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EXHIBIT 10(1)
INNOVATIVE GAMING CORPORATION OF AMERICA
SECURITIES PURCHASE AGREEMENT AND
LETTER OF INVESTMENT INTENT
PROMISSORY NOTE
AND WARRANT TO PURCHASE COMMON STOCK
Innovative Gaming, Inc.
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Blake Capital Partners, LLC, hereby subscribes for the purchase of a
$1,000,000 principal amount Promissory Note (the "Note"), in the form attached
hereto as ANNEX A, of Innovative Gaming Corporation of America, a Minnesota
corporation (the "Company"), and warrants to purchase 70,000 shares of the
Company's common stock, $.01 par value, at a $1.00 per-share exercise price, to
be issued to each of (i) Blake Capital Partners, LLC, (ii) Wyncrest Capital and
(iii) Gulfstream Financial Partners (the "Warrants," and collectively with the
Note hereinafter called the "Securities") in the form attached hereto as ANNEX
B, upon the terms and conditions set forth below. The undersigned acknowledges
that this subscription is contingent upon acceptance in whole or in part by the
Company.
(1) Payment of Purchase Price; Delivery of Note and Warrant. The
undersigned subscriber will pay the purchase price in full to the order of
Innovative Gaming Corporation of America and deliver a complete and manually
signed copy of this Securities Purchase Agreement with such payment to the
Company. The undersigned will (1) send a completed and executed Securities
Purchase Agreement and (2) enclose or deliver a check in the amount of the
undersigned's subscription, PAYABLE TO "INNOVATIVE GAMING CORPORATION OF
AMERICA" TO THE ATTENTION OF ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, CHIEF EXECUTIVE OFFICER,
INNOVATIVE GAMING CORPORATION OF AMERICA, ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇ ▇▇▇▇▇; or alternatively, transmit the subscription amount by wire to the
account below:
Innovative Gaming Corporation of America
US Bank: Account # 153790378100
Routing # ▇▇▇▇▇▇▇▇▇
Upon the Company's acceptance of this Securities Purchase Agreement,
the Securities subscribed for will be registered in the name(s) of the person(s)
or entity/entities, and delivered by certified mail to the address specified on
page 7, or otherwise as instructed by the undersigned. Upon receipt of the
subscription amount by the Company, the Company shall pay an origination fee of
$50,000 to Blake Capital Partners, LLC.
(2) Registration Rights. The Company shall file a registration statement on Form
S-3 with the Securities and Exchange Commission (the "SEC") registering the
shares of the Company's common
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stock within 90 days of the issuance of any Securities under this Agreement,
which registration statement shall cover all 210,000 shares of the Company's
common stock issuable upon exercise of the Warrants. If the Company, at any time
after the issuance of the Securities and before 90 days following such issuance,
shall file a registration statement with the SEC under the Securities Act of
1933, as amended (the "Act"), for the purpose of registering shares of the
Company's common stock for sale to the public, the Company shall give to the
undersigned at least 20 days advance written notice of its intention to file
such registration statement and the undersigned shall have the right to have
included in such registration statement such number of the shares as it shall
designate to the Company within ten days after the date of such notice;
provided, however, that the number of shares to be included in such registration
statement, when added to all the other shares to be included therein, does not
exceed the number of shares which the Company and its underwriters, if any, or
any self-regulatory organization or gaming commission reasonably fix for
inclusion. The undersigned shall furnish the Company with such information as
may be required in connection with such registration statement and will
cooperate to cause such registration to become effective at the earliest
practicable time. If the shares to which such registration relates are to be
sold in an underwritten offering, the undersigned, as a condition to the
inclusion of the shares in the registration statement, shall agree that its
shares will be sold only as a part of such underwritten offering and at the
price and upon the terms fixed by the Company and its underwriters, subject to
the right of the undersigned to withdraw the shares therefrom.
(3) Certain Litigation Matters. In addition to the Securities subscribed
for hereunder, the undersigned subscriber hereby also subscribes for an interest
and right to ten percent (10%) of the gross proceeds of "certain litigation
matters" that are paid or to be paid to the Company in cash, provided that in
the event that an amount is required to be paid to the Company as licensing or
royalty fees on a going-forward basis and such licensing or royalty arrangement
would require the Investor to be licensed by one or more gaming authority in
order to participate in such licensing or royalty fee arrangement, that the
Investor and the Company will negotiate, in good faith, to agree upon a present
value payment of such licensing or royalty fee stream. The precise scope of the
"certain litigation matters" shall be mutually agreed upon by the parties at the
closing of this subscription.
