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 |X|
Check the appropriate Box:
|X| 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 Pursuant to ss.240.14a-12
MULTIMEDIA GAMES, INC.
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(Name of Registrant as Specified in Its Charter)
LIBERATION INVESTMENTS, L.P.
LIBERATION INVESTMENTS, LTD.
LIBERATION INVESTMENT GROUP, LLC
EMANUEL R. PEARLMAN
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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MULTIMEDIA GAMES, INC.
SOLICITATION STATEMENT TO CALL A SPECIAL MEETING OF SHAREHOLDERS
BY
LIBERATION INVESTMENTS, L.P.,
LIBERATION INVESTMENTS, LTD.,
LIBERATION INVESTMENT GROUP, LLC AND
EMANUEL R. PEARLMAN
WHY YOU WERE SENT THIS SOLICITATION STATEMENT
---------------------------------------------
Liberation Investments, L.P., a Delaware limited partnership ("LILP"),
Liberation Investments, Ltd., a private offshore investment corporation
("LILtd"), Liberation Investment Group, LLC, a Delaware limited liability
company and general partner of LILP and discretionary investment adviser to
LILtd ("LIGLLC"), and Emanuel R. Pearlman, as Chief Executive Officer and
majority member of LIGLLC (collectively, "Liberation Investments") are hereby
asking you to help Liberation Investments call a special meeting of shareholders
(the "Special Meeting") of Multimedia Games, Inc., a Texas corporation (the
"Company").
This solicitation statement (together with its exhibits, this
"Solicitation Statement") and the accompanying WHITE request card are being
furnished to certain holders of the Company's common stock, par value $0.01
("Common Stock"). Liberation Investments seeks to call the Special Meeting for
the purpose of considering and voting upon certain proposals described below
(see the section "THE PROPOSALS" on page 3) (collectively, the "Proposals"). At
this time, Liberation Investments is only soliciting your request to call the
Special Meeting as described herein. Liberation Investments is not currently
seeking your proxy, consent, authorization or agent designation for approval of
any of the Proposals. In the event the Special Meeting will be called,
Liberation Investments intends to send to all shareholders of record proxy
materials relating to the Proposals to be voted upon at the Special Meeting.
Pursuant to Section 2.24(C) of the Texas Business Corporation Act (the
"TBCA") and Section 2.03 of the Company's Amended and Restated Bylaws, as filed
with the Securities and Exchange Commission (the "SEC") as an exhibit to the
Company's Form 10-K for the fiscal year ended September 30, 2003 (the "Bylaws"),
the Special Meeting may be called by the holders of at least 10% of the shares
entitled to vote at the proposed Special Meeting.
As of September 28, 2006, Liberation Investments was the beneficial owner
of, and had the right to vote, 2,311,327 shares of Common Stock, representing
approximately 8.4% of the outstanding Common Stock (based on the number of
outstanding shares of Common Stock set forth by the Company in its Form 10-Q for
the quarterly period ended June 30, 2006, hereinafter the "10-Q").
The date of this Solicitation Statement is [_], 2006, and it and the
accompanying WHITE request card are first being sent to certain Company
shareholders on or about [_], 2006.
REQUESTS SHOULD BE DELIVERED AS PROMPTLY AS POSSIBLE, BY FAX OR BY MAIL
(USING THE ENCLOSED ENVELOPE), TO INNISFREE M&A INCORPORATED, AS SET FORTH
BELOW.
THIS SOLICITATION IS BEING MADE BY LIBERATION INVESTMENTS, AND NOT ON
BEHALF OF THE CURRENT BOARD OF DIRECTORS OF THE COMPANY (THE "BOARD").
THE REQUEST TO CALL THE SPECIAL MEETING IS IMPORTANT. LIBERATION
INVESTMENTS URGES YOU TO SIGN, DATE AND RETURN THE ENCLOSED WHITE REQUEST CARD.
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IMPORTANT
If your shares of Common Stock are registered in your own name, please
sign, date and mail the enclosed WHITE request card to Innisfree M&A
Incorporated in the postage-paid envelope provided herewith. If your shares of
Common Stock are held in the name of a brokerage firm, bank nominee or other
institution, only it can sign a WHITE request card with respect to your shares
and only upon receipt of specific instructions from you. Accordingly, you should
contact the person responsible for your account and give instructions for a
WHITE request card to be signed representing your shares of Common Stock.
Liberation Investments urges you to confirm in writing your instructions to the
person responsible for your account and to provide a copy of such instructions
to Liberation Investments in care of Innisfree M&A Incorporated to the address
below, so that Liberation Investments will be aware of all instructions given
and can attempt to ensure that such instructions are followed. If you have any
questions about executing or delivering your WHITE request card or require
assistance, please contact:
Innisfree M&A Incorporated
501 Madison Avenue, 20th Floor
New York, NY 10022
Stockholders call toll free: 1-877-825-8631
Banks and Brokers call collect: 1-212-750-5833
WE ARE DISSATISFIED WITH THE COMPANY'S PERFORMANCE AND THE MANAGEMENT OF ITS
AFFAIRS
----------------------------------------------------------------------------
As described in Schedule 13D filings that we have made with the SEC, we
are dissatisfied with the Company's performance and the management of its
affairs, and have for many months discussed with and advised the Company that it
should pursue strategies to maximize shareholder value. Since we are one of the
largest shareholders of the Company, we have a strong incentive to maximize
shareholder value. Liberation Investments believes that calling the Special
Meeting will provide the Company's shareholders an opportunity to express their
dissatisfaction with the Company's performance and the management of its
affairs. Holding the Special Meeting will also provide the Company's
shareholders an opportunity to influence the future of the Company by changing
the composition of the Board. Liberation Investments expects to nominate for
election to the Board at the Special Meeting up to three individuals with
significant capital markets expertise who are sensitive to shareholder concerns.
