITDA (based on the Galaxy Projections), (iii) 6.8x to 9.3x to Galaxy’s estimated 2024E Adj. EBITDA less CapEx (based on the Galaxy Projections), and (iv) 5.4x to 7.9x to Galaxy’s estimated 2025E Adj. EBITDA less CapEx (based on the Galaxy Projections). This analysis indicated the following approximate implied per share equity value reference ranges for Galaxy, as compared to the per share merger consideration in the merger.

 

Metric		Implied Range				Merger Consideration
2024E Adj. EBITDA		$	0.77 - $1.47			$	3.20
2025E Adj. EBITDA		$	1.08 - $1.94
2024E Adj. EBITDA less CapEx		$	1.46 - $2.50
2025E Adj. EBITDA less CapEx		$	1.30 - $2.56
Overall (based on average)		$	1.15 - $2.12

Selected Precedent Transactions Analysis

Macquarie Capital performed for Galaxy a selected precedent transactions analysis, which is designed to derive an implied value of a company based on publicly available financial terms for selected transactions. In connection with its analysis, Macquarie Capital reviewed publicly available financial data for certain transactions involving targets deemed comparable in one or more respects.

For the selected transactions noted below, Macquarie Capital considered, among other things, the implied transaction value as a multiple of (i) Adj. EBITDA for the twelve months preceding the announcement of the transaction, or LTM Adj. EBITDA, and (ii) Adj. EBITDA minus CapEx for the twelve months preceding the announcement of the transaction, or LTM Adj. EBITDA less CapEx, in each case based on public filings, press releases and other publicly available information. For purposes of Macquarie Capital’s analyses, in deriving ranges of implied values for Galaxy, Macquarie Capital used information provided by Galaxy for the applicable financial data for Galaxy.

The selected transactions (and their corresponding multiples) considered by Macquarie Capital for its analysis of Galaxy were:

 

Date Announced

Target

Acquiror

Enterprise Value / LTM Adj. EBITDA

Enterprise Value / LTM Adj. EBITDA less CapEx

02/24

Everi Holdings Inc.

International Game Technology PLC

6.0x

9.9x

05/24

PlayAGS, Inc.

Brightstar Capital Partners

6.4x

10.3x

 

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Based on the application of its professional judgment and experience, Macquarie Capital applied multiple ranges of 5.4x to 6.9x to Galaxy’s LTM Adj. EBITDA (based on information provided by Galaxy management) and 8.9x to 11.4x to Galaxy’s LTM Adj. EBITDA less CapEx (based on information provided by Galaxy management). This analysis indicated an approximate implied per share equity value reference ranges for Galaxy, as compared to the per share merger consideration in the merger.

 

Metric		Implied Range				Merger Consideration
LTM Adj. EBITDA		$	0.75 - $1.37			$	3.20
LTM Adj. EBITDA less CapEx		$	0.85 - $1.51
Overall (based on average)		$	0.80 - $1.44

Discounted Cash Flow Analysis

Macquarie Capital performed a discounted cash flow analysis for Galaxy by calculating the estimated present value (as of June 30, 2024) of (a) the standalone unlevered free cash flows that Galaxy was forecasted to generate during the six-month period ending December 31, 2024 through fiscal year ending December 31, 2029, based on the Galaxy Projections and (b) an estimated terminal value for Galaxy. To derive an estimate of Galaxy’s terminal value, Macquarie Capital applied terminal multiple ranges of (i) 4.9x to 6.4x to Galaxy’s 2029E Adj. EBITDA (based on the Galaxy Projections) and (ii) 9.4x to 11.9x to Galaxy’s 2029E Adj. EBITDA less CapEx (based on the Galaxy Projections). The present values (as of June 30, 2024) of the cash flows and implied terminal values were then calculated using a range of discount rates, selected by Macquarie Capital based on its professional judgement and experience after application of the capital asset pricing model, of 15.3% to 17.3%. This analysis indicated the following approximate implied per share equity value reference ranges for Galaxy, as compared to the per share merger consideration in the Merger.

 

Terminal Value Metric		Implied Range				Merger Consideration
LTM Adj. EBITDA		$	1.89 - $2.70			$	3.20
LTM Adj. EBITDA less CapEx		$	3.11 - $4.31
Overall (based on average)		$	2.50 - $3.50

Certain Additional Information

Macquarie Capital also observed certain additional information that was not considered part of its financial analyses with respect to its opinion but was noted for informational purposes, including premia reflected in certain precedent public transactions. Reviewing data from transactions (other than master limited partnership and real estate transactions) with premia ranging from 0% to 200%, that were announced from 2010 to July 15, 2024 and involved North American publicly listed targets with enterprise values from $10 million to $1 billion, Macquarie Capital noted that the mean, median, 25^th percentile and 75^th percentile one-day premia were 44.2%, 34.2%, 17.9% and 57.8% and that applying an illustrative range of premia of 29.2% to 39.2% to Galaxy’s closing share price on July 17, 2024 would indicate an implied per share equity range of $1.85 to $1.99.

Miscellaneous

Macquarie Capital acted as financial advisor to Galaxy in connection with the proposed merger and will receive a fee payable upon the consummation of the merger in an amount based upon the transaction value of the merger (currently estimated to be $2.9 million). Macquarie Capital also became entitled to a fee of $600,000 (creditable toward the estimated $2.9 million fee) upon having informed Galaxy that it had substantially completed its work in connection with the rendering of its opinion. In addition, Galaxy agreed to reimburse Macquarie Capital for its expenses, including fees and expenses of counsel, incurred in connection with its engagement and to indemnify Macquarie Capital and related parties against certain liabilities, including liabilities under the federal securities laws, relating to or arising out of Macquarie Capital’s engagement.

 

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In the ordinary course of business, Macquarie Capital and its affiliates may acquire, hold, sell or trade debt, equity and other securities and financial instruments (including derivatives, loans and other obligations) of Galaxy, Parent or any other company that may be involved in the merger, and their respective affiliates, for its and their own accounts and for the accounts of its and their customers and, accordingly, may at any time hold a long or short position in such securities or financial instruments. As of a recent date prior to the date of this proxy statement, Macquarie Capital’s positions in the equity of Parent represented less than 1% of the outstanding equity in Parent. Macquarie Capital and its affiliates provide a wide range of investment banking advice and services, including financial advisory services, securities underwritings and placements, securities sales and trading, brokerage advice and services, and loans. Macquarie Capital and its affiliates may in the future provide investment banking advice and services to, and may otherwise seek to expand our business and commercial relationships with, Galaxy, Parent and their respective affiliates for which it would expect to receive compensation.

Certain Unaudited Prospective Financial Information

We do not, as a matter of course, make public projections as to our future financial performance, due to, among other reasons, the uncertainty, unpredictability and subjectivity of the underlying assumptions and estimates and the inherent difficulty of predicting financial performance for future periods. However, in connection with the Board’s evaluation of the Merger, as described further in the section captioned “The Merger-Background of the Merger” beginning on page 37 of this proxy statement, Galaxy’s management prepared and reviewed with the Board certain unaudited prospective financial information of Galaxy as an independent company for the second half of fiscal year 2024 and the fiscal years 2025 through 2029, as prepared and used as described below (referred to as the “Unaudited Prospective Financial Information”).

The Unaudited Prospective Financial Information was prepared for internal use only and not for public disclosure and was provided to the Board for the purposes of considering, analyzing and evaluating the Merger. The Unaudited Prospective Financial Information was provided to, approved by Galaxy for use by, and relied upon by, Macquarie Capital, Galaxy’s financial advisor, for the purposes of Macquarie Capital’s financial analysis and fairness opinion in connection with the Merger (as described in more detail in the section captioned “The Merger-Opinion of Macquarie Capital” beginning on page 48 of this proxy statement). The Unaudited Prospective Financial Information was also provided to Parent. The Unaudited Prospective Financial Information includes estimates of Galaxy’s financial performance on a risk-adjusted basis.

The Unaudited Prospective Financial Information was developed without giving effect to the Merger, including any impact of the negotiation or execution of the Merger Agreement or the Merger, the expenses that have already or may be incurred in connection with completing the Merger or any changes to Galaxy’s operations or strategy that may be implemented during the pendency of or following the consummation of the Merger. The Unaudited Prospective Financial Information also does not consider the effect of any failure of the Merger to be completed and it should not be viewed as accurate or continuing in that context.

The Unaudited Prospective Financial Information was not prepared with a view toward public disclosure or complying with accounting principles generally accepted in the United States (which we refer to as “GAAP”). In addition, the accompanying Unaudited Prospective Financial Information was not prepared with a view toward complying with the guidelines established by the SEC or the American Institute of Certified Public Accountants with respect to prospective financial information. The Unaudited Prospective Financial Information included in this document has been prepared by, and is the responsibility of, the Company’s management. Our independent registered public accounting firm has not audited, reviewed, examined, compiled nor applied agreed-upon procedures with respect to the Unaudited Prospective Financial Information and accordingly, our independent registered public accounting firm does not express an opinion or any other form of assurance with respect thereto. The Moss Adams LLP report included in the Company’s Annual Report on Form 10-K relates to the Company’s previously issued financial statements. It does not extend to the Unaudited Prospective Financial Information and should not be read to do so.

 

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Because the Unaudited Prospective Financial Information reflects estimates and judgments, it is susceptible to sensitivities and assumptions, as well as multiple interpretations based on actual experience and business developments. The Unaudited Prospective Financial Information also covers multiple years, and such information by its nature becomes less predictive with each succeeding year. The Unaudited Prospective Financial Information is not, and should not be considered to be, a guarantee of future operating results. Further, the Unaudited Prospective Financial Information is not fact and should not be relied upon as being necessarily indicative of our future results.

Although the Unaudited Prospective Financial Information is presented with numerical specificity, it reflects numerous assumptions and estimates as to future events. The Unaudited Prospective Financial Information reflects assumptions and uncertainties that are subject to change. Important factors that may affect actual results and cause the Unaudited Prospective Financial Information not to be achieved are described in various risk factors described in the section captioned “Cautionary Statement Regarding Forward-Looking Statements” beginning on page 33 of this proxy statement, and in our other filings with the SEC, including those listed under the section captioned “Where You Can Find More Information” beginning on page 102 of this proxy statement. All of these factors are difficult to predict, and many of them are outside of our control. As a result, there can be no assurance that the Unaudited Prospective Financial Information will be realized, and actual results may be materially better or worse than those contained in the Unaudited Prospective Financial Information, whether or not the Merger is consummated. The Unaudited Prospective Financial Information also reflects assumptions as to certain business decisions that are subject to change. The Unaudited Prospective Financial Information may differ from publicized analyst estimates and forecasts and does not consider any events or circumstances after the date that it was prepared, including the announcement of the entry into the Merger Agreement. The Unaudited Prospective Financial Information has not been updated or revised to reflect information or results after the date it was prepared or as of the date of this proxy statement. Except to the extent required by applicable federal securities laws, we do not intend to update or otherwise revise the Unaudited Prospective Financial Information to reflect circumstances existing after the date that such information was prepared or to reflect the occurrence of future events. Galaxy has or may report results of operations for periods included in the Unaudited Prospective Financial Information that were or will be completed following the preparation of the Unaudited Prospective Financial Information. Stockholders and investors are urged to refer to Galaxy’s periodic filings with the SEC for information on Galaxy’s actual historical results.

Certain of the financial measures included in the Unaudited Prospective Financial Information, including Adjusted EBITDA, EBIT, net operating profits after tax (“NOPAT”) and Unlevered Free Cash Flow, are “non-GAAP financial measures.” These are financial performance measures that are not calculated in accordance with GAAP. These non-GAAP financial measures should not be viewed as a substitute for GAAP financial measures, and may be different from non-GAAP financial measures used by other companies. Furthermore, there are limitations inherent in non-GAAP financial measures because they exclude charges and credits that are required to be included in a GAAP presentation. In certain circumstances, including those applicable to the Unaudited Prospective Financial Information, financial measures included in forecasts provided to a financial advisor and a board of directors in connection with a business combination transaction are excluded from the definition of “non-GAAP financial measures” under applicable SEC rules and regulations. As a result, the Unaudited Prospective Financial Information is not subject to SEC rules regarding disclosures of non-GAAP financial measures, which would otherwise require a reconciliation of a non-GAAP financial measure to a GAAP financial measure. Reconciliations of non-GAAP financial measures were not provided to or relied upon by the Board or Macquarie Capital. Accordingly, no reconciliation of the financial measures included in the Unaudited Prospective Financial Information is provided in this proxy statement.

The Unaudited Prospective Financial Information constitutes forward-looking statements. By including the Unaudited Prospective Financial Information in this proxy statement, neither we nor any of our representatives has made or makes any representation to any person regarding our ultimate performance as compared to the information contained in the Unaudited Prospective Financial Information. The inclusion of the Unaudited Prospective Financial Information should not be regarded as an indication that the Board, Galaxy or any other

 

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person considered, or now considers, the Unaudited Prospective Financial Information to be predictive of actual future results. Further, the inclusion of the Unaudited Prospective Financial Information in this proxy statement does not constitute an admission or representation by Galaxy that the information presented is material. The Unaudited Prospective Financial Information is included in this proxy statement solely to give our stockholders access to the information that was provided to the Board and Macquarie Capital and shared with Parent. The Unaudited Prospective Financial Information is not included in this proxy statement in order to influence any Galaxy stockholder to make any investment decision with respect to the Merger, including whether or not to seek appraisal rights with respect to their shares.

Unaudited Prospective Financial Information

Various judgments and assumptions were made when preparing the Unaudited Prospective Financial Information, including, among others, revised prospects for the Company’s business, changes in general business or economic conditions, certain accounting assumptions, timing of business investments, changes in actual or projected cash flows, competitive pressures and changes in tax or other laws or regulations, corporate general and administrative expenses generally, and or other transactions or events that have occurred or that may occur and that were not anticipated when the financial projections were prepared. Similarly, the Unaudited Prospective Financial Information reflects Galaxy management’s assessment of Galaxy’s business and prospects at the time such estimates were prepared, and such estimates were not updated to reflect subsequent events or financial results that may have been available to Galaxy’s management following the preparation thereof.

The following table presents estimates of Galaxy’s revenue, Adjusted EBITDA, EBIT, NOPAT and Unlevered Free Cash Flow, in each case, for the second half of fiscal year 2024 and the fiscal years 2024 through 2029, as reflected in the Unaudited Prospective Financial Information, as approved by Galaxy management.

 

		Projected Non-GAAP ($ in millions, Unaudited)
		Six Months Ended 2024B				FY 2024B				FY 2025E				FY 2026E				FY 2027E				FY 2028E				FY 2029E
Net Revenue		$	15.1			$	29.9			$	32.7			$	36.3			$	38.5			$	40.6			$	42.8
Adjusted EBITDA(1)			6.7				12.2				15.2				17.9				19.5				20.9				22.5
EBIT(2)			5.0				8.8				11.9				14.4				16.0				17.5				19.0
NOPAT(3)			3.9				6.8				9.1				11.1				12.4				13.4				14.6
Capital Expenditures			0.5				1.0				1.7				1.7				1.9				2.1				2.3
Unlevered Free Cash Flow(4)			4.9				8.5				9.4				11.3				12.4				13.3				14.3

 

(1)

Adjusted EBITDA includes adjustments to net loss/income to exclude interest, taxes, depreciation, amortization, share based compensation, gain/loss on extinguishment of debt, foreign currency exchange gains/losses, change in estimated fair value of interest rate swap liability and severance and other expenses related to litigation. Adjusted EBITDA is not a measure of performance defined in accordance with U.S. GAAP.

(2)	“EBIT” is defined as Adjusted EBITDA, less (i) depreciation, (ii) amortization, and (iii) stock-based compensation. EBIT is not a financial measure in conformity with U.S. GAAP.

(3)	“NOPAT” is defined as Adjusted EBITDA, less (i) depreciation and amortization expense, less (ii) stock-based compensation, less (iii) cash taxes. NOPAT is not a financial measure in conformity with U.S. GAAP.

(4)	“Unlevered Free Cash Flow” is defined as NOPAT less (i) capital expenditures, less (ii) increases (decreases) in working capital, plus (iii) depreciation and amortization expense. Unlevered Free Cash Flow is not a financial measure in conformity with U.S. GAAP.

 

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Interests of the Directors and Executive Officers of Galaxy in the Merger

Members of the Board and Galaxy’s executive officers may have various interests in the Merger that may be in addition to, or different from, the interests of Galaxy stockholders generally. The members of the Board were aware of these potential interests and considered them at the time they approved the Merger Agreement and in making their recommendation that Galaxy stockholders adopt the Merger Agreement. These potential interests are described below.

Treatment of Equity Awards

One of our directors and all of our executive officers hold outstanding Galaxy equity awards. Effective as of immediately prior to the Effective Time, outstanding Galaxy equity awards held by our directors and executive officers will be treated as follows:

 

•

Treatment of Galaxy Options. Effective as of immediately prior to the Effective Time, each In-the-Money Company Stock Option that is outstanding and unexercised will be automatically fully vested, canceled and converted into the right to receive an amount in cash (without interest) equal to the Option Consideration, less any applicable withholding taxes. Each Company Stock Option (whether vested or unvested) that is not an In-the-Money Company Stock Option will, at the Effective Time, be automatically canceled for no consideration.

 

•

Treatment of Galaxy Stock Awards. Effective as of immediately prior to the Effective Time, except as described in the following paragraph, each unvested Company Stock Award that vests solely on the basis of time and that is outstanding immediately prior to the Effective Time will, at the Effective Time, be automatically fully vested, canceled and converted into the right to receive an amount in cash (without interest and subject to deduction for any required withholding under applicable law), equal to the Stock Award Consideration.

Mr. Reback’s Long-Term Incentive Stock Grant and each other Company Stock Award that was granted on or after July 18, 2024 but prior to the Effective Time, and that is, in each case, outstanding immediately prior to the Effective Time, will, at the Effective Time, be automatically canceled and converted into a Contingent Cash Award. Each Contingent Cash Award will generally be subject to the same terms and conditions (including vesting terms and any terms providing for “double-trigger” acceleration of vesting) that applied to the Company Stock Award from which it was converted as of immediately prior to the Effective Time, subject to certain adjustments to reflect the Merger, except that, with respect to Mr. Reback’s Contingent Cash Award, (a) any portion of the Contingent Cash Award that vests in accordance with its terms based on 2024, 2025, or 2026 performance, as applicable, shall be paid to him prior to March 15, 2025, 2026, or 2027, respectively, and (b) any portion of a Contingent Cash Award that vests in accordance with its terms as a result of any other vesting event (including termination of employment) shall be paid to him within 30 days following the vesting date.

The following tables set forth, for each current executive officer or non-employee director or any individual who served as an executive officer or non-employee director at any time since December 31, 2023, (i) the number and value of Company Shares subject to vested and unvested Company Stock Options that would accelerate at the Effective Time, (ii) the number and value of Company Shares subject to unvested Company Stock Awards that would accelerate at the Effective Time, (iii) the number and value of Company Shares subject to Company Stock Awards that would convert into Contingent Cash Performance Awards at the Effective Time, and (iv) the total value of Company Shares subject to Galaxy equity awards, in each case, held by such current or former director or executive officer as of August 30, 2024, as if the Effective Time were to occur on August 30, 2024. Any amounts actually payable in respect of these equity awards will be less any required withholding taxes and without interest. These amounts do not attempt to forecast any additional equity award grants, vesting, issuances or forfeitures that may occur prior to the Effective Time following the date of this proxy statement in accordance with the terms of the Merger Agreement. As a result of the foregoing assumptions, which may or

 

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may not actually occur or be accurate on the relevant date, the actual amounts to be received by the individuals identified in the table below may materially differ from the amounts set forth below.

 

		Number of Shares subject to Vested Stock Options (#)				Value of Vested Stock Options ($)(1)				Number of Shares subject to Unvested Stock Options (#)				Value of Accelerated Unvested Stock Options ($)(1)				Number of Accelerated Time-Based Company Stock Awards (#)				Value of Accelerated Time-Based Company Stock Awards ($)(1)				Number of Shares subject to Company Stock Awards to be Converted into Contingent Cash Performance Awards (#)(2)				Value of Shares subject to Company Stock Awards to be Converted into Contingent Cash Performance Awards ($)(1)				Total ($)(3)
Non-Employee Directors
Mark A. Lipparelli			—				—				—				—				—				—				—				—				—
Michael Gavin Isaacs			—				—				—				—				—				—				—				—				—
Cheryl A. Kondra			—				—				—				—				25,000				80,000				—				—				80,000
Meredith Brill			—				—				—				—				—				—				—				—				—
Bryan W. Waters			—				—				—				—				—				—				—				—				—
Executive Officers
Matthew D. Reback			—				—				400,000				560,000				—				—				300,000				960,000				1,520,000
Steven Kopjo			—				—				300,000				510,000				—				—				—				—				510,000
Harry C. Hagerty			200,000				—				—				—				—				—				—				—				—

 

(1)	For purposes of this table, the value of each Company Share underlying the equity awards is equal to $3.20. No value is reflected in the table above for the Company Stock Options held by Mr. Hagerty as the exercise price per share of such options exceeds $3.20.

