EXHIBIT 10.1
REGULATION S SECURITIES SUBSCRIPTION AGREEMENT
THESE SECURITIES HAVE NOT BEEN REGISTERED WITH THE UNITED STATES
SECURITIES AND EXCHANGE COMMISSION UNDER THE U.S. SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"), OR THE SECURITIES COMMISSION OF ANY STATE UNDER ANY STATE
SECURITIES LAW. THEY ARE BEING OFFERED PURSUANT TO AN EXEMPTION FROM
REGISTRATION UNDER REGULATION S ("REGULATION S") PROMULGATED UNDER THE ACT. THE
SECURITIES MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE UNITED
STATES OR TO A U.S. PERSON (AS SUCH TERM IS DEFINED IN REGULATION S) UNLESS THE
SECURITIES ARE REGISTERED UNDER THE ACT AND APPLICABLE STATE SECURITIES LAWS, OR
SUCH OFFERS, SALES AND TRANSFERS ARE MADE PURSUANT TO AVAILABLE EXEMPTIONS FROM
THE REGISTRATION REQUIREMENTS OF THOSE LAWS.
THIS SUBSCRIPTION AGREEMENT DOES NOT CONSTITUTE AN OFFER TO SELL, OR A
SOLICITATION OF AN OFFER TO BUY, ANY OF THE SECURITIES OFFERED HEREBY BY OR TO
ANY PERSON IN ANY JURISDICTION IN WHICH SUCH OFFER OF SOLICITATION WOULD BE
UNLAWFUL. INVESTMENT IN THESE SECURITIES INVOLVES A HIGH DEGREE OF RISK. IN
MAKING AN INVESTMENT DECISION, INVESTORS MUST RELY ON THEIR OWN EXAMINATION OF
THE COMPANY AND THE TERMS OF THE OFFERING, INCLUDING THE MERITS AND THE RISKS
INVOLVED. THESE SECURITIES HAVE NOT BEEN RECOMMENDED BY ANY FEDERAL OR STATE
SECURITIES COMMISSION OR REGULATORY AUTHORITY. FURTHERMORE, THE FOREGOING
AUTHORITIES HAVE NOT CONFIRMED OR DETERMINED THE ACCURACY OR ADEQUACY OF THIS
DOCUMENT. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
This Regulation S Securities Subscription Agreement (the "Agreement" or
the "Subscription Agreement") is executed by the undersigned (the "Subscriber")
in connection with the offer and subscription by the Subscriber for 1428 shares
of Series A Preferred Stock (the "Preferred Stock") of SPINTEK GAMING
TECHNOLOGIES, INC., a California corporation (the "Company"). The Company is
offering, in the aggregate, 1428 shares (U.S.) of Series A Preferred Stock (the
"Preferred Stock") at an aggregate purchase price of the Preferred Stock at
$1,000,000.00 (U.S.). The purchase price represents a 30% discount from the face
amount ($1,428,000.00) of the Preferred Stock issued (1428 shares at $1,000.00
face value each per share. The terms of the Preferred Stock, including the terms
on which the Preferred Stock may be converted into shares of the Company's
common stock, $.002 par value per share ("Shares"), are set forth in the
Certificate of Designation attached hereto as Exhibit A. The solicitation of
this Subscription and, if accepted by the Company, the offer and sale of the
Preferred Stock, are being made in reliance upon the provisions of Regulation S
("Regulation S") promulgated under the United States Securities Act of 1933, as
amended (the "Act"). The Preferred Stock and the Shares issuable upon conversion
thereof are sometimes referred to herein as the "Securities." The Subscriber
wishes to subscribe for the amount of Preferred Stock set forth in Section 15 in
accordance with the terms and conditions of this Agreement. It is agreed as
follows:
1. Offer to Subscribe; Purchase Price
The Subscriber hereby offers to purchase and subscribe for 1428 shares
of Preferred Stock at $1,000.00 per share, for an aggregate purchase price of
$1,000,000.00. The Closing shall be deemed to occur when this Agreement has been
executed by both the Subscriber and the Company (the "Closing") and payment
shall have been made by the Subscriber, by wire transfer, as directed in writing
by the Company on the day so directed, to an escrow agent, against the Company's
delivery of certificates representing the Preferred Stock subscribed for under
the terms of this Agreement. If the Closing does not occur, the funds of the
Subscriber shall be returned from escrow. The payment shall be made by
delivering same day funds in United States Dollars as designated above.
2. Representations; Access to Information; Independent Information;
Independent Investigation
The Subscriber represents and warrants to and covenants with the
Company, on its own behalf and on behalf of each person or entity for which the
Subscriber is acting as a fiduciary, as follows:
2.1 Offshore Transaction. The Subscriber represents and warrants to the
Company that (i) neither the Subscriber nor any of the investors on whose behalf
the Subscriber may purchase and hold Preferred Stock or Shares (the "Investors")
is a "U.S. person" as that term is defined in Rule 902(o) of Regulation S (a
copy of which definition is attached as Exhibit B); and neither the Subscriber
nor any Investor is an entity organized or incorporated under the laws of any
foreign jurisdiction by any "U.S person" principally for the purpose of
investing in securities not registered under the Act, unless the Subscriber is
or was organized or incorporated by "U.S. persons" who are accredited investors
(as defined in Rule 501(a) under the Act) and who are not natural persons,
estates or trusts ("Institutional Investors"), and all owners of interests in
such entity who are "U.S. persons" are Institutional Investors, and not natural
persons, estates or trusts;(ii) the shares of Preferred Stock were not offered
to the Subscriber or to any Investor in the United States and at the time of
execution of this Subscription Agreement and of any offer to the Subscriber or
to the Investors to purchase the Preferred Stock hereunder, the Subscriber and
each such Investor was physically outside the United States; (iii) the
Subscriber is purchasing the Securities for its own account and not on behalf of
or for the benefit of any U.S. person and the sale and resale of the Securities
have not been prearranged with any buyer in the United States; (iv) the
Subscriber and to the best knowledge of the Subscriber each distributor, if any,
participating in the offering of the Securities, has agreed and the Subscriber
hereby agrees that all offers and sales of the Securities prior to the
expiration of a period commencing on the Closing of all shares of Preferred
Stock offered and ending forty (40) days thereafter (the "Restricted Period")
shall not be made to U.S. persons or for the account or benefit of U.S. persons
and shall otherwise be made in compliance with the provisions of Regulation S.
Subscriber has not been engaged or acted as or on behalf of a distributor or
dealer (and is not an affiliate of a distributor or dealer) with respect to this
transaction.
2.2 Independent Investigation. The Subscriber, in offering to subscribe
for the Securities hereunder, has relied upon an independent investigation made
by it for itself and on behalf of the Investors, the Subscriber representing and
warranting that it has full power and authority to act on behalf of the
Investors, and has, prior to the date hereof, been given access to and the
opportunity to examine all books and records of the Company, and all material
contracts and documents of the Company. The Subscriber will keep confidential
all non-public information regarding the Company that the Subscriber receives
from the Company. In making its investment decision to purchase the Preferred
Stock, the Subscriber and each Investor are not relying on any oral or written
representations or assurances from the Company or any other person or any
representation of the Company or any other person other than as set forth in
this Agreement, public filings of the Company or in a document executed by a
duly authorized representative of the Company making reference to this
Agreement. The Subscriber and each Investor have such experience in business and
financial matters that they are capable of evaluating the risk of their
investment and determining the suitability of their investment. The Subscriber
and each Investor are sophisticated investors, as defined in Rule 506(b)(2)(ii)
of Regulation D, and accredited investors as defined in Rule 501 of Regulation
D, a copy of which definition is attached hereto as Exhibit C.
2.3 Economic Risk. The Subscriber and each Investor understands and
acknowledges that an investment in the Preferred Stock involves a high degree of
risk, including a possible total loss of investment. The Subscriber and each
Investor represents that the Subscriber and each Investor is able to bear the
economic risk of an investment in the Preferred Stock. In making this statement
the Subscriber hereby represents and warrants that the Subscriber and each
Investor has adequate means of providing for the Subscriber's and each
Investor's current needs and contingencies; the Subscriber and each Investor is
able to afford to hold the Preferred Stock for an indefinite period and the
Subscriber further represents that the Subscriber and each Investor have such
knowledge and experience in financial and business matters that the Subscriber
and each Investor are capable of evaluating the merits and risks of the
investment in the Preferred Stock to be received by the Subscriber and each
Investor. Further, the Subscriber represents that the Subscriber and each
Investor are able to bear the economic risks of an investment in the Preferred
Stock; the Subscriber and the Investor have no present need for liquidity in
such Preferred Stock; the Subscriber and each Investor can afford a complete
loss of such investment in the Preferred Stock; and the Subscriber and each
Investor are willing to accept such investment risks.
2.4 No Government Recommendation or Approval. The Subscriber and each
Investor understand that no United States federal or state agency or similar
agency of any other country has passed upon or made any recommendation or
endorsement of the Company, this transaction or the subscription of the
Securities.
2.5 No Directed Selling Efforts in Regard to this Transaction. The
Subscriber has not, and to the best of the Subscriber's knowledge, neither the
Company nor any distributor, if any, participating in the offering of the
Securities nor any person acting for the Company or any such distributor has
conducted any "directed selling efforts" as that term is defined in Rule 902 of
Regulation S. Such activity includes, without limitation, the mailing of printed
material to investors residing in the United States, the holding of promotional
seminars in the United States, the placement of advertisements with radio or
television stations broadcasting in the United States or in publications with a
general circulation in the United States, which discuss the offering of the
Securities.
2.6 Reliance on Representation. This Agreement is made by the Company with
the Subscriber in reliance upon such Subscriber's representations and covenants
made in this Section 2, which by his execution of this Agreement the Subscriber
hereby confirms. If the Subscriber includes or consists of more than one person
or entity, the obligations of the Subscriber shall be joint and several and the
representations and warranties herein contained shall be deemed to be made by
and be binding upon each such person or entity and their respective heirs,
executors, administrators, successors and assigns.
2.7 No Registration. Subscriber understands that the Preferred Stock and
the Common Stock issuable upon conversion of the Preferred Stock have not been
registered under the Act and are being offered and sold pursuant to an exemption
from registration contained in the Act based in part upon the representations of
Subscriber contained herein. The Common Stock does, however, carry certain
registration rights as set forth in the Registration Rights Agreement executed
by the parties hereto (the "Registration Rights Agreement").
2.8 No Public Solicitation. Subscriber knows of no public solicitation or
advertisement of an offer in connection with the proposed issuance and sale of
the Preferred Stock.