Liberation Investments has previously provided the Company with the names and
backgrounds of three individuals that the Company could consider for election to
the Board. As of the date of this Solicitation Statement, Liberation Investments
has not selected the individuals that it would nominate for election at the
Special Meeting, in the event one is called. Liberation Investments is in the
process of evaluating potential nominees and selection of Liberation
Investments' candidates will necessarily depend, in part, on whether Liberation
Investments is successful in soliciting sufficient requests to call the Special
Meeting, when such requests are received and when the Special Meeting occurs.
None of the potential nominees previously identified by Liberation Investments
to the Company is or was a "participant" in the solicitation conducted with this
Solicitation Statement or one of its affiliates.
Of particular concern to Liberation Investments is the languishing Common
Stock price which is currently trading below its levels of even three years ago.
Also, the Company recently announced poor results for the fiscal 2006 third
quarter, including the results set forth in the table below:
Fiscal 2006 third Fiscal 2005 third
quarter quarter
----------------- -----------------
Total Revenue $32.2 million $37.1 million
Profit/(Loss) $(0.6) million $4.6 million
EBITDA $15.1 million $23.0 million
Selling, General and
Administrative Expenses $17.4 million $14.1 million
THE SPECIAL MEETING
In connection with our solicitation of requests to call the Special
Meeting, we are furnishing you with this Solicitation Statement and a form of
request to enable you and other shareholders of the Company to
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call the Special Meeting. For the Special Meeting to be held in accordance with
the TBCA and the Bylaws, requests in favor of the call of the Special Meeting
must be executed by the holders of at least 10% of the shares entitled to vote
at the proposed Special Meeting (the "Requisite Holders"). According to the
10-Q, there were 27,482,486 shares of Common Stock outstanding as of August 4,
2006, with each share entitled to one vote. Based on such number, requests from
holders of an aggregate of at least 2,748,249 shares of Common Stock would be
required to call the Special Meeting under the TBCA and the Bylaws. In order to
minimize costs, we intend to solicit requests to call the Special Meeting only
from large shareholders who, together with our shares of Common Stock, hold at
least 10% of the shares entitled to vote at the proposed Special Meeting.
Pursuant to the TBCA, the record date for determining the shareholders entitled
to call the Special Meeting is the date the first shareholder signs the notice
of the Special Meeting. As of the date hereof, Liberation Investments has not
submitted a notice of Special Meeting to the Company. In the event the Special
Meeting will be called, Liberation Investments intends to send to all
shareholders of record proxy materials relating to the Proposals to be voted
upon at the Special Meeting. The record date for determining shareholders
entitled to notice of, or to vote at, the Special Meeting will be the date on
which notice of the Special Meeting is mailed to the shareholders, unless the
Board sets a different record date in accordance with the TBCA.
PLEASE COMPLETE, SIGN AND RETURN THE ENCLOSED WHITE CARD AS PROMPTLY AS
POSSIBLE. Failure to sign and return the WHITE request card will have the same
effect as opposing the call of a Special Meeting.
THE PROPOSALS
-------------
If Liberation Investments is successful in soliciting sufficient requests,
Liberation Investments will have the right, but, as described in the next
sentence, not the obligation, to call and hold the Special Meeting. Liberation
Investments may decide not to call the Special Meeting even if Liberation
Investments is successful in soliciting sufficient requests to call the Special
Meeting if Liberation Investments determines that the Company has taken specific
actions which Liberation Investments concludes will lead to maximizing
shareholder value. In the event the Special Meeting will be called, Liberation
Investments intends to solicit proxies from all shareholders of record in
support of the Proposals by sending all record shareholders a notice of the
Special Meeting, a proxy statement and a proxy card for use therewith.
At the Special Meeting, the shareholders will be asked to vote on the
following Proposals:
o the removal without cause of up to three individuals (which may
include Robert D. Repass, Thomas W. Sarnoff and John M. Winkelman)
from the Board and any other person or persons (other than the
persons to be elected pursuant to the Proposals) elected or
appointed to the Board prior to the effective date of the Proposals
to fill any existing or newly created directorship or vacancy on the
Board;
o the amendment of the Bylaws to fix the number of directors
constituting the Board at five (or such other number as is necessary
to permit the Nominees (as defined below) to be elected to the Board
and to serve on the Board together with at least two current
directors of the Company);
o the amendment of the Bylaws to require the unanimous vote of all
directors in order for the Board to (i) amend the section of the
Bylaws which fixes the number, term and qualification of directors
constituting the Board or (ii) take any action referred to in such
section;
o the amendment of the Bylaws to provide that vacancies on the Board
resulting from shareholder action may be filled only by a vote of
the shareholders and to expressly provide that the Board may not
amend or repeal this Bylaw;
o the election of up to three individuals with significant capital
markets expertise who are sensitive to shareholder concerns (the
"Nominees") to the Board to fill the newly created vacancies on the
Board; and
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o the repeal of each provision of the Bylaws or amendments of the
Bylaws that are adopted after December 29, 2003 (the last date the
Company reported changes to the Bylaws) and before the effectiveness
of the Proposals and the seating of the Nominees on the Board.
Liberation Investments expects to request, in any future proxy materials
relating to the Special Meeting, authority to (i) initiate and vote for
proposals to recess or adjourn the Special Meeting for any reason and/or (ii)
oppose and vote against any proposal to recess or adjourn the Special Meeting.
Liberation Investments does not currently anticipate additional proposals
on any substantive matters. Nevertheless, Liberation Investments reserves the
right to either modify the Proposals or cause additional proposals to be
identified in the proxy materials for the Special Meeting. Liberation
Investments is not aware of any other proposals to be brought before the
Company's shareholders at the Special Meeting.