(2)

In accordance with the terms of the Merger Agreement and based on the Merger Consideration of $3.20, represents, for each Company Share subject to a Company Stock Award that would convert into a Contingent Cash Performance Award at the Effective Time, the number and value of Company Shares underlying the Company Stock Award (with respect to the maximum number of Company Shares still eligible to be earned under such award). For additional information regarding the Company Stock Awards held by Mr. Reback and the accelerated vesting terms that would apply upon his qualifying termination following the Effective Time, see “The Merger-Interests of the Directors and Executive Officers of Galaxy in the Merger-Change in Control Benefits.”

(3)	See page 100 of this proxy statement for additional information regarding Company Shares beneficially owned by non-employee directors and executive officers of Galaxy.

Change in Control Benefits

Employment Agreement with Mr. Reback

We have entered into an employment agreement with Matt Reback to serve as the Company’s President and Chief Executive Officer. The Reback employment agreement has a three-year term and provides for a base salary of $350,000 per year, an annual discretionary bonus target of up to 50% of his base salary, with the opportunity to earn additional amounts if certain financial objectives are achieved, and eligibility to participate in the employee benefit plans available to the Company’s employees. Under the Reback employment agreement, the Company has agreed to pay a minimum bonus of $80,000 to Mr. Reback for the 2024 calendar year (on its regularly scheduled plan for annual bonus payments) if 80% of the annual bonus target is achieved.

Under the Reback employment agreement, Mr. Reback received a Company Stock Award that is eligible to vest based on achievement of performance-based vesting conditions (the “Long-Term Incentive Stock Grant”). The award is eligible to vest based on personal and business performance targets to be established by the Board for each of 2024, 2025 and 2026. The targets, if achieved, will provide Mr. Reback the opportunity to receive a total of 70,000 shares of common stock for calendar year 2024, 100,000 shares of common stock for calendar year 2025, and 130,000 shares of common stock for calendar year 2026, with final vesting determined following

 

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the assessment of achievement of the performance objectives during the first quarter of the following calendar year. To the extent any portion of this Company Stock Award remains outstanding at the Effective Time, such portion will convert into a Contingent Cash Award at the Effective Time and will remain subject to the same vesting conditions, subject to the acceleration terms described below.

The Reback employment agreement provides that upon termination of employment by Mr. Reback for good reason or by the Company for any reason other than Mr. Reback’s death or disability or other than for cause, Mr. Reback is entitled to receive cash severance payments equal to 12 months of his annual base salary at the time of termination and continuation of his medical and health insurance benefits for a period equal to the lesser of (x) 12 months and (y) the period ending on the date he first becomes entitled to medical and health insurance benefits under any plan maintained by any person for whom Mr. Reback provides services as an employee or otherwise. In addition to the foregoing severance benefits, if Mr. Reback’s employment is terminated without cause following a change of control (including the Merger), he is also entitled to: (i) additional cash severance payments equal in the aggregate to 12 months of his annual base salary at the time of termination and (ii) accelerated vesting of his “base” Company Stock Options granted under the Reback employment agreement. In addition, if the Effective Time occurs and Mr. Reback is not retained or is not provided the continuing opportunity to earn his Company Stock Award (or any Contingent Cash Award issued to Mr. Reback in consideration of his Company Stock Award at the Effective Time), Mr. Reback will vest in the earned portion of such award (for any calendar year completed prior to the Effective Time) or if a calendar year is not yet complete (or has not commenced) as of the Effective Time, the remaining unearned portion of the award.

All such severance payments are subject to Mr. Reback entering into and not revoking a release of claims in favor of the Company and Mr. Reback fully complying with certain covenants, including confidentiality and non-compete and non-solicit covenants.

Employment Agreement with Steven Kopjo

We have entered into an employment agreement with Steven Kopjo to serve as the Company’s Chief Financial Officer. The Kopjo employment agreement has a three-year term and provides for a base salary of $250,000 per year, an annual discretionary bonus target of up to 50% of his base salary, with the opportunity to earn additional amounts if certain financial objectives are achieved, and eligibility to participate in the employee benefit plans available to the Company’s employees.

The Kopjo employment agreement provides that upon termination of employment by Mr. Kopjo for good reason or by the Company for any reason other than Mr. Kopjo’s death or disability or other than for cause, Mr. Kopjo is entitled to receive cash severance payments equal to 12 months of his annual base salary at the time of termination and continuation of his medical and health insurance benefits for a period equal to the lesser of (x) 12 months and (y) the period ending on the date he first becomes entitled to medical and health insurance benefits under any plan maintained by any person for whom Mr. Kopjo provides services as an employee or otherwise. In addition to the foregoing severance benefits, if Mr. Kopjo’s employment is terminated without cause following a change of control, he is also entitled to: (i) additional cash severance payments equal in the aggregate to 12 months of his annual base salary at the time of termination and (ii) accelerated vesting of his “base” Company Stock Options granted under the Kopjo employment agreement.

All such severance payments are subject to Mr. Kopjo entering into and not revoking a release of claims in favor of the Company and Mr. Kopjo fully complying with certain covenants, including confidentiality and non-compete and non-solicit covenants.

Employment Agreement with Mr. Hagerty

We have entered into an employment agreement with Harry C. Hagerty, the Company’s former Chief Financial Officer and a current advisor to the Company. The Hagerty employment agreement has a term ending

 

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April 30, 2025, after which he intends to retire from the Company. The Hagerty agreement provides that Mr. Hagerty will serve as a strategic advisor during the remaining term of the agreement to assist with the transition to the Company of his successor, Steven Kopjo. Pursuant to the Hagerty employment agreement, Mr. Hagerty will continue to receive a base salary of $6,000 per month until April 30, 2025 unless his service is earlier terminated. In the event Mr. Hagerty is terminated without cause or terminates his employment for good reason, Mr. Hagerty is entitled to receive cash severance payments equal to 12 months of his annual base salary at the time of termination and continuation of his medical and health insurance benefits for a period equal to the lesser of (x) 12 months and (y) the period ending on the date he first becomes entitled to medical and health insurance benefits under any plan maintained by any person for whom Mr. Hagerty provides services as an employee or otherwise. In addition to the foregoing severance benefits, if Mr. Hagerty’s employment is terminated without cause following a change of control, he is also entitled to: (i) additional cash severance payments equal in the aggregate to 12 months of his annual base salary at the time of termination and (ii) accelerated vesting of his Company Stock Options.

Retention Bonus Agreement with Mr. Hagerty

Mr. Hagerty is eligible for a retention bonus in the amount of $50,000 in connection with the Merger. The retention bonus is payable as follows: $7,500 is payable on January 1, 2025; and $42,500 is payable upon the Effective Time, in each case, subject to Mr. Hagerty’s continued employment or service. The retention bonus (or any remaining unpaid installments) will be paid on an accelerated basis in the event his employment or service is terminated as a result of the expiration of his employment agreement prior to the Effective Time, subject to his execution and non-revocation of a general release of claims in favor of Galaxy.

Payment of Annual Bonuses Under Merger Agreement

Under the Merger Agreement, if the Effective Time occurs before the annual bonuses for the preceding fiscal year have been paid, then Parent shall, or shall cause the surviving corporation to, pay to each eligible continuing employee, including the Galaxy’s executive officers, the amounts payable for such fiscal year under Galaxy’s bonus plans at substantially the same time(s) as amounts have historically been paid by the Company under such bonus plans, with the amount of such bonus payments to be determined as follows: (i) if the Effective Time occurs prior to the last day of such fiscal year, for the portion of the fiscal year elapsed prior to the Effective Time based on the accrued level of performance (measured through the Effective Time), and with the bonus for the portion of the fiscal year elapsed following the Effective Time to be based on actual performance, or (ii) if the Effective Time occurs on or after the last day of such fiscal year, based on the actual level of performance and individual earned bonus amounts as determined by the Company no later than immediately prior to the Effective Time (in each case, determined in the ordinary course of business consistent with past practice and in good faith in accordance with the terms of the bonus plans). Payments under the bonus plans will be subject to continued employment through the payment date; however, if any employee’s employment is terminated without cause following the Effective Time but prior to the payment of his or her bonus, subject to such employee’s execution and non-revocation of a release of claims, the employee will remain eligible to receive his or her bonus, prorated for the portion of the applicable performance period elapsed prior to the date of termination.

New Parent Arrangements

Certain of Galaxy’s executive officers may continue to provide employment or other services to Parent after the Effective Time and may enter into new agreements, arrangements or understandings with Parent to set forth the terms and compensation of such post-Effective Time service. As of the date of this proxy statement, no such agreements, arrangements or understandings with Parent exist.

280G Mitigation Actions

Galaxy may, with Parent’s consent, implement strategies before the Effective Time to mitigate the possible impact of Sections 280G and 4999 of the Code.

 

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Golden Parachute Disclosure

As required by Section 14A of the Exchange Act and the applicable SEC rules issued thereunder, Galaxy is required to submit a proposal to Galaxy stockholders for a non-binding, advisory vote to approve certain compensation that may be paid or become payable to the named executive officers of Galaxy that is based on or otherwise relates to the Merger, as determined in accordance with Item 402(t) of Regulation S-K. This compensation is summarized in the table set forth below under “Proposal No. 2: Advisory Vote on the Merger Compensation Proposal.”

Indemnification of Directors and Officers; Insurance

Directors and officers of Galaxy are also entitled to indemnification and covered by insurance in certain circumstances. For a detailed description of these requirements, please see “The Merger Agreement-Other Covenants and Agreements-Indemnification of Directors and Officers; Insurance” beginning on page 87 of this proxy statement.

Financing of the Merger

The consummation of the Merger is not subject to any financing conditions, and Parent intends to pay the Merger Consideration from available funds. Parent has represented to Galaxy in the Merger Agreement that, through the Effective Time, it will have sufficient cash and cash equivalents to enable Merger Sub and the Surviving Corporation to pay the aggregate Merger Consideration and any other amounts required to be paid in connection with the transactions contemplated by the Merger Agreement and to pay all related fees and expenses required to be paid by Parent and Merger Sub in connection with the transactions contemplated by the Merger Agreement.

Closing and Effective Time of the Merger

The Closing will take place by electronic exchange of signatures and documents on a date to be specified by the parties, which shall be not later than the third business day after the satisfaction (or waiver, if permitted by applicable law) of the last to be satisfied of the conditions set forth in the Merger Agreement (other than those conditions that, by their nature, are to be satisfied at the Closing, but subject to the satisfaction (or waiver, if permitted by applicable law) of those conditions), or at such other date and time as Galaxy and Parent shall mutually agree upon in writing.

On the Closing Date, Parent, Galaxy and Merger Sub will cause the Merger to be consummated under the NRS by filing the articles of merger in such form as required by, and executed in accordance with, the NRS with the Nevada Secretary of State and will take such further actions as may be required to make the Merger effective on the Closing Date. The Merger will become effective at the time and day of the filing and acceptance of such certificate of merger with the Nevada Secretary of State, or such later time and day as may be agreed in writing by Galaxy and Parent (and specified in the articles of merger).

Support Agreements

As an inducement to Parent entering into the Merger Agreement, on July 18, 2024, Michael Gavin Isaacs, Meredith Brill, Mark Lipparelli, Cheryl Kondra, Cheryl Kondra and Bryan W. Waters (collectively, the “Support Agreement Signatories”), who collectively beneficially own shares representing approximately 14% of the voting power of the Company Shares, entered into Support Agreements with Galaxy (collectively, the “Support Agreements”), pursuant to which the Support Agreement Signatories will, among other things, (i) cause all of their respective Company Shares to be counted as present thereat for purposes of determining a quorum; and (ii) be present (in person or by proxy) and vote (or cause to be voted if another person is the holder of record of any Company Shares beneficially owned by the Support Agreement Signatory), or deliver (or cause to be delivered) a written consent with respect to, all of his or her Company Shares (a) in favor of (1) the adoption and

 

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approval of the Merger Agreement and the approval of the Merger, (2) the approval of any proposal to adjourn or postpone such meeting (including the Special Meeting) to a later date if Galaxy or Parent proposes or requests such postponement or adjournment in accordance with the terms of the Merger Agreement, and (3) the approval of any other proposal considered and voted upon by the Galaxy stockholders at any meeting of the stockholders of Galaxy (including the Special Meeting) necessary for consummation of the Merger and the other transactions contemplated by the Merger Agreement, and (b) against any (1) Takeover Proposal, (2) change in the Board (as defined herein), (3) action or agreement that would result in a breach of any covenant, representation or warranty or any other obligation or agreement of Galaxy contained in the Merger Agreement and (4) other action that is intended or could reasonably be expected to impede or interfere with or materially delay the Merger or any other transactions contemplated by the Merger Agreement.

The Support Agreements will terminate automatically, without any notice or other action by any person, upon the first to occur of (i) the valid termination of the Merger Agreement in accordance with its terms, (ii) the Effective Time, (iii) the Board or any committee thereof makes an Adverse Recommendation Change as a result of an Intervening Event, and (iv) the mutual written consent of all of the parties thereto.

The foregoing description of the Support Agreements and the transactions contemplated thereby does not purport to be complete, and is subject to, and qualified in its entirety by reference to, the full text of the Support Agreement (the form of which is attached as Annex B to the accompanying proxy statement).

Appraisal Rights

Under the NRS, stockholders and beneficial owners who do not vote in favor of the Merger Proposal and who follow the procedures set forth in Sections 92A.300 through 92A.500 of the NRS will have the right to seek appraisal of the fair value of their issued and outstanding Company Dissenting Shares. Company Dissenting Shares will not be converted into a right to receive the Merger Consideration, but will instead be entitled to only such rights as are granted by Sections 92A.300 through 92A.500 of the NRS. However, if, after the Effective Time, a holder of Company Dissenting Shares fails to perfect, withdraws or loses such holder’s right to appraisal pursuant to Sections 92A.300 through 92A.500 of the NRS or if a court of competent jurisdiction determines that such holder is not entitled to the relief provided by Sections 92A.300 through 92A.500 of the NRS, such holder’s Company Dissenting Shares shall be treated as if they had been converted as of the Effective Time into the right to receive the Merger Consideration upon surrender of the Certificate formerly representing such Company Dissenting Shares or transfer of the Book-Entry Shares, as applicable. A copy of the full text of Sections 92A.300 through 92A.500 of the NRS is attached to this proxy statement as Annex C and incorporated herein by reference.

Material U.S. Federal Income Tax Consequences of the Merger to Holders of Company Shares

The following discussion is a summary of certain material U.S. federal income tax consequences of the Merger that may be relevant to holders of Company Shares whose Company Shares are converted into the right to receive cash pursuant to the Merger. This discussion is based upon the Internal Revenue Code of 1986, as amended (the “Code”), Treasury Regulations promulgated under the Code, court decisions, published positions of the Internal Revenue Service (the “IRS”), and other applicable authorities, all as in effect on the date of this proxy statement and all of which are subject to change or differing interpretations at any time, possibly with retroactive effect. This discussion is limited to holders that hold their Company Shares as “capital assets” within the meaning of Section 1221 of the Code (generally, property held for investment). This summary of material U.S. federal income tax consequences is not a complete description of all potential U.S. federal income tax consequences of the Merger. This summary does not describe any tax consequences arising under the laws of any state, local or non-U.S. tax jurisdiction and does not consider any aspects of U.S. federal tax law other than income taxation (e.g., state or local tax, estate, gift or alternative minimum tax, the Medicare contribution tax on net investment income or any withholding considerations under the Sections 1471 through 1474 of the Code (including regulations issued thereunder and intergovernmental agreements entered into pursuant thereto or in

 

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connection therewith)). In addition, this summary does not address the U.S. federal income tax consequences to holders of Company Shares that exercise appraisal rights under the DGCL. For purposes of this discussion, a “holder” means either a U.S. Holder or a Non-U.S. Holder or both, as the context may require.

This discussion is for general information only and does not address all of the U.S. federal income tax considerations that may be relevant to holders in light of their particular facts and circumstances, including, but not limited to:

 

•

holders that may be subject to special treatment under U.S. federal income tax laws, such as: financial institutions, tax-exempt organizations, governmental organizations, S corporations, partnerships or any other entities or arrangements treated as pass-through entities or partnerships for U.S. federal income tax purposes or any investor therein, insurance companies, mutual funds, brokers or dealers in stocks, securities, commodities or currencies, traders in securities that elect to use the mark-to-market method of accounting for their securities, regulated investment companies, real estate investment trusts, “controlled foreign corporations,” “passive foreign investment companies” or certain former citizens or long-term residents of the United States;

 

•

holders holding their Company Shares as part of a hedging, straddle or other risk reduction strategy or as part of a conversion transaction or other integrated investment;

 

•

holders deemed to sell their Company Shares under the constructive sale provisions of the Code;

 

•

holders that received their Company Shares in compensatory transactions;

 

•

holders that hold their Company Shares through individual retirement or other tax-deferred accounts;

 

•

holders that own an equity interest, actually or constructively, in Parent or the surviving corporation;

 

•

U.S. Holders whose “functional currency” is not the U.S. dollar;

 

•

holders that are required to report income no later than when such income is reported in an “applicable financial statement” (as defined in the Code); or

 

•

holders that own or have owned (directly, indirectly or constructively) 5% or more of the Company Shares.

If a partnership (including an entity or arrangement classified as a partnership for U.S. federal income tax purposes) is a beneficial owner of Company Shares, the U.S. federal income tax treatment of a partner in such partnership will generally depend upon the status of the partner and the activities of the partnership. Partnerships holding Company Shares and partners therein should consult their tax advisors regarding the particular tax consequences to them of the Merger.

We have not sought, and do not intend to seek, any ruling from the IRS with respect to the statements made and the conclusions reached in the following summary. No assurance can be given that the IRS will agree with the views expressed in this summary, or that a court will not sustain any challenge by the IRS in the event of litigation. Further, no opinion of counsel has been or will be rendered with respect to the tax consequences of the Merger or related transactions.

THIS DISCUSSION OF MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES IS PROVIDED FOR GENERAL INFORMATION ONLY AND DOES NOT CONSTITUTE LEGAL OR TAX ADVICE TO ANY HOLDER. HOLDERS SHOULD CONSULT THEIR TAX ADVISORS CONCERNING THE U.S. FEDERAL INCOME TAX CONSEQUENCES RELATING TO THE MERGER IN LIGHT OF THEIR PARTICULAR CIRCUMSTANCES AND ANY CONSEQUENCES ARISING UNDER THE LAWS OF ANY STATE, LOCAL OR NON-U.S. TAXING JURISDICTION OR OTHER TAX LAWS.

 

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U.S. Holders

For purposes of this proxy statement, a “U.S. Holder” is a beneficial owner of Company Shares who or that is for U.S. federal income tax purposes:

 

•

An individual who is a citizen or resident of the United States;

 

•

A corporation, or other entity taxable as a corporation, created or organized in or under the laws of the United States or any state thereof or the District of Columbia;

 

•

An estate, the income of which is subject to U.S. federal income taxation regardless of its source; or

 

•

A trust (i) that is subject to the primary supervision of a court within the United States and the control of one or more United States persons as defined in Section 7701(a)(30) of the Code or (ii) that has a valid election in effect under applicable Treasury Regulations to be treated as a United States person for U.S. federal income tax purposes.

The receipt of cash by a U.S. Holder in exchange for Company Shares pursuant to the Merger will be a taxable transaction for U.S. federal income tax purposes. In general, such U.S. Holder will recognize gain or loss equal to the difference, if any, between the amount of cash received and the U.S. Holder’s adjusted tax basis in the Company Shares surrendered pursuant to the Merger. A U.S. Holder’s adjusted tax basis generally will equal the amount that such U.S. Holder paid for the Company Shares. Any such gain or loss generally will be capital gain or loss and will be long-term capital gain or loss if such U.S. Holder’s holding period in such Company Shares is more than one year at the time of the consummation of the Merger. A reduced tax rate on capital gains generally will apply to long-term capital gains of non-corporate U.S. Holders, including individuals. There are limitations on the deductibility of capital losses. If a U.S. Holder acquired different blocks of Company Shares at different times or different prices, such U.S. Holder must determine its adjusted tax basis and holding period separately with respect to each block of Company Shares.