2.9 Investment Intent. Subscriber and each Investor are acquiring the
Preferred Stock to be issued and sold hereunder (and the Shares issuable upon
conversion of the Preferred Stock) for the Subscriber and each Investor's own
account (or for
beneficiaries' accounts over which the Subscriber has investment discretion but
no discretionary voting or dispositive authority). Subscriber and each other
party acquiring Preferred Stock and the Shares issuable upon conversion of the
Preferred Stock pursuant to this Agreement are acquiring such securities for
investment and not with a view to the distribution thereof. Subscriber
understands that Subscriber and each Investor must bear the economic risk of
this investment indefinitely unless the sale of such Preferred Stock or such
Shares is registered pursuant to the Act, or an exemption from such registration
is available, and that except as set forth in the Registration Rights Agreement,
the Company has no present intention of registering any such sale of the
Preferred Stock or such Shares. Subscriber for itself and on behalf of each
Investor represents and warrants to the Company that it has no present plan or
intention of selling the Preferred Stock or the Shares in the United States, has
made no predetermined arrangements to sell the Preferred Stock or the Shares
other than as provided in the Registration Rights Agreement and that the
offering by the Company of its securities to the Subscriber, as contemplated in
this Subscription Agreement (the "Offering"), together with any subsequent
resale of the Preferred Stock or the Shares, is not part of a plan or scheme to
evade the registration provisions of the Act. Subscriber currently has no short
position in the Shares, including any short call position or any long put
position or any contract or arrangement that has the effect of eliminating or
substantially diminishing the risk of ownership of the Preferred Stock or the
Shares, nor has engaged in any hedging transaction with respect to the Preferred
Stock or the Shares. Subscriber covenants that neither Subscriber, any Investor,
nor any of their respective affiliates nor any person acting on its or their
behalf has the intention of entering, or will enter during the Restricted
Period, into any put option, short position or any hedging transaction or other
similar instrument or position with respect to the Shares or securities of the
same class as the Shares and neither Subscriber, any Investor nor any of their
respective affiliates nor any person acting on its or their behalf will use at
any time Shares acquired pursuant to this Agreement to settle any put option,
short position or other similar instrument or position that may have been
entered into prior to the execution of this Agreement.
2.10 No Sale in Violation of the Act. Subscriber further covenants neither
Subscriber nor any Investor will make any sale, transfer or other disposition of
the Preferred Stock or the Shares in violation of the Act (including Regulation
S), the Securities Exchange Act of 1934, as amended (the "Exchange Act") or the
rules and regulations of the Securities and Exchange Commission (the
"Commission") promulgated thereunder.
2.11 Incorporation and Authority. Subscriber has the full power and
authority to execute, deliver and perform this Agreement and to perform its
obligations hereunder for itself and on behalf of the Investors. This Agreement
has been duly approved by all necessary action of Subscriber, including any
necessary shareholder approval, has been executed by persons duly authorized by
Subscriber, and constitutes a valid and legally binding obligation of
Subscriber, enforceable in accordance with its terms.
2.12 No Reliance on Tax Advice. Subscriber and each Investor have reviewed
with his, her or its own tax advisors the foreign, federal, state and local tax
consequences of this investment, where applicable, and the transactions
contemplated by this Agreement. Subscriber and each Investor are relying solely
on such advisors and not on any statements or representations of the Company or
any of their agents and understands that Subscriber (and not the Company) shall
be responsible for the Subscriber's or Investor's own tax liability that may
arise as a result of this investment or the transactions contemplated by this
Agreement.
2.13 Independent Legal Advice. Subscriber acknowledges that Subscriber and
each Investor have had the opportunity to review this Agreement and the
transactions contemplated by this Agreement with his or her own legal counsel.
Subscriber is relying solely on such counsel and not on any statements or
representations of the Company or any of its agents for legal advice with
respect to this investment or the transactions contemplated by this Agreement,
except for the representations, warranties and covenants set forth herein and in
the opinion provided for in Section 7.6 herein. Subscriber acknowledges that the
law firm of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇▇▇, L.L.P., which is acting as
escrow agent in connection with this transaction, is not legal counsel to
Subscriber and has not provided legal advice to Subscriber in connection with
this transaction.
2.14 Compliance. If Subscriber or any Investor becomes subject to Section
13(d) of the Exchange Act, Subscriber or such Investor will duly file the
required Schedule thereunder.
2.15 Not an Affiliate. Neither Subscriber nor any Investor is an officer,
director or "affiliate" (as that term is defined in Rule 405 of the Act) of the
Company. For this purpose, it is hereby represented (and such representation is
hereby accepted by Company) that neither Subscriber nor any Investor will
beneficially own, at any time, more than 10% of the total issued and outstanding
shares of Common Stock of the Company. Subscriber does not have voting control
or power of disposition over securities owned by the Investor and no Investor is
an affiliate of another Investor or Subscriber.
2.16 No Pledges. Neither Subscriber nor any Investor has pledged the
Securities, and will not pledge the Securities during the Restricted Period (as
defined below), as collateral in a margin account or otherwise with a U.S.
person.
2.17 No Inquiries. Subscriber has not been the subject of a regulatory
inquiry by ------------ the Commission.
2.18 Warranties of Other Parties. If Subscriber is purchasing the Preferred
Stock for the accounts of parties other than Subscriber (as contemplated by
Section 2.9 above), Subscriber has full power and authority to make the
representations, warranties and agreements made pursuant to this Agreement on
behalf of the owners of such accounts, and agrees that each representation,
warranty and agreement made by Subscriber herein is also made by and on behalf
of each owner of each such account.
3. Resales
Subscriber acknowledges and agrees that the Securities may and will
only be resold (a) in compliance with Regulation S; (b) pursuant to a
Registration Statement under the Act; or (c) pursuant to an exemption from
registration under the Act.
4. Legends; Subsequent Transfer of Securities
4.1 Legends. The certificate(s) representing the Preferred Stock shall
bear the legend set forth below and any other legend, if such legend or legends
are reasonably required by the Company to comply with state, federal or foreign
law. Assuming that there are no changes in the material facts set forth in
Section 2 of this Agreement or applicable law from the date hereof until the
date of conversion, and subject to the Company's transfer agent's receipt of a
legal opinion from legal counsel to the Company, the certificate representing
the Shares into which the Preferred Stock are converted after the Restricted
Period shall not bear a legend.
"The shares of Series A Preferred Stock of Spintek Gaming Technologies,
Inc. (the "Issuer") represented by this certificate have been issued
pursuant to Regulation S, promulgated under the Securities Act of 1933, as
amended (the "Act"), and have not been registered under the Act or any
applicable state securities laws. These shares may not be offered or sold
within the United States or to or for the account of a "U.S. Person" (as
that term is defined in Regulation S) during the period commencing on the
sale of these securities and ending on the fortieth (40th) day following
completion of the Regulation S offering of the Issuer pursuant to which
these shares have been issued, which day is ______________, 1997 (the
"Restricted Period"). The shares of Preferred Stock represented by this
certificate may first be converted into common stock of the issuer on that
date which is 45 days after the date of issuance. The Issuer will notify
the transfer agent of the date of completion of such offering and of the
expiration of such Restricted Period. Following expiration of the
Restricted Period, these shares may not be offered or sold unless such
offer or sale is registered or exempt from registration under the Act."
4.2 Transfers. Subject to receipt of a legal opinion from legal counsel
to the Company, the Company agrees, and shall instruct its agents, that the
Securities may be transferred to any person or entity who is not an affiliate of
the Company if such transfer occurs after the Restricted Period and the transfer
is made in compliance with the Act. Upon election by the Subscriber to convert
the Preferred Stock into Shares, the Subscriber shall deliver to the Company a
duly completed Notice of Conversion (a "Notice of Conversion") in the form
attached to this Agreement.
5. Issuance of Further Securities
5.1 Restrictions on Additional Issuances. The Company will not issue
any debt or equity securities for cash in public or private capital raising
transactions for a period of ninety (90) days after the Closing, without the
prior written consent of the Subscriber; provided, however, the requirement for
Subscriber's prior written consent shall not apply to: (i) the issuance of
securities pursuant to the exercise of options or warrants issued and
outstanding on September 30, 1997; (ii) any transaction involving the Company's
arrangements, now or in the future, with commercial banks or other lending
institutions; (iii) issuances of securities pursuant to the acquisition of
another corporation by the Company by merger, purchase of substantially all of
the assets or other reorganization whereby the Company owns more than fifty
percent (50%) of the voting power of such corporation following such
transaction; (iv) any acquisition or disposition of a product or a license by
the Company on the condition that such issuance is approved by the Board of
Directors of the Company; or (v) the issuance of securities upon exercise or
conversion of the Company's Preferred Stock or note issued to the ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇▇ V Family Trust in the principal amount of $500,000 outstanding on the
date of the Closing (collectively, the "Permitted Issuances"); provided,
however, this restriction shall be null and void if the Subscriber fails to
invest an additional $500,000 in the Company within forty (40) days from the
date of Closing.
5.2 Right of First Refusal. The Company hereby grants to the Subscriber
the right of first refusal to purchase all (or any part) of New Securities (as
defined in this Section) that the Company may, from time to time, propose to
sell and issue prior to June 30, 1999. "New Securities" shall mean any capital
stock of the Company, whether now authorized or not, and rights, options or
warrants to purchase said capital stock, and debt or equity securities of any
type whatsoever that are, or may become, convertible into said capital stock;
provided, however, that the term "New Securities" does not include Permitted
Issuances or stock options granted to full-time employees or directors of the
Company. In the event that the Company proposes to undertake an issuance of New
Securities, it shall give the Subscriber written notice of its intention,
describing the type of New Securities, the price and the general terms upon
which the Company proposes to issue the same. The Subscriber shall have fifteen
(15) days from the date of receipt of any such notice to agree to purchase all
or less than all of the New Securities for the price and upon the general terms
specified in the notice by giving written notice to the Company and stating
therein the quantity of New Securities to be purchased. If the Subscriber fails
to exercise in full the right of first refusal within such fifteen (15) day
period, the Company shall have sixty (60) days thereafter to sell the New
Securities respecting which the Subscriber's rights were not exercised, at a
price and upon general terms no more favorable to the purchasers thereof than
specified in the Company's notice. In the event that the Company has not sold
the New Securities within such sixty (60) day period, the Company shall not
thereafter issue or sell any New Securities without first offering such
securities to the Subscriber in the manner provided above. The right of first
refusal granted under this Section shall terminate upon the earlier of: (i) June
30, 1999; or (ii) the date upon which the Subscriber ceases to own any
securities: (a) purchased in the Offering; (b) issued with respect
to or upon conversion of securities purchased in the Offering; or (c) purchased
pursuant to the right of first refusal granted under this Section.