REQUEST PROCEDURES
------------------
Pursuant to this Solicitation Statement, Liberation Investments is
soliciting requests from certain holders of outstanding shares of Common Stock
to call the Special Meeting. By executing a request, a shareholder is
designating specified persons as the shareholder's agents (each, a "Designated
Agent"), and is authorizing the Designated Agents to call the Special Meeting,
set the place (if required), date and time of the Special Meeting, to give
notice of the Special Meeting and any adjournment thereof, and to exercise all
rights of the Requisite Holders incidental to calling and convening the Special
Meeting.
Pursuant to Section 2.25(A) of the TBCA, in the that event Liberation
Investments calls the Special Meeting, Liberation Investments will have the
power and obligation to deliver a notice to the shareholders stating the place,
date and time of the meeting. Section 2.24(A) of the TBCA provides that meetings
of shareholders may be held at such place as may be stated in or fixed in
accordance with the bylaws of a corporation and Section 2.01 of the Bylaws
states that all meetings of shareholders will be held at the principal office of
the Company, or any other place, as may be designated for that purpose from time
to time by the Board. Thus, even though the TBCA grants Liberation Investments
the power to state the place of the Special Meeting, the Bylaws would seem to
indicate that the only place where such meeting may be held (except as otherwise
designated by the Board) is the Company's principal office. However, Liberation
Investments does not control access to the Company's premises (although
Liberation Investments' view is that, based on the TBCA, the Bylaws and Texas
law, Liberation Investment would have the legal right to have the Special
Meeting held at the Company's principal office without interference by the
Company). Therefore, unless, prior to Liberation Investments calling the Special
Meeting, the Company confirms to Liberation Investments in writing that it will
grant Liberation Investments and the Company's shareholders reasonable access
rights to the Company's principal office for purposes of holding the Special
Meeting and that the Company will not in any manner hinder or interfere with
conducting the Special Meeting at such location, Liberation Investments intends
to set the place of the Special Meeting at a location in Austin, Texas.
If your shares are held in the name of a brokerage firm, bank nominee or
other institution, only it can sign a request with respect to your shares and
only upon receipt of your specific instructions. Accordingly, please contact the
person responsible for your account and give instructions for a WHITE request
card representing your shares to be signed. Liberation Investments urges you to
confirm in writing your instructions to the person responsible for your account
and to provide a copy of such instructions to Liberation Investments in care of
Innisfree M&A Incorporated at the address or fax number set forth in this
Solicitation Statement so that Liberation Investments will be aware of all
instructions given and can attempt to ensure that such instructions are
followed.
Prior to the taking of any action by the Designated Agents pursuant to the
request to call the Special Meeting, you may revoke your request to call the
Special Meeting by delivering a written revocation to Liberation Investments in
care of Innisfree M&A Incorporated at the address or fax number set forth in
this Solicitation Statement. Such a revocation must clearly state that your
request to call the Special Meeting is no longer effective.
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Prior to the taking of any action by the Designated Agents pursuant to the
request to call the Special Meeting, you may also revoke your request to call
the Special Meeting by delivering a written revocation to the Company at its
address set forth in this Solicitation Statement. Such a revocation must clearly
state that your request to call the Special Meeting is no longer effective. If
you decide to revoke your request to call the Special Meeting by delivering a
written revocation to the Company, Liberation Investments requests that you
provide the original or a photostatic copy of such written revocation to
Liberation Investments in care of Innisfree M&A Incorporated at the address or
fax number set forth in this Solicitation Statement so that we will be aware of
all revocations and can more accurately determine if and when sufficient
requests to call the Special Meeting have been received.
Liberation Investments' solicitation of requests to call the Special
Meeting pursuant to this Solicitation Statement is not limited in time under
Texas law. Thus, assuming that Liberation Investments is successful in
soliciting sufficient requests to call the Special Meeting, Liberation
Investments might call the Special Meeting a significant amount of time after
you have submitted your request to call the Special Meeting and at a time when
facts and circumstances might have changed as compared to when you submitted
your request to call the Special Meeting. Notwithstanding the foregoing, you may
revoke your request to call the Special Meeting as set forth in the prior two
paragraphs.
SOLICITATION OF REQUESTS; EXPENSES
----------------------------------
The entire expense of preparing this Solicitation Statement and any other
soliciting material and the soliciting of requests (including, without
limitation, costs, if any, related to advertising, printing, fees of attorneys,
financial advisors, solicitors, accountants, public relations, transportation
and litigation) will be borne by Liberation Investments. Requests may be
solicited by Liberation Investments, its officers, agents or representatives by
telephone, telegram, other electronic means, mail, or personal solicitation.
Banks, brokerage houses, and other custodians, nominees, and fiduciaries will be
requested to forward solicitation material to the beneficial owners of Common
Stock that such institutions hold, and Liberation Investments will reimburse
such institutions for their reasonable out-of-pocket expenses.
Liberation Investments has retained Innisfree M&A Incorporated to assist
in the solicitation of requests at a fee estimated not to exceed $25,000 and the
proxy solicitation, if any, in connection with the Special Meeting at a fee to
be agreed upon by Liberation Investments and Innisfree M&A Incorporated, and
will reimburse such firm for its reasonable out-of-pocket expenses. That firm
will utilize approximately 30 persons in its solicitation efforts.
Liberation Investments estimates that its total expenditures relating to
the solicitation of requests and the solicitation of proxies for approval of the
Proposals at the Special Meeting will be approximately $500,000 (including,
without limitation, costs, if any, related to advertising, printing, fees of
attorneys, financial advisors, solicitors, accountants, public relations,
transportation, and litigation). Total expenditures to date relating to these
solicitations have been approximately $100,000.