Non-U.S. Holders

For purposes of this proxy statement, the term “Non-U.S. Holder” means a beneficial owner of Company Shares that is neither a U.S. Holder nor an entity or arrangement treated as a partnership for U.S. federal income tax purposes.

Non-U.S. Holders should consult their tax advisors to determine the U.S. federal, state, local, non-U.S. and other tax consequences that may be relevant to them in light of their particular circumstances.

Any gain realized by a Non-U.S. Holder pursuant to the Merger generally will not be subject to U.S. federal income tax unless:

 

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the gain is effectively connected with a trade or business of such Non-U.S. Holder in the United States (and, if required by an applicable income tax treaty, is attributable to a permanent establishment maintained by such Non-U.S. Holder in the United States), in which case such gain generally will be subject to U.S. federal income tax at rates generally applicable to U.S. persons, and, if the Non-U.S. Holder is a corporation, such gain may also be subject to an additional branch profits tax at a rate of 30% (or a lower rate specified under an applicable tax treaty);

 

•

such Non-U.S. Holder is an individual who is present in the United States for 183 days or more in the taxable year of the consummation of the Merger, and certain other specified conditions are met, in which case such gain will be subject to U.S. federal income tax at a rate of 30% (or a lower rate specified under an applicable tax treaty), which may be offset by U.S.-source capital losses of such Non-U.S. Holder recognized in the same taxable year (if any) provided the Non-U.S. Holder timely files U.S. federal income tax returns with respect to such losses; or

 

•

Company Shares held by such Non-U.S. Holder constitute a United States real property interest (a “USRPI”) by reason of Galaxy’s status as a “United States real property holding corporation” within

 

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the meaning of Section 897(c)(2) of the Code (a “USRPHC”), at any time during the shorter of the five-year period ending on the date of the Effective Time or the period that the Non-U.S. Holder held the applicable Company Shares.

With respect to the third bullet point above, Galaxy believes it is not a USRPHC. Because the determination of whether Galaxy is a USRPHC depends, however, on the fair market value of its USRPIs relative to the fair market value of its non-U.S. real property interests and other business assets, there can be no assurance Galaxy is not a USRPHC. Even if Galaxy is a USRPHC, gain realized by a Non-U.S. Holder pursuant to the Merger will not be subject to U.S. federal income tax if Company Shares are “regularly traded,” as defined by applicable Treasury Regulations, on an established securities market and such Non-U.S. Holder owned, actually and constructively, 5% or less of Company Shares throughout the shorter of the five-year period ending on the date of the Effective Time or the Non-U.S. Holder’s holding period with respect to the applicable Company Shares.

Non-U.S. Holders should consult their tax advisors regarding potentially applicable income tax treaties that may provide for different rules.

Information Reporting and Backup Withholding

Information reporting and backup withholding (at a current rate of 24%) may apply to the proceeds received by a holder pursuant to the Merger. Backup withholding generally will not apply to (1) a U.S. Holder that furnishes a correct taxpayer identification number and certifies that such U.S. Holder is not subject to backup withholding on IRS Form W-9 (or a substitute or successor form) or (2) a Non-U.S. Holder that (a) provides a certification of such Non-U.S. Holder’s non-U.S. status on the applicable IRS Form W-8 (or a substitute or successor form) or (b) otherwise establishes an exemption from backup withholding. Backup withholding is not an additional tax. Any amounts withheld under the backup withholding rules may be allowed as a refund or a credit against the holder’s U.S. federal income tax liability, if the required information is timely furnished to the IRS.

Regulatory Approvals Required for the Merger

The parties have agreed that, with respect to Parent, receipt of Gaming Approvals (as defined in the Merger Agreement) in (i) certain Core Gaming Approval Jurisdictions (as defined in the Merger Agreement) and (ii) such other jurisdictions for which there is a Required Gaming Approval (as defined in the Merger Agreement) other than the Core Gaming Approval Jurisdictions that, when taken together with the Core Gaming Approval Jurisdictions represents, in the aggregate, Attributable Revenue (as defined in the Merger Agreement) equal to or greater than the Revenue Threshold (as defined in the Merger Agreement), is a condition to Closing. The parties have agreed in the Merger Agreement that Parent and Merger Sub will file with the applicable Gaming Authorities all applications for licensure, submissions for suitability review and other appropriate, necessary and requested documentation in connection with all Required Gaming Approvals as soon as reasonably practicable following the date of the Merger Agreement.

There is no assurance that we will obtain all required gaming regulatory approvals, or that those approvals will not include terms, conditions or restrictions that may have an adverse effect on Galaxy and/or Parent after completion of the Merger. Other than the filings described above and in this section of the proxy statement, we are not aware of any mandatory regulatory filings to be made, approvals to be obtained, or waiting periods to expire, in order to complete the Merger. If the parties discover that other regulatory filings, approvals or waiting periods are necessary, they will seek to obtain or comply with them.

Although we expect that all required regulatory clearances and approvals will be obtained, we cannot assure you that these regulatory clearances and approvals will be timely obtained, obtained at all or that the granting of these regulatory clearances and approvals will not involve the imposition of additional conditions, restrictions, qualifications, requirements or limitations on the completion of the Merger, including the requirement to divest

 

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assets, license or hold separate assets or terminate existing relationships and contractual rights, or agree to other remedies, or require changes to the terms of the Merger Agreement, or that a challenge to the Merger on antitrust or gaming regulatory grounds will not be made, or if such challenge is made, what the result will be. These conditions or changes could result in the conditions to the Merger not being satisfied. There is currently no way to predict how long it will take to obtain all of the required gaming regulatory approvals or whether such approvals will ultimately be obtained and there may be a substantial period of time between the approval of the proposal to approve the Merger Agreement by stockholders and the completion of the Merger.

In accordance with the terms and subject to the conditions of the Merger Agreement, Parent, Merger Sub, and Galaxy have agreed to use their reasonable best efforts to obtain all gaming regulatory approvals required to complete the Merger.

Delisting and Deregistration of Company Shares

If the Merger is consummated, following the Effective Time, the Company Shares will cease trading on the OTCQB and will be deregistered under the Exchange Act. As such, we would no longer file periodic reports with the SEC.

 

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THE MERGER AGREEMENT

The following summary describes certain material provisions of the Merger Agreement. This summary is not complete and is qualified in its entirety by reference to the Merger Agreement, which is attached to this proxy statement as Annex A and incorporated into this proxy statement by reference. We encourage you to read the Merger Agreement carefully in its entirety because this summary may not contain all the information about the Merger Agreement that is important to you. The rights and obligations of the parties are governed by the express terms of the Merger Agreement and not by this summary or any other information contained in this proxy statement.

Explanatory Note Regarding the Merger Agreement

The Merger Agreement and this summary of its terms have been included to provide you with information regarding the terms of the Merger Agreement. Factual disclosures about Galaxy contained in this proxy statement or in Galaxy’s public reports filed with the SEC may supplement, update or modify the factual disclosures about Galaxy contained in the Merger Agreement and described in this summary. The representations, warranties, covenants, and agreements made in the Merger Agreement by Galaxy and Evolution were qualified and subject to important limitations agreed to by Galaxy and Evolution in connection with negotiating the terms of the Merger Agreement. In particular, in your review of the representations, warranties, covenants, and agreements contained in the Merger Agreement and described in this summary, it is important to bear in mind that the representations, warranties, covenants, and agreements were negotiated with the principal purposes of establishing the circumstances in which a party to the Merger Agreement may have the right to not close the Merger if the representations and warranties of the other party prove to be untrue (or such covenants and agreements were not complied with), due to a change in circumstance or otherwise, and allocating risk between the parties to the Merger Agreement, rather than establishing matters as facts. The representations, warranties, covenants, and agreements may also be subject to a contractual standard of materiality different from those generally applicable to stockholders and reports and documents filed by each of Galaxy or Evolution (or its applicable affiliate) with the SEC or Nasdaq Stockholm, as applicable, and in some cases were qualified by disclosures contained in the disclosure letter delivered by Galaxy to Evolution (the “Galaxy Disclosure Letter”) and in the disclosure letter delivered by Evolution to Galaxy (the “Evolution Disclosure Letter” and, together with the Galaxy Disclosure Letter, the “Disclosure Letters”), in each case in connection with the Merger Agreement, which disclosures are not reflected in the Merger Agreement. Moreover, information concerning the subject matter of the representations and warranties, which do not purport to be accurate as of the date of this proxy statement, may have changed since the date of the Merger Agreement, and subsequent developments or new information qualifying a representation or warranty may have been included in this proxy statement or in the respective public filings made by each of Galaxy or Evolution (or its applicable affiliate) with the SEC or Nasdaq Stockholm, as applicable. For the foregoing reasons, the representations, warranties, covenants, and agreements and any descriptions of those provisions should not be read alone or relied upon as characterizations of the actual state of facts or condition of Galaxy, Evolution or any of their respective subsidiaries or affiliates. Instead, such provisions or descriptions should be read only in conjunction with the other information provided elsewhere in this proxy statement or incorporated by reference into this proxy statement.

Additional information about Galaxy may be found elsewhere in this proxy statement and Galaxy’s other public filings. See “Where You Can Find More Information” beginning on page 102 of this proxy statement.

When the Merger Becomes Effective

The Closing will take place at 10:00 a.m. (New York City time) on the date that is three business days following the satisfaction or waiver (to the extent permitted by applicable law) of the conditions set forth in the Merger Agreement (other than those conditions that by their nature are to be satisfied at the Closing, but subject to the satisfaction or waiver (to the extent such waiver is permitted by applicable law) of those conditions at such time) at the offices of Kirkland & Ellis LLP, 601 Lexington Avenue, New York, New York 10022, or remotely

 

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by exchange of documents and signatures (or their electronic counterparts), unless another date, time or place is agreed to in writing by Evolution and Galaxy (such date, the “Closing Date”).

On the Closing Date, Galaxy, Evolution and Merger Sub will cause the Merger to be consummated by filing the articles of merger with the Nevada Secretary of State executed and acknowledged in accordance with, and in such form as is required by, the relevant provisions of the NRS, and will make all other filings, recordings or publications required under the NRS in connection with the Merger. The Merger will become effective at the time that the articles of merger are filed with the Nevada Secretary of State or, to the extent permitted by applicable law, at such later time as is agreed to in writing by Galaxy and Evolution prior to the filing of such articles of merger and specified in the articles of merger (the “Effective Time”).

Structure of the Merger; Articles of Incorporation; Bylaws; Directors and Officers

Pursuant to the terms and conditions of the Merger Agreement, at the Effective Time, Merger Sub will be merged with and into Galaxy and the separate corporate existence of Merger Sub will cease. Galaxy will continue as the surviving corporation and as a wholly owned subsidiary of Evolution. At the Effective Time, the articles of incorporation of Galaxy, as in effect immediately prior to the Effective Time, will be amended and restated as of the Effective Time to be identical to the articles of incorporation of Merger Sub as in effect immediately prior to the Effective Time, except that the name of the surviving corporation will be “Galaxy Gaming, Inc.” and, as so amended, will be the articles of incorporation of the surviving corporation until thereafter amended as provided therein or by applicable law. The bylaws of the surviving corporation will be amended and restated as of the Effective Time to be identical to the bylaws of Merger Sub as in effect immediately prior to the Effective Time, and as so amended and restated, will be the bylaws of the surviving corporation until thereafter amended as provided therein or by applicable law.

Effect of the Merger on Company Shares

At the Effective Time, each issued and outstanding Company Share as of immediately prior to the Effective Time (other than Canceled Company Shares and Company Shares that are outstanding immediately prior to the Effective Time held by a stockholder of Galaxy who has not voted in favor of adoption of the Merger Agreement or consented thereto in writing and who has properly exercised appraisal rights of such Company Shares in accordance with the applicable provisions of Sections 92A.300 through 92A.500 of the NRS (“Company Dissenting Shares”)) will be canceled and extinguished and automatically cease to exist and will be converted into the right to receive the Merger Consideration.

At the Effective Time, each Canceled Company Share will be canceled automatically and will cease to exist and no consideration will be delivered in exchange therefor.

If, during the period between July 18, 2024 and the Effective Time, the outstanding Company Shares are changed into a different number or class of shares by reason of the occurrence or record date of any stock split, reverse stock split, stock dividend (including any dividend or other distribution of securities convertible into Company Shares), reorganization, recapitalization, reclassification, combination, exchange of shares, or other like change, the Merger Consideration and any other amount payable pursuant the Merger Agreement (including consideration payable in respect of Company Stock Options or Company Stock Awards) will be appropriately adjusted to reflect the effect of such stock split, reverse stock split, stock dividend (including any dividend or other distribution of securities convertible into Company Shares), reorganization, recapitalization, reclassification, combination, exchange of shares, or other like change, as permitted by the Merger Agreement.

 

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Treatment of Equity Awards

Under the Merger Agreement, by virtue of the Merger and without any action on the part of any person, effective as of immediately prior to the Effective Time:

 

•

Each In-the-Money Company Stock Option that is outstanding and unexercised immediately prior to the Effective Time be automatically fully vested (to the extent unvested), canceled and converted into the right to receive an amount in cash, without interest and subject to deduction for any required withholding under applicable law, equal to (i) the number of Company Shares underlying such In-the-Money Company Stock Option, multiplied by (ii) the excess of (a) the Merger Consideration minus (b) the applicable per share exercise price of such In-the-Money Company Stock Option (the “Stock Option Consideration”). Each Company Stock Option that that is not an In-the-Money Company Stock Option will be automatically canceled for no consideration.

 

•

Each Company Stock Award subject to only time-based vesting requirements that was granted prior to July 18, 2024 and is outstanding immediately prior to the Effective Time will, be automatically fully vested, canceled and converted into the right to receive an amount in cash, without interest and subject to deduction for any required withholding under applicable law, equal to (i) the number of Company Shares underlying such Company Stock Award, multiplied by (ii) the Merger Consideration, subject to any applicable withholding taxes (the “Stock Award Consideration”).

 

•

Mr. Reback’s Long-Term Incentive Stock Grant and each other Company Stock Award that was granted on or after July 18, 2024 but prior to the Effective Time, and that, in each case, remains outstanding immediately prior the Effective Time will be automatically canceled and converted into a contingent right to receive an amount in cash, without interest and subject to deduction for any required withholding under applicable law, equal to the Stock Award Consideration with respect to the maximum number of Company Shares still eligible to be earned and subject to such Company Stock Award as of the Effective Time (each, a “Contingent Cash Award”). Each Contingent Cash Award will be subject to the same terms and conditions (including vesting terms and any terms providing for “double-trigger” acceleration of vesting) that applied to the Company Stock Award from which it was converted as of immediately prior to the Effective Time, except that (i) any portion of a Contingent Cash Award that vests in accordance with its terms based on 2024, 2025 or 2026 performance, as applicable, will be paid to him prior to March 15, 2025, 2026 or 2027, respectively, and (ii) any portion of a Contingent Cash Award that vests in accordance with its terms as a result of any other vesting event (including termination of employment) will be paid to him within 30 days following the date on which such portion becomes vested.

Promptly after the Effective Time (but in any event no later than the second payroll date after the Effective Time), the surviving corporation will pay through its or its affiliate’s payroll systems the Stock Option Consideration and the Stock Award Consideration.

Treatment of Warrants

Each outstanding Company Warrant will, in accordance with the terms thereof, automatically and without any required action on the part of the holder thereof or any other person, cease to represent a Company Warrant exercisable for Company Shares and convert into the right to receive cash in an amount equal to the product of the total number of shares of Company Shares subject to such Company Warrant prior to the Effective Time, multiplied by the excess of the Merger Consideration minus $0.01.

Company Dissenting Shares

The Merger Agreement provides that Company Dissenting Shares will not be converted into a right to receive the Merger Consideration, but instead at the Effective Time will be entitled to only such rights as are granted by Sections 92A.300 through 92A.500 of the NRS. If any holder of Company Dissenting Shares fails to

 

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perfect, withdraws or loses such holder’s right to appraisal under Sections 92A.300 through 92A.500 of the NRS or if a court of competent jurisdiction determines that such holder is not entitled to the relief provided by Sections 92A.300 through 92A.500 of the NRS, such holder’s Company Dissenting Shares will be treated as if they had been converted as of the Effective Time into the right to receive the Merger Consideration, without interest thereon, upon surrender of the Certificate formerly representing such Company Dissenting Shares or transfer of the Book-Entry Shares, as applicable.

Payment for Company Shares

At or prior to the Closing Date, Evolution will deposit, or cause to be deposited, with a paying agent designated by Evolution that is reasonably acceptable to Galaxy, for the sole benefit of holders of Company Shares, an amount in cash sufficient to pay the aggregate Merger Consideration to which the Galaxy stockholders are entitled under the Merger Agreement.

Promptly after the Effective Time, Evolution and the surviving corporation will cause the paying agent to mail to each person who was, immediately prior to the Effective Time, a holder of record of Company Shares (other than the Company Shares to be canceled in accordance with the provisions of the Merger Agreement): (i) a letter of transmittal (which will specify that delivery will be effected, and risk of loss and title to the Certificates or Book-Entry Shares, as applicable, will pass, in the case of Certificates, only upon delivery of the Certificates to the paying agent, and which will be in such form and will have such other customary provisions (including customary provisions regarding delivery of an “agent’s message” with respect to Book-Entry Shares) as Evolution and Galaxy may reasonably agree in writing prior to the Closing Date and (ii) instructions for use in effecting the surrender of the Certificates or Book-Entry Shares in exchange for payment of the Merger Consideration as provided in the Merger Agreement.

Upon (i) surrender of a Certificate for cancelation to the paying agent, together with such letter of transmittal, duly completed and validly executed in accordance with such letter’s instructions (and such other customary documents as may be reasonably required by the paying agent) or (ii) in the case of Book-Entry Shares, receipt of an “agent’s message” by the paying agent (or such other evidence, if any, of transfer as the paying agent may reasonably request), the holder of such Certificate or Book-Entry Share will be entitled to receive in exchange therefor the Merger Consideration for each Company Share formerly represented by such Certificate or Book-Entry Share, and the Certificate or Book-Entry Share so surrendered shall forthwith be canceled.

Until surrendered as contemplated, each Certificate and Book-Entry Share will be deemed at any time after the Effective Time to represent only the right to receive the Merger Consideration.

Representations and Warranties

The Merger Agreement contains representations and warranties of each of Galaxy, Evolution and Merger Sub (subject to certain qualifications or exceptions in the Merger Agreement and the Disclosure Letters) as to, among other things:

 

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corporate organization, good standing and corporate power and authority to conduct its business as currently conducted;

 

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corporate power and authority to enter into the Merger Agreement, to perform its obligations thereunder and to consummate the transactions contemplated thereby;

 

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the absence of certain violations, defaults or consent requirements under certain contracts, organizational documents, and applicable law or judgments, in each case arising out of the execution, delivery or performance of, or consummation of the transactions contemplated by, the Merger Agreement;

 

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•

required regulatory filings or actions and authorizations, consents or approvals of governmental entities and other persons, and compliance with applicable gaming laws, listing and corporate governance rules and regulations of the OTCQB (in the case of Galaxy) and Nasdaq Stockholm (in the case of Evolution);

 

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the absence of any failure to receive a license, certificate, registration or finding of suitability from an applicable gaming regulator;

 

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the absence of operations in material violation of any applicable gaming law of any jurisdiction in which either Galaxy or Evolution holds a license, permit, approval, authorization or registration from any gaming authority;

 

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the absence of certain litigation, orders and judgments and governmental proceedings and investigations pending against the parties; and

 

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matters relating to information to be included in required filings with the SEC, including this proxy statement, in connection with the Merger.