6. Representations, Warranties and Covenants of Company
The Company represents and warrants to and covenants with the
Subscriber as follows:
6.1 Organization, Good Standing, and Qualification. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of the State of California and has all requisite corporate power and authority
to carry on its business as now conducted and as proposed to be conducted. The
Company is duly qualified to transact business and is in good standing in each
jurisdiction in which the failure to so qualify would have a material adverse
effect on the business or properties of the Company and its subsidiaries taken
as a whole. The Company to its knowledge is not the subject of any pending or
threatened investigation or administrative or legal proceeding by the Internal
Revenue Service, the taxing authorities of any state or local jurisdiction, or
the Securities and Exchange Commission which have not been disclosed in the
reports referred to in Section 6.5 below.
6.2 Corporate Condition. None of the Company's filings made pursuant to the
Exchange Act, including, but not limited to, those reports referenced in Section
6.5 below, contains any untrue statement of a material fact or omits to state a
material fact necessary in order to make the statements made, in light of the
circumstances under which they were made, not misleading. There have been no
material adverse changes in the Company's financial condition or business since
the date of those reports which have not been disclosed to Subscriber in
writing.
6.3 Authorization. All corporate action on the part of the Company, its
officers, directors and shareholders necessary for the authorization, execution
and delivery of this Agreement, the performance of all obligations of the
Company hereunder and the authorization, issuance (or reservation for issuance)
and delivery of the shares of Preferred Stock being sold hereunder and the
Common Stock issuable upon conversion of the Preferred Stock have been taken,
and this Agreement constitutes a valid and legally binding obligation of the
Company, enforceable in accordance with its terms.
6.4 Valid Issuance of Preferred Stock and Common Stock. The Preferred
Stock, when issued, sold and delivered in accordance with the terms hereof for
the consideration expressed herein, will have been issued in compliance with all
applicable U.S. federal and state securities laws. The Common Stock issuable
upon conversion of the Preferred Stock when issued in accordance with the terms
thereof, shall be duly and validly issued and outstanding, fully paid and
nonassessable, and based in part on the representations and warranties of
Subscriber and any transferee of the Preferred Stock, will be issued in
compliance with all applicable U.S. federal and state securities laws.
6.5 Current Public Information. The Company represents and warrants to the
Subscriber that the Company is a "reporting issuer" as defined in Rule 902(l) of
Regulation S and it has a class of securities registered under Section 12(g) of
the Exchange Act and has filed all the materials required to be filed as reports
pursuant to the Exchange Act for a period of at least twelve months preceding
the date hereof (or for such shorter period as the Company was required by law
to file such material). The Company undertakes to furnish the Subscriber with
copies of such other information as may be reasonably requested by the
Subscriber prior to consummation of this Offering.
6.6 No Directed Selling Efforts in Regard to this Transaction. The Company
has not, and to the best of the Company's knowledge neither the Subscriber nor
any distributor, if any, participating in the offering of the Preferred Stock
nor any person acting for the Company or any such distributor has conducted any
"directed selling efforts" as that term is defined in Rule 902 of Regulation S.
Such activity includes, without limitation, the mailing of printed material to
investors residing in the United States, the holding of promotional seminars in
the United States, the placement of advertisements with radio or television
stations broadcasting in the United States or in publications with a general
circulation in the United States, which discuss the offering of Shares. The
Company represents and warrants that the Offering is not part of a plan or
scheme to evade the registration provisions of the Act.
6.7 No Conflicts. The execution and delivery of this Agreement and the
consummation of the issuance of the Securities and the transactions contemplated
by this Agreement do not and will not conflict with or result in a breach by the
Company of any of the terms or provisions of, or constitute a default under, the
Certificate of Incorporation or bylaws of the Company, or any indenture,
mortgage, deed of trust or other material payment or instrument to which the
Company is a party or by which it or any of its properties or assets are bound,
or any existing applicable decree, judgment or order of any court, Federal or
State regulatory body, administrative agency or other governmental body having
jurisdiction over the Company or any of its properties or assets.
6.8 Issuance of Securities. The Company will issue one or more certificates
representing the Preferred Stock in the name of Subscriber in such denominations
of $1,000 or greater to be specified by the Subscriber prior to Closing. Upon
conversion of the Preferred Stock in accordance with their terms, the Company
will issue one or more certificates representing Shares in the name of
Subscriber and in such denominations to be specified by Subscriber prior to
conversion. Subject to the Company's transfer agent's receipt of a legal opinion
from legal counsel to the Company, the Shares to be issued upon conversion of
the Preferred Stock shall not bear any restrictive legends. The Company further
warrants that no instructions other than these instructions, and instructions
for a "stop transfer" until the end of the Restricted Period, have been given to
the transfer agent and also warrants that the Shares shall otherwise be freely
transferable by Subscriber on the books and records of the Company subject to
compliance with Federal and State securities laws, the receipt of a legal
opinion from legal counsel to the Company and the terms of the Certificate of
Designation for the Preferred Stock. The Company will notify the transfer agent
of the date of completion of the Offering and of the date of expiration of the
Restricted Period. Nothing in this section shall affect in any way Subscriber's
obligations and agreement to comply with all applicable securities laws upon
resale of the Securities.
6.9 No Action. The Company has not taken and will not take any action that
will affect in any way the running of the Restricted Period or the ability of
Subscriber to resell freely the Securities in accordance with applicable
securities laws and the Agreement.
6.10 Compliance with Laws. As of the date hereof, the conduct of the
business of the Company complies in all material respects with all material
statutes, laws, regulations, ordinances, rules, judgments, orders or decrees
applicable thereto. The Company has not received notice of any alleged violation
of any statute, law, regulations, ordinance, rule, judgment, order or decree
from any governmental authority. The Company shall comply with all applicable
securities laws with respect to the sale of the Securities, including but not
limited to the filing of all reports required to be filed in connection
therewith with the Securities and Exchange Commission or any stock exchange or
the NASDAQ Stock Market or any other regulatory authority.
6.11 Litigation. Except as disclosed in the Company's Annual Report on Form
10- KSB for the year ended June 30, 1997, there is no action, suit or proceeding
before or by any court or governmental agency or body, domestic or foreign, now
pending or, to the knowledge of the Company, threatened, against or affecting
the Company, or any of its properties, which could reasonably be expected to
result in any material adverse change in the business, financial condition or
results of operations of the Company, or which could reasonably be expected to
materially and adversely affect the properties or assets of the Company.
6.12 No U.S. Offering. The Company represents that it has not offered the
Securities to the Subscriber or any Investor in the U.S. or to any person in the
United States or any U.S. person.
6.13 Disclosures. There is no fact known to the Company (other than general
economic conditions known to the public generally) that has not been disclosed
in writing to the Subscriber that (a) could reasonably be expected to have a
material adverse effect on the business, financial condition or results of
operations of the Company, or which could reasonably be expected to materially
and adversely affect the properties or assets of the Company or (b) could
reasonably be expected to materially and adversely affect the ability of the
Company to perform its obligations pursuant to this Subscription Agreement and
the issuance of the Convertible Debentures hereunder.
6.14 Commissions. Except for a fee which is payable by the Company to ▇.▇.
▇▇▇▇▇ Enterprises, Inc., no other person, firm or corporation will be entitled
to receive any brokerage fee, commission or other similar payment from the
Company in connection with the consummation of the transactions contemplated
hereby and the Company shall not make any such payment to any person, firm or
corporation other than ▇.▇. ▇▇▇▇▇ Enterprises, Inc.
6.15 Capitalization. The Company, as of the date of the Closing, will have
outstanding the number of shares of Common Stock, Preferred Stock, Options and
Warrants as set forth on Exhibit D.
7. Additional Covenants of Company
7.1 Accountants. The Company shall, until at least the second anniversary
of the date of the Closing (the "Closing Date"), maintain as its independent
auditors an accounting firm that is authorized to practice before the SEC.
7.2 Corporate Existence and Taxes. The Company shall, until at least the
second anniversary of the Closing Date, maintain its corporate existence in good
standing, and shall pay all its taxes when due except for taxes which the
Company disputes.
7.3 Reserved Shares and Listings. For so long as any Preferred Stock held
by the Subscriber remains outstanding:
(a) The Company will reserve from its authorized but unissued shares of
Common Stock ("Common Stock") a sufficient number of Shares to permit
the conversion in full of the outstanding stated value (face amount)
of Preferred Stock; and
(b) the Company will maintain the listing of its Shares on the NASDAQ
Bulletin Board Market System.
7.4 Liquidated Damages for Late Conversion. As set forth in the Certificate
of Designation for the Preferred Stock, the Company shall use all reasonable
efforts to issue and deliver, within three business days after the Subscriber
has fulfilled all conditions and submitted all necessary documents duly executed
and in proper form required for conversion (the "Deadline"), to the Subscriber
or any party receiving the Preferred Stock by transfer from the Subscriber
(together with the Subscriber, a "Holder"), at the address of the Holder on the
books of the Company, a certificate or certificates for the number of Shares of
Common Stock to which the Holder shall be entitled. The Company understands that
a delay in the issuance of the Shares of Common Stock beyond the Deadline could
result in economic loss to the Holder. As compensation to the Holder for such
loss, the Company agrees to pay liquidated damages to the Holder for late
issuance of Shares upon conversion in accordance with the following schedule
(where "No. Business Days Late" is defined as the number of business days beyond
ten business days from the date of receipt by the Company of a Notice of
Conversion and the transfer agent of all necessary documentation duly executed
and in proper form required for conversion, including the original certificate
representing the Preferred Stock to be converted, all in accordance with this
Agreement, the Preferred Stock and the requirements of the transfer agent):
No. Business Days Late Liquidated Damages
---------------------- ------------------
1 $500
2 $1,000
3 $1,500
4 $2,000
5 $2,500
6 $3,000
7 $3,500
8 $4,000
9 $4,500
10 $5,000
>10 $5,000 + $1,000 for each
Business Day Late beyond
10 days
The Company shall pay the Holder any liquidated damages incurred under this
Section by check upon the earlier to occur of (i) issuance of the Shares to the
Holder or (ii) each monthly anniversary of the receipt by the Company of such
Holder's Notice of Conversion. Nothing herein shall limit the Subscriber's right
to pursue actual damages for the Company's failure to issue and deliver shares
of Common Stock to the Subscriber in accordance with the terms of the
Certificate of Designation.