Liberation Investments intends to seek reimbursement from the Company for
Liberation Investments' actual expenses incurred in connection with this
solicitation and the solicitation of proxies approving the Proposals. Following
the Special Meeting, Liberation Investments will request that the Board approve
the reimbursement of such expenses. Liberation Investments does not expect to
submit such matter to a vote of the Company's shareholders but if the matter is
submitted to a vote of the Company's shareholders, Liberation Investments will
vote its shares in favor of such reimbursement and will accept the results of
such shareholder vote.
CERTAIN INFORMATION REGARDING THE PARTICIPANTS
----------------------------------------------
Each of LILP, LILtd, LIGLLC and Emanuel R. Pearlman may be deemed to be a
"participant" in the solicitation conducted with this Solicitation Statement.
Emanuel R. Pearlman, is the Chief Executive Officer and majority member of
LIGLLC, which in turn is a general partner of LILP and discretionary investment
adviser to LILtd. The principal occupation of Mr. Pearlman is to provide
discretionary investment management services through LIGLLC. The principal
business of LIGLLC is to serve as the general partner of LILP and discretionary
investment adviser to LILtd. The principal business of LILP is
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that of a private investment partnership engaging in the purchase and sale of
securities for investment for its own account. The principal business of LILtd
is that of a private offshore investment corporation engaging in the purchase
and sale of securities for investment for its own account. The principal
business address for Mr. Pearlman, LIGLLC and LILP is 330 Madison Avenue, 6th
Floor, New York, NY 10017. The principal business address for LILtd is P.O. Box
31106 SMB Corporate Centre, West Bay Road, Grand Cayman, Cayman Islands. As of
September 28, 2006, LILP and LILtd beneficially owned 1,543,418 and 767,909
shares of Common Stock, respectively. As the sole general partner of LILP and
the sole investment advisor to LILtd, LIGLLC may be deemed to beneficially own
the 2,311,327 shares of Common Stock beneficially owned in the aggregate by LILP
and LILtd. As the Chief Executive Officer and majority member of LIGLLC, Mr.
Pearlman may be deemed to beneficially own the 2,311,327 shares of Common Stock
beneficially deemed to be owned by LIGLLC.
Exhibit A lists certain information regarding ownership of Common Stock by
Liberation Investments and transactions in Common Stock made by Liberation
Investments during the last two years. Liberation Investments beneficially owns
2,311,327 shares of Common Stock, or approximately 8.4% of the outstanding
shares of Common Stock. Liberation Investments may, however, change or alter its
investment strategy at any time to increase or decrease its holdings in the
Company. The amount of funds expended by Liberation Investments to acquire the
2,311,327 shares of Common Stock it beneficially owns was $23,911,409.44. The
source of funds for this consideration was working capital of LILP and LILtd.
Except as set forth in this Solicitation Statement, Liberation Investments
is not now, nor has been within the past year, a party to any contract,
arrangement or understanding with any person with respect to any securities of
the Company (including, but not limited to, joint ventures, loan or option
arrangements, puts or calls, guarantees against loss or guarantees of profit,
division of losses or profits, or the giving or withholding of proxies).
There are no material proceedings to which LILP, LILtd, LIGLLC or Emanuel
R. Pearlman or any of their associates is a party adverse to the Company or any
of its subsidiaries or has a material interest adverse to the Company or any of
its subsidiaries. Except as described herein, none of LILP, LILtd, LIGLLC or
Emanuel R. Pearlman nor any of their associates has any interest in the matters
to be voted upon at the Special Meeting, other than an interest, if any, as a
shareholder of the Company.
Except as set forth in this Solicitation Statement, to the best knowledge
of Liberation Investments, none of LILP, LILtd, LIGLLC or Emanuel R. Pearlman
nor any of their associates (i) has engaged in or has a direct or indirect
interest in any transaction or series of transactions since the beginning of the
Company's last fiscal year, or in any currently proposed transaction, to which
the Company or any of its subsidiaries is a party where the amount involved was
in excess of $60,000 and in which such person had, or will have, a direct or
indirect material interest; (ii) has been indebted to the Company or any of its
subsidiaries; (iii) has borrowed any funds for the purpose of acquiring or
holding any securities of the Company, or is presently, or has been within the
past year, a party to any contract, arrangement or understanding with any person
with respect to either any securities of the Company, any future employment by
the Company or its affiliates, or any future transaction to which the Company or
any of its affiliates will or may be a party; (iv) has purchased or sold any
securities of the Company within the past two years; or (v) is the direct or
indirect beneficial or record owner of any securities of the Company or any
parent or subsidiary thereof.
Liberation Investments has previously advised the Company that it should
pursue strategies to maximize shareholder value, including (i) a transaction or
restructuring to monetize the Company's participation arrangements with Native
American tribes in the State of Oklahoma and use the proceeds to implement a
substantial stock repurchase or otherwise create a mechanism to deliver maximum
value to shareholders and (ii) recapitalizing the Company's balance sheet to
enable a significant stock repurchase. None of Liberation Investments nor any
associate thereof has or currently intends to have any interest in any such
transaction or any similar transaction, other than an interest, if any, as a
shareholder of the Company. In the event that the Special Meeting is called and
the Nominees are elected, Liberation Investments would expect that the Nominees
would pursue strategies to maximize shareholder value, which might include the
above specified strategies, consistent with their fiduciary duties to the
Company and its shareholders. Except as described above with respect to the
potential reimbursement of our actual expenses incurred in connection with this
solicitation and the solicitation of proxies approving the Proposals (see the
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section "SOLICITATION OF REQUESTS; EXPENSES" on page 4), Liberation Investments
does not expect to receive any fees or other compensation as a result of this
solicitation and the solicitation of proxies approving the Proposals.