The Merger Agreement also contains representations and warranties of Galaxy (subject to certain qualifications or exceptions in the Merger Agreement and the Galaxy Disclosure Letter) as to, among other things:

 

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the licensing and qualification and good standing of Galaxy and its subsidiaries in each jurisdiction in which the character or location of the properties and assets owned or leased by it makes such licensing or qualification necessary;

 

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the capitalization of Galaxy, including the authorized and outstanding Company Shares and Company Shares held by Galaxy in its treasury, and its subsidiaries;

 

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outstanding Company Shares and all Company Shares issued upon exercise, settlement or conversion, as applicable, of Company Stock Options, Company Stock Awards, and Company Warrants having been or being when issued duly authorized and validly issued, fully paid, nonassessable and free of preemptive rights or similar rights;

 

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the Company Stock Options being in compliance in all material respects with all applicable laws, and the per share exercise price of each Company Stock Option being equal to or greater than the fair market value of the underlying Company Shares on the date of the grant (within the meaning of Section 409A of the Code and the Treasury Regulations promulgated thereunder);

 

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except as otherwise disclosed, the absence of (i) outstanding shares of capital stock of, or other equity or voting interest in, Galaxy, (ii) outstanding securities of Galaxy convertible into or exchangeable for shares of capital stock, or other equity or voting in Galaxy, (iii) outstanding subscriptions, options, warrants, rights, puts, calls, stock appreciation rights, restricted or performance stock units, phantom stock or other commitments or agreements to acquire from Galaxy, or that obligate Galaxy to issue, any capital stock of, or other equity or voting interests (including indebtedness of Galaxy having the right to vote or convertible into, or exchangeable for, securities having the right to vote) in, or any securities convertible into or exchange for shares of capital stock of, or other equity or voting interests in, Galaxy, (iv) obligations of Galaxy to grant, extend or enter into any subscription, option, warrant, right, put, call, stock appreciation right, restricted or performance stock unit, phantom stock, convertible or exchangeable security or other similar agreement or commitment relating to any capital stock of, or other equity or voting interests in, Galaxy and (v) other outstanding obligations by Galaxy to make any payments based on the price or value of any of the foregoing securities covered in clauses (i) through (iv) above (the items in clauses (i), (ii), (iii), (iv) and (v) being referred to collectively as “Company Securities”);

 

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except as otherwise disclosed, the absence of outstanding agreements of any kind which obligate Galaxy to repurchase, redeem or otherwise acquire any Company Securities (other than pursuant to the

 

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cashless exercise of Company Stock Options or the forfeiture or withholding of taxes with respect to Company Stock Options or Company Stock Awards), or obligate Galaxy to grant, extend or enter into any such agreements relating to any Company Securities, including any agreements granting any preemptive rights, subscription rights, anti-dilutive rights, call or rights of first refusal or similar rights with respect to any Company Securities;

 

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the absence of any stockholder’s agreements, voting trust agreement, registration rights agreement or other similar agreement or understanding relating to any Company Securities or any other agreement relating to the disposition, voting or dividends with respect to any Company Securities or the right to elect, or to designate or nominate for election, a director to the Board or the board of directors (or similar governing body) of any subsidiary of Galaxy;

 

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that, assuming the due authorization, execution and delivery of the Merger Agreement by Evolution and Merger Sub, the Merger Agreement constitutes a legal, valid and binding obligation of Galaxy;

 

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the Board, at a meeting duly called and held, adopting resolutions (i) determining that the Merger Agreement, the Merger and the other transactions contemplated by the Merger Agreement are advisable, fair to and in the best interests of Galaxy and its stockholders, (ii) approving and declaring that it is advisable for Galaxy to execute, deliver and perform its obligations under the Merger Agreement and to consummate the Merger and the other transactions contemplated by the Merger Agreement, (iii) subject to the terms and conditions set forth in the Merger Agreement, resolving to recommend that Galaxy stockholders adopt and approve the Merger Agreement and approve the Merger and (iv) assuming that the representations and warranties of Evolution and Merger Sub in the Merger Agreement are correct, its completion of all necessary actions so that the restrictions under Nevada takeover laws are not applicable to Galaxy, Evolution, Merger Sub or their respective affiliates and subsidiaries or the Merger Agreement and its contemplated transactions, and that these resolutions have not, except as after the date of the Merger Agreement as permitted by the terms of the Merger Agreement, been rescinded, modified or withdrawn;

 

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the timeliness and accuracy of Galaxy’s filings with the SEC, and the compliance of such filings and financial statements with SEC rules, GAAP (in the case of financial statements), the Securities Act, the Exchange Act, and the Sarbanes-Oxley Act of 2002;

 

•

the absence of outstanding or unresolved comments received from the SEC staff or outstanding SEC investigations with respect to Galaxy’s SEC filings;

 

•

the absence of liabilities or obligations of any nature (whether accrued, absolute, contingent or otherwise) that would be required under GAAP, as in effect on July 18, 2024, to be reflected or reserved against on a consolidated balance sheet of Galaxy (including notes thereto);

 

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the absence of any agreement or obligation on Galaxy or any of any of its subsidiaries to become a party to any securitization transaction, off-balance sheet partnership or any loan or credit agreement, indenture, debenture, note, bond, mortgage, deed of trust, lease, sublease, license, contract or other agreement or understanding that is legally binding (each, a “Contract”) to avoid disclosure in Galaxy’s SEC filings;

 

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Galaxy’s disclosure controls and procedures and internal control over financial reporting and the absence of “significant deficiencies” or “material weaknesses” in Galaxy’s internal controls;

 

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the absence of fraud or allegation thereof that involves management or other employees who have a significant role in Galaxy’s internal control over financial reporting;

 

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since December 31, 2023 through the date of the Merger Agreement, Galaxy and its subsidiaries have conducted their respective businesses in the ordinary course of business in all material respects (except for the execution and performance of the Merger Agreement and the discussions and negotiations related thereto) and have not suffered a Material Adverse Effect;

 

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•

the payment of taxes, filing of tax returns, absence of tax obligations, audits or proceedings and other tax matters;

 

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Galaxy’s employee benefit plans, including compliance with the Employee Retirement Income Security Act of 1974 and the Code, and other agreements with its employees;

 

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labor matters, including the absence of certain employee related disputes since January 1, 2022;

 

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environmental matters, including compliance with environmental laws by Galaxy and its subsidiaries;

 

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Galaxy’s intellectual property rights;

 

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the compliance by Galaxy and its subsidiaries with data privacy and protection laws and the absence of material failures of Galaxy and its subsidiaries information technology systems;

 

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the absence of a stockholders’ rights agreement and non-applicability of certain anti-takeover laws to the Merger Agreement and the Merger;

 

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real property leased by Galaxy and its subsidiaries;

 

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certain categories of specified material contracts;

 

•

insurance policies maintained by Galaxy and its subsidiaries;

 

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compliance with anti-bribery and anti-corruption laws, rules and regulations, including the Foreign Corrupt Practices Act of 1977;

 

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the absence of any fees owed by Galaxy to investment bankers or brokers in connection with the Merger, other than those specified in the Galaxy Disclosure Letter;

 

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Galaxy’s 10 largest customers by dollar volume of revenue and 10 largest suppliers by dollar volume of spend during the fiscal years ended December 31, 2022 and December 31, 2023;

 

•

the adoption of the Merger Agreement by the affirmative vote of the holders of at least a majority of the voting power of the outstanding Company Shares in favor of the Merger Agreement and the transactions, including the Merger, at the stockholders meeting as the only vote or approval of the holders of any securities of Galaxy necessary to adopt the Merger Agreement and approve the transactions, including the Merger;

 

•

the compliance as to form of the proxy statement with the applicable requirements of the Exchange Act and the accuracy of the information provided in such proxy statement;

 

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the receipt by the Board of the opinion of Macquarie Capital as to the fairness of the Merger Consideration, from a financial point of view, to the holders of Company Shares (other than holders of Company Dissenting Shares and Canceled Company Shares);

 

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transactions with certain affiliates of Galaxy;

 

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the compliance by Galaxy with certain disclosure requirements of the OTCQB Rules for U.S. companies; and

 

•

compliance with certain U.S. defense laws.

The Merger Agreement also contains representations and warranties of Evolution and Merger Sub (subject to certain qualifications or exceptions in the Merger Agreement and the Evolution Disclosure Letter) as to, among other things:

 

•

the absence of any ownership by Evolution and Merger Sub or any of their respective affiliates of Company Shares or securities convertible into or exchangeable for Company Shares;

 

•

the availability to Evolution and Merger Sub, at all times from July 18, 2024 through the Closing Date, sufficient cash and cash equivalents to enable Merger Sub and the surviving corporation to pay, on the

 

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terms and conditions contained in the Merger Agreement, the aggregate Merger Consideration and any other amounts required to be paid in connection with the consummation of the Merger and the other transactions contemplated by the Merger Agreement required to be paid by Evolution and Merger Sub in connection with the related transactions;

 

•

ownership and operations of Merger Sub since its formation;

 

•

the solvency of Evolution and Merger Sub;

 

•

the absence of any fees owed by Evolution, Merger Sub or any of their respective affiliate to investment bankers or brokers in connection with the Merger, except for those, if any, whose fees and expenses will be paid by Evolution; and

 

•

other than the Support Agreement, the absence of certain arrangements between Evolution, Merger Sub or any of their respective affiliates and any member of Galaxy’s management or directors relating to the Merger Agreement, the Merger and the other transactions contemplated by the Merger Agreement, pursuant to which (i) any stockholder of Galaxy would be entitled to receive consideration of a different amount or nature than the Merger Consideration, (ii) any stockholder of Galaxy (a) has agreed to vote to adopt the Merger Agreement or the Merger (b) has agreed to vote against, or not to tender his, her or its shares of capital stock of Galaxy in, any takeover proposal and (iii) any such person (other than any affiliate of Evolution) has agreed to provide, directly or indirectly, equity capital to Evolution or Galaxy to finance in whole or in part the Merger.

Some of the representations and warranties in the Merger Agreement are qualified by materiality qualifications or a “Material Adverse Effect” clause.

For purposes of the Merger Agreement, a “Material Adverse Effect” means any effect, change, event, fact, circumstance, development or occurrence that: (i) has had or would reasonably be expected to have a material adverse effect on the businesses, results of operations, assets or financial conditions of Galaxy and its subsidiaries, taken as a whole; provided, however, that none of the following, either alone or in combination, will constitute or be taken into account in determining whether a Material Adverse Effect has occurred: (a) any effect, change, event, fact, circumstance, development or occurrence to the extent resulting from (1) general conditions (or changes therein) in the industry in which Galaxy or any of its subsidiaries operates, (2) business, economic or political conditions (or changes therein) in the United States or elsewhere in the world or (3) general conditions (or changes therein) in the credit, financial, banking, currency or capital markets, in the United States or elsewhere in the world, including changes in interest or exchange rates; (b) any effect, change, event, fact, circumstance, development or occurrence to the extent resulting from (1) changes in law or in GAAP or other applicable accounting standards (or the interpretation thereof) after the date of the Merger Agreement, (2) acts of war (whether or not declared), sabotage or terrorism, or any escalation or worsening of any such acts of war (whether or not declared), sabotage or terrorism, or (3) volcanoes, tsunamis, pandemics (including the COVID-19 pandemic), earthquakes, hurricanes, tornados or other natural disasters; (c) (1) any decline in the market price, or change in trading volume, of the capital stock of Galaxy or (2) any failure to meet any internal or public projections, forecasts, guidance, estimates, milestones, budgets or internal or published financial or operating predictions of revenue, earnings, cash flow or cash position (it being understood that the exceptions in clauses (c) (1) and (2) shall not prevent or otherwise affect a determination that the underlying cause of any such change, decline or failure referred to therein is, or would reasonably be expected to be, a Material Adverse Effect, unless such change, decline or failure would otherwise be excepted from the definition of “Material Adverse Effect”); (d) any action taken by Galaxy or any of its subsidiaries at Evolution’s written request; (e) any legal action brought by a stockholder of Galaxy (on their own behalf or on behalf of Galaxy) against Galaxy, to the extent arising out of the Merger or in connection with the related transactions; (f) the negotiation, execution, public announcement, or the pendency or consummation of the transactions, including (1) by reason of the identity of Evolution, Merger Sub or their affiliates or (2) the termination of, failure to renew or inability to enter into any contracts with customers, suppliers, distributors or other business partners as a result of the foregoing (it being understood that this clause (f) will not apply to any representation or warranty to the extent the purpose of

 

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such representation or warranty is to address the consequences resulting from the execution and delivery of the Merger Agreement or the consummation of the related transactions); provided further, however, that any effect, change, event, fact, circumstance, development or occurrence referred to in clause (a) or clause (b) may be taken into account in determining whether there has been, or would reasonably be expected to be, a Material Adverse Effect to the extent such effect, change, event, fact, circumstance, development or occurrence has a disproportionate adverse effect on the businesses, results of operations, assets or financial condition of Galaxy and its subsidiaries, taken as a whole, as compared to other similarly situated companies in the industry in which Galaxy and its subsidiaries operate; or (ii) would reasonably be expected to prevent or materially impede, interfere with, hinder or delay the consummation by Galaxy of the transactions or the performance by Galaxy in all material respects of its obligations under the Merger Agreement.

Conduct of Business Pending the Merger

The Merger Agreement provides that except (i) as required by applicable law or judgment, as expressly required by the Merger Agreement or as set forth in the Galaxy Disclosure Letter, during the period from the date of the Merger Agreement until the Effective Time (or such earlier date on which the Merger Agreement is terminated pursuant to its terms), unless Evolution otherwise expressly provides consent in writing in advance of Galaxy or any of its subsidiaries taking or omitting to take any action (such consent not to be unreasonably withheld or delayed), Galaxy will, and will cause its subsidiaries to: (a) carry on their respective businesses in all material respects in the ordinary course of business; (b) use their respective reasonable best efforts to preserve their respective business organizations substantially intact and preserve existing relations with employees, customers, suppliers, licensors, licensees, governmental authorities and other persons with whom Galaxy or any of its subsidiaries has material business relationships and (c) use their respective reasonable best efforts to maintain in full force and effect their permits under applicable gaming laws, and (ii) without limiting the generality of the foregoing, except as required by applicable law or judgment, as expressly required by the Merger Agreement or as set forth in the Galaxy Disclosure Letter, during the period from the date of the Merger Agreement until the Effective Time (or such earlier date on which the Merger Agreement may be terminated pursuant to its terms), unless Evolution otherwise expressly consents in writing in advance (such consent not to be unreasonably withheld, conditioned, or delayed), Galaxy will not, and will cause each of its subsidiaries not to:

 

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except as expressly required pursuant to the terms of the Merger Agreement or any existing Galaxy benefit plan (as in effect on the date of the Merger Agreement and as defined in the Merger Agreement):

 

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issue, sell, deliver, transfer, pledge, dispose of, encumber, grant or authorize or commit to the issuance, sale, delivery, transfer, pledge, disposal, encumbrance or grant of any shares of its capital stock or other equity or voting interests, or any other Company Securities, securities of Galaxy’s subsidiaries or any other securities or rights convertible into, exchangeable or exercisable for, or evidencing the right to subscribe for any shares of its capital stock or other equity or voting interests, or any rights, warrants or options to purchase any shares of its capital stock or other equity or voting interests (except pursuant to the exercise of any Company Stock Options set forth in the corresponding section of the Galaxy Disclosure Letter, in each case, or the settlement of Company Stock Awards set forth in the Galaxy Disclosure Letter in accordance with their existing terms), or take any action to accelerate the vesting or remove the forfeiture conditions of (as applicable) of any Company Stock Option or Company Stock Award that is otherwise unvested or subject to forfeiture;

 

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redeem, purchase or otherwise acquire any of its outstanding shares of capital stock or other equity or voting interests, or any rights, warrants or options to acquire any shares of its capital stock or other equity or voting interests (other than pursuant to the cashless exercise of Company Stock Options in accordance with their existing terms or the forfeiture or repurchase or withholding of taxes with respect to Company Stock Options or Company Stock Awards outstanding and as in effect on the date of the Merger Agreement);

 

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establish a record date for, declare, set aside for payment, authorize or pay any dividend on, or any other distribution (whether in cash, securities, other property or any combination thereof) in respect of, any shares of its capital stock or other equity or voting interests (other than any dividend or distribution by a wholly owned subsidiary of Galaxy to Galaxy or any other wholly owned subsidiary of Galaxy);

 

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split, combine, subdivide, adjust, recapitalize or reclassify any shares of its capital stock or other equity or voting interests or authorize the issuance of any other securities in respect of, in lieu of or in substitution for shares of its capital stock any of its other equity or equity-linked interests; or

 

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enter into any agreement with respect to the voting or registration of any shares of its capital stock or other equity or equity-linked interests;

 

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(i) incur, assume, or otherwise become liable for any indebtedness in excess of $1,000,000, except for debt incurred in the ordinary course of business consistent with past practice to finance premiums and other expenses in connection with the directors and officers insurance policies, issue or sell any debt securities or warrants or other rights to acquire any debt securities of Galaxy or any of its subsidiaries, guarantee any such indebtedness or any debt securities of another person or enter into any “keep well” or other agreement to maintain any financial statement condition of another Person, (ii) enter into any swap or hedging transaction or other derivative agreements or (iii) make or forgive any loans, capital contributions or advances to any Person, other than, in the case of this clause (iii), to a wholly owned subsidiary of Galaxy;

 

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sell, spin-off, abandon, assign, license, transfer, exchange, swap or lease to any person, or mortgage or otherwise encumber or subject to any lien (other than Permitted Liens (as defined in the Merger Agreement)) in a single transaction or series of related transactions, any of its properties or assets (other than intellectual property) that have a current value in excess of $250,000, except dispositions of inventory in the ordinary course of business and dispositions of obsolete, surplus or worn out assets or assets that are no longer used or useful in the conduct of the businesses of Galaxy or its subsidiaries in the ordinary course of business;

 

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make or authorize capital expenditures for property, plant and equipment, except as expressly contemplated by the capital expenditure budget of Galaxy set forth in the Galaxy Disclosure Letter, or otherwise in an aggregate amount for all such capital expenditures, not to exceed $500,000;

 

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make (i) any acquisition (including by merger) of the capital stock or a material portion of the assets of any other person (other than any acquisition of, inventory or products in the ordinary course of business) or (ii) any advances, capital contributions or investments (including through any loans or advances) in any other person;

 

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except as required pursuant to the terms of the Merger Agreement, any existing Galaxy benefit plan (as in effect on the date of the Merger Agreement) or as required under applicable law, (i) increase the cash compensation, wages, bonuses, incentive compensation, pension, severance or termination pay or any other compensation or benefits, payable or to become payable to any current or former director, officer, employee or independent contractor of Galaxy or any of its subsidiaries, other than pursuant to offer letters to new hires who are hired in compliance with the terms of the Merger Agreement that provide for no equity or equity-based incentive awards, severance, retention or change in control payments or benefits, (ii) establish, adopt, enter into, terminate or amend in any material respect any Galaxy benefit plan (or any benefit or compensation plan, policy, program, contract, agreement or arrangement that would be a Galaxy benefit plan if in effect on the date of the Merger Agreement), except for any offer letters to new hires who are hired in compliance with the terms of the Merger Agreement that provide for no equity or equity-based incentive awards, severance, retention or change in control payments or benefits, (iii) grant or award, or commit to grant or award, any equity or equity-based awards, (iv) take any action to accelerate any rights or benefits under any Galaxy plan, including any action to accelerate the vesting or funding or payment of any compensation or benefit to any current or former director,

 

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officer, employee or independent contractor of Galaxy, (v) enter into any employment, severance, retention, transaction bonus, or change in control agreement (excluding offer letters that provide for no equity or equity-based incentive awards, severance, retention, transaction bonus, change in control or similar payments or benefits), (vi) hire or engage any individual to be employed or engaged by Galaxy or any of its subsidiaries with target annual compensation of $250,000 or more, except for replacement hires in the ordinary course of business to replace employees who have terminated employment provided that such replacement hires’ target annual compensation shall not be materially greater than the target annual compensation of the replaced individual, or (vii) terminate (other than for cause, death or disability) any individual with target annual compensation of $250,000 or more;

 

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implement or announce any closings, employment losses, layoffs, reductions in force, furloughs, temporary layoffs, salary or wage reductions, work schedule changes or other such actions that would require advance notice under the Worker Adjustment and Retraining Notification Act of 1988, as amended;

 

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(i) establish, adopt, modify, extend, or enter into any collective bargaining agreement, or (ii) recognize or certify any labor union, works council, labor organization or group of employees of Galaxy or any of its subsidiaries as the bargaining representative of any employees of Galaxy or any such subsidiary;

 

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except as may be required by applicable law, waive or release any legally binding noncompetition, nonsolicitation, nondisclosure, noninterference or nondisparagement obligation for the benefit of Galaxy or its subsidiaries of any current or former director, officer, employee or independent contractor;

 

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make any material changes in financial accounting methods, principles or practices materially affecting the consolidated assets, liabilities or results of operations of Galaxy and its subsidiaries, except insofar as may be required (i) by GAAP, (ii) by Regulation S-X under the Securities Act, or (iii) by any governmental authority or quasi-governmental authority (including the Financial Accounting Standards Board or any similar organization);

 

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amend Galaxy’s articles of incorporation or bylaws, each as amended as of the date of the Merger Agreement (collectively, the “Company Charter Documents”) or the organizational documents of any subsidiary of Galaxy;

 