(4) Representations of the Investor. In connection with, and in
consideration of the sale of the Securities to the undersigned, the undersigned
hereby represents and warrants to the Company that the undersigned:
A. has been given access to full and complete information regarding the
Company (including the opportunity to meet with the Company's officers
and review all documents as the undersigned may have requested in
writing); has utilized such access to the undersigned's satisfaction
for the purpose of obtaining information in addition to, or verifying
information included in IGCA's filings with the Securities and
Exchange Commission, including but not limited to the Company's Form
10-K for the Fiscal Year ended December 31, 2000 (the "SEC Filings");
and has been given reasonable opportunity to ask questions of, and
receiving answers from, such representatives of the Company concerning
the terms and conditions of the offering of the securities offered
hereby;
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B. realizes that the Note is unsecured and that a purchase of the
Securities represents a speculative investment involving a high degree
of risk, including but not limited to the reasons described in the SEC
Filings;
C. understands that the Note is not convertible into IGCA's common stock;
D. understands that the Company's common stock may only be sold pursuant
to a registration statement relating to such securities or pursuant to
an exemption from registration;
E. can bear the economic risk of an investment in the Securities, can
afford to sustain a complete loss of such investment, has no need for
liquidity in connection with an investment in the Securities, and can
afford to hold such securities indefinitely;
F. realizes that there will be no market for the Securities, that there
are significant restrictions on the transferability of the Securities
and that for these and other reasons, the undersigned may not be able
to liquidate an investment in the Securities for an indefinite period;
G. realizes that the Securities have not been registered for sale under
the Act, or applicable state securities laws (the "State Laws"), and
may be sold only pursuant to registration under the Act and State
Laws, or an opinion of counsel satisfactory to counsel for the Company
that such registration is not required;
H. believes that the investment in the Securities is suitable for the
undersigned based upon the undersigned's investment objectives and
financial needs, and the undersigned has adequate means to provide for
the undersigned's current financial needs and personal/business
contingencies and has no need for liquidity of investment with respect
to the Securities; and
I. is experienced and knowledgeable in financial and business matters,
capable of evaluating the merits and risks of investing in the
Securities, and does not need or desire the assistance of a
knowledgeable representative to aid in the evaluation of such risks
(or, in the alternative, has a knowledgeable representative who such
investor intends to use in connection with a decision as to whether to
purchase the Securities and who together with such investor has such
knowledge and experience in financial and business matters that they
are together capable of evaluating the merits and risks of investing
in the Securities).
(5) Investment Intent. The undersigned has been advised that the Securities
have not been registered under the Act or the relevant State Laws but are being
offered, and will be offered and sold, pursuant to exemptions from the Act and
State Laws, and that the Company's reliance upon such exemptions is predicated
in part on the undersigned's representations contained herein. The undersigned
represents and Warrants that the Securities are being purchased for the
undersigned's own account and for long-term investment and without the intention
of reselling or
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redistributing the Securities, that the undersigned has made no agreement
with others regarding any of the Securities, and that the undersigned's
financial condition is such that it is not likely that it will be necessary for
the undersigned to dispose of any of the Securities in the foreseeable future.
The undersigned is aware that (i) in the view of the SEC, a purchase of
securities with an intent to resell by reason of any foreseeable specific
contingency or anticipated change in market values, or any change in the
liquidation or settlement of any loan obtained for the acquisition of any of the
Securities and for which the Securities were or may be pledged as security would
represent an intent inconsistent with the investment representations set forth
above, and (ii) the transferability of the Securities is restricted.
The undersigned understands that the Note will contain the following
legend:
This Note has not been registered under the Securities Act of 1933 or
under the securities laws of any state or other jurisdiction
(together, the "Securities Laws") and may not be offered for sale,
sold, or otherwise transferred or encumbered in the absence of
compliance with such Securities Laws and until the Company (as defined
herein) thereof shall have received an opinion from counsel acceptable
to it that the proposed disposition will not violate any applicable
Securities Laws. This Note is non-negotiable and non-transferable and
no interest shall be paid except to the payee named herein except as
otherwise noted herein. This Note is not secured.
The undersigned further represents and agrees that if, contrary to the
undersigned's foregoing intentions, the undersigned should later desire to
dispose of or transfer any of the Securities in any manner, the undersigned
shall not do so without first obtaining (i) an opinion of counsel satisfactory
to the Company that such proposed disposition or transfer may be made lawfully
without the registration of such securities pursuant to the Act and applicable
State Laws, or (ii) registration of such securities (it being expressly
understood that the Company shall not have any obligation to register such
Securities except as specifically set forth herein).
