SILICON GAMING, INC.
AMENDMENT NO. 2 TO
SECURITIES PURCHASE AGREEMENT
DATED AS OF SEPTEMBER 30, 1997
FOR
UNITS CONSISTING OF
SENIOR DISCOUNT NOTES
DUE SEPTEMBER 30, 2002
AND
WARRANTS TO PURCHASE COMMON STOCK,
PAR VALUE $.001 PER SHARE,
OF
SILICON GAMING, INC.
November 24, 1999
SILICON GAMING, INC.
This AMENDMENT NO. 2 (this "AMENDMENT") to the Securities Purchase
Agreement dated as of September 30, 1997 (the "AGREEMENT") by and between
Silicon Gaming, Inc., a California corporation (the "COMPANY"), and the
purchaser named therein (the "PURCHASER") is effective as of November 24, 1999.
Unless otherwise defined, capitalized terms used in this Amendment have the same
meanings as those ascribed to them in the Agreement.
WHEREAS, the Company and the Purchaser entered into the Agreement as of
September 30, 1997 providing for the issuance by the Company and the purchase by
the Purchaser of $30,000,000 aggregate principal amount of Senior Discount Notes
(the "NOTES") and Warrants to purchase 375,000 shares of Common Stock; and
WHEREAS, the Company and the Purchaser entered into Amendment No. 1 to the
Agreement as of July 8, 1998, providing for the issuance by the Company and the
purchase by the Purchaser of an additional $17.25 million aggregate principal
amount of Notes and Warrants to purchase 250,000 shares of Common Stock; and
WHEREAS, in connection with the financial restructuring of the Company
contemplated by that certain Restructuring Agreement dated as of November 24,
1999 (the "RESTRUCTURING AGREEMENT") by and between the Company and the
Purchaser, the Company and the Purchaser desire to amend the Agreement to
provide for the cancellation of $39.75 million aggregate principal amount of the
Notes by the Purchaser in exchange for 39,750 shares of Series D Preferred Stock
of the Company, to amend the terms and provisions of the remaining $7.5 million
aggregate principal amount of the Notes and to issue to Purchaser warrants for
the Series E Preferred Stock of the Company; and
WHEREAS, in connection with such cancellation of Notes and accrued
interest, and issuance of Preferred Stock, the Company and the Purchaser have
agreed to amend certain terms of the Agreement as set forth herein.
NOW THEREFORE, in consideration of the mutual covenants and agreements set
forth herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Company and the Purchaser
agree as follows:
ARTICLE I
AMENDMENTS
1.1 AMENDMENTS TO ARTICLE I.
(a) SECTION 1.1 OF THE AGREEMENT IS HEREBY AMENDED BY ADDING THE
FOLLOWING DEFINITIONS:
"Authorized Common Stock Amendment" means the Amendment to the
Articles of Incorporation of the Company approved by the Board of
Directors of the Company to increase the number of authorized shares
of Common Stock of the Company from 50,000,000 shares to 750,000,000
shares.
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"Management Incentive Plan" means the Silicon Gaming, Inc. 1999
Long-Term Compensation Plan adopted by the Board of Directors of the
Company, contemporaneously with the Closing, under which grants and
sales of Common Stock and options to purchase up to _________________
shares of Common Stock of the Company may be made.
"Management Options" means any options to purchase the Common Stock of
the Company sold or grated to any eligible participant under the
Management Incentive Plan.
"Management Shares" means the shares issued under the Management
Incentive Plan or upon exercise of the options granted under that
plan.
"Old Equity Warrants" means the warrants to purchase the Common Stock
of the Company issuable to the stockholders of the Company as of the
Record Date set pursuant to the Restructuring Agreement, and the terms
and provisions of which are set forth in the Warrant Agreement by and
between the Company and the Warrant Agent (as defined in the Warrant
Agreement).
"Restructuring Agreement" shall mean that certain Restructuring
Agreement by and between the Company and BIII Capital Partners, L.P.,
dated as of November ____, 1999.
"Restructuring Closing" has the meaning ascribed thereto in Section
2.9 hereof.
"Restructuring Closing Date" has the meaning ascribed thereto in
Section 2.9 hereof.