OTHER MATTERS
-------------
The principal executive offices of the Company are located at 206 Wild
Basin Road, Building B, Fourth Floor, Austin, Texas 78746. Except as otherwise
noted herein, the information concerning the Company has been taken from or is
based upon documents and records on file with the SEC and other publicly
available information. Although Liberation Investments does not have any
knowledge that would indicate that any statement contained herein based upon
such documents and records is untrue, it does not take any responsibility for
the accuracy or completeness of the information contained in such documents and
records, or for any failure by the Company to disclose events that may affect
the significance or accuracy of such information.
Exhibit B sets forth information regarding the security ownership of
certain beneficial owners, directors and executive officers of the Company.
SHAREHOLDER PROPOSALS FOR 2007 ANNUAL MEETING
---------------------------------------------
The Company's proxy statement dated March 2, 2006, relating to its 2006
annual meeting, indicates that proposals of shareholders intended to be
presented at its 2007 annual meeting of shareholders must be received by the
Company no later than November 2, 2006 to be considered for inclusion in the
proxy statement and form of proxy relating to that meeting. The Company's proxy
statement also indicates that shareholder proposals not submitted for inclusion
in the proxy statement and form of proxy for the Company's 2007 annual meeting
of shareholders, but instead sought to be presented directly at such meeting,
may be brought before the annual meeting so long as the Company receives notice
of the proposal, no later than January 21, 2007.
YOUR SUPPORT IS IMPORTANT
-------------------------
WE ARE SEEKING YOUR SUPPORT TO CALL THE SPECIAL MEETING. PLEASE SIGN,
DATE, AND MAIL IN THE ENCLOSED POSTAGE-PAID ENVELOPE THE ENCLOSED WHITE REQUEST
CARD AS PROMPTLY AS POSSIBLE.
IF YOUR SHARES OF COMMON STOCK ARE HELD IN THE NAME OF A BROKERAGE FIRM,
BANK, BANK NOMINEE OR OTHER INSTITUTION, ONLY IT CAN SIGN A REQUEST WITH RESPECT
TO YOUR COMMON STOCK. ACCORDINGLY, PLEASE CONTACT THE PERSON RESPONSIBLE FOR
YOUR ACCOUNT AND GIVE INSTRUCTIONS FOR A REQUEST TO BE SIGNED REPRESENTING YOUR
SHARES OF COMMON STOCK.
WHO TO CALL IF YOU HAVE QUESTIONS
---------------------------------
If you have any questions or require any assistance, please contact
Innisfree M&A Incorporated at the following address and toll free telephone
number:
Innisfree M&A Incorporated
501 Madison Avenue, 20th Floor
New York, NY 10022
Stockholders call toll free: 1-877-825-8631
Banks and Brokers call collect: 1-212-750-5833
LIBERATION INVESTMENTS
[_], 2006
7
EXHIBIT A
---------
Holdings of Common Stock by Liberation Investments as of September 28,
2006:
Shares Participant
Beneficially Holds or
May Be Deemed to Hold Percent of
Participant and Address Beneficially Class(1)
--------------------------------------------------------- --------------------- ----------
Liberation Investments, L.P. 1,543,418 5.6%
330 Madison Avenue, 6th Floor, New York, NY 10017
Liberation Investments, Ltd. 767,909 2.8%
P.O. Box 31106 SMB Corporate Centre, West Bay Road, Grand
Cayman, Cayman Islands
Liberation Investment Group, LLC 2,311,327(2) 8.4%
330 Madison Avenue, 6th Floor, New York, NY 10017
Emanuel R. Pearlman 2,311,327(3) 8.4%
330 Madison Avenue, 6th Floor, New York, NY 10017
Transactions in securities of the Company by Liberation Investments during
the past two years:
Price Per
Quantity of Shares Share
Date of Purchase / (Sale) Class of Security Purchased / (Sold) ($)(4)
------------------------- ----------------- ------------------ ---------
Liberation Investments, L.P.
February 1, 2005 Common Stock 65,000 8.7931
February 2, 2005 Common Stock 71,500 8.9431
February 3, 2005 Common Stock 26,000 8.9537
February 3, 2005 Common Stock 9,750 8.6464
February 4, 2005 Common Stock 3,250 8.6342
April 25, 2005 Common Stock 65,000 6.9238
April 26, 2005 Common Stock 65,000 6.8709
April 27, 2005 Common Stock 130,000 6.7800
April 27, 2005 Common Stock 32,500 6.8477
June 8, 2005 Common Stock 6,500 10.9500
June 8, 2005 Common Stock 3,250 10.9474
June 15, 2005 Common Stock 3,250 10.9587
(June 16, 2005) Common Stock (26,000) 11.6850
(June 17, 2005) Common Stock (32,565) 12.1000
(July 11, 2005) Common Stock (65,000) 12.0022
(July 22, 2005) Common Stock (39,260) 12.1932
(July 27, 2005) Common Stock (20,475) 12.8016
August 9, 2005 Common Stock 16,250 9.3900
August 9, 2005 Common Stock 6,500 9.3474
August 22, 2005 Common Stock 6,500 9.6629
August 22, 2005 Common Stock 9,750 9.6339
September 12, 2005 Common Stock 21,450 10.0487
September 13, 2005 Common Stock 53,300 10.2922
September 13, 2005 Common Stock 84,500 10.2469
September 14, 2005 Common Stock 32,500 10.0295
September 14, 2005 Common Stock 16,257 9.8203
--------------------
(1) Based on the number of shares of Common Stock outstanding as reported in
the 10-Q.
(2) Indirect beneficial ownership as a result of LILP and LILtd's beneficial
ownership.
(3) Indirect beneficial ownership as a result of LILP and LILtd's beneficial
ownership.
(4) Excluding commissions.