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settle, or offer or propose to settle, any action made or pending against Galaxy or any of its subsidiaries, other than the settlement of any actions in the ordinary course of business that require payments by Galaxy and its subsidiaries (net of insurance proceeds) in an amount not to exceed $500,000 individually or $1,000,000 in the aggregate; provided, however, that the foregoing clause will not permit Galaxy or any of its subsidiaries to (i) settle any action that would involve injunctive or equitable relief, impose any restrictions or changes on the businesses or operations of Galaxy or any of its subsidiaries (or, following the Closing, on Evolution or any of its affiliates), involve any admission of any wrongdoing by Galaxy or any of its subsidiaries, or involve any license, cross license or similar arrangement with respect to intellectual property or (ii) settle or propose to settle any transaction litigation, the treatment of which is addressed in the Merger Agreement;

 

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commence any action, other than in such cases where Galaxy reasonably determines in good faith that the failure to commence suit would result in a material impairment of a valuable aspect of its business (provided that Galaxy consults with Evolution and considers the views and comments of Evolution with respect to such action prior to commencement thereof);

 

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(i) make, change or revoke any material tax election in a manner materially inconsistent with past practice, (ii) change any annual tax accounting period or material method of tax accounting, (iii) file any material amendment with respect to any material tax return, (iv) settle or compromise any material claim, notice, audit, investigation, assessment or other proceeding with respect to material taxes, (v) enter into any material tax allocation agreement, tax sharing agreement, tax indemnity agreement (in each case, other than an agreement entered into in the ordinary course of business and the principal

 

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purpose of which is not tax), (vi) execute any closing agreement relating to any material amount of tax, (vii) affirmatively surrender or compromise any right to claim a material tax refund or (viii) consent to any extension or waiver of the statute of limitations period with respect to the assessment or examination of any material tax (other than an extension in the ordinary course or as a result of the extension of the due date for filing any tax return);

 

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(i) modify, amend, terminate (other than expiration in accordance with its terms) or waive any rights or claims under any material contract in any material respect, except in the ordinary course of business, (ii) enter into any contract (or any substantially related contracts, taken together) that, if entered into prior to the date of the Merger Agreement, would be a material contract, except in the ordinary course of business (provided that no such contract may be entered pursuant to the ordinary course of business exception in this clause (ii) with respect to any contract (a) that relates to any joint venture, strategic alliance, partnership, limited liability company or other similar arrangement, (b) with profit-sharing arrangements or co-ownership of products by Galaxy or any of its subsidiaries, on the one hand, and a third party on the other, involving milestone payments, earnouts or royalties, (c) that provides for the creation of any lien, other than a Permitted Lien (as defined in the Merger Agreement), (d) that contains provisions related to non-competition, most-favored nations arrangements, exclusivity, or perpetual license grants of intellectual property including, in each case, terms that would so limit or impose such obligations on Evolution or any of its affiliates following the Closing, (e) that contains a put, call, right of first refusal or similar right or option for the purchase or sale of certain equity interests or assets, (f) that contains a standstill or similar agreement, or (g) that relates to an acquisition or disposition, directly or indirectly, of assets or capital stock pursuant to which Galaxy or any of its subsidiaries has continuing “earn out” or other contingent payment obligations or gives any person the right to acquire any material assets of Galaxy or any of its subsidiaries), or (iii) enter into any contract that contains a change in control or similar provision in favor of the other party or parties thereto that would require a payment to, or give rise to any rights to, such other party or parties in connection with the consummation of the transactions (including in combination with any other event or circumstance) or any subsequent change in control of Evolution or any of its affiliates (including Galaxy and its subsidiaries);

 

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enter into, fail to renew, terminate or amend in any material respect any lease of real property by Galaxy or any of its subsidiaries;

 

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(i) sell, assign, transfer, convey, license, waive rights, fail to maintain or otherwise dispose of any intellectual property (other than non-exclusive, non-perpetual licenses granted to customers in the ordinary course of business), (ii) fail to diligently prosecute or maintain any Galaxy registrations or fail to exercise a right of renewal or extension under any contract relating to, or with respect to, any intellectual property, except in the ordinary course of business or (iii) disclose any trade secrets (including source code for any of Galaxy’s or any of its subsidiaries’ products) of Galaxy or any of its subsidiaries;

 

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adopt a plan or agreement of complete or partial liquidation or dissolution, merger, consolidation, recapitalization, restructuring or other reorganization of Galaxy or any of its subsidiaries;

 

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engage in, enter into or amend any interested party transaction that would be required to be disclosed by Galaxy under Regulation S-K promulgated by the SEC;

 

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commence operations or activities in any new jurisdiction which requires Galaxy or its subsidiaries or any officers, directors or employees thereof to submit applications and obtain licenses pursuant to gaming laws, or otherwise enter into any new line of business that is not related to, and is not an extension of, the current business of Galaxy, except to the extent that taking any such action would not reasonably be expected to materially interfere with any existing gaming approval of Galaxy or any of its subsidiaries or prevent, hinder or delay the ability of Evolution, Galaxy or any of their respective affiliates to obtain any required gaming approval;

 

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•

intentionally fail to maintain insurance covering Galaxy and its subsidiaries and their respective properties, assets and businesses at less than current levels or otherwise in a manner inconsistent with past practice; or

 

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authorize any of, or commit or agree, in writing or otherwise, to take any of, the foregoing actions.

Nothing contained in the Merger Agreement is intended to give Evolution, directly or indirectly, the right to control or direct the operations of Galaxy and its subsidiaries prior to the Effective Time, and nothing contained in the Merger Agreement is intended to give Galaxy or any of its subsidiaries, directly or indirectly, the right to control or direct Evolution’s or its subsidiaries’ operations.

Other Covenants and Agreements

Special Meeting and Related Actions

Galaxy will establish a record date for, duly call, give notice of, convene and hold the Special Meeting for the purpose of obtaining the Galaxy Stockholder Approval. Galaxy will schedule such stockholder meeting on a date to be selected by Galaxy, in consultation with Evolution, as promptly as reasonably practicable (and in any event no later than 35 days after the earlier of (i) the 10^th calendar day after the preliminary proxy statement has been filed with the SEC if by such date the SEC has not informed Galaxy that it intends to review the proxy statement and (ii) if the SEC has by such date informed Galaxy that it intends to review the proxy statement, the date on which the SEC confirms that it has no further comments on the proxy statement) for the purposes of obtaining the Galaxy Stockholder Approval.

Galaxy is permitted to postpone, adjourn or recess the Special Meeting (i) to the extent required by applicable law, (ii) if as of the time for which the Special Meeting is originally scheduled, (a) Galaxy has not received proxies representing a sufficient number of Company Shares to obtain the Galaxy Stockholder Approval to allow reasonable additional time to solicit additional proxies or (b) there are insufficient Company Shares represented (either in person or by proxy) and voting to constitute a quorum necessary to conduct the business of the Special Meeting or (iii) to allow reasonable additional time for the filing and dissemination of any supplemental or amended disclosure which the Board has determined in good faith after consultation with outside counsel is necessary under applicable law and for such supplemental or amended disclosure to be disseminated and reviewed by the Galaxy stockholders prior to the Special Meeting to the extent so determined to be necessary (it being understood that, with respect to clauses (ii) through (iii) above, Galaxy may not postpone or adjourn the Special Meeting more than two times without Evolution’s prior written consent). Other than pursuant to clause (i) above, Galaxy may not postpone, recess or adjourn to a date that is more than ten business days after the date on which the Special Meeting was originally scheduled, and, in any event, to a date not fewer than three business days prior to the Outside Date, without the prior written consent of Evolution. However, Galaxy must, at the request of Evolution, to the extent permitted by law, adjourn the Special Meeting to a date specified by Evolution for the absence of a quorum or if the Galaxy has not received proxies representing a sufficient number of Company Shares to obtain the Galaxy Stockholder Approval, provided that Galaxy will not be required to adjourn the Special Meeting more than two times, and no such adjournment will be required to be for a period exceeding ten business days. Except to the extent an Adverse Recommendation Change (as defined in the section entitled “The Merger Agreement-Other Covenants and Agreements-No Solicitation; Galaxy Takeover Proposal; Adverse Recommendation Change” beginning on page 80 of this proxy statement) has been effected, the Board will include the Company Board Recommendation in the proxy statement and Galaxy will use its reasonable best efforts to solicit votes of Galaxy stockholders in favor of obtaining the Galaxy Stockholder Approval.

Access and Information

Between the date of the Merger Agreement and the earlier of the Effective Time and the valid termination of the Merger Agreement according to its terms, upon reasonable notice, Galaxy will, and will cause its subsidiaries

 

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to, afford to Evolution and Evolution’s representatives reasonable access during normal business hours to the officers, employees, agents, properties, books, contracts and records of Galaxy and its subsidiaries (subject to any reasonable redactions as to the pricing terms of such contracts), and Galaxy will, and will cause its subsidiaries to, furnish reasonably promptly to Evolution and Evolution’s representatives such information concerning their respective businesses, personnel, assets, liabilities and properties as Evolution may reasonably request; provided that Evolution and its representatives will conduct any such activities in such a manner so as not to interfere unreasonably with the businesses or operations of Galaxy and its subsidiaries; provided further, that neither Galaxy nor any of its subsidiaries will be obligated to provide such access or information if Galaxy determines, in its reasonable judgment, that doing so would (i) result in the disclosure of trade secrets or competitively sensitive information to third parties, (ii) violate applicable law, an applicable judgment or a binding material contract or obligation of confidentiality owing to a third party, or (iii) jeopardize the protection of an attorney-client privilege, attorney work product protection or other legal privilege; provided further, that (a) Galaxy, Evolution and Merger Sub will make appropriate substitute arrangements under circumstances in which the restrictions of the preceding proviso apply and (b) Galaxy will, and will cause its subsidiaries to, use their respective reasonable best efforts to communicate the applicable information to Evolution in a way that would not violate any applicable law or such a contract or waive such a privilege (including, subjecting certain properties, books, contracts and other records of Galaxy and its subsidiaries to necessary redactions).

No Solicitation; Galaxy Takeover Proposal; Adverse Recommendation Change

From the date of the Merger Agreement until the earlier to occur of the termination of the Merger Agreement in accordance with its terms and the Effective Time, Galaxy and its subsidiaries will not, nor will they authorize or knowingly permit any of their representatives to, directly or indirectly:

 

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initiate, solicit, or knowingly facilitate (including by way of furnishing non-public information) the submission of any inquiries, regarding, or the making of any inquiry, proposal or offer that constitutes, or would reasonably be expected to lead to, a Takeover Proposal;

 

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engage in, continue or otherwise participate in any discussions or negotiations regarding, or furnish to any person (other than Evolution, Merger Sub or their respective affiliates) any non-public information relating to Galaxy or its subsidiaries or afford to any person access to the business, properties, assets, books or records, or to any personnel of Galaxy or its Subsidiaries, in any such case, with the intent of, encouraging any inquiry, proposal or offer that constitutes, or would reasonably be expected to lead to, or result in, a Takeover Proposal;

 

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amend or grant any waiver or release under, or fail to use reasonable best efforts to enforce, any standstill, confidentiality or similar agreement with Galaxy or its subsidiaries or with respect to any securities of Galaxy or its subsidiaries entered into in respect of, in contemplation of or otherwise relating to a Takeover Proposal, except to solely permit the making of a Takeover Proposal in accordance with the terms of the Merger Agreement; or

 

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resolve or agree to do any of the foregoing.

In addition, from the date of the Merger Agreement until the earlier to occur of the termination of the Merger Agreement pursuant to its terms and the Effective Time, Galaxy will, and will instruct and cause its subsidiaries and their respective directors and officers to and instruct its other representatives to, immediately cease any existing discussions or negotiations with any person that may be ongoing with respect to a Takeover Proposal, or any inquiry, proposal, indication of interest or offer that would reasonably be expected to lead to, or result in, a Takeover Proposal, cease providing any information with respect to Galaxy or any of its subsidiaries or access to the business, properties, assets, books, records or other non-public information, or to any personnel of Galaxy or its subsidiaries and, terminate all physical and electronic data room access previously granted to any person or its representatives in connection with a Takeover Proposal, or any inquiry, proposal or indication of interest that would reasonably be expected to lead to, or result in, a Takeover Proposal, and request in writing the prompt return or destruction of all confidential information concerning Galaxy or any of its subsidiaries in such person’s possession or control.

 

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Notwithstanding the limitations in the preceding paragraphs or any other provision in the Merger Agreement, if at any time after the date of the Merger Agreement and prior to obtaining the Galaxy Stockholder Approval Galaxy or any of its representatives receives an unsolicited bona fide Takeover Proposal, which Takeover Proposal was made after the date of the Merger Agreement and did not result from any material breach of the Merger Agreement, (i) Galaxy and its representatives may contact such person or group of persons making the Takeover Proposal to clarify the terms and conditions thereof or to request that such Takeover Proposal made orally be made in writing and (ii) if the Board or any committee thereof determines in good faith, after consultation with Galaxy’s financial advisor and outside legal counsel, that such Takeover Proposal constitutes or is reasonably expected to result in a Superior Proposal, and that failure to take such actions would be inconsistent with its directors’ fiduciary duties under applicable law, then Galaxy and any of its representatives may (1) enter into an Acceptable Confidentiality Agreement with the person or group of persons making the Takeover Proposal and furnish pursuant to an Acceptable Confidentiality Agreement information (including non-public information) with respect to Galaxy and its subsidiaries to the person or group of persons who has made such Takeover Proposal and its or their respective representatives (except that Galaxy will promptly provide to Evolution written notice of entry into an Acceptable Confidentiality Agreement and any non-public information concerning Galaxy or any of its subsidiaries that is provided to any person given such access which was not previously provided to Evolution or its representatives) and (2) following the execution of an Acceptable Confidentiality Agreement, engage in or otherwise participate in discussions or negotiations regarding such Takeover Proposal with the person or group of persons making such Takeover Proposal and its or their representatives (and waive such person’s or group of persons’ noncompliance with the provisions of any “standstill” agreement to the extent necessary to permit such discussions or negotiations).

From the date of the Merger Agreement until the earlier to occur of the termination of the Merger Agreement pursuant to its terms and the Effective Time, Galaxy will as promptly as practicable (and in any event within 24 hours) notify Evolution in writing in the event that Galaxy or its representatives receives any inquiry, proposal or offer that constitutes, or could reasonably be expected to lead to, a Takeover Proposal and shall disclose to Evolution the material terms and conditions thereof and the identity of the person or group of persons making such inquiry, proposal or offer and as promptly as practicable (and in any event within 24 hours) provide Evolution with a copy of any such Takeover Proposal if made in writing (or a written summary of the material terms if not made in writing), copies of any written materials or communications related thereto exchanged between Galaxy or its representatives and any such person, and Galaxy will keep Evolution informed on a reasonably prompt basis (and in any event within 24 hours of any such change or event) of any material developments with respect to any such Takeover Proposal (including any changes to the material terms thereto).

Subject to limited exceptions as described herein, neither the Board nor any committee thereof may (i) (a) withhold, withdraw or qualify (or modify in a manner adverse to Evolution), or publicly propose to withhold, withdraw or qualify (or modify in a manner adverse to Evolution), the Company Board Recommendation, (b) fail to publicly and without qualification reaffirm the Company Board Recommendation in the proxy statement or fail to recommend without qualification against any Takeover Proposal upon a written request therefor by Parent within 10 business days following a written request by Evolution (or, if earlier, by the second business day prior to the then-scheduled Special Meeting), (c) in the case of the Board, if any Takeover Proposal structured as a tender or exchange offer is commenced, fail to recommend against acceptance of such tender or exchange offer by Galaxy stockholders within 10 business days of commencement thereof pursuant to Rule 14d-2 of the Exchange Act or (d) recommend the approval or adoption of, or approve or adopt, or publicly propose to recommend, approve or adopt, any Takeover Proposal (it being understood that the Board or any committee thereof may, and may cause Galaxy to, if any Takeover Proposal structured as a tender or exchange offer is commenced make a customary “stop, look and listen” communication, or elect to take no position with respect to a Takeover Proposal until such time as a position statement is required pursuant to Rule 14e-2 under the Exchange Act without such communication or election in and of itself being considered an Adverse Recommendation Change) (any action being described in this clause (i), an “Adverse Recommendation Change”) or (ii) authorize, execute or enter into (or cause or permit Galaxy or any of its subsidiaries to execute or enter into) any letter of intent, memorandum of understanding, agreement in principle, license agreement, merger

 

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agreement, acquisition agreement or other similar agreement relating to a Takeover Proposal, other than any Acceptable Confidentiality Agreement (each, a “Company Acquisition Agreement”). Notwithstanding the foregoing limitations but subject to Galaxy’s compliance with the applicable provisions of the Merger Agreement, prior to obtaining Galaxy Stockholder Approval, but not after, the Board or any committee thereof may (A) make an Adverse Recommendation Change or (B) cause Galaxy to enter into a Company Acquisition Agreement with respect to a Takeover Proposal that did not result from any breach of the terms of the Merger Agreement and terminate the Merger Agreement pursuant to the terms of the Merger Agreement, in either case if the Board or any committee thereof has determined in good faith, after consultation with its financial advisor and outside legal counsel, that (x) in the case of clause (A), the Adverse Recommendation Change is not made in response to a Takeover Proposal and is made in response to an Intervening Event, and failure to take such action would be inconsistent with the directors’ fiduciary duties under applicable Law and (y) in the case of clause (B) where such Adverse Recommendation Change is made in response to a Takeover Proposal or in the case of clause (B), such Takeover Proposal constitutes a Superior Proposal.

Prior to taking any of the actions expressly permitted in the preceding paragraph, in the event an Adverse Recommendation Change is proposed to be taken in connection with an Intervening Event (an “Intervening Event Adverse Recommendation Change”) and is not proposed to be taken in connection with a Superior Proposal, the Board or any committee thereof will not, and will cause Galaxy not to, make an Intervening Event Adverse Recommendation Change, unless (i) Galaxy has first given Evolution at least 4 business days’ prior written notice of its intention to effect an Intervening Event Adverse Recommendation Change in connection with such Intervening Event, which notice shall specify the nature of the Intervening Event in reasonable detail, (ii) Galaxy has negotiated, and has caused its representatives to negotiate, in good faith with Evolution during such 4 business day period following Evolution’s receipt of the notice described in clause (i), to the extent Evolution wishes to negotiate, to enable Evolution to propose in writing an offer to effect revisions to the terms of the Merger Agreement that would eliminate the need of the Board to effect an Intervening Event Adverse Recommendation Change in connection with such Intervening Event, and (iii) following the end of such 4 Business Day period, the Board or any committee thereof shall have considered in good faith any amendments to the Merger Agreement that Parent and Merger Sub have proposed in connection with such revised offer by Parent and shall have determined in good faith after consultation with its financial advisors and outside legal counsel that the failure to effect such Intervening Event Adverse Recommendation Change would continue to be inconsistent with the directors’ fiduciary duties under applicable Law.

Notwithstanding the limitations in the preceding paragraphs or any other provision in the Merger Agreement, nothing in the Merger Agreement prohibits Galaxy or the Board (or a committee thereof) from (i) taking and disclosing to Galaxy stockholders a position contemplated by Rule 14e-2(a) under the Exchange Act or complying with the provisions of Rule 14d-9 or Regulation M-A promulgated under the Exchange Act or (ii) making any disclosure to Galaxy stockholders if the Board (or a committee thereof) determines in good faith (after consultation with its outside legal counsel) that the failure to make such disclosure would be inconsistent with its fiduciary duties to Galaxy stockholders under applicable law; provided that any such disclosure that constitutes or contains an Adverse Recommendation Change will be subject to the terms of the Merger Agreement as described under “The Merger Agreement-Other Covenants and Agreements-No Solicitation; Galaxy Takeover Proposals; Adverse Recommendation Change” beginning on page 80 of this proxy statement.

For purposes of the Merger Agreement:

 

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“Acceptable Confidentiality Agreement” means (i) any confidentiality agreement entered into by Galaxy from and after the date of the Merger Agreement that contains provisions that are not materially less favorable in the aggregate to Galaxy than those contained in the confidentiality agreement Galaxy entered into with Evolution, or (ii) any confidentiality agreement entered into prior to the date of the Merger Agreement that contains provisions that are not materially less favorable in the aggregate to Galaxy than those contained in the confidentiality agreement Galaxy entered into with Evolution, it being understood that Galaxy, in its sole discretion, will be entitled to waive or release any preexisting

 

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explicit or implicit standstill provisions or similar agreements with any person or group of persons in order to permit such person(s) to make a private proposal to Galaxy; provided that in no event will an Acceptable Confidentiality Agreement include provisions that prohibit Galaxy from complying with its obligations under the Merger Agreement.