7.5 Conversion Notice. The Company agrees that, in addition to any other
remedies which may be available to the Subscriber, including, but not limited
to, remedies available under Section 7.4 of this Agreement, in the event the
Company fails for any reason, other than an act of God, to effect delivery to
the Subscriber of certificates representing Shares within three (3) business
days following receipt by the Company of a Notice of Conversion, the Investor
will be entitled to revoke the Notice of Conversion by delivering a notice to
such effect to the Company whereupon the Company and the Subscriber shall each
be restored to their respective positions immediately prior to delivery of such
Notice of Conversion.
7.6 Opinion of Counsel. Subscriber shall, upon purchase of the Convertible
Debentures, receive an opinion letter from ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇, Counsel to
the Company, to the effect that (i) the Company is duly incorporated and validly
existing; (ii) this Agreement and the issuance of Preferred Stock have been duly
approved by all required corporate action, and that all such securities, upon
due issuance, shall be validly issued and outstanding, fully paid and
nonassessable; (iii) this Agreement and the Registration Rights Agreement are
valid and binding obligations of the Company, enforceable in accordance with
their terms, except as enforceability of any indemnification provisions may be
limited by principles of public policy, and subject to laws of general
application relating to bankruptcy, insolvency and the relief of debtors and
rules of laws governing specific performance and other equitable remedies; and
(iv) based upon the representations and warranties of the Company and each
Subscriber in the Offering, the offer and sale of the Preferred Stock to the
Subscriber is exempt from the registration requirements of the Securities Act;
except that with respect to the foregoing opinions counsel may add such
qualifications as are consistent with firm practice, including an assumption
that the transaction does not constitute a plan or scheme to evade the
registration provisions of the Act.
7.7 Form 8-K Filing. The Company shall timely file a Form 8-K in connection
with the Offering, and will timely make any and all such additional filings
under the securities laws deemed necessary by such counsel.
7.8 Registration Rights. The Company will grant the Subscriber the
registration rights covering the Shares issuable on conversion of the Preferred
Stock on substantially the terms of the Registration Rights Agreement attached
hereto as Exhibit E on the Closing Date.
8. Conversion Right
The Company knows of no reason for disallowing the conversion of the
Preferred Stock into Shares upon expiration of the Restricted Period and hereby
covenants and agrees to permit such conversion and not to use legal process or
take any action to prevent such conversion.
9. Governing Law
This Agreement shall be governed by and construed in accordance with
the laws of the State of Georgia, U.S.A., applicable to agreements made in and
wholly to be performed in that jurisdiction, except for matters arising under
the Act or the Exchange Act which matters shall be construed and interpreted in
accordance with such laws. Any action brought to enforce, or otherwise arising
out of, this Agreement shall be heard and determined in either a federal or
state court sitting in the State of Georgia, U.S.A.
10. Entire Agreement; Amendment
This Agreement, the Preferred Stock, the Registration Rights Agreement
and the other documents delivered pursuant hereto constitute the full and entire
understanding and agreement between the parties with regard to the subjects
hereof and thereof, and no party shall be liable or bound to any other party in
any manner by any warranties, representations or covenants except as
specifically set forth herein or therein. Except as expressly provided herein,
neither this Agreement nor any term hereof may be amended, waived, discharged or
terminated other than by a written instrument signed by the party against whom
enforcement of any such amendment, waiver, discharge or termination is sought.
11. Notices, Etc.
Any notice, demand or request required or permitted to be given by either
the Company or the Subscriber pursuant to the terms of this Agreement shall be
in writing and shall be deemed given when delivered personally or by facsimile,
with a hard copy to follow by two day courier addressed to the parties at the
addresses or facsimile numbers of the parties set forth at the end of this
Agreement or such other address or facsimile number as a party may request by
notifying the other in writing.
12. Counterparts
This Agreement may be executed in any number of counterparts, each of
which shall be enforceable against the parties actually executing such
counterparts, and all of which together shall constitute one instrument.
13. Severability
In the event that any provision of this Agreement becomes or is
declared by a court of competent jurisdiction to be illegal, unenforceable or
void, this Agreement shall continue in full force and effect without said
provision; provided that no such severability shall be effective if it
materially changes the economic benefit of this Agreement to any party.
14. Titles and Subtitles
The titles and subtitles used in this Agreement are used for
convenience only and are not to be considered in construing or interpreting this
Agreement.
15. Amount
The undersigned Subscriber hereby subscribes for shares of Preferred
Stock with a stated value (i.e., in the face amount) of One Million Four Hundred
and Twenty Eight Thousand Dollars ($1,428,000.00) (U.S.) and pays herewith
purchase funds in the amount of One Million Dollars ($1,000,000.00) (U.S.). The
undersigned Subscriber acknowledges that this subscription shall not be
effective unless accepted by the Company as indicated below. Dated this 22nd day
of October, 1997.
RBB Bank Aktiengesellschaft
---------------------------
(Name) (Please Print)
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
-------------------
(Signature) ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇, ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇
-------------------------------
(Mailing Address)
▇▇▇-▇▇-▇▇▇-▇▇▇▇/354
-------------------
(Telephone Number)
▇▇▇-▇▇-▇▇▇-▇▇▇▇/392
-------------------
(Facsimile Number)
Austria
-------
(Place of Execution)
THIS SUBSCRIPTION IS ACCEPTED BY THE COMPANY ON THE 22nd DAY OF
OCTOBER, 1997.
SPINTEK GAMING TECHNOLOGIES, INC.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------
Print Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Chairman
Address:
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Subscription for 1,428 preferred shares Series A
RBB Bank will hold all 8,741 preferred shares as agent for more than 50
independent clients. No client will at any time own more than 4.9% of the total
issued and outstanding shares of Common Stock of the Company. RBB Bank does not
have voting control or power of disposition over securities owned by clients and
no client is an affiliate of another client.
RBB Bank Aktiengesellschaft
---------------------------
▇▇▇▇▇▇▇▇ ▇▇, ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇
-------------------------------
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
-------------------
NOTICE OF CONVERSION
(To be Executed by the Registered Holder
in order to Convert Shares of Series A Preferred Stock)
The undersigned hereby irrevocably elects to convert $________ U.S. in stated
value (face amount) of Series A Preferred Stock (the "Preferred Stock"),
represented by Certificate No(s). _____ into shares of common stock (the "Common
Stock") of Spintek Gaming Technologies, Inc. (the "Company"). If shares are to
be issued in the name of a person other than undersigned, the undersigned will
pay all transfer taxes payable with respect thereto and is delivering herewith
such certificates. No fee will be charged to the undersigned for any conversion,
except for transfer taxes, if any.
The undersigned represents that it and each person or entity on whose behalf it
holds Preferred Stock to be converted into Common Stock (each an "Investor"):
(i) is familiar with and understands the terms, conditions and requirements
contained in Regulation S ("Regulation S") and Rule 144 promulgated under the
Securities Act of 1933, as amended (the "Act"); (ii) is not a "U.S. Person" or
"distributor" as defined in Regulation S; (iii) purchased the Convertible
Debenture or Preferred Stock for which conversion is being elected, and is
purchasing the Common Stock referenced herein, for its own account and for the
account of each Investor and not for the account or benefit of any U.S. Person;
(iv) will comply with the transfer restrictions contained in Section 4(1) of the
Act and Rule 144 promulgated thereunder to the extent they are applicable; (v)
will make any sale, transfer or other disposition of the Common Stock in full
compliance with the Act, the Exchange Act, as amended, and the rules and
regulations of the Securities and Exchange Commission promulgated thereunder;
and (vi) received the offer to purchase the Preferred Stock outside the United
States and, at the time the Subscription Agreement pursuant to which the
Preferred Stock was purchased, and, upon execution of this Notice of Conversion,
is outside the United States. The undersigned has obtained representations from
each Investor with respect to compliance with paragraphs (i) - (vi) of this
Notice.
Conversion Formula: ______________________________
Date of Conversion
------------------------------
Applicable Conversion Price
------------------------------
Signature
------------------------------
Name
Address:
==============================
* No shares of Common Stock will be issued until the original Preferred Stock
Certificate(s), as the case may be, to be converted and the Notice of Conversion
are received by the Company's Attorney or Transfer Agent. The original Preferred
Stock Certificate(s) to be converted and the Notice of Conversion must be
received by the Company's Attorney or Transfer Agent by the third business day
following the Date of Conversion, or such Notice of Conversion shall become null
and void in the discretion of the Holder.
EXHIBIT A
---------
AMENDED AND RESTATED
CERTIFICATE OF DESIGNATION, NUMBER, POWERS,
PREFERENCES AND RELATIVE, PARTICIPATING,
OPTIONAL, AND OTHER SPECIAL RIGHTS AND THE
QUALIFICATIONS, LIMITATIONS, RESTRICTIONS,
AND OTHER DISTINGUISHING CHARACTERISTICS OF
SERIES A PREFERRED STOCK
OF
SPINTEK GAMING TECHNOLOGIES, INC.
It is hereby certified that the Certificate of Designation originally filed on
July 16, 1996, 1996 with respect to the Series A Preferred Stock is hereby
amended and restated as follows:
1. The name of the corporation (hereinafter called the "Corporation")
is SPINTEK GAMING TECHNOLOGIES, INC.
2. The certificate of incorporation of the Corporation authorizes the
issuance of 100,000 shares of Preferred Stock, no par value per share, and
expressly vests in the Board of Directors of the Corporation the authority
provided therein to issue any or all of said shares in one or more series and by
resolution or resolutions to establish the designation, number, full or limited
voting powers, or the denial of voting powers, preferences and relative,
participating, optional, and other special rights and the qualifications,
limitations, restrictions, and other distinguishing characteristics of each
series to be issued.
3. The Board of Directors of the Corporation, pursuant to the authority
expressly vested in it as aforesaid, has adopted the following resolutions
creating a Series A issue of Preferred Stock:
RESOLVED, that 15,000 of the 100,000 authorized shares of Preferred
Stock of the Corporation shall be designated Series A Preferred Stock (the
"Series A Preferred Stock") and shall possess the rights and privileges set
forth below:
A. Dividends.
----------
(i) The holder of each issued and outstanding share of Series A Preferred
Stock shall be entitled to receive, when and as declared by the Board of
Directors of the Corporation, out of the assets at the time legally available
for such purpose, dividends at a rate of 4% per annum, payable in cash or in
stock. Such dividends shall not be cumulative and no right to such dividends
shall accrue to holders of Series A Preferred Stock unless declared by the
Corporation's Board of Directors. No dividends shall be declared or paid with
respect to the Corporation's Common Stock (other than a dividend payable solely
in Common Stock of the Corporation), or upon any other class of Preferred Stock
of the Corporation with a dividend preference subordinate to the dividend
preference of the Series A Preferred Stock, unless a dividend of equal or
greater amount per share (on an as-if-converted to Common Stock basis) is first
declared and paid with respect to the Series A Preferred Stock.