8
Price Per
Quantity of Shares Share
Date of Purchase / (Sale) Class of Security Purchased / (Sold) ($)(4)
------------------------- ----------------- ------------------ ---------
September 30, 2005 Common Stock 721 9.7000
October 19, 2005 Common Stock 4,420 8.9644
October 21, 2005 Common Stock 28,080 8.9875
(November 23, 2005) Common Stock (5,005) 10.8000
December 27, 2005 Common Stock 1,384 8.9295
December 28, 2005 Common Stock 26,520 8.9915
December 29, 2005 Common Stock 9,750 9.2332
December 30, 2005 Common Stock 16,250 9.2115
February 7, 2006 Common Stock 105,000 9.0141
February 13, 2006 Common Stock 81,400 9.1838
February 14, 2006 Common Stock 38,000 9.1766
March 14, 2006 Common Stock 17,250 10.7000
March 14, 2006 Common Stock 17,250 10.6635
(March 21, 2006) Common Stock (138,000) 13.9705
May 18, 2006 Common Stock 84,000 11.9336
May 18, 2006 Common Stock 42,000 12.0000
May 18, 2006 Common Stock 84,000 12.4273
May 19, 2006 Common Stock 252,000 12.4885
May 24, 2006 Common Stock 85,000 11.9621
May 30, 2006 Common Stock 19,191 11.5430
May 31, 2006 Common Stock 55,250 11.3198
May 31, 2006 Common Stock 29,750 11.3570
May 31, 2006 Common Stock 43,010 11.1454
June 1, 2006 Common Stock 41,990 11.4305
June 16, 2006 Common Stock 34,000 9.6000
June 27, 2006 Common Stock 25,500 9.6149
Liberation Investments, Ltd.
February 1, 2005 Common Stock 35,000 8.7931
February 2, 2005 Common Stock 38,500 8.9431
February 3, 2005 Common Stock 14,000 8.9537
February 3, 2005 Common Stock 5,250 8.6464
February 4, 2005 Common Stock 1,750 8.6342
April 25, 2005 Common Stock 35,000 6.9238
April 26, 2005 Common Stock 35,000 6.8709
April 27, 2005 Common Stock 70,000 6.7800
April 27, 2005 Common Stock 17,500 6.8477
June 8, 2005 Common Stock 3,500 10.9500
June 8, 2005 Common Stock 1,750 10.9474
June 15, 2005 Common Stock 1,750 10.9587
(June 16, 2005) Common Stock (14,000) 11.6850
(June 17, 2005) Common Stock (17,535) 12.1000
(July 11, 2005) Common Stock (35,000) 12.0022
(July 22, 2005) Common Stock (21,140) 12.1932
(July 27, 2005) Common Stock (11,025) 12.8016
August 9, 2005 Common Stock 8,750 9.3900
August 9, 2005 Common Stock 3,500 9.3474
August 22, 2005 Common Stock 3,500 9.6629
August 22, 2005 Common Stock 5,250 9.6339
September 12, 2005 Common Stock 11,550 10.0487
September 13, 2005 Common Stock 28,700 10.2922
September 13, 2005 Common Stock 45,500 10.2469
September 14, 2005 Common Stock 17,500 10.0295
September 14, 2005 Common Stock 8,753 9.8203
September 30, 2005 Common Stock 389 9.7000
October 19, 2005 Common Stock 2,380 8.9644
October 21, 2005 Common Stock 15,120 8.9875
(November 23, 2005) Common Stock (2,695) 10.8000
December 27, 2005 Common Stock 745 8.9295
9
Price Per
Quantity of Shares Share
Date of Purchase / (Sale) Class of Security Purchased / (Sold) ($)(4)
------------------------- ----------------- ------------------ ---------
December 28, 2005 Common Stock 14,280 8.9915
December 29, 2005 Common Stock 5,250 9.2332
December 30, 2005 Common Stock 8,750 9.2115
February 7, 2006 Common Stock 45,000 9.0141
March 14, 2006 Common Stock 7,750 10.7000
March 14, 2006 Common Stock 7,750 10.6635
(March 21, 2006) Common Stock (62,000) 13.9705
May 18, 2006 Common Stock 16,000 11.9336
May 18, 2006 Common Stock 8,000 12.0000
May 18, 2006 Common Stock 16,000 12.4273
May 19, 2006 Common Stock 48,000 12.4885
May 24, 2006 Common Stock 15,000 11.9621
May 30, 2006 Common Stock 3,387 11.5430
May 31, 2006 Common Stock 9,750 11.3198
May 31, 2006 Common Stock 5,250 11.3570
May 31, 2006 Common Stock 7,590 11.1454
June 1, 2006 Common Stock 7,410 11.4305
June 16, 2006 Common Stock 6,000 9.6000
June 27, 2006 Common Stock 4,500 9.6149
July 14, 2006 Common Stock 100,000 9.9975
July 17, 2006 Common Stock 50,000 9.9938
July 18, 2006 Common Stock 50,000 9.9326
July 25, 2006 Common Stock 60,000 9.8768
August 2, 2006 Common Stock 25,000 9.1315
10
EXHIBIT B
---------
Except to the extent superceded by information contained in subsequent
Schedule 13D and 13G filings made with the SEC and the updated number of
outstanding shares of Common Stock specified in the 10-Q, the following table
sets forth the beneficial ownership of Common Stock as of February 9, 2006, as
presented in the Company's definitive proxy statement filed with the SEC on
March 2, 2006, by (i) each director of the Company, (ii) each executive officer
of the Company, (iii) all directors and executive officers as a group and (iv)
each person known to the Company to be the beneficial owner of more than 5% of
the outstanding shares of Common Stock. While Liberation Investments does not
have any knowledge that would indicate that any statement contained in this
Exhibit B is untrue, except for the information with respect to Liberation
Investments, Liberation Investments takes no responsibility for the accuracy or
completeness of such information, or for any failure by the Company to disclose
events that may affect the significance or accuracy of such information.