(6) Residence. The undersigned represents and warrants that the undersigned
is a bona fide resident of, or if a business entity is duly organized, formed,
or incorporated in the State of Minnesota, and that the Securities are being
purchased by the undersigned in the undersigned's name solely for the
undersigned's own beneficial interest and not as nominee for, on behalf of, for
the beneficial interest transfer to, any other person, trust, or organization
(except as specifically set forth in paragraph (10) of this Agreement).
PARAGRAPH (7) IS REQUIRED IN CONNECTION WITH THE EXEMPTIONS FROM THE ACT
AND STATE LAWS BEING RELIED ON BY THE COMPANY WITH RESPECT TO THE OFFER AND SALE
OF THE SECURITIES OFFERED BY THIS SECURITIES PURCHASE AGREEMENT. ALL OF SUCH
INFORMATION WILL BE KEPT CONFIDENTIAL AND WILL BE REVIEWED ONLY BY THE COMPANY
AND ITS COUNSEL. The undersigned agrees to furnish any additional information
which the Company or its legal counsel deem necessary in order to verify the
responses set forth below.
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(7) Accredited Status. The undersigned represents and warrants as follows
(check all that apply):
______ A. The undersigned is an individual with a net worth, or a joint net
worth together with his or her spouse, in excess of $1,000,000
(In calculating net worth, you may include equity in personal
property and real estate, including your principal residence,
cash, short-term investments, stock, and securities. Equity in
personal property and real estate should be based on the fair
market value of such property minus debt secured by such
property).
______ B. The undersigned is an individual (not a partnership, corporation,
etc.) with income in excess of $200,000 in each of the prior two
years and reasonably expects an income in excess of $200,000 in
the current year.
______ C. The undersigned is an individual (not a partnership, corporation,
etc.) who, with his or her spouse, had joint income in excess of
$300,000 in each of the prior two years and reasonably expects
joint income in excess of $300,000 in the current year.
______ D. The undersigned, if other than an individual, is an entity all of
whose equity owners meet one of the tests set forth in (a)
through (d) above (if relying on this category alone, each equity
owner must complete a separate copy of this Agreement).
______ E. The undersigned is an entity, and is an "Accredited Investor" as
defined in Rule 501(a) of Regulation D under the Act.
(8) Entities. If the undersigned is not an individual but an entity, the
individual signing on behalf of such entity and the entity jointly and severally
agree and certify that:
A. The undersigned was not organized for the specific purpose of
acquiring the Securities; and
B. This Agreement has been duly authorized by all necessary action on the
part of the undersigned, has been duly executed by an authorized
officer or representative of the undersigned, and is a legal, valid
and binding obligation of the undersigned enforceable in accordance
with its terms.
(9) Legal Age. If the undersigned is an individual, the undersigned is of
legal age.
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(10) Miscellaneous.
A. Manner in which title is to be held: (check one):
_____ Individual Ownership
_____ Joint Tenants with Right of Survivorship*
_____ Partnership*
_____ Tenants in Common*
_____ Corporation
_____ Trust
_____ Other (describe): ______________________________
* Multiple signatures required.
B. The undersigned agrees that he/she understands the meaning and legal
consequences of the agreements, representations and warranties
contained herein, agrees that such agreements, representations and
warranties shall survive and remain in full force and effect after the
execution hereof and payment for the Securities, and further agrees to
indemnify and hold harmless the Company, each current and future
officer, director, employee, agent and shareholder from and against
any and all loss, damage or liability due to, or arising out of, a
breach of any agreement, representation or warranty of the undersigned
contained herein.
C. This Agreement shall be construed and interpreted in accordance with
Minnesota law without regard to conflict-of-law provisions.
D. The undersigned agrees to furnish to the Company, upon request, such
additional information as may be deemed necessary to determine the
undersigned's suitability as an investor.
INTENTIONAL SHORT PAGE
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INDIVIDUAL SUBSCRIBERS: ENTITY SUBSCRIBERS:
(including joint tenants and
tenants in common)
X_______________________________ X_________________________________
Signature Signature
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Name (typed or printed)
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Name (typed or printed) and title
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Address, city, state and zip code Name of entity
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Social security number
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Business telephone number
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Fax number Address, city, state and zip code
X_________________________________ ----------------------------------
Signature (If more than one Tax identification number
individual subscriber)
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Name (typed or printed) Telephone number
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Fax number
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Address, city, state and zip code Date signed
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Social security number
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Date signed
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ACCEPTANCE
This Securities Purchase Agreement and Letter of Investment Intent is
accepted as of this ____ day of April, 2001.
INNOVATIVE GAMING CORPORATION OF AMERICA
By: _________________________________
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Chief Executive Officer
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ANNEX A
Form of Promissory Note
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