(ii) No dividends shall be paid on the Series A Preferred Stock at such
time as:
(a) such payment would violate California law; or
(b) such payment would impair the net capital or other financial
requirements applicable to the Corporation established by the National
Association of Securities Dealers, Inc., the Securities and Exchange
Commission, or any other state or federal securities authority or agency,
any state or federal commodities authority or agency, or any commodities or
securities exchange.
B. Liquidation Preference
----------------------
(i) In the event of any liquidation, dissolution or winding-up of the
Corporation, either voluntary or involuntary (a "Liquidation"), the holders of
shares of the Series A Preferred Stock then issued and outstanding shall be
entitled to be paid out of the assets of the Corporation available for
distribution to its shareholders, whether from capital, surplus or earnings,
before any payment shall be made to the holders of shares of the Common Stock or
upon any other series of Preferred Stock of the Corporation with a liquidation
preference subordinate to the liquidation preference of the Series A Preferred
Stock, an amount equal to one thousand dollars ($1,000) per share. If, upon any
Liquidation of the Corporation, the assets of the Corporation available for
distribution to its shareholders shall be insufficient to pay the holders of
shares of the Series A Preferred Stock and the holders of any other series of
Preferred Stock with a liquidation preference equal to the liquidation
preference of the Series A Preferred Stock the full amounts to which they shall
respectively be entitled, the holders of shares of the Series A Preferred Stock
and the holders of any other series of Preferred Stock with liquidation
preference equal to the liquidation preference of the Series A Preferred Stock
shall receive all of the assets of the Corporation available for distribution
and each such holder of shares of the Series A Preferred Stock and the holders
of any other series of Preferred Stock with a liquidation preference equal to
the liquidation preference of the Series A Preferred Stock shall share ratably
in any distribution in accordance with the amounts due such shareholders. After
payment shall have been made to the holders of shares of the Series A Preferred
Stock of the full amount to which they shall be entitled, as aforesaid, the
holders of shares of the Series A Preferred Stock shall be entitled to no
further distributions thereon and the holders of shares of the Common Stock and
of shares of any other series of stock of the Corporation shall be entitled to
share, according to their respective rights and preferences, in all remaining
assets of the Corporation available for distribution to its shareholders.
(ii) A merger or consolidation of the Corporation with or into any other
corporation, or a sale, lease, exchange, or transfer of all or any part of the
assets of the Corporation which shall not in fact result in the liquidation (in
whole or in part) of the Corporation and the distribution of its assets to its
shareholders shall not be deemed to be a voluntary or involuntary liquidation
(in whole or in part), dissolution, or winding-up of the Corporation.
C. Conversion of Series A Preferred Stock.
---------------------------------------
The holders of Series A Preferred Stock shall have
the following conversion rights:
(i) Right to Convert. Each share of Series A Preferred Stock shall be
convertible, on the Conversion Dates and at the Conversion Prices set forth
below, into fully paid and nonassessable shares of Common Stock.
(ii) Mechanics of Conversion. Each holder of Series A Preferred Stock who
desires to convert the same into shares of Common Stock shall provide notice
("Conversion Notice") via telecopy to the Corporation. The original Conversion
Notice and the certificate or certificates representing the Series A Preferred
Stock for which conversion is elected, shall be delivered to the Corporation by
international courier, duly endorsed. The date upon which a Conversion Notice is
properly received by the Corporation shall be a "Notice Date."
The Corporation shall use all reasonable efforts to issue and deliver
within three (3) business days after the Notice Date, to such holder of Series A
Preferred Stock at the address of the holder on the stock books of the
Corporation, a certificate or certificates for the number of shares of Common
Stock to which the holder shall be entitled as aforesaid; provided that the
original shares of Series A Preferred Stock to be converted are received by the
transfer agent or the Corporation within three business days after the Notice
Date and the person or persons entitled to receive the shares of Common Stock
issuable upon such conversion shall be treated for all purposes as the record
holder or holders of such shares of Common Stock on such date. If the original
shares of Series A Preferred Stock to be converted are not received by the
transfer agent or the Corporation within three business days after the Notice
Date, the Conversion Notice shall become null and void.
(iii) Conversion Dates. The Series A Preferred Stock shall become
convertible into shares of Common Stock at any time commencing forty-five (45)
days after the last day on which there is an original issuance of the Series A
Preferred Stock (the "Conversion Date"). This restricted period shall only apply
to the 1,428 newly issued shares, all 7,313 pr. Shares shall continue to be
convertible at any time.
(iv) Conversion Price. Each share of Series A Preferred Stock shall be
convertible into the number of shares of Common Stock according to the following
formula:
[(.04) (N/365) (1,000)] + 1,000
-------------------------------
Conversion Price
N = the number of days
between (i) the date of issuance of the
Series A Preferred Stock and (ii) the
applicable date of conversion for the Series
A Preferred Stock for which conversion is
being elected.
Conversion Price = the
average closing bid price of the
Corporation's Common Stock for the five (5)
trading days immediately preceding the
Notice Date, but shall in no event be higher
than 3US$.
(v) Automatic Conversion. Each share of Series A Preferred Stock
outstanding on December 31, 1999 automatically shall be converted into
Common Stock on such date at the Conversion Price then in effect, and
December 31, 1999 shall be deemed to be the Notice Date with respect to
such conversion. The Company shall have no right to force conversion of any
outstanding shares of Series A Preferred Stock prior to December 31, 1999.
(vi) Fractional Shares. No fractional share shall be issued upon the
conversion of any shares, share or fractional share of Series A Preferred Stock.
All shares of Common Stock (including fractions thereof) issuable upon
conversion of shares (or fractions thereof) of Series A Preferred Stock by a
holder thereof shall be aggregated for purposes of determining whether the
conversion would result in the issuance of any fractional share. If, after the
aforementioned aggregation, the conversion would result in the issuance of a
fraction of a share of Common Stock, the Corporation shall, in lieu of issuing
any fractional share, pay the holder otherwise entitled to such fraction a sum
in cash equal to the closing bid price of the Corporation's Common Stock on the
Notice Date multiplied by such fraction.
(vii) Reservation of Stock Issuable Upon Conversion. The Corporation
shall at all times reserve and keep available out of its authorized but
unissued shares of Common Stock, solely for the purpose of effecting the
conversion of the shares of the Series A Preferred Stock, such number of
its shares of Common Stock as shall from time to time be sufficient to
effect the conversion of all then outstanding shares of the Series A
Preferred Stock; and if at any time the number of authorized but unissued
shares of Common Stock shall not be sufficient to effect the conversion of
all then outstanding shares of the Series A Preferred Stock, the
Corporation will take such corporate action as may be necessary to increase
its authorized but unissued shares of Common Stock to such number of shares
as shall be sufficient for such purpose.
(viii) Adjustment to Conversion Price.
(a) If, prior to the conversion of all shares of Series A
Preferred Stock at a time when conversion would be at the Conversion
Price, there is a stock split, stock dividend, or other similar event
which occurs during the five-day period utilized to compute the
Conversion Price, then the Closing Bid Price used to compute the
Conversion Price shall be appropriately adjusted to reflect, as deemed
equitable and appropriate by the Company, such stock split, stock
dividend or other similar event.
(b) If, prior to the conversion of all shares of Series A
Preferred Stock, there shall be any merger, consolidation, exchange of
shares, recapitalization, reorganization, or other similar event, as a
result of which shares of Common Stock of the Corporation shall be
changed into the same or a different number of shares of the same or
another class or classes of stock or securities of the Corporation or
another entity, then the holders of Series A Preferred Stock shall
thereafter have the right to purchase and receive upon conversion of
shares of Series A Preferred Stock, upon the basis and upon the terms
and conditions specified herein and in lieu of the shares of Common
Stock immediately theretofore issuable upon conversion, such shares of
stock and/or securities as may be issued or payable with respect to or
in exchange for the number of shares of Common Stock immediately
theretofore purchasable and receivable upon the conversion of shares
of Series A Preferred Stock held by such holders had such merger,
consolidation, exchange of shares, recapitalization or reorganization
not taken place, and in any such case appropriate provisions shall be
made with respect to the rights and interests of the holders of the
Series A Preferred Stock to the end that the provisions hereof
(including, without limitation,
provisions for adjustment of the Conversion Price and of the number of shares
issuable upon conversion of the Series A Preferred Stock) shall thereafter be
applicable, as nearly as may be practicable in relation to any shares of stock
or securities thereafter deliverable upon the exercise hereof. The Corporation
shall not effect any transaction described in this subsection unless the
resulting successor or acquiring entity (if not the Corporation) assumes by
written instrument the obligation to deliver to the holders of the Series A
Preferred Stock such shares of stock and/or securities as, in accordance with
the foregoing provisions, the holders of the Series A Preferred Stock may be
entitled to purchase.
(c) If any adjustment under this subsection would create a
fractional share of Common Stock or a right to acquire a fractional
share of Common Stock, such fractional share shall be disregarded and
the number of shares of Common Stock issuable upon conversion shall be
the next higher number of shares.
D. Redemption.
-----------
(i) Right to Redeem on Conversion. The Corporation shall have the right, in
its sole discretion, upon receipt of a notice of conversion pursuant to Section
C, to redeem in whole or in part any shares of Series A Preferred Stock
submitted for conversion, immediately prior to conversion. If the Corporation
elects to redeem some, but not all, of the shares of Series A Preferred Stock
submitted for conversion, the Company shall redeem from among the shares of
Series A Preferred Stock submitted by the various shareholders for conversion on
the applicable date, a pro-rata amount from each shareholder so submitting
shares of Series A Preferred Stock for conversion.
(ii) Mechanics of Redemption on Conversion. The Corporation shall effect
each such redemption by giving notice of its election to redeem, by facsimile
within 1 business day following receipt of a notice of conversion from a Holder,
with a copy by 2-day courier, to the Holder of shares of Series A Preferred
Stock submitted for conversion at the address and facsimile number of such
Holder appearing in the Corporation's register for the Series A Preferred Stock.
Such redemption notice shall indicate whether the Corporation will redeem all or
part of the shares of Series A Preferred Stock submitted for conversion and the
applicable redemption price. The Corporation shall not be entitled to send any
notice of redemption and begin the redemption procedure unless it has the full
amount of the redemption price, in cash, available in a demand or other
immediately available account in a bank or similar financial institution on the
date the redemption notice is sent to shareholders.