Number of Shares
Beneficial Owner(5) Beneficially Owned Percent of Class(6)
------------------------------------ ------------------ -------------------
Royce & Associates, LLC 2,933,438(7) 10.7%
Barclays Global Investors, N.A. 2,856,392(8) 10.4%
FMR Corp. 2,802,464(9) 10.2%
Prentice Capital Management, LP 2,661,733(10) 9.7%
Private Capital Management, L.P. 2,452,433(11) 8.9%
Liberation Investments 2,311,327(12) 8.4%
--------------------
(5) Unless otherwise noted, the address for all officers and directors of the
Company is the address of the Company's principal executive offices at 206
Wild Basin, Building B, Fourth Floor, Austin, Texas 78746.
(6) Percentages of ownership are based on 27,482,486 shares of Common Stock
outstanding as of August 4, 2006 per the 10-Q. Shares of Common Stock
subject to stock options which were exercisable as of February 9, 2006 or
were to become exercisable within 60 days after February 9, 2006, are
deemed outstanding for computing the percentage for the person or group
holding such options, but are not deemed outstanding for computing the
percentage for any other person or group.
(7) Pursuant to a Schedule 13G/A dated January 30, 2006, filed with the SEC,
Royce & Associates, LLC reported that as of December 31, 2005 it had sole
voting power over 2,933,438 shares and sole dispositive power over
2,933,438 shares and that its address is 1414 Avenue of the Americas, New
York, New York 10019.
(8) Pursuant to a Schedule 13G dated February 10, 2006, filed with the SEC,
Barclays Global Investors, N.A. reported that as of January 31, 2006 it
and certain related entities had sole voting power over 2,695,027 shares
and sole dispositive power over 2,856,392 shares and that its address was
45 Fremont Street, San Francisco, California 94105.
(9) Pursuant to a Schedule 13G dated June 10, 2005, filed with the SEC, FMR
Corp. reported that as of May 31, 2005 it and certain related entities had
sole voting power over 26,100 shares and sole dispositive power over
2,802,464 shares and that its address is 82 Devonshire Street, Boston,
Massachusetts 02109.
(10) Pursuant to a Schedule 13G/A dated February 14, 2006, filed with the SEC,
Prentice Capital Management, LP reported that as of December 31, 2005 it
and certain related persons had shared voting power over 2,661,733 shares
and shared dispositive power over 2,661,733 shares and that its address is
623 Fifth Avenue, 32nd Floor, New York, New York 10022.
(11) Pursuant to a Schedule 13G dated February 14, 2006, filed with the SEC,
Private Capital Management, L.P. reported that as of February 14, 2006 it
and certain related entities had shared voting power over 2,452,433 shares
and shared dispositive power over 2,452,433 shares and that its address
was 8889 Pelican Bay Blvd., Naples, Florida 34108. According to a Form 13F
filed with the SEC on August 14, 2006, Private Capital Management, L.P. no
longer owns shares of Common Stock.
(12) Pursuant to a Schedule 13D/A dated August 7, 2006, filed with the SEC,
Liberation Investments reported that as of August 7, 2006 it had shared
voting power over 2,311,327 shares and shared dispositive power over
2,311,327 shares and that its address is as set forth in the Solicitation
Statement.
11
Number of Shares
Beneficial Owner(5) Beneficially Owned Percent of Class(6)
------------------------------------ ------------------ -------------------
Sowood Capital Management LP 1,464,900(13) 5.3%
Clifton E. Lind 2,051,686(14) 7.2%
Brendan M. O'Connor 403,000(15) 1.4%
Gary L. Loebig 393,662(16) 1.4%
Craig S. Nouis 286,250(17) 1.0%
Dirk D. Heinen 250,000(18) *(19)
John M. Winkelman 220,000(20) *
Robert D. Repass 172,500(21) *
Thomas W. Sarnoff 150,000(22) *
Michael J. Maples, Sr. 47,500(23) *
All executive officers and directors 4,265,972(24) 13.9%
as a group (13 persons)
-------------------
(13) Pursuant to a Schedule 13G dated May 30, 2006, filed with the SEC, Sowood
Capital Management LP reported that it and certain related persons had
sole voting power over 1,464,900 shares and sole dispositive power over
1,464,900 shares and that its address is 500 Boylson Street, 17th Floor,
Boston, Massachusetts 02116.
(14) Consists of (i) 994,852 shares owned by Mr. Lind, (ii) options to purchase
977,334 shares that were exercisable within 60 days after February 9,
2006, (iii) 27,000 shares held in various retirement accounts, and (iv)
52,500 shares held by the Lind Family Partnership. According to a Form 4
filed with the SEC on August 21, 2006, Mr. Lind increased his direct
beneficial ownership of shares of Common Stock by 1,000 to 995,852 shares
of Common Stock.
(15) Consists of options to purchase 403,000 shares that were exercisable
within 60 days after February 9, 2006.
(16) Includes options to purchase 392,662 shares that were exercisable within
60 days after February 9, 2006.
(17) Consists of options to purchase 286,250 shares that were exercisable
within 60 days after February 9, 2006.
(18) Includes options to purchase 247,500 shares that were exercisable within
60 days after February 9, 2006. Mr. Heinen ceased serving as an executive
officer of the Company upon his transition in November 2005 from Senior
Vice President of Operations to Development Executive.
(19) Represents beneficial ownership of less than one percent.
(20) Consists of options to purchase 220,000 shares that were exercisable
within 60 days after February 9, 2006.
(21) Consists of options to purchase 172,500 shares that were exercisable
within 60 days after February 9, 2006.
(22) Consists of options to purchase 150,000 shares that were exercisable
within 60 days after February 9, 2006.