 

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“Intervening Event” means a positive event, development or change in circumstances arising or occurring after the date of the Merger Agreement that materially affects Galaxy and was either not known to or not reasonably foreseeable by the Board as of the date of the Merger Agreement (or, if known to or reasonably foreseeable by the Board, the consequences of which were neither known to nor reasonably foreseeable by the Board as of the date of the Merger Agreement); provided that in no event shall, (i) the receipt, existence or terms of a Takeover Proposal, (ii) any events, developments or change in circumstances of Evolution, in each case in and of itself, (iii) receipt or timing of any consents or permits required to be obtained in connection with the transactions, or (iv) the fact, in each case in and of itself, that Galaxy meets or exceeds any internal or published projections, forecasts or estimates of its revenue, earnings or other financial performance or results of operations for any period ending on or after the date of the Merger Agreement, or any change in and of itself after the date of the Merger Agreement in the market price or trading volume of Company Shares or credit rating of Galaxy, constitute an Intervening Event.

 

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“Superior Proposal” means a bona fide unsolicited, written Takeover Proposal of the types described in clauses (i) through (iv) of the definition thereof made after the date of the Merger Agreement, in each case, that the Board or any committee thereof has determined in its good faith judgment (i) would be more favorable to Galaxy stockholders from a financial point of view than the transactions contemplated by the Merger Agreement and (ii) is reasonably capable of being completed on the terms proposed, in each case, taking into account all legal, regulatory, financial, financing and other aspects of such proposal and of the Merger Agreement that the Board or such committee thereof may deem appropriate; provided that for purposes of the definition of “Superior Proposal”, the references to “20% or more” in the definition of Takeover Proposal shall be deemed to be references to “50% or more”.

 

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“Takeover Proposal” means any proposal, offer or indication of interest from any person or group (other than Evolution and its subsidiaries or their respective affiliates) relating to, in a single transaction or series of related transactions, any direct or indirect (i) acquisition or license of 20% or more of the consolidated assets of Galaxy and its subsidiaries, taken as a whole (based on the fair market value thereof as determined in good faith by the Board or any committee thereof), (ii) issuance or acquisition of 20% or more of the outstanding Company Shares, (iii) tender offer or exchange offer that if consummated would result in any person or group beneficially owning 20% or more of the outstanding Company Shares or (iv) merger, consolidation, share exchange, business combination, recapitalization, liquidation, dissolution or similar transaction involving Galaxy pursuant to which such person or group (or the stockholders of any person) would acquire, directly or indirectly, 20% or more of the consolidated assets of Galaxy and its subsidiaries, taken as a whole (based on the book value thereof), 20% or more of the outstanding capital stock of Galaxy or 20% or more of the aggregate voting power of Galaxy or of the surviving entity in a merger, consolidation, share exchange or other business combination involving Galaxy or the resulting direct or indirect parent of Galaxy or such surviving entity; provided, however, that, for clarity, the Merger Agreement and the transactions will not be deemed a Takeover Proposal.

Galaxy has agreed that in the event any representative of Galaxy takes, or fails to take, any action which, if taken, or failed to be taken, by Galaxy or its subsidiaries that would constitute a breach of the obligations described in this section, Galaxy will be deemed to be in breach of the Merger Agreement.

Employee Matters

For a period beginning at the Effective Time and ending on the earlier of (i) the first anniversary of the Effective Time and (ii) the termination of employment of the relevant Continuing Employee (as defined below),

 

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Evolution will, or will cause the surviving corporation to provide to the employees of Galaxy immediately prior to, and who remain so employed immediately following, the Effective Time (each, a “Continuing Employee”):

 

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an annual base salary or base wage rate (as applicable) not less than the base salary or base wage rate (as applicable) provided to such Continuing Employee immediately prior to the Effective Time;

 

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a target annual cash bonus opportunity or target cash commissions opportunity (as applicable) that is not less than such individual’s target annual cash bonus opportunity or target cash commissions opportunity (as applicable) in effect immediately prior to the Effective Time;

 

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employee benefits (other than defined benefit pension, nonqualified deferred compensation, severance, retiree or post-termination health or welfare benefits, equity or equity-based compensation, and retention or change in control-related compensation or similar compensation (collectively, the “Specified Arrangements”)) that are no less favorable in the aggregate to the employee benefits (other than the Specified Arrangements) provided to Continuing Employees immediately prior to the Effective Time under the Galaxy benefit plans; and

 

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except as otherwise set forth in any individual agreement with a Continuing Employee or any Galaxy benefit plan, severance protections and benefits that are no less favorable than the severance protections and benefits provided to similarly-situated employees of Evolution.

If requested by Evolution at least one day prior to the Closing Date, Galaxy will take or shall cause to be taken all actions necessary, including the adoption of written resolutions of the appropriate governing body in a form satisfactory to Evolution, to terminate each Galaxy benefit plan intended to be qualified under Section 401(a) of the Code plan (the “Galaxy 401(k) Plan”), to cease all contributions to the Galaxy 401(k) Plan and to fully vest all participants under the Galaxy 401(k) Plan, to be effective no later than the business day preceding the Closing Date and contingent upon the consummation of the transactions. To the extent Evolution requests termination of the Galaxy 401(k) Plan, each Continuing Employee who is a participant in a Galaxy 401(k) Plan will be allowed to participate, effective as of as soon as administratively practicable following the Effective Time, in Evolution’s 401(k) Plan. Evolution will use commercially reasonable efforts to, or will cause an affiliate to, take all actions necessary so that Evolution’s 401(k) Plan will accept rollover contributions of “eligible rollover distributions” from the Galaxy 401(k) Plan, and Evolution (or its affiliate) will thereafter maintain such loan under the Evolution 401(k) plan.

Except as set forth below, with respect to any 401(k) plan of the surviving corporation and employee benefit plans (including vacation, paid time-off and severance plans) maintained by the surviving corporation, Evolution, or any of their respective subsidiaries in which Continuing Employees are eligible to participate after the Effective Time, for purposes of eligibility to participate, level of benefits and vesting, Evolution will, or will cause the surviving corporation to, use commercially reasonable efforts to provide that each Continuing Employee’s service with Galaxy or its subsidiaries (as well as service with any predecessor employer of Galaxy or its subsidiaries, to the extent such service was recognized by Galaxy or such subsidiary) prior to the Closing shall be treated as service with the surviving corporation (with such service to be credited to the same extent such service was recognized and for the same purpose under the analogous Galaxy benefit plan in which such Continuing Employee participated immediately prior to the Effective Time, if an analogous Galaxy benefit plan was maintained by Galaxy immediately prior to the Closing); provided, however, that such service need not be recognized to the extent that such recognition would result in any duplication of benefits or compensation for the same period of service. No Continuing Employee will be credited with his or her years of service with Galaxy before the Effective Time for any purposes under any defined benefit pension, retiree or post-termination welfare benefit plan.

Evolution will, or will cause the surviving corporation to, use commercially reasonable efforts to waive, or cause to be waived, any pre-existing condition limitations, exclusions, actively-at-work requirements and waiting periods under any group health benefit plan maintained by the surviving corporation in which Continuing Employees (and their eligible dependents) will be eligible to participate from and after the Effective Time and in

 

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the plan year in which the Effective Time occurs, except to the extent that such pre-existing condition limitations, exclusions, actively-at-work requirements and waiting periods would not have been satisfied or waived under the corresponding Galaxy plan immediately prior to the Effective Time.

Evolution will, or will cause the surviving corporation to, use commercially reasonable efforts to recognize the dollar amount of all co-insurance, deductibles and maximum out-of-pocket expenses paid prior to the Effective Time by each Continuing Employee (and his or her covered, eligible dependents) under a group health Galaxy benefit plan during the plan year in which the Effective Time occurs for purposes of satisfying such year’s deductible and co-insurance limitations under the relevant group health benefit plans of the surviving corporation in which they will be eligible to participate from and after the Effective Time and in the plan year in which the Effective Time occurs.

Galaxy and Evolution will take the actions described in the Galaxy Disclosure Letter with respect to annual bonuses.

Efforts to Consummate the Merger

Subject to the terms and conditions of the Merger Agreement, Galaxy, Evolution and Merger Sub will cooperate and use their respective reasonable best efforts (unless, with respect to any action, another standard of performance is expressly provided for in the Merger Agreement) to promptly (i) consummate and make effective, as promptly as reasonably practicable, and in any event prior to the Outside Date, the Merger and the other transactions contemplated by the Merger Agreement, including preparing and filing promptly and fully all documentation necessary to effect all necessary filings, notices, petitions, statements, registrations, submissions of information, applications and other documents, (ii) obtain all approvals, consents, registrations, waivers, permits, authorizations, orders and other confirmations from any governmental authority or third party necessary, proper or advisable to consummate the Merger and the other transactions contemplated by the Merger Agreement and (iii) execute and deliver any additional instruments necessary to consummate the Merger and the other transactions contemplated by the Merger Agreement, other than, in the case of each of clauses (i) through (iii), with respect to filings, notices, petitions, statements, registrations, submissions of information, applications and other documents, approvals, consents, registrations, permits, authorizations and other confirmations relating to gaming laws, gaming authorities or required gaming approvals.

Galaxy and Evolution will each (i) take all action necessary to ensure that no takeover law is or becomes applicable to any of the transactions and refrain from taking any actions that would cause the applicability of such laws and (ii) if the restrictions of any takeover law become applicable to any of the transactions, take all action reasonably necessary to ensure that the Merger and the other transactions contemplated by the Merger Agreement may be consummated as promptly as practicable on the terms contemplated by the Merger Agreement and otherwise lawfully minimize the effect of such takeover law on the Merger and the other transactions contemplated by the Merger Agreement.

Notwithstanding any provision in the Merger Agreement to the contrary, Evolution and its affiliates will not be required (and Galaxy will not agree to any of the following without the express written consent of Evolution): (i) (a) to offer, agree or consent to sell, divest, lease, license, transfer, dispose of or otherwise encumber or hold separate (before or after the Closing) any assets, licenses, operations, rights, product lines, businesses or interests therein of Evolution or any of its affiliates (other than, after the Closing, Galaxy or any of its subsidiaries), (b) to offer, agree or consent to terminate or amend any (1) existing relationship, contractual right or obligation of Evolution or any of its affiliates (other than, after the Closing, Galaxy or any of its subsidiaries) or (2) venture or other similar arrangement of Evolution or any of its affiliates (other than, after the Closing, Galaxy or any of its subsidiaries), or (c) to offer, agree or consent to any impairment of, or restriction on, Evolution or any of its affiliates’ ability to own or operate any assets, licenses, operations, rights, product lines, businesses or interests (other than, after the Closing, any of the assets, licenses, operations, rights, product lines, businesses or interests of Galaxy or any of its subsidiaries); or (ii) to commit to or effect any action that is not conditioned upon consummation of the Merger.

 

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Required Gaming Approvals

Evolution and Merger Sub will, and will (i) cause any person employed by Evolution or its affiliates to (ii) use reasonable best efforts to cause any person holding at least 5% of the outstanding capital stock of Evolution, in each case that are reasonably necessary to obtain the required gaming approvals to, as soon as reasonably practicable following the date of the Merger Agreement, file, or cause to be filed, with the applicable gaming authorities all applications for licensure, submissions for suitability review and other appropriate, necessary and requested documentation in connection with all required gaming approvals (it being understood that any such gaming authority’s failure to deem any such filing complete will not, in and of itself, constitute a failure by Evolution or Merger Sub to have satisfied its filing obligations pursuant to this sentence).

Galaxy, Evolution and Merger Sub will, and will cause each of their respective affiliates, as applicable, to use reasonable best efforts to comply with, pursue, and respond to any and all subsequent regulatory requests related to the required gaming approvals, and use reasonable best efforts to cause the receipt of, and to eliminate any restraint in respect of, the required gaming approvals so as to obtain such required gaming approvals as promptly as reasonably practicable following the date of the Merger Agreement (it being understood that any failure to obtain any required gaming approval will not, in and of itself, constitute a failure by Evolution, Merger Sub or Galaxy to have satisfied its obligations pursuant to this sentence).

Evolution will lead, control and direct the process by which it and Galaxy seek the required gaming approvals, including by making final determinations related to the review or investigation of the transactions pursuant to the Merger Agreement by the gaming authorities (including substantive analyses, appearances, presentations, memoranda, briefs, arguments, opinions and proposals to be made or submitted by or on behalf of any party hereto or any other persons reasonably necessary to obtain the required gaming approvals) relating to any required gaming approvals and attending all meetings and discussions with the gaming authorities except to the extent that the gaming authorities may request to communicate exclusively with Galaxy.

Galaxy will, and will cause its subsidiaries to, supply to parent as promptly as practicable any additional information and documentary material relating to Galaxy, its subsidiaries or any applicable individuals that may be (or is reasonably expected to be) requested by any gaming authority, and use reasonable best efforts to furnish to parent such information and reasonable assistance as parent may request in connection with each of (i) the preparation of any required applications, notices, registrations and requests as may be required or advisable to be filed with any gaming authority and (ii) Evolution’s efforts to obtain the required gaming approvals.

If during the period between the date of the Merger Agreement and the Effective Time, Galaxy, Evolution and Merger Sub become aware that a consent, approval, authorization or other action by, or filing with or notification to, any gaming authority on the part of, or with respect to, Galaxy, Evolution, Merger Sub, or any of their respective subsidiaries and affiliates is required in connection with the execution, delivery and performance of the Merger Agreement or the consummation of the transactions contemplated therein, which was not otherwise listed in the Galaxy Disclosure Letter, the party identifying such additional approval will give prompt notice of such requirement to the others, and, upon the written consent of Galaxy, Evolution and Merger Sub, each such additional approval will be considered required solely for purposes of Section 5.03 of the Merger Agreement.

If requested in writing by Evolution (such request to set forth the specific gaming approval(s) to which the request relates) Galaxy will, and will cause its subsidiaries to, take all such actions that are reasonably necessary (which, will not include any actions that would prevent Galaxy’s ability to operate in the ordinary course of business prior to Closing) to surrender any gaming approval(s) held by Galaxy or any of its subsidiaries and set forth in such request (and cease business in each state or jurisdiction to which such gaming approval relates); provided, that such surrender (and cessation of business) will only be required (i) to occur at such time the conditions to the Closing have been satisfied or waived or will then be capable of being satisfied or waived if the Closing were to take place immediately following such surrender and cessation of business (which Evolution will

 

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confirm in writing in connection with its request), and (ii) to be effective immediately prior to, and conditioned upon, the Closing. If Evolution requests the surrender of any such gaming approval(s), and any such gaming approval is a required gaming approval set forth in the Galaxy Disclosure Letter, then for purposes of the applicable provisions in the Merger Agreement such required gaming approval will, upon the effectiveness of such surrender (and cessation of business) in accordance with the Merger Agreement, will be deemed to have been obtained.

Indemnification of Directors and Officers; Insurance

For the six-year period commencing immediately after the Effective Time, the surviving corporation will to the fullest extent permissible by applicable law, (i) indemnify and hold harmless each individual who at the Effective Time is, or at any time prior to the Effective Time was, a director or officer of Galaxy or any of its subsidiaries (each, an “Indemnitee” and, collectively, the “Indemnitees”) with respect to all claims, liabilities, losses, damages, judgments, fines, penalties, costs (including amounts paid in settlement or compromise) and expenses (including fees and expenses of legal counsel) in connection with any action based on or arising out of, directly or indirectly, (a) the fact that an Indemnitee is or was a director or officer of Galaxy or any of its subsidiaries or (b) acts or omissions by an Indemnitee in the Indemnitee’s capacity as a director or officer of Galaxy or any of its subsidiaries or taken at the request of Galaxy or any of its subsidiaries (including in connection with serving at the request of Galaxy or any of its subsidiaries as a representative of another person (including any employee benefit plan)), in the case of each of clauses (a) and (b), at, or at any time prior to, the Effective Time (including any Action relating in whole or in part to the transactions) and (ii) assume (in the case of the surviving corporation, in the Merger without any further action) all obligations of Galaxy and its subsidiaries to the Indemnitees in respect of indemnification, advancement of expenses and exculpation from liabilities for acts or omissions occurring at or prior to the Effective Time as provided in the Company Charter Documents or the organizational documents of Galaxy’s subsidiaries as in effect on the date of the Merger Agreement or in the agreements in effect as of the date of the Merger Agreement providing for indemnification between the Company and any Indemnitee (except that each such Indemnitee agrees in advance to return any such funds to which a court of ultimately entitled to indemnification). For a period of six-years after the Effective Time, Evolution will cause, unless otherwise required by law, the articles of incorporation and bylaws of the surviving corporation to contain provisions no less favorable to the Indemnitees with respect to limitation of liabilities and exculpation of directors and officers and indemnification of and advancement of expenses to directors and officers than are in the Company Charter Documents or organizational documents of Galaxy’s subsidiaries (as applicable) as in effect as of the date of the Merger Agreement, which provisions shall not be amended, repealed or otherwise modified in a manner that would adversely affect the rights thereunder of the Indemnitees.

For the six-year period commencing immediately after the Effective Time, the surviving corporation will maintain in effect directors’ and officers’ liability insurance covering acts or omissions occurring at or prior to the Effective Time with respect to those individuals who are currently (and any additional individuals who prior to the Effective Time become) covered by Galaxy’s directors’ and officers’ liability insurance policies on terms and scope with respect to such coverage, and in amounts, no less favorable to such individuals than those of such policy as in effect on the date of the Merger Agreement (or Evolution may substitute therefor policies, issued by reputable insurers, of at least the same coverage with respect to matters existing or occurring prior to the Effective Time, including a “tail” policy). However, the surviving corporation will not be required to expend in any one year an amount in excess of 300% of the annual premium currently payable by Galaxy with respect to the current policy (the “Premium Cap”), except that if the aggregate annual premium of such insurance coverage exceeds the Premium Cap, the surviving corporation shall be obligated to obtain a policy for such year with the greatest coverage available for a cost not exceeding the Premium Cap. Galaxy shall have the right prior to the Effective Time to purchase a six-year prepaid “tail policy” on terms and conditions providing at least substantially equivalent benefits as the current policies of directors’ and officers’ liability insurance maintained by Galaxy with respect to matters existing or occurring prior to the Effective Time, covering without limitation the Merger and the other transactions contemplated by the Merger Agreement, so long as the premium under

 

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such policy does not exceed the Premium Cap. If such prepaid “tail policy” has been obtained by Galaxy, it shall be deemed to satisfy all obligations to obtain insurance pursuant to the requirements of the Merger Agreement and the surviving corporation shall use its reasonable best efforts to cause such policy to be maintained in full force and effect, for its full term, and to honor all of its obligations thereunder.

In the event that (i) the surviving corporation or any of its successors or assigns (a) consolidates with or merges into any other person and is not the continuing or surviving corporation or entity of such consolidation or merger or (b) transfers or conveys all or substantially all of its properties and assets to any person, or (ii) Evolution or any of its successors or assigns dissolves the surviving corporation, then, and in each such case, proper provision shall be made so that the successors and assigns of the surviving corporation shall assume all of the obligations described in this section.

Miscellaneous Covenants

The Merger Agreement contains additional agreements among Galaxy, Evolution and Merger Sub relating to, among other matters:

 

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the filing by Galaxy of this proxy statement with the SEC and cooperation in response to any comments from the SEC with respect to this proxy statement;

 

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notification upon the occurrence or non-occurrence of certain matters;

 

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the coordination of press releases and other public announcements or filings relating to the Merger;

 

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actions necessary to cause Merger Sub to perform its obligations under the Merger Agreement;

 

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reporting requirements under Section 16 of the Exchange Act;

 

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actions taken by the parties to cause the Company Shares to cease to be quoted on the OTCOB and the deregistration of Company Shares under the Exchange Act following the Effective Time;

 

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any litigation against Galaxy and/or its directors or its officers relating to or in connection with the Merger Agreement, the Merger or any other transactions contemplated by the Merger Agreement; and

 

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the resignation of each director of Galaxy to be effective at the Effective Time.

Conditions to the Merger

The respective obligations of Galaxy, Evolution and Merger Sub to consummate the Merger are subject to the satisfaction (or waiver by Evolution and Galaxy, if permissible under applicable law) on or prior to the Closing Date of the following conditions:

 

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the Galaxy Stockholder Approval must have been obtained;

 

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the absence of any Restraints (after taking into account any valid surrender (and cessation of business) of any gaming approval permitted pursuant to the terms of the Merger Agreement) enjoining, making illegal or otherwise prohibiting consummation of the Merger, except that, for purposes of the conditions to the obligation of Galaxy, Evolution and Merger Sub to consummate the Merger, with respect to gaming approvals, only Restraints in (1) certain jurisdictions specified in the Galaxy Disclosure Letter (the “Core Gaming Approval Jurisdictions”) or (2) jurisdictions of one or more required gaming approvals that represent consolidated revenues of Galaxy and its subsidiaries for the 12 months ended March 31, 2024 in the aggregate equal to or greater than a threshold specified in the Galaxy Disclosure Letter shall constitute a Restraint (such condition, the “No Restraints Closing Condition”).