The redemption price per shares of Series A Preferred Stock shall be
calculated in accordance with the following formula:
Principal + Interest x Closing Bid Price
--------------------
Conversion Price
For the purposes of the above formula, "Principal", "Interest",
"Closing Bid Price" and "Conversion Price" shall have the meanings set forth in
Section C.
The redemption price shall be paid to the Holder of shares of Series A
Preferred Stock redeemed within 10 business days of the delivery of the notice
of such redemption to such Holder; provided, however, that the Corporation shall
not be obligated to deliver any portion of such redemption price unless either
the certificates evidencing the shares of Series A Preferred Stock redeemed are
delivered to the Corporation or its transfer agent as provided in Section C, or
the Holder notifies the Corporation or its transfer agent that such certificates
have been lost, stolen or destroyed and executes an agreement satisfactory to
the Corporation to indemnify the Corporation from any loss incurred by it in
connection with such certificates.
(iii) Redemption on Asset Sale. In the event the Corporation enters into a
transaction or series of transactions to sell all or substantially all of its
assets, the Corporation shall, within seven days after the closing of such
transaction and after giving at least 15 days advance written notice of such
transaction (which notice shall specify the date that such redemption is to be
effected, which date is referred to hereinafter as the "Effective Date of
Redemption"), redeem the shares of Series A Preferred Stock for cash. The
redemption price in such event ("Redemption Price on Asset Sale") shall be
calculated in accordance with the formula set forth in Section D(ii) above.
Upon the close of the transaction causing redemption under this Section
D(iii), the Corporation shall deposit the Redemption Price on Asset Sale for all
outstanding shares of Series A Preferred Stock with a bank or trust company
having aggregate capital and surplus in excess of $50,000,000 as a trust fund
for the benefit of the respective holders of the Series A Preferred Stock
designated for redemption and not yet redeemed. Simultaneously, the Corporation
shall deposit irrevocable instruction and authority to such bank or trust
company to publish the notice of redemption thereof (or to complete such
publication if theretofore commenced) and to pay, on and after the date fixed
for redemption or prior thereto, the Redemption Price on Asset Sale to the
holders of the Series A Preferred Stock upon surrender of their certificates.
(iv) Redemption on Change of Control. In the event of a Change of Control
(as hereinafter defined), the shares of Series A Preferred Stock shall be
redeemed by the Corporation for cash at a redemption price calculated in
accordance with the formula set forth in Section D(ii) above.
For purposes of this Section D(iv), Change of Control shall be deemed
to have occurred at such time as:
(a) any person (other than the Corporation, any Subsidiary of the
Corporation or any employee benefit plan of the Corporation)("Person") is
or becomes the beneficial owner, directly or indirectly, through a
purchase, merger or other acquisition or transaction or series of
transactions, of shares of capital stock of the Corporation entitling such
Person to exercise 50% or more of the total voting power of all shares of
capital stock of the Corporation entitled to vote generally in the election
of directors (any shares of voting stock of which such person or group is
the beneficial owners that are not then outstanding for purposes of
calculating such percentage); or
(b) any consolidation of the Corporation with, or merger of the
Corporation into, any other Person, any merger of another Person into the
Corporation (other than a merger (x) which does not result in any
reclassification, conversion, exchange or cancellation of outstanding
shares of Common Stock or (y) which is effected solely to change the
jurisdiction of incorporation of the Corporation and results in a
reclassification, conversion or exchange of outstanding shares of Common
Stock into solely shares of Common Stock).
(v) No Other Redemption. The Company shall have no right to redeem the
Series A Preferred Stock except as provided in Section D hereof.
E Voting. Except as otherwise provided by the General
Corporation Law of the State of California, the holders of the Series A
Preferred Stock shall have no voting power whatsoever, and no holder of Series A
Preferred Stock shall vote or otherwise participate in any proceeding in which
actions shall be taken by the Corporation or the shareholders thereof or be
entitled to notification as to any meeting of the Board of Directors or the
shareholders.
F. Protective Provisions. So long as shares of Series A
Preferred Stock are outstanding, the Corporation shall not without first
obtaining the approval (by vote or written consent, as provided by law) of the
holders of at least a majority of the then outstanding shares of Series A
Preferred Stock:
(i) alter or change the rights, preferences or privileges of the shares of
Series A Preferred Stock so as to affect adversely the Series A Preferred Stock;
(ii) create any new class or series of stock being on a parity with or
having a preference over the Series A Preferred Stock with respect to dividends,
to payments upon Liquidation (as provided for in Section B of this Designation)
or to redemption; or
(iii) do any act or thing not authorized or contemplated by this
Designation which would result in taxation of the holders of shares of the
Series A Preferred Stock under Section 305 of the Internal Revenue Code of 1986,
as amended (or any comparable provision of the Internal Revenue Code as
hereafter from time to time amended).
G. Status of Converted Stock. In the event any shares of
Series A Preferred Stock shall be converted as contemplated by this Designation,
the shares so converted shall be canceled, shall return to the status of
authorized but unissued Preferred Stock of no designated class or series, and
shall not be issuable by the Corporation as Series A Preferred Stock.
FURTHER RESOLVED, that the statements contained in the foregoing resolutions
creating and designating the said Series A Preferred Stock and fixing the
number, powers, preferences and relative, optional, participating, and other
special rights and the qualifications, limitations, restrictions, and other
distinguishing characteristics thereof shall, upon the effective date of said
series, be deemed to be included in and be a part of the certificate of
incorporation of the Corporation pursuant to the provisions of the California
Corporations Code
Signed on October 22, 1997.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------
Its: Chairman
-----------------
Attest:
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ V
--------------------------
Secretary
EXHIBIT B
Definition of "U.S. Person"
Pursuant to Rule 902 (c), (o) and (p) of Regulation S, the terms "U.S. person"
and "United States" are defined as follows:
(o) U.S. Person.
------------
1. "U.S. person" means:
(i) Any natural person resident in the United States;
(ii) Any partnership or corporation organized or incorporated
under the laws of the United States;
(iii) Any estate of which any executor or administrator is a U.S.
person;
(iv) Any trust of which any trustee is a U.S. person;
(v) Any agency or branch of a foreign entity located in the
United States;
(vi) Any non-discretionary account or similar account (other than
an estate or trust) held by a dealer or other fiduciary for the
benefit or account of a U.S. person;
(vii) Any discretionary account or similar account (other than an
estate or trust) held by a dealer or other fiduciary organized
incorporated, or (if an individual) resident in the United States; and
(viii) Any partnership or corporation if: (A) organized or
incorporated under the laws of any foreign jurisdiction; and (B)
formed by a U.S. person principally for the purpose of investing in
securities not registered under the Securities Act of 1933, as amended
(the "Act") unless it is organized or incorporated, and owned, by
accredited investors (as defined in Rule 501(a) of the Act) who are
not natural persons, estates or trusts.
(2) Notwithstanding paragraph (o)(1) of this rule, any discretionary
account or similar account (other than an estate or trust) held for the benefit
or account of a non-U.S. person by a dealer or other professional fiduciary
organized, incorporated, or (if an individual) resident in the United States
shall not be deemed a "U.S. person".
(3) Notwithstanding paragraph (o)(1), any estate of which any professional
fiduciary acting as executor or administrator is a U.S. person shall not be
deemed a U.S. person if:
(i) An executor or administrator of the estate who is not a U.S.
person has sole or shared investment discretion with respect to the assets
of the estate; and
(ii) The estate is governed by foreign law.
(4) Notwithstanding paragraph (o)(1), any trust of which any professional
fiduciary acting as trustee is a U.S. person shall not be deemed a U.S. person
if a trustee who is not a U.S. person has sole or shared investment discretion
with respect to the trust assets, and no beneficiary of the trust (and no
settlor if the trust is revocable) is a U.S. person.
(5) Notwithstanding paragraph (o)(1), an employee benefit plan established
and administered in accordance with the law of a country other than the United
States and customary practices and documentation of such country shall not be
deemed a U.S. person.
(6) Notwithstanding paragraph (o)(1), any agency or branch of a U.S. person
located outside the United States shall not be deemed a "U.S. person" if:
(i) The agency or branch operates for valid business reasons; and
(ii) The agency or branch is engaged in the business of insurance or
banking and is subject to substantive insurance or banking regulation,
respectively, in the jurisdiction where located.
(7) The International Monetary Fund, the International Bank for
Reconstruction and Development, the Inter-American Development Bank, the Asian
Development Bank, the African Development Bank, the United Nations, and their
agencies, affiliates and pension plans, and any other similar international
organizations, their agencies, affiliates and pension plans shall not be deemed
"U.S. persons".
(p) United States. "United States" means the United States of America,
its territories and possessions, any State of the United States, and the
District of Columbia.
EXHIBIT C
---------
Definition of "Accredited Investor"
Pursuant to Rule 501 (a) of Regulation D, the term "Accredited Investor" is
defined as follows:
1. Any bank as defined in section 3(a)(2) of the Securities Act of 1933 (the
"Act"), or any savings and loan association or other institution as defined
in section 3(a)(5)(A) of the Act whether acting in its individual or
fiduciary capacity; any broker or dealer registered pursuant to section 15
of the Securities Exchange Act of 1934; any insurance company as defined in
section 2(13) of the Act; any investment company registered under the
Investment Company Act of 1940 or a business development company as defined
in section 2(a)(48) of that Act; Small Business Investment Company licensed
by the U.S. Small Business Administration under section 301(c) or (d) of
the Small Business Investment Act of 1958; any plan established and
maintained by a state, its political subdivisions, or any agency or
instrumentality of a state or its political subdivisions for the benefit of
its employees, if such plan has total assets in excess of $5,000,000;
employee benefit plan within the meaning of the Employee Retirement Income
Security Act of 1974, if the investment decision is made by a plan
fiduciary, as defined in section 3(21) of such Act, which is either a bank,
savings and loan association, insurance company, or registered investment
adviser, or if the employee benefit plan has total assets in excess of
$5,000,000 or, if a self-directed plan, with investment decisions made
solely by persons that are accredited investors.
2. Any private business development company as defined in section 202(a)(22)
of the Investment Advisers Act of 1940.
3. Any organization described in section 501(c)(3) of the Internal Revenue
Code, corporation, Massachusetts or similar business trust, or partnership,
not formed for the specific purpose of acquiring the securities offered,
with total assets in excess of $5,000,000.