(23) Consists of options to purchase 47,500 shares that were exercisable within
60 days after February 9, 2006. According to a Form 4 filed with the SEC
on August 30, 2006, Mr. Maples acquired 10,000 shares of Common Stock on
August 18, 2006.
(24) Includes options to purchase 3,183,920 shares that were exercisable within
60 days after February 9, 2006. The reported number of shares does not
include shares held by Mr. Heinen, who was a "named executive officer" for
the purposes of the Company's March 2, 2006 definitive proxy statement but
who ceased serving as an executive officer in November 2005.
12
REQUEST OF SHAREHOLDERS OF MULTIMEDIA GAMES, INC., A TEXAS CORPORATION
(THE "COMPANY")
SOLICITED BY LIBERATION INVESTMENTS, L.P. ("LILP"), LIBERATION INVESTMENTS, LTD.
("LILTD"), LIBERATION INVESTMENT GROUP, LLC ("LIGLLC") AND EMANUEL R. PEARLMAN
(COLLECTIVELY, "LIBERATION INVESTMENTS")
TO CALL A SPECIAL MEETING OF THE SHAREHOLDERS OF THE COMPANY PURSUANT TO SECTION
2.24(C) OF THE TEXAS BUSINESS CORPORATION ACT AND SECTION 2.03 OF THE COMPANY'S
AMENDED AND RESTATED BYLAWS
The undersigned hereby constitutes and appoints Emanuel R. Pearlman and
Gregg E. Frankel, and each of them, with full power of substitution, the proxies
and agents of the undersigned (said proxies and agents, together with each
substitute appointed by any of them, if any, collectively, the "Designated
Agents") in respect of all common stock, par value $0.01 per share ("Common
Stock"), of the Company owned by the undersigned to do any or all of the
following, to which the undersigned hereby consents, to:
(1) take all action necessary to call (BUT NOT TO VOTE AT) a special
meeting the Company's shareholders (the "Special Meeting"), for the purposes of
considering and voting upon the following proposals (the "Proposals"):
o the removal without cause of up to three individuals (which
may include Robert D. Repass, Thomas W. Sarnoff and John M.
Winkelman) from the board of directors of the Company (the
"Board") and any other person or persons (other than the
persons to be elected pursuant to the Proposals) elected or
appointed to the Board prior to the effective date of the
Proposals to fill any existing or newly created directorship
or vacancy on the Board;
o the amendment of the Company's Amended and Restated Bylaws
(the "Bylaws") to fix the number of directors constituting the
Board at five (or such other number as is necessary to permit
the Nominees (as defined below) to be elected to the Board and
to serve on the Board together with at least two current
directors of the Company);
o the amendment of the Bylaws to require the unanimous vote of
all directors in order for the Board to (i) amend the section
of the Bylaws which fixes the number, term and qualification
of directors constituting the Board or (ii) take any action
referred to in such section;
o the amendment of the Bylaws to provide that vacancies on the
Board resulting from shareholder action may be filled only by
a vote of the shareholders and to expressly provide that the
Board may not amend or repeal this Bylaw;
o the election of up to three individuals with significant
capital markets expertise who are sensitive to shareholder
concerns (the "Nominees") to the Board to fill the newly
created vacancies on the Board; and
o the repeal of each provision of the Bylaws or amendments of
the Bylaws that are adopted after December 29, 2003 (the last
date the Company reported changes to the Bylaws) and before
the effectiveness of the Proposals and the seating of the
Nominees on the Board.
(2) set the place (if required), date and time of the Special Meeting or
any adjournment thereof, and to give notice of the Special Meeting or any
adjournment thereof and the purposes for which the Special Meeting or any
adjournment thereof has been called; and
(3) exercise all rights of the undersigned incidental to calling and
convening the Special Meeting.
Liberation Investments does not currently anticipate additional proposals
on any substantive matters. Nevertheless, Liberation Investments reserves the
right to either modify the Proposals or cause additional
13
proposals to be identified in the proxy materials for the Special Meeting.
Liberation Investments is not aware of any other proposals to be brought before
the Company's shareholders at the Special Meeting.
Even if Liberation Investments is successful in soliciting sufficient
requests to call the Special Meeting, Liberation Investments may decide not to
call the Special Meeting if Liberation Investments determines that the Company
has taken specific actions which Liberation Investments concludes will lead to
maximizing shareholder value.
NOTHING CONTAINED IN THIS INSTRUMENT SHALL BE CONSTRUED TO GRANT THE
DESIGNATED AGENTS THE RIGHT, POWER OR AUTHORITY TO VOTE ANY SHARES OWNED BY THE
UNDERSIGNED AT THE SPECIAL MEETING.
The undersigned hereby authorizes Liberation Investments and its agents to
collect and, if necessary, deliver this request to the Company, and to deliver
any other information required in connection therewith.
This request supercedes, and the undersigned hereby revokes, any earlier
dated revocation which the undersigned may have submitted to Liberation
Investments, the Company or any designees of either.
Print Name:_____________________________________________________________________
Signature:______________________________________________________________________
Signature (if held jointly):____________________________________________________
Title (only if shares are held by an entity):___________________________________
Number of shares beneficially owned
(and as to which you have the right to vote):___________________________________
Dated:__________________________________________________________________________
Please sign exactly as your shares are registered. When shares are held by
joint tenants, both should sign. When signing as an attorney, executor,
administrator, trustee, or guardian, please give full title as such. If a
corporation, please sign in full corporation name by the President or other duly
authorized officer. If a partnership, please sign in partnership name by
authorized person. This request will represent all shares held in all
capacities.
PLEASE COMPLETE, SIGN, DATE, AND MAIL IN THE ENCLOSED ENVELOPE AS PROMPTLY
AS POSSIBLE.
14