 

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The obligations of Evolution and Merger Sub to consummate the Merger are subject to the satisfaction (or waiver by Evolution, if permissible under applicable law) on or prior to the Closing Date of the following conditions:

 

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except for de minimis accuracies, certain specified representations and warranties made by Galaxy in the Merger Agreement with respect to the capitalization of Galaxy’s outstanding equity interests being true and correct in all respects as of the Closing Date, with the same effect as though made on the Closing Date (except to the extent expressly made as of an earlier date, in which case as of such earlier date);

 

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the representations and warranties made by Galaxy in the Merger Agreement with respect to corporate organization and qualification, the capitalization of Galaxy not covered by the preceding bullet, Galaxy’s subsidiaries, corporate authority and the requisite Board approval with respect to the Merger, the absence of certain stockholder rights’ plans and applicability of takeover laws, Galaxy Stockholder Approval with respect to the Merger, opinion of Galaxy’s financial advisor, and brokers’ fees, in each case, being true and correct (disregarding all qualifications or limitations as to “materiality”, “Material Adverse Effect” and words of similar import set forth therein) in all material respects as of the Closing Date, with the same effect as though made as of the Closing Date (except to the extent expressly made as of an earlier date, in which case as of such earlier date);

 

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the representations and warranties made by Galaxy in the Merger Agreement with respect to the non-occurrence of a Material Adverse Effect since December 31, 2023 through the date of the Merger Agreement being true and correct in all respects as of the Closing Date, with the same effect as though made as of the Closing Date;

 

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Galaxy having complied with or performed in all material respects its obligations required to be complied with or performed by it prior to the Closing under the Merger Agreement;

 

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the non-occurrence since the date of the Merger Agreement of a Material Adverse Effect that is continuing;

 

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the delivery by Galaxy of a certificate signed by an executive officer of Galaxy certifying that the conditions described in the preceding five bullets have been satisfied; and

 

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the receipt of gaming approvals in (i) each of the Core Gaming Approval Jurisdictions and (ii) such other jurisdictions for which there is a required gaming approval other than the Core Gaming Approval Jurisdictions that, when taken together with the Core Gaming Approval Jurisdictions represent, in the aggregate, consolidated revenues of Galaxy and its subsidiaries for the 12 months ended March 31, 2024 equal to or greater than a threshold specified in the Galaxy Disclosure Letter (such condition, the “Gaming Approvals Closing Condition”).

The obligations of Galaxy to consummate the Merger are subject to the satisfaction (or waiver by Galaxy, if permissible under applicable law) on or prior to the Closing Date of the following conditions:

 

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the representations and warranties made by Evolution and Merger Sub in the Merger Agreement, in each case, being true and correct as of the Closing Date, as though made as of the Closing Date (except to the extent expressly made as of an earlier date, in which case as of such earlier date), except where the failure to be so true and correct would not, individually and in the aggregate, reasonably be expected to prevent or materially impede, materially interfere with, materially hinder or materially delay the consummation by Evolution or Merger Sub of the Merger and the other transactions contemplated by the Merger Agreement.

 

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Evolution and Merger Sub having complied with or performed in all material respects their obligations required to be complied with or performed by them prior to the Closing under the Merger Agreement; and

 

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the delivery by Evolution of a certificate signed by an executive officer of Evolution certifying that the conditions described in the preceding two bullets have been satisfied.

 

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Termination

The Merger Agreement may be terminated and the transactions contemplated thereby abandoned at any time prior to the Effective Time, whether before or after receipt of the Galaxy Stockholder Approval (except as otherwise expressly noted), as follows:

 

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by the mutual written consent of Galaxy and Evolution;

 

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by either of Galaxy or Evolution, if:

 

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the Merger has not consummated on or prior to the July 18, 2025 (the “Initial Outside Date”); provided that (a) if, on the Initial Outside Date, (i) the No Restraints Closing Condition has not been satisfied or validly waived or (ii) the Gaming Approval Closing Condition has not been satisfied or validly waived, but all other conditions to the Merger have been satisfied or waived if the Closing were to take place on the Initial Outside Date, then the Initial Outside Date will be automatically extended, without action by Galaxy or Parent, to October 18, 2025 (the “First Extended Outside Date”); and (b) if, on the First Extended Outside Date, (i) the No Restraints Closing Condition has not been satisfied or validly waived or (ii) the Gaming Approval Closing Condition has not been satisfied or validly waived, but all other conditions to the Merger have been satisfied or waived if the Closing were to take place on the First Extended Outside Date, then the First Extended Outside Date will be automatically extended, without action by Galaxy or Parent, to January 18, 2026. As used in this proxy statement, the term “Outside Date” shall mean the Initial Outside Date, unless the Initial Outside Date has been extended, in which case the term “Outside Date” shall mean the date to which the Outside Date has been so extended. However, the right to terminate the Merger Agreement as described in this paragraph is not available to a terminating party if the terminating party’s breach of its representations and warranties or obligations under the Merger Agreement has been a principal cause of the failure of the Effective Time to occur on or before the Outside Date;

 

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a regulatory authority of competent jurisdiction has issued a Restraint enjoining, making illegal or otherwise prohibiting consummation of the Merger and such Restraint shall have become final and nonappealable, provided that the terminating party’s breach of its obligations under the Merger Agreement may not have been a principal cause of the issuance or entry of such Restraint (or if the issuance or entry of such Restraint resulted principally from such breach;

 

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the Special Meeting (including any adjournments or postponements thereof) has been held and the Galaxy Stockholder Approval was not obtained;

 

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by Evolution, if:

 

•

Galaxy breaches any of its representations or warranties or fails to perform any of its covenants or agreements set forth in the Merger Agreement, such that the closing condition with respect to Galaxy’s performance of its covenants and agreements would not be satisfied and Galaxy’s failure to perform such covenants or agreements is incapable of being cured prior to the Outside Date, or if capable of being cured by the Outside Date, Galaxy has not cured the breach or failure to perform within 30 calendar days (but in no event later than the Outside Date) following receipt by Galaxy of written notice of such breach or failure to perform from Evolution, provided that Evolution will not have the right to terminate the Merger Agreement if Evolution or Merger Sub is in breach of any of its representations, warranties, covenants or agreements thereunder such that Galaxy has the right to terminate the Merger Agreement pursuant to its terms;

 

•

the Board or a committee thereof makes an Adverse Recommendation Change; or

 

•

by Galaxy, if:

 

•

Evolution or Merger Sub breaches any of its representations or warranties or fails to perform any of its covenants or agreements set forth in the Merger Agreement, such that the closing condition

 

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with respect to Evolution’s or Merger Sub’s performance of its covenants and agreements is incapable of being cured prior to the Outside Date, or if capable of being cured by the Outside Date, Evolution and Merger Sub has not cured the breach or failure to perform within 30 calendar days (but in no event later than the Outside Date) following receipt by Evolution or Merger Sub of written notice of such breach or failure to perform from Galaxy, provided that Galaxy will not have the right to terminate the Merger Agreement if Galaxy is then in breach of any of its representations, warranties, covenants or agreements such that Evolution has the right to terminate the Merger Agreement pursuant to its terms; or

 

•

prior to receipt of the Galaxy Stockholder Approval, in connection with Galaxy concurrently entering into an acquisition agreement providing for a Superior Proposal in accordance with the Merger Agreement, provided that (x) prior to or concurrently with such termination (and as a condition to such termination) Galaxy pays the Company Termination Fee due under the Merger Agreement, (y) such Superior Proposal did not result from a breach of the terms of the Merger Agreement with respect to such Superior Proposal and any Takeover Proposal that was a precursor thereto and (z) concurrently with such termination, Galaxy enters into an acquisition agreement providing for such Superior Proposal.

Termination Fee; Certain Expenses

Galaxy will pay to Evolution the Company Termination Fee by wire transfer of immediately available funds to an account or accounts designated in writing by Evolution in the event that the Merger Agreement is terminated:

 

•

by either Galaxy or Evolution because (i) (a) the Merger has not been consummated by the Outside Date or (b) the Galaxy Stockholder Approval has not been obtained upon a vote taken at the Special Meeting (including any adjournment or postponement thereof) (so long as, on such date, such termination does not otherwise entitle Galaxy to payment of the Parent Termination Fee), and in either case; (ii) a bona fide Takeover Proposal had been publicly announced or had otherwise become publicly known and, in either case, had not been publicly and unconditionally withdrawn or otherwise abandoned (x) in the case of a termination for failure to consummate the Merger by the Outside Date, prior to the date of termination or (y) in the case of termination in the event the Galaxy Stockholder Approval is not obtained, prior to the date that is 10 business days prior to the Stockholders Meeting; and (iii) within 12 months after such termination, Galaxy enters into an acquisition agreement with any third party with respect to any Takeover Proposal or consummates any Takeover Proposal (provided that for purposes of this bullet, each reference to “20%” in the definition for “Takeover Proposal” will mean “50%”);

 

•

by Galaxy, at any time prior to obtaining the Galaxy Stockholder Approval, because Galaxy, concurrently with such termination, enters into an acquisition agreement providing for a Superior Proposal (as described under “The Merger Agreement-Other Covenants and Agreements-No Solicitation; Galaxy Takeover Proposal; Adverse Recommendation Change” beginning on page 80 of this proxy statement), provided that such Superior Proposal did not result from a breach of the Merger Agreement with respect to such Superior Proposal and any Takeover Proposal that was a precursor thereto; or

 

•

by Evolution because the Board makes an Adverse Recommendation Change.

Evolution will pay to Galaxy the Parent Termination Fee by wire transfer of immediately available funds (in the case of a termination by Evolution) or within two business days (in the case of a termination by Galaxy) to an account or accounts designed in writing by Galaxy in the event that the Merger Agreement is terminated:

 

•

by Galaxy or Evolution because (i) the Merger has not been consummated by the Outside Date or any Restraint has become final and nonappealable, (ii) at the time of such termination, any of the conditions

 

91

set forth in the No Restraints Closing Condition (where the failure of the No Restraints Closing Condition arises out of (x) any gaming law of a Core Gaming Approval Jurisdiction or (y) any gaming law of jurisdictions (other than the Core Gaming Approval Jurisdictions) that represent consolidated revenues of Galaxy and its subsidiaries for the 12 months ended March 31, 2024 equal to or greater than a threshold specified in the Galaxy Disclosure Letter or the Gaming Approvals Closing Condition has not been satisfied or validly waived; and (iii) all other closing conditions set forth in the Merger Agreement have been satisfied or validly waived (except for those conditions that by their terms must be satisfied at the Closing, provided that such conditions would have been so satisfied if the Closing would have occurred on the date of such termination).

In no event shall either party be required to pay the Company Termination Fee or the Parent Termination Fee, as applicable, on more than one occasion, whether or not the applicable termination fee would be payable under more than one provision of the Merger Agreement at the same or at different times.

The Merger Agreement further provides that in the event Galaxy or Evolution fails to pay any termination fee that becomes due pursuant to, and within the time frame provided in, the Merger Agreement, and Galaxy or Evolution commences a legal proceeding resulting in a judgment against Galaxy or Evolution, as applicable, for any portion of the fees or expenses due, the non-prevailing party in such legal proceeding will be required to pay to the prevailing party its reasonable and documented out-of-pocket costs and expenses (including reasonable and documented attorneys’ fees) incurred by the prevailing party in connection with such legal proceeding, together with interest on the amount of any unpaid fee, cost or expense at the publicly announced prime rate of Citibank, N.A. from the date such fee, cost or expense was required to be paid to the payment date, except that in no event will the amount that any party is required to be pay in connection with enforcing such a legal proceeding will exceed $1,000,000.

Expenses Generally

Except as otherwise described above or provided in the Merger Agreement, whether or not the Merger and the other transactions contemplated by the Merger Agreement are consummated, Galaxy, Evolution and Merger Sub are each responsible for all of their respective costs and expenses incurred in connection with the Merger and the other transactions contemplated by the Merger Agreement.

Specific Performance

The parties to the Merger Agreement are entitled (in addition to any other remedy to which they may be entitled in law or equity) to an injunction to prevent breaches of the Merger Agreement and to enforce specifically the terms and provisions of the Merger Agreement.

Amendments; Waiver

Any provision of the Merger Agreement may be amended or waived prior to the Effective Time if, but only if, such amendment or waiver is in writing and is signed, in the case of an amendment, by each party to the Merger Agreement or, in the case of a waiver, by each party against whom the waiver is to be effective.

Governing Law and Jurisdiction

The Merger Agreement and any matters or disputes relating thereto will be governed by, and construed in accordance with, the laws of the State of Delaware applicable to contracts executed in and to be performed entirely within that state, regardless of the laws that might otherwise govern under any applicable conflict of laws principles, except that the laws of the State of Nevada will govern (i) the Merger, to the extent required, (ii) the internal affairs (including fiduciary duties) of Galaxy and the Board, and (iii) any other provisions set forth in the Merger Agreement in which such laws are required to apply to the provisions or transactions contemplated by the Merger Agreement.

 

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All actions arising out of or relating to the Merger Agreement and the transactions contemplated therein, other than as to Nevada law matters, will be heard and determined exclusively in the Court of Chancery of the State of Delaware (or, if the Court of Chancery of the State of Delaware declines to accept jurisdiction over any such action, any state or federal court within the State of Delaware), and in each case, appellate courts therefrom, and Galaxy, Evolution and Merger Sub hereby irrevocably submit to the exclusive jurisdiction and venue of such courts in any such action, other than as to Nevada law matters, and irrevocably waive the defense of an inconvenient forum or lack of jurisdiction to the maintenance of any such Action.

All actions arising out of the Nevada law matters will be heard and determined exclusively in the Court of the Eighth Judicial District Court of Clark County, Nevada (or, if the court does not have jurisdiction, the Second Judicial District Court of Washoe County, Nevada) and any state appellate court therefrom within the State of Nevada (or, if the Eighth Judicial District Court of Clark County, Nevada and Second Judicial District Court of Washoe County, Nevada decline to accept jurisdiction over a particular matter, any federal court within the State of Nevada (and any appellate court therefrom) or, if any federal court within the State of Nevada declines to accept jurisdiction over a particular matter, any other state court within the State of Nevada (and any appellate court therefrom)).

 

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PROPOSAL NO. 1: APPROVAL OF THE MERGER PROPOSAL

The Merger Proposal

We are asking you to approve a proposal to adopt the Merger Agreement, which we refer to as the “Merger Proposal.” For a detailed discussion of the terms and conditions of the Merger Agreement, see “The Merger Agreement” beginning on page 67 of this proxy statement. A copy of the Merger Agreement is attached to this proxy statement as Annex A. See also “The Merger” beginning on page 35 of this proxy statement.

Vote Required

As described under “The Merger-Recommendation of the Board and Reasons for the Merger” beginning on page 43 of this proxy statement, after considering various factors described in such section, the Board has determined that the Merger Agreement and the transactions contemplated thereby, including the Merger, are advisable, fair to, and in the best interests of, Galaxy and our stockholders. The Board has approved and declared advisable the execution and delivery by Galaxy of the Merger Agreement and the other transactions contemplated thereby upon the terms and subject to the conditions contained therein, and the Board recommends that you vote “FOR” the Merger Proposal.

Under Nevada law, approval of the Merger Proposal requires the affirmative vote of the holders of a majority of the voting power of the outstanding Company Shares entitled to vote thereon as of the Record Date. Each Company Share issued and outstanding as of the close of business on the Record Date is entitled to one vote at the Special Meeting. If a stockholder signs and returns a proxy and does not indicate how he, she or it wishes to vote on the Merger Proposal, such stockholder’s Company Shares will be voted in favor of the Merger Proposal.

Abstentions and broker non-votes, if any, will have the same effect as a vote “AGAINST” the Merger Proposal.

Board Recommendation

THE BOARD RECOMMENDS THAT YOU VOTE “FOR” THE MERGER PROPOSAL.

 

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PROPOSAL NO. 2: ADVISORY VOTE ON THE MERGER COMPENSATION PROPOSAL

The Merger Compensation Proposal

As required by Section 14A of the Exchange Act and the applicable SEC rules issued thereunder, Galaxy is required to submit a proposal to Galaxy stockholders for a non-binding, advisory vote to approve certain compensation that may be paid or become payable to the named executive officers of Galaxy that is based on or otherwise relates to the Merger, as determined in accordance with Item 402(t) of Regulation S-K. This compensation is summarized in the table set forth below, including the footnotes to the table. This proposal is commonly known as a “say-on-golden parachute proposal,” and we refer to it as the “Merger Compensation Proposal.”

The information set forth in the table below is intended to comply with Item 402(t) of Regulation S-K, which requires disclosure of information about compensation that may be paid or become payable to our named executive officers that is based on or otherwise relates to the Merger, assuming the Merger is consummated on the latest practicable date prior to the filing of this proxy statement, August 30, 2024.

Please note that the amounts indicated below are estimates based on the material assumptions described in the assumptions and notes to the table below, which may or may not actually occur. Some of these assumptions are based on information currently available and, as a result, the actual amounts, if any, that may become payable to a named executive officer may differ in material respects from the amounts set forth below. For purposes of this disclosure, “single-trigger” refers to payments and benefits that arise solely as a result of the completion of the Merger and “double-trigger” refers to payments and benefits that require two conditions, which are the completion of the Merger and a qualifying termination of employment.

Furthermore, for purposes of calculating such amounts, we have assumed:

 

•

the employment of each named executive officer is terminated by Galaxy without “cause” or by the named executive officer for “good reason” (each, a “qualifying termination”), in either case, immediately following the consummation of the Merger;

 

•

the named executive officer’s base salary and target bonus will remain unchanged from those applicable as of August 30, 2024, which target bonus amount is 50% of base salary;

 

•

each named executive officer’s prorated bonus for 2024 is calculated as of August 30, 2024;

 

•

each named executive officer’s outstanding Company Stock Options and Company Stock Awards are those that are outstanding and unvested as of August 30, 2024;

 

•

vested Company Stock Options which are unexercised as of August 30, 2024 are not included;

 

•

each named executive officer will receive reimbursement or payment of COBRA premiums, as applicable, for the maximum eligible period; and

 

•

a price per Company Share equal to the Merger Consideration of $3.20.

No amounts are reflected in the table below for Mr. Cravens as he separated from employment with Galaxy on November 10, 2023, and did not receive and is not entitled to receive any payments or benefits required to be disclosed by Item 402(t) of Regulation S-K.

Quantification of Potential Payments and Benefits to Galaxy’s Named Executive Officers

 

Named Executive Officer		Cash ($)(1)				Equity ($)(2)				Benefits/ Perquisites ($)(3)				Total ($)
Matthew D. Reback			815,068				1,520,000				33,012				1,586,024
Harry C. Hagerty			194,000				—				15,061				209,061
Todd P. Cravens			—				—				—				—

 

95

 

(1)

Cash. For each named executive officer, consists of (a) cash severance equal to (i) for Mr. Reback, two times his base salary, plus, pursuant to the Merger Agreement, a prorated annual bonus payment (assumed to equal target performance for purposes of this quantification), and (ii) for Mr. Hagerty, two times his base salary and his retention bonus, as described below.

Mr. Hagerty is eligible for a retention bonus in the amount of $50,000. The retention bonus is payable as follows: $7,500 is payable on January 1, 2025; and $42,500 is payable upon the Effective Time, subject to Mr. Hagerty’s continued employment or service. The retention bonus (or any remaining unpaid installments) will be paid on an accelerated basis in the event his employment or service is terminated as a result of the expiration of his employment agreement prior to the Effective Time, subject to his execution and non-revocation of a general release of claims.

The cash severance and the pro-rated annual bonus are “double trigger” and, upon or following the Effective Time, become payable only upon a qualifying termination of employment following a change in control of Galaxy under the terms of their employment agreements. The retention bonus is a “single trigger” benefit and will be payable upon the date set forth above or the Effective Time (or, if earlier, upon an expiration of his employment agreement). See “The Merger-Interests of the Directors and Executive Officers of Galaxy in the Merger—Change in Control Benefits.”