4. Any director, executive officer, or general partner of the issuer of the
securities being offered or sold, or any director, executive officer, or
general partner of a general partner of that issuer.
5. Any natural person whose individual net worth, or joint net worth with that
person's spouse, at the time of his purchase exceeds $1,000,000.
6. Any natural person who had an individual income in excess of $200,000 in
each of the two most recent years or joint income with that person's spouse
in excess of $300,000 in each of those years and has a reasonable
expectation of reaching the same income level in the current year.
7. Any trust, with total assets in excess of $5,000,000, not formed for the
specific purpose of acquiring the securities offered, whose purchase is
directed by a sophisticated person as described in section (b)(2)(ii) of
Rule 506.
8. Any entity in which all of the equity owners are accredited investors.
EXHIBIT D
---------
Outstanding Common Stock, Convertible Debentures
and Warrants
Spintek Gaming Technologies, Inc.
As of October 22,1997
-- 15,786,443 Shares of Common Stock
-- 7,313 Shares of Preferred Stock
-- 3,386,946 Options
-- 250,000 Warrants
EXHIBIT E
---------
Spintek Gaming Technologies, Inc.
Registration Rights Agreement
-----------------------------
THIS REGISTRATION RIGHTS AGREEMENT (the "Agreement") is entered into as
of October 22, 1997, by and among SPINTEK GAMING TECHNOLOGIES, INC., a
California corporation (the "Company"), and the persons and entities listed on
Exhibit A attached hereto (the "Investors").
Recitals
--------
WHEREAS, pursuant to Subscription Agreements (the "Agreements"), by and
among the Company and the Investors, the Company has agreed to sell and the
Investors have agreed to purchase an aggregate of 1428 shares of the Company's
Series A Preferred Stock (the "Preferred Stock") of the Company for aggregate
purchase price of One Million Dollars ($1,000,000.00 U.S.) Face value of each
share shall be $1,000.00 each.
WHEREAS, the Preferred Stock is convertible into shares of the
Company's Common Stock, $.002 par value per share (the "Shares"); and
WHEREAS, pursuant to the terms of, and in partial consideration for,
the Investors' agreement to enter into the Agreements, the Company has agreed to
provide the Investors with certain registration rights with respect to the
Shares;
NOW THEREFORE, in consideration of the mutual promises,
representations, warranties, covenants and conditions set forth in the
Agreements and this Registration Rights Agreement, the Company and the Investors
agree as follows:
Agreement:
----------
I. Certain Definitions. As used in this Agreement, the following terms
shall have the following respective meanings:
"Commission" shall mean the Securities and Exchange Commission or any
other Federal agency at the time administering the Securities Act.
"Common Stock" shall mean the Company's Common Stock, par value $.002
per share.
"Initiating Holders" shall mean holders of the Company's Preferred
Stock having an aggregate initial purchase price from the Company of $500,000 or
more.
"Other Registrable Securities" shall mean those shares of Common Stock
heretofore or hereafter issued pursuant to one or more agreements granting the
purchasers of such securities the right to have the Company register such
securities or include such securities in any other registration of the Company's
equity securities.
"Registrable Shares" shall means (i) the Shares, and (ii) any Common
Stock of the Company issued or issuable in respect of the Shares or upon any
stock split, stock dividend, recapitalization or similar event; provided,
however, that Registrable Shares or other securities shall no longer be treated
as Registrable Shares if (A) they have been sold to or through a broker or
dealer or underwriter in a public distribution or a public securities
transaction, (B) they have been sold in a transaction exempt from the
registration and prospectus delivery requirements of the Securities Act so that
all transfer restrictions and restrictive legends with respect thereto are
removed upon consummation of such sale or (C) the Shares are available for sale
under the Securities Act (including Rule 144), in the opinion of counsel to the
Company, without compliance with the registration and prospectus delivery
requirements of the Securities Act so that all transfer restrictions and
restrictive legends with respect thereto may be removed upon the consummation of
such sale.
The terms "register", "registered" and "registration" shall refer to a
registration effected by preparing and filing a registration statement in
compliance with the Securities Act and applicable rules and regulations
thereunder, and the declaration or ordering of the effectiveness of such
registration statement.
"Registration Expenses" shall mean all expense incurred by the Company
in compliance with Section 2 hereof, including, without limitation, all
registration and filing fees, printing expenses, fees and disbursements of
counsel for the Company, blue sky fees and expenses, reasonable fees and
disbursements (not to exceed $20,000) of one counsel for all the selling holders
of Registrable Shares for a limited "due diligence" examination of the Company,
and the reasonable expenses of any special audits incident to or required by any
such registration (but excluding the compensation of regular employees of the
Company, which shall be paid in any event by the Company, and excluding all
underwriting discounts and selling commissions applicable to the sale of the
Registrable Shares).
"Securities Act" shall mean the Securities Act of 1933, as amended, or
any similar federal statute, and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time.
"Selling Expenses" shall mean all underwriting discounts and selling
commissions applicable to the sale of Registrable Shares and all fees and
disbursements of one counsel for the selling holders of Registrable Shares
(other than the fees disbursements of such counsel
included in Registration Expenses).
II. Requested Registration.
The following registration rights will apply if, and only if, at any
time prior to the termination of this Agreement, Regulation S promulgated under
the Securities Act is rescinded or modified so as to preclude Initiating Holders
from reselling in United States public securities markets Shares received from
the Company pursuant to the Agreements following expiration of the Restricted
Period (as defined in the Agreements), or if, for any other reason, the Company
refuses to issue Shares at the times required by the Agreements bearing no
restrictive legend to Initiating Holders after expiration of the Restricted
Period; provided, however, that no Investor shall be entitled to request
registration pursuant to this Agreement (and such Investor shall not be
considered an Initiating Holder pursuant to this Agreement, and the securities
held by such Investor shall not be considered Registrable Shares pursuant to
this Agreement) if a representation or warranty of such Investor in the
Agreements between the Investor and the Company is inaccurate or was inaccurate
when made, or the Investor has failed to comply with the covenants and
agreements of the Investor set forth in the Agreements between the Investor and
the Company:
(a) Request for Registration. If the Company shall receive
from Initiating Holders, at any time after two (2) and prior to twenty four (24)
months following the final closing of the sale of the Preferred Stock pursuant
to the Agreements, a written request that the Company effect a registration with
respect to all, but not less than all, of the Registrable Shares held by such
Initiating Holders (which notice shall specify the intended method of
disposition), the Company shall:
i) promptly give written notice of the proposed registration to all
other holders of Registrable Shares; and
ii) as soon as practicable use its best efforts to effect such
registration (including, without limitation, the execution of an
undertaking to file post-effective amendments, appropriate qualification
under applicable blue sky or other state securities laws and appropriate
compliance with applicable regulations issued under the Securities Act) as
may be so requested and as would permit or facilitate the sale and
distribution of all or such portion of such Registrable Shares as are
specified in such request, together with all or such portion of the
Registrable Shares of any holder or holders of Registrable Shares joining
in such request as are specified in a written request given within fifteen
(15) days after receipt of such written notice from the Company; provided
that the Company shall not be obligated to effect, or to take any action to
effect, any such registration pursuant to this Section 2:
a) after the Company has effected one such registration pursuant
to this Section 2(a) and such registration has been declared or
ordered effective by the Commission and the sale of such Registrable
Shares shall have closed; or
b) within the period starting with the date thirty (30) days
prior to the Company's good faith estimated date of filing of, and
ending ninety (90) days following the effective date of, any
registered offering of the Company's securities to the general public;
or
c) more often than once in each eighteen (18) month period during
the term of this agreement.
Subject to the foregoing limitations in clauses (A) and (B) above, the
Company shall file a registration statement covering the Registrable Shares so
requested to be registered as soon as practicable after receipt of the request
or requests of the Initiating Holders, but no later than forty-five (45) days
following receipt of such request or requests, except in the event audited
financial statements not previously prepared are required to be prepared prior
to the filing of such registration statement, in which case such registration
statement must be filed as soon as practicable, but in any event within ninety
(90) days following receipt of such request or requests.
The registration statement filed pursuant to the request of the Initiating
Holders may, subject to the provision of Section 2(b) below, include Other
Registrable Securities, other securities of the Company which are held by
officers or directors of the Company or which are held by other holders of
registration rights, and may include securities of the Company being sold for
the account of the Company.
(b) Underwriting. If the Initiating Holders intend to distribute
the Registrable Shares covered by their request by means of an
underwriting, they shall so advise the Company as a part of their
request made pursuant to Section 2 and the Company shall include such
information in the written notice referred to in Section 2(a)(i)
above. The right of any holder of Registrable Shares to registration
pursuant to Section 2 shall be conditioned upon such holder's
participation in such underwriting and the inclusion of such holder's
Registrable Shares in such underwriting (unless otherwise mutually
agreed by a majority in interest of the Initiating Holders and such
holder with respect to such participation and inclusion) to the extent
provided herein. A holder of Registrable Shares may elect to include
in such underwriting all or a part of the Registrable Shares it holds.
i) If the Company shall request inclusion in any
registration pursuant to Section 2 of securities being sold for
its own account, or if officers or directors of the Company
holding other securities of the Company or other holders of
registration rights, shall request inclusion in any registration
pursuant to Section 2, the Initiating Holders
shall, on behalf of all holders of Registrable Shares, offer
to include Other Registrable Securities and the securities of the
Company, such officers and directors and such other holders of
registration rights in the underwriting and may condition such
offer on their acceptance of the further applicable provisions of
this Agreement. The Company shall (together with all holders of
Registrable Shares, officers and directors, other holders of
registration rights and holders of Other Registrable Securities
proposing to distribute their securities through such
underwriting) enter into an underwriting agreement in customary
form with the underwriter or representative of the underwriters
selected for such underwriting by the Company, which
underwriter(s) shall be reasonably acceptable to a majority in
interest of the Initiating Holders.
ii) Notwithstanding any other provision of this Section 2,
if the representative of the underwriters advises the Company in
writing that marketing factors require a limitation on the number
of shares to be underwritten, the Company shall so advise all
holders of Registrable Shares and other shareholders whose
securities would otherwise be underwritten pursuant hereto, and
the number of Registrable Shares and other securities that may be
included in the registration and underwriting shall be allocated
in the following manner: the securities of the Company held by
officers and directors of the Company (other than Registrable
Shares) shall be excluded from such registration and underwriting
to the extent required by such limitation, and, if a limitation
on the number of shares is still required, the Other Registrable
Securities shall be excluded pro rata with Registrable Shares,
unless another method of determining such exclusion is specified
in the agreements governing the Other Registrable Securities,
according to the relative number of Other Registrable Securities
requested to be included in such registration and underwriting,
from such registration and underwriting to the extent required by
such limitation, and, if a limitation on the number of shares is
still required, the number of Registrable Shares that may be
included in the registration and underwriting shall be allocated
among all holders of Registrable Shares in proportion, as nearly
as practicable, to the respective amounts of Registrable Shares
which they had requested to be included in such registration at
the time of filing the registration statement. No Registrable
Shares or any other securities excluded from the underwriting by
reason of the underwriter's marketing limitation shall also be
included in such registration.
iii) If the Company or any officer, director or holder of
Registrable Shares or Other Registrable Securities who has
requested inclusion in such registration and underwriting as
provided above disapproves of the terms of the underwriting, such
person may elect to withdraw therefrom by written notice to the
Company, the underwriter and the Initiating Holders. The
securities so withdrawn shall also be withdrawn from
registration.