"Series D Certificate of Determination" means the officer's
certificate filed with the Secretary of State of the State of
California which sets forth the voting powers, preferences and
relative, participating, optional and other special rights, and
qualifications, limitations and restrictions of the Company's Series D
Preferred Stock.
"Series D Preferred Stock" means the Series D Convertible Redeemable
Preferred Stock of the Company.
"Warrant Agent" has the meaning ascribed to it in the Warrant
Agreement.
"Warrant Agreement" means the Warrant Agreement between the Company
and the Warrant Agent (as defined in the Warrant Agreement) which sets
forth the terms and provisions of the Old Equity Warrants.
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(b) SECTION 1.1 IS HEREBY FURTHER AMENDED BY RESTATING EACH OF THE
FOLLOWING DEFINITIONS IN ITS ENTIRETY:
the definition of "Accreted Value" is hereby deleted in its entirety.
"Amended Notes" means the Senior Discount Notes, as amended by
Amendment No. 2 to the Securities Purchase Agreement.
"Change of Control" means any transaction or series of transactions in
which any of the following occurs: (a) any Person or group (within the
meaning of Rule 13d-3 under the Exchange Act and Sections 13(d) and
14(d) of the Exchange Act) becomes the direct or indirect "beneficial
owner" (as defined in Rule 13d-3 under the Exchange Act) of 25% or
more of the issued and outstanding shares of Capital Stock entitled to
vote in the election of directors of the Company or the Surviving
Person (if other than the Company); (b) a merger or consolidation of
the Company with or into another corporation in which less than a
majority of the outstanding voting power of the surviving or
consolidated corporation immediately following such event is held by
persons or entities who were stockholders of the Company immediately
prior to such event or (c) the sale of all or substantially all of the
properties and assets of the Company and its subsidiaries; or (d) the
redemption or repurchase of shares representing a majority of the
voting power of the outstanding shares of capital stock of the Company
or (e) individuals who at the Closing constituted the Board of
Directors of the Company (together with any new directors whose
election by such Board of Directors or whose nomination for election
by the stockholders of the Company was approved by a vote of at least
a majority of the directors of the Company then still in office who
were either directors at the Closing or whose election or nomination
for election was previously so approved) cease for any reason to
constitute a majority of the Board of Directors of the Company then in
office; provided, however, that a conversion of Series D Preferred
Stock into Common Stock, an issuance of Common Stock under the
Management Incentive Plan, an issuance of the Units, or an issuance of
Common Stock upon exercise of the Old Equity Warrants, shall not,
individually or in the aggregate, constitute a Change of Control.
"Fair Market Value" or "fair market value" means, with respect to any
assets or properties, the amount at which such assets or properties
would change hands between a willing buyer and a willing seller,
within a commercially reasonable time, each having reasonable
knowledge of the relevant facts, neither being under a compulsion to
sell or buy, as such amount is determined by (a) the Board of
Directors of the Company acting in good faith or (b) at the request of
the holders of the majority of the outstanding Senior Discount Notes
an appraisal or valuation firm of national or regional standing
selected by the Company (with the reasonable consent of the holders of
a majority of the outstanding Senior Discount Notes), with experience
in the appraisal or valuation of properties or assets of the type for
which Fair Market Value is being determined; provided, however, that
if the Common Stock is traded on the Nasdaq National Market or the
NYSE (or successor thereof), the Fair Market Value of the Common Stock
shall be the average of the closing prices for the 10 trading days
immediately prior to the date of determination.
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"Incur" or "incur" means, with respect to any Indebtedness or other
obligation of any Person, to create, issue, incur (by conversion,
exchange or otherwise), suffer to exist, assume, Guarantee or
otherwise become liable in respect of such Indebtedness or other
obligation, including by way of merger or acquisition of another
Person, or the recording, as required pursuant to GAAP or otherwise,
of any such Indebtedness or other obligation on the balance sheet of
such Person (and "Incurrence," "Incurred," "Incurrable" and
"Incurring" shall have meanings correlative to the foregoing).
"Issue Date" means July 15, 1999.
"Officers' Certificate" means a certificate executed on behalf of the
Company by an Officer of the Company or by an Assistant Secretary of
the Company.
"Securities" means the Amended Notes.