The estimated amount of each such payment is shown in the following table:

 

Named Executive Officer		Severance ($)				Prorated Bonus ($)				Retention Bonus ($)				Total ($)
Matthew D. Reback			700,000				115,068				—				815,068
Harry C. Hagerty			144,000				—				50,000				194,000
Todd P. Cravens			—				—				—				—

 

(2)

Equity. Amounts shown reflect the sum of the value that Mr. Reback is expected to receive in connection with the accelerated vesting of his Company option awards and Contingent Cash Awards issued to him in consideration of his Company Stock Awards at the Closing (assuming his employment is terminated without cause immediately following the Closing), as more fully described in the section entitled “The Merger Agreement-Treatment of Equity Awards” beginning on page 69 of this proxy statement and in the section entitled “The Merger-Interests of the Directors and Executive Officers of Galaxy in the Merger-Change in Control Benefits” beginning on page 58 of this proxy statement. For purposes of this quantification, it is assumed that Contingent Cash Awards issued to Mr. Reback in consideration of his Company Stock Awards at the Closing would vest in full in connection with his termination without cause following the Merger, see “The Merger-Interests of the Directors and Executive Officers of Galaxy in the Merger-Treatment of Equity Awards” and “The Merger-Interests of the Directors and Executive Officers of Galaxy in the Merger-Change in Control Benefits.”

Given that the Company Stock Options will accelerate at the Effective Time of the Merger pursuant to the Merger Agreement without regard to any termination of employment, they are considered “single-trigger” benefits. The acceleration of Contingent Cash Awards issued to Mr. Reback in consideration of his Company Stock Awards at the Effective Time is considered a “double-trigger” benefit, which means that both a change in control of Galaxy, such as the Merger, and a qualifying termination of employment must occur in order for the vesting of such awards to be accelerated and for Mr. Reback to receive a payment in respect of such awards prior to the regularly scheduled vesting dates.

 

96

The following table quantifies each separate form of compensation included in the aggregate total reported in this column:

 

 

(3)

Benefits and Perquisites. Amounts consist of the estimated value of continued health benefits for each named executive officer pursuant to his employment agreement, calculated through the applicable severance period (12 months) and are calculated based on actual average monthly health coverage costs for each respective named executive officer for fiscal year 2024. Such benefits are “double trigger” and are provided only upon a qualifying termination of employment following a change in control of Galaxy (see “The Merger-Interests of the Directors and Executive Officers of Galaxy in the Merger-Change in Control Benefits”).

Vote Required

The Board recommends that the stockholders of Galaxy approve the following resolution:

“BE IT RESOLVED THAT:

the compensation that may be paid or become payable to Galaxy’s named executive officers in connection with the Merger, as disclosed pursuant to Item 402(t) of Regulation S-K under the section entitled “Proposal No. 2: Advisory Vote on the Merger Compensation Proposal-The Merger Compensation Proposal-Quantification of Potential Payments and Benefits to Galaxy’s Named Executive Officers” beginning on page 95 of the proxy statement dated September 26, 2024, including the tables, associated footnotes and narrative discussion, is hereby approved, ratified and confirmed on a non-binding, advisory basis.”

Approval of the Merger Compensation Proposal requires the affirmative vote of the holders of a majority in voting power of the votes cast (excluding abstentions and broker non-votes, if any) at the Special Meeting by the holders entitled to vote thereon. Each Company Share issued and outstanding as of the close of business on the Record Date is entitled to one vote at the Special Meeting. If a stockholder signs and returns a proxy and does not indicate how he, she or it wishes to vote on the Merger Compensation Proposal, such stockholder’s Company Shares will be voted in favor of the Merger Compensation Proposal. If a Galaxy stockholder abstains from voting, it will not be considered to be a vote cast on the Merger Compensation Proposal and will have no effect on the Merger Compensation Proposal. If a Galaxy stockholder fails to vote, it will have no effect on the Merger Compensation Proposal. Broker non-votes, if any, will have no effect on the Merger Compensation Proposal.

The vote on the Merger Compensation Proposal is a vote separate and apart from the vote on the Merger Proposal. Accordingly, you may vote to approve the Merger Proposal and vote against or abstain with respect to the Merger Compensation Proposal and vice versa. Because the vote on the Merger Compensation Proposal is advisory only, it will not be binding on either Galaxy or Parent. Accordingly, if the Merger Proposal is approved and the Merger is completed, the compensation will be payable, subject only to the conditions applicable thereto, regardless of the outcome of the non-binding, advisory vote of Galaxy stockholders on the Merger Compensation Proposal.

Board Recommendation

THE BOARD RECOMMENDS THAT YOU VOTE “FOR” THE MERGER COMPENSATION PROPOSAL.

 

97

PROPOSAL NO. 3: ADJOURNMENT OF THE SPECIAL MEETING

The Adjournment Proposal

We are asking you to approve a proposal to approve the adjournment of the Special Meeting to a later date or dates if necessary to solicit additional proxies if there are insufficient votes to approve the Merger Proposal at the time of the Special Meeting, which we refer to as the “Adjournment Proposal.” If our stockholders approve the Adjournment Proposal, we could adjourn the Special Meeting to solicit additional proxies, including the solicitation of proxies from stockholders that have previously returned properly executed proxies voting against the Merger Proposal. Among other things, approval of the Adjournment Proposal could mean that, even if we had received proxies representing a sufficient number of votes against the Merger Proposal such that the Merger Proposal would be defeated, we could adjourn the Special Meeting without a vote on the Merger Proposal and seek to convince the holders of those Company Shares to change their votes to vote in favor of the Merger Proposal. In addition, the chairperson of the Special Meeting could adjourn the Special Meeting if under our amended and restated bylaws a quorum is not present for the meeting.

Notwithstanding the foregoing, Galaxy’s right to adjourn or postpone the Special Meeting, and the number of times that Galaxy may adjourn or postpone the Special Meeting, and the duration of any such adjournment or postponement, is subject to the terms of the Merger Agreement as described further under “The Merger Agreement-Other Covenants and Agreements-Special Meeting and Related Actions” beginning on page 79 of this proxy statement.

If the Special Meeting is adjourned or postponed to solicit additional proxies, stockholders who have already submitted their proxies will be able to revoke them at any time prior to their use at the Special Meeting as adjourned or postponed. Galaxy does not intend to call a vote on the Adjournment Proposal if the Merger Proposal is approved at the Special Meeting.

The Board believes that it is in the best interests of Galaxy and our stockholders to be able to adjourn the Special Meeting if necessary for the purpose of soliciting additional proxies in respect of the Merger Proposal if there are insufficient votes to approve the Merger Proposal at the time of the Special Meeting.

Vote Required

Approval of the Adjournment Proposal requires the affirmative vote of the holders of a majority in voting power of the votes cast (excluding abstentions and broker non-votes, if any) at the Special Meeting by the holders entitled to vote thereon. Each Company Share issued and outstanding as of the close of business on the Record Date is entitled to one vote at the Special Meeting. If a stockholder signs and returns a proxy and does not indicate how he, she or it wishes to vote on the Adjournment Proposal, such stockholder’s Company Shares will be voted in favor of the Adjournment Proposal. If a Galaxy stockholder abstains from voting, it will not be considered to be a vote cast on the Adjournment Proposal and will have no effect on the Adjournment Proposal. If a Galaxy stockholder fails to vote, it will have no effect on the Adjournment Proposal. Broker non-votes, if any, will have no effect on the Adjournment Proposal.

The vote on the Adjournment Proposal is a vote separate and apart from the vote on the Merger Proposal. Accordingly, you may vote to approve the Merger Proposal and vote against or abstain with respect to the Adjournment Proposal and vice versa.

Board Recommendation

THE BOARD RECOMMENDS THAT YOU VOTE “FOR” THE ADJOURNMENT PROPOSAL.

 

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MARKET PRICES AND DIVIDEND DATA

Company Shares are listed on the OTCQB under the symbol “GLXZ.”

As of September 18, 2024, there were 24,975,826 Company Shares issued and outstanding, held by approximately 38 stockholders of record.

We do not currently intend to pay, nor under the Merger Agreement may we pay without the prior written consent of Parent, any cash dividends on our capital stock in the foreseeable future.

On July 17, 2024, the last trading day before we publicly announced the execution of the Merger Agreement, the high and low sale prices for the Company Shares as reported on the OTCQB were $1.44 and $1.40 per share, respectively. The closing price of the Company Shares on the OTCQB on July 17, 2024 was $1.43 per share.

On September 25, 2024, the latest practicable trading day before the printing of this proxy statement, the closing price of the Company Shares on the OTCQB was $2.77 per share. You are encouraged to obtain current market quotations for Company Shares.

Upon the consummation of the Merger, there will be no further market for Company Shares and, as promptly as practicable thereafter, the Company Shares will cease trading on and be delisted from the OTCQB and deregistered under the Exchange Act. As a result, following the Merger and such deregistration, we will no longer file periodic reports with the SEC.

 

99

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table and accompanying footnotes set forth certain information with respect to the beneficial ownership of the Company Shares on August 30, 2024 for:

 

•

each of our directors;

 

•

each of our named executive officers;

 

•

all of our current directors and executive officers as a group; and

 

•

each person, or group of affiliated persons, who beneficially owned more than 5% of the Company Shares.

We have determined beneficial ownership in accordance with the rules of the SEC, and the information is not necessarily indicative of beneficial ownership for any other purpose. Except as indicated by the footnotes below, we believe, based on information furnished to us, that the persons and entities named in the table below have sole voting and sole investment power with respect to all Company Shares that they beneficially own, subject to applicable community property laws.

Applicable percentage ownership is based on 24,975,826 Company Shares issued and outstanding as of August 30, 2024. In computing the number of Company Shares beneficially owned by a person and the percentage ownership of that person, we deemed to be issued and outstanding all Company Shares subject to options, warrants or other rights held by that person or entity that are currently exercisable within 60 days of August 30, 2024. We did not deem these shares issued and outstanding, however, for the purpose of computing the percentage ownership of any other person.

 

		Beneficial Ownership
		Number				Percentage
Name of Beneficial Owner
5% or Greater Stockholders
Cannell Capital LLC(1)			1,417,265				5.67	%
Name of Beneficial Owner
Named Executive Officers and Directors
Mark A. Lipparelli, Director(2)			1,995,017				7.99	%
Michael Gavin Isaacs, Director			308,445				1.23	%
Meredith Brill, Director(3)			394,366				1.58	%
Bryan W. Waters, Director			589,174				2.36	%
Cheryl A. Kondra, Director			145,505				*
Todd P. Cravens, Former President and Chief Executive Officer			685,220				2.74	%
Matthew D. Reback, President and Chief Executive Officer(4)			—				*
Harry C. Hagerty, Former Chief Financial Officer(5)			1,090,500				4.37	%
All current executive officers and directors as a group			4,523,007				18.11	%

 

*	Less than 1%.

(1)	Based on the Schedule 13G filed with the SEC by Cannell Capital LLC on February 13, 2024.

(2)	Mr. Lipparelli holds 1,865,017 shares of common stock under his name and 130,000 shares under Mark Allan Lipparelli TTEE.

(3)	Ms. Brill holds 119,366 shares of common stock under her name and 275,000 shares of common stock indirectly as a beneficial owner of Yoav Brill Medicine Professional Corporation.

(4)	Mr. Reback holds options to purchase 400,000 shares of our common stock, none of which are exercisable at or within 60 days of August 30, 2024.

(5)	Mr. Hagerty holds 890,500 shares of our common stock and holds options to purchase 200,000 shares of our common stock which are exercisable within 60 days of August 30, 2024.

 

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FUTURE STOCKHOLDER PROPOSALS

If the Merger is consummated, we will have no public stockholders and there will be no public participation in any future meetings of our stockholders. However, if the Merger is not consummated, our stockholders will continue to be entitled to attend and participate in meetings of our stockholders.

We intend to hold an annual meeting of stockholders in 2025 only if the Merger is not consummated.

Stockholders who intend to have a proposal considered for inclusion in our proxy materials for presentation at our annual meeting of stockholders to be held in 2025 pursuant to Rule 14a-8 under the Exchange Act must have submitted the proposal to our principal executive offices, 6480 Cameron Street, Suite 305, Las Vegas, Nevada 89118, Attention: Corporate Secretary, not later than December 27, 2024 if the Company’s annual meeting of stockholders in 2025 is held within 30 days of May 29, 2025, and must otherwise comply with Rule 14a-8. While our Board will consider stockholder proposals, we reserve the right to omit from the proxy statement stockholder proposals that we are not required to include under the Exchange Act, including Rule 14a-8.

Stockholders intending to present a proposal at the 2025 annual meeting of stockholders, but not to include the proposal in our proxy statement, or to nominate a person for election as a director, must comply with the requirements set forth in our second amended and restated bylaws. Our second amended and restated bylaws require, among other things, that our Corporate Secretary receive written notice from the stockholder of record of their intent to present such proposal or nomination not less than 90 days nor more than 120 days prior to May 29, 2025, provided that if the date of the 2025 annual meeting is more than 30 days before or more than 70 days after May 29, 2025, notice by a stockholder to be timely must be so delivered, or mailed and received, not earlier than the 120th day prior to May 29, 2025 and not later than the 90th day prior to May 29, 2025 or, if later, the 10th day following the day on which public disclosure of the date of the 2025 annual meeting is first made by the Company. Notice received outside of these dates is considered untimely. For proposals not made in accordance with Rule 14a-8, you must comply with specific procedures set forth in our second amended and restated bylaws and the proposal must contain the specific information required by our second amended and restated bylaws. SEC rules permit management to vote proxies in its discretion in certain cases if the stockholder does not comply with this deadline and, in certain other cases, notwithstanding the stockholder’s compliance with this deadline. Stockholders are advised to review our second amended and restated bylaws which also specify requirements as to the form and content of a stockholder’s notice.

In addition to satisfying the foregoing requirements under our Bylaws, to comply with the universal proxy rules (once they become effective), stockholders who intend to solicit proxies in support of director nominees other than our nominees must provide notice that sets forth the information required by Rule 14a-9 under the Exchange Act no later than March 30, 2025.

We reserve the right to reject, rule out of order or take other appropriate action with respect to any proposal that does not comply with these or other applicable requirements.

 

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WHERE YOU CAN FIND MORE INFORMATION

The SEC allows us to “incorporate by reference” information into this proxy statement, which means that we can disclose important information to you by referring you to other documents filed separately with the SEC. The information incorporated by reference is deemed to be part of this proxy statement, except for any information superseded by information in this proxy statement or incorporated by reference subsequent to the date of this proxy statement. This proxy statement incorporates by reference the documents set forth below that we have previously filed with the SEC. These documents contain important information about us and our financial condition and are incorporated by reference into this proxy statement. Statements contained in this proxy statement, or in any document incorporated by reference in this proxy statement, regarding the contents of any contract or other document, are not necessarily complete and each such statement is qualified in its entirety by reference to that contract or other document filed as an exhibit with the SEC.

The following Galaxy filings with the SEC are incorporated by reference:

 

•

Galaxy’s Annual Report on Form 10-K for the fiscal year ended December 31, 2023, filed with the SEC on March 25, 2024;

 

•

Galaxy’s Quarterly Reports on Form 10-Q for the quarter ended March 31, 2024, filed with the SEC on May 13, 2024 and for the quarter ended June 30, 2024, filed with the SEC on August 12, 2024; and

 

•

Galaxy’s Current Reports on Form  8-K filed with the SEC on March  28, 2024, April  23, 2024, May  24, 2024, May  31, 2024, July  18, 2024, July  18, 2024, and August  5, 2024 and August 13, 2024 (other than the portions of such document not deemed to be filed).

We also incorporate by reference into this proxy statement any documents filed by us with the SEC pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act between the date of this proxy statement and the earlier of the date of the Special Meeting or the termination of the Merger Agreement. The information provided on our website is not part of this proxy statement and therefore is not incorporated by reference herein.

Information furnished under Item 2.02 or Item 7.01 of any Current Report on Form 8-K, including related exhibits, is not and will not be incorporated by reference into this proxy statement.

Stockholders may obtain free copies of the documents filed with the SEC by Galaxy through the SEC’s website, www.sec.gov, or through the Investors section of our website, ir.galaxygaming.com, and the “SEC Filings” section therein.

You may obtain any of the documents incorporated by reference into this proxy statement, excluding any exhibits to those documents unless the exhibit is specifically incorporated by reference into those documents, without charge, by requesting them in writing or by telephone from us at the following address:

Galaxy Gaming, Inc.

Attention: Corporate Secretary

Email: investors@galaxygaming.com

If you would like to request documents from us, please do so by October 28, 2024, to receive them before the Special Meeting. If you request any documents from us, we will mail them to you by first class mail or another equally prompt method, within 1 business day after we receive your request. Please note that all of our documents that we file with the SEC are also promptly available through the Investors section of our website, ir.galaxygaming.com, and the “SEC Filings” section therein. The information included on our website is not incorporated by reference into this proxy statement.

If you have any questions about this proxy statement, the Special Meeting or the Merger or need assistance with voting procedures, you should contact our proxy solicitor or us at:

 

102

INNISFREE M&A INCORPORATED

501 Madison Avenue, 20^th Floor

New York, New York 10022

Stockholders may call toll-free: (877) 800-5185

Banks and brokers may call collect: (212) 750-5833

or

 

 

 

Galaxy Gaming, Inc.

Attn: Corporate Secretary

Email: investors@galaxygaming.com

 

103

MISCELLANEOUS

Galaxy has supplied all information relating to Galaxy, and Parent has supplied, and Galaxy has not independently verified, all of the information relating to Parent and Merger Sub contained in “Summary-The Companies” beginning on page 13 of this proxy statement and “The Companies” beginning on page 25 of this proxy statement.

If you hold any certificates representing Company Shares, you should not send in such certificates until you receive transmittal materials after the Merger is consummated.

You should rely only on the information contained in this proxy statement, the annexes to this proxy statement and the documents incorporated by reference into this proxy statement to vote on the Merger. We have not authorized anyone to provide you with information that is different from what is contained in this proxy statement. This proxy statement is dated September 26, 2024. You should not assume that the information contained in this proxy statement is accurate as of any date other than that date (or as of an earlier date if so indicated in this proxy statement) and the mailing of this proxy statement to stockholders does not create any implication to the contrary. This proxy statement does not constitute a solicitation of a proxy in any jurisdiction where, or to or from any person to whom, it is unlawful to make a proxy solicitation.

 

104

Annex A

 

 

 

AGREEMENT AND PLAN OF MERGER

By and Among

EVOLUTION MALTA HOLDING LIMITED,

GALAGA MERGER SUB, INC.

and

GALAXY GAMING, INC.

Dated as of July 18, 2024

 

 

 

TABLE OF CONTENTS

 

ARTICLE I
The Transactions
				Page
SECTION 1.01.		The Merger			A-1
SECTION 1.02.		Closing			A-2
SECTION 1.03.		Effective Time			A-2
SECTION 1.04.		Effects of the Merger			A-2
SECTION 1.05.		Articles of Incorporation and Bylaws of the Surviving Corporation			A-2
SECTION 1.06.		Directors and Officers of the Surviving Corporation			A-2
ARTICLE II
Effect of the Merger on Capital Stock; Exchange of Certificates; Warrants;
Equity-Based Awards
SECTION 2.01.		Effect on Capital Stock			A-3
SECTION 2.02.		Exchange of Certificates and Book Entry Shares			A-3
SECTION 2.03.		Treatment of Equity Awards			A-5
SECTION 2.04.		Treatment of Warrants			A-6
SECTION 2.05.		Adjustments			A-6
SECTION 2.06.		Company Dissenting Shares			A-6
SECTION 2.07.		Withholding Rights			A-7
ARTICLE III
Representations and Warranties of the Company
SECTION 3.01.		Organization; Standing			A-7
SECTION 3.02.		Capitalization			A-8
SECTION 3.03.		Subsidiaries			A-9
SECTION 3.04.		Authority; Noncontravention			A-10
SECTION 3.05.		Governmental Approvals			A-11
SECTION 3.06.		Company SEC Documents; Undisclosed Liabilities			A-11
SECTION 3.07.		Absence of Certain Changes			A-13
SECTION 3.08.		Legal Proceedings			A-13
SECTION 3.09.		Compliance with Laws; Permits			A-13
SECTION 3.10.		Tax Matters			A-14
SECTION 3.11.		Employee Benefits			A-15
SECTION 3.12.		Labor Matters			A-17
SECTION 3.13.		Environmental Matters			A-17
SECTION 3.14.		Intellectual Property			A-18
SECTION 3.15.		Data Protection; Company Systems			A-20
SECTION 3.16.		No Rights Agreement; Anti-Takeover Laws			A-20
SECTION 3.17.		Property			A-21
SECTION 3.18.		Contracts			A-21
SECTION 3.19.		Insurance			A-23
SECTION 3.20.		International Trade; Anti-Corruption			A-23
SECTION 3.21.		Customers and Suppliers			A-24

 

A-i