III. Expenses of Registration. The Company shall bear all
Registration Expenses incurred in connection with any registration,
qualification or compliance of the Registrable Shares pursuant to this
Agreement. All Selling Expenses shall be borne by the holders of the
securities so registered pro rata on the basis of the number of their
shares so registered.
IV. Registration Procedures. Pursuant to this Agreement, the
Company will keep each holder of Registrable Shares advised in writing
as to the initiation of a registration under this Agreement and as to
the completion thereof. At its expense, the Company will:
(a) Use reasonable efforts to keep such registration
effective for a period of one hundred eighty (180) days or until
the holder or holders of Registrable Shares have completed the
distribution described in the registration statement relating
thereto or until the securities registered cease to be
Registerable Shares, whichever first occurs;
(b) Prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus
used in connection with such registration statement as may be
necessary to comply with the provisions of the Securities Act
with respect to the disposition of securities covered by such
registration statement; and
(c) Furnish such number of prospectuses and other documents
incidental thereto, including any amendment of or supplement to
the prospectus, as a holder of Registrable Shares from time to
time may reasonably request.
V. Indemnification.
(a) The Company will indemnify each holder of Registrable
Shares, each of its officers, directors and partners, and each
person controlling such holder of Registrable Shares, with
respect to which registration has been effected pursuant to this
Agreement, and each underwriter, if any and each person who
controls any underwriter, and their respective counsel against
all claims, losses, damages and liabilities (or actions,
proceedings or settlements in respect thereof) arising out of or
based on any untrue statement (or alleged untrue statement) of a
material fact contained in any prospectus, or other document
incident to any such registration, or based on any omission (or
alleged omission) to state therein a material fact required to be
stated therein or necessary to make the statements therein not
misleading, or any violation by the Company of the Securities Act
or any rule or regulation thereunder applicable to the Company in
connection with any such registration and will reimburse each
such holder of Registrable Shares, each of its officers,
directors and partners, and each person controlling such holder
of Registrable Shares, each such underwriter and each person who
controls any such underwriter, for any legal and any other
expenses as they are reasonably incurred in connection with
investigating and defending any such claim, loss, damage,
liability or action, provided, however, that the indemnity
contained in this Section 5(a) shall not apply to amounts paid in
settlement of any such claim, loss, damage, liability or action
if such Settlement is effected without the consent of the
Company; and provided further that the Company shall not be
liable in any such case to the extent that any such claim, loss,
damage, liability or expense arises out of or is based on any
untrue statement or omission based upon written information
furnished to the Company by such holder of Registrable Shares or
underwriter and stated to be specifically for use therein. The
foregoing indemnity agreement is further subject to the condition
that insofar as it relates to any untrue statement,
alleged untrue statement, omission or alleged omission made in a
preliminary prospectus, such indemnity agreement shall not inure
to the benefit of the foregoing indemnified parties if copies of
a final prospectus correcting the misstatement, or alleged
misstatement, omission or alleged omission upon which such loss,
liability, claim or damage is based is timely delivered to such
indemnified party and a copy thereof was not furnished to the
person asserting the loss, liability, claim or damage.
(b) Each holder of Registrable Shares will, if Registrable
Shares held by it are included in the securities as to which such
registration is being effected, indemnify the Company, each of
its directors and officers and each underwriter, if any, of the
Company's securities covered by such a registration statement,
each person who controls the Company or such underwriter within
the meaning of the Securities Act and the rules and regulations
thereunder, each other such holder of Registrable Shares and each
of its officers, directors and partners, and each person
controlling such holder of Registrable Shares, and their
respective counsel (collectively, the "Company, Underwriters and
Counsel") against all claims, losses, damages and liabilities (or
actions, proceedings or settlements in respect thereof) arising
out of or based on any untrue statement (or alleged untrue
statement) of a material fact relating to such Holder contained
in any such registration statement, prospectus, offering circular
or other document, or any omission (or alleged omission) to state
therein a material fact required to be stated therein relating to
such holder or necessary to make the statements therein relating
to such holder not misleading or any violation by such holder of
any rule or regulation promulgated under the Securities Act
applicable to such holder and relating to action or inaction
required of such holder in connection with any such registration;
and will reimburse the Company, such holders of Registrable
Shares, directors, officers, partners, persons, underwriters or
control persons for any legal or any other expense reasonably
incurred in connection with investigating or defending any such
claim, loss, damage, liability or action, in each case to the
extent, but only to the extent, that such untrue statement (or
alleged untrue statement) or omission (or alleged omission)
relating to such holder is made in such registration statement,
prospectus, offering circular or other document in reliance upon
and in conformity with written information furnished to the
Company by such holder of Registrable Shares and stated to be
specifically for use therein; provided, however, that such
indemnification obligations shall not apply if the Company
modifies or changes to a material extent written information
furnished by such Holder. Each holder of Registrable Shares will,
if Registrable Shares held by it are included in the securities
as to which such registration is being effected, indemnify the
Company, Underwriters and Counsel against all claims, losses,
damages and liabilities (or actions, proceedings or settlements
in respect thereof), arising out of or based on any sale of
Registrable Shares made by such holder following receipt by such
holder of written notice from the Company, Underwriters or
Counsel that the registration statement filed with respect to
such Registrable Shares contains an untrue statement of material
fact or omits to state a material fact necessary in order to make
the statements made therein, in light of the circumstances under
which they were made, not misleading.
(c) Each party entitled to indemnification under this
Section 5 (the "Indemnified Party") shall give notice to the
party required to provide indemnification (the "Indemnifying
Party") promptly after such Indemnified Party has actual
knowledge of any claim as to which indemnity may be sought, and
shall permit the Indemnifying Party to assume the defense of any
such claim or any litigation resulting therefrom, provided that
counsel for the Indemnifying Party, who shall conduct the defense
of such claim or any litigation resulting therefrom, shall be
approved by the Indemnified Party (whose approval shall not
unreasonably be withheld or delayed), and the Indemnified Party
may participate in such defense at such Indemnified Party's
expense. No Indemnifying Party, in the defense of any such claim
or litigation, shall except with the consent of each Indemnified
Party, consent to entry of any judgment or enter into any
settlement which does not include as an unconditional term
thereof the giving by the claimant or plaintiff to such
Indemnified Party of a release from all liability in respect to
such claim or litigation. Each Indemnified Party shall furnish
such information regarding itself or the claim in question as an
Indemnifying Party may reasonably request in writing and as shall
be reasonably required in connection with defense of such claim
and litigation resulting therefrom.
VI. Information by Holder of Registrable Shares. Each holder of
Registrable Shares shall furnish to the Company such information
regarding such holder of Registrable Shares and the distribution
proposed by such holder of Registrable Shares as the Company may
reasonably request in writing and as shall be reasonably required in
connection with any registration referred to in this Agreement.
VII. Miscellaneous.
A. Governing Law. This agreement shall be governed by and
construed in accordance with the laws of the State of California
without giving effect to conflict of laws.
B. Successors and Assigns. Except as otherwise provided
herein, the provisions hereof shall inure to the benefit of, and
be binding upon, the successors, assigns, heirs, executors and
administrators of the parties hereto.
C. Entire Agreement. This Agreement constitutes the full and
entire understanding and agreement between the parties with
regard to the subject matter hereof.
D. Notices, etc. All notices and other communications
required or permitted hereunder shall be in writing and shall be
mailed by first-class mail, postage prepaid, or delivered by hand
or by messenger or courier delivery service, addressed (a) if to
an Investor, at such Investor's address set forth on Exhibit A
hereof, or at such other address as such Investor shall have
furnished to the Company in writing, or (b) if to the Company at
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇, Attn:
President, or at such other address as the Company shall have
furnished to each Investor and each such other holder in writing.
E. Delays or Omissions. No delay or omission to exercise any
right, power or remedy accruing to any holder of any Registrable
Shares, upon any breach or default of the Company under this
Agreement, shall impair any such right, power or remedy of such
holder nor shall it be construed to be a waiver of any such
breach or default, or an acquiescence therein, or of or in any
similar breach or default thereunder occurring, nor shall any
waiver of any single breach or default be deemed a waiver of any
other breach or default thereafter occurring. Any waiver, permit,
consent or approval of any kind or character on the part of any
holder of any breach or default under this Agreement, or any
waiver on the part of any party of any provisions of conditions
of this Agreement, must be in writing and shall be effective only
to the extent specifically set forth in such writing. All
remedies, either under this Agreement, or by law or otherwise
afforded to any holder, shall be cumulative and not alternative.
F. Counterparts. This agreement may be executed in any
number of counterparts, each of which may be executed by less
than all of the Investors, each of which shall be enforceable
against the parties actually executing such counterparts, and all
of which together shall constitute one instrument.
G. Severability. In the case any provision of this Agreement
shall be invalid, illegal or unenforceable, the validity,
legality and enforceability of the remaining provisions shall not
in any way be affected or impaired thereby.
H. Amendments. The provisions of this Agreement may be
amended at any time and from time to time, and particular
provisions of this Agreement may be waived, with and only with an
agreement or consent in writing signed by the Company and by the
Investors currently holding fifty percent (50%) of the
Registrable Shares as of the date of such amendment or waiver.
I. Termination of Registration Rights. This Agreement shall
terminate at such time as there ceases to be at least $500,000 in
stated value (face amount) of Preferred Stock which constitute
Registrable Shares as defined herein.
The foregoing Registration Rights Agreement is hereby executed as of the date
first above written.
SPINTEK GAMING TECHNOLOGIES, INC.
INVESTOR
RBB Bank Aktiengesellschaft
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By:/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
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Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
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Title: Chairman and CEO Title: Headtrader
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