"Senior Discount Notes" means the Company's Senior Discount Notes
(Series A) and Senior Discount Notes (Series B), due September 30,
2002, and Amended Notes, as amended or supplemented from time to time
in accordance with the terms hereof, that are issued pursuant to this
Agreement and each note delivered in substitution or exchange for any
such note.
"Transaction Documents" means, collectively, this Agreement, the
Certificate of Determination, the Amended Notes, the Amendment No. 2
to the Securities Purchase Agreement, the New Notes, the Restructuring
Agreement, the Stockholders Agreement, and the Management Incentive
Plan, the Warrant Agreement and any and all agreements, certificates,
instruments and other documents contemplated thereby or executed and
delivered in connection therewith.
"Units" means the Units consisting of one share of Common Stock and
one Old Equity Warrant that the Company intends to issue as soon as is
practicable following the Closing of the Restructuring.
1.2 AMENDMENTS TO ARTICLE II.
(a) ARTICLE II OF THE AGREEMENT IS HEREBY AMENDED TO ADD THE FOLLOWING
SECTIONS 2.7, 2.8 AND 2.9:
2.7 ISSUANCE OF AMENDED NOTES.
(a) The Company has authorized the issuance of up to $7.5 million
aggregate principal amount of its Amended Notes, to be issued pursuant to and in
accordance with the terms of this Agreement, as a replacement and in
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substitution for the remaining principal amount of Senior Discount Notes
outstanding upon execution and delivery of the Amendment No. 2 to the Agreement
and the Restructuring Agreement. Each Amended Note will be issued in
substantially in the form set forth in EXHIBIT E hereto, with such changes
thereto, if any, as may be approved by the Purchaser and the Company.
(b) The Company has authorized the issuance and sale of up to
39,750 shares of Series D Preferred Stock in exchange for the cancellation by
the Purchaser of (i) $39.75 million aggregate principal amount of Senior
Discount Notes and any and all interest accrued thereon through the
Restructuring Closing Date, and (ii) any and all interest accrued through July
15, 1999 on the remaining $7.5 million aggregate principal amount of Senior
Discount Notes. The rights, preferences, and limitations of the Series D
Preferred Stock are set forth in the Certificate of Determination.
2.8 ISSUANCE AND ACCEPTANCE OF AMENDED NOTES. At the Restructuring Closing
provided for in Section 2.9, the Company will issue to the Purchaser and,
subject to the terms and conditions of this Agreement, the Purchaser will accept
from the Company, the Amended Notes. In addition, the Company will issue shares
of Series D Preferred Stock in exchange for the cancellation of (i) $39.75
million aggregate principal amount of Senior Discount Notes and all interest
accrued thereon through the Restructuring Closing Date, and (ii) any and all
interest that has accrued through July 15, 1999 on the remaining $7.5 million
aggregate principal amount of Senior Discount Notes, subject to the terms and
conditions of the Amendment No. 2 to the Agreement and the Restructuring
Agreement.
2.9 CLOSING OF THE RESTRUCTURING. The events set forth in Sections 2.7 and
2.8 will take place at the offices of Squire, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ L.L.P., ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, at a closing (the
"RESTRUCTURING CLOSING") on November 24, 1999, or at such other place or on such
other date as the Purchaser and the Company may agree upon (such date on which
the Restructuring Closing shall have actually occurred, the "RESTRUCTURING
CLOSING DATE").
1.3 AMENDMENTS TO ARTICLE III.
ARTICLE III OF THE AGREEMENT IS HEREBY AMENDED TO ADD THE FOLLOWING
SECTIONS 3.5 AND 3.6:
3.5 CONDITIONS PRECEDENT TO OBLIGATIONS OF THE PURCHASER ON THE
RESTRUCTURING CLOSING DATE. The Purchaser's obligation to cancel $39.75 million
aggregate principal amount of the Senior Discount Notes, and any interest
accrued thereon, and any interest which has accrued on the remaining $7.5
million aggregate principal amount of the Senior Discount Notes through July 15,
1999, is subject to the fulfillment to its satisfaction, prior to or at the
Restructuring Closing, of the conditions set forth in Sections 3.1(a), (b), (c),
(g), (h)(iii), (j) and (k) above, in each case substituting the Restructuring
Closing for the Closing and, with respect to the certificate provided for in
Section 3.1(c), referring to the conditions set forth in this Section 3.5;
provided that any or all of such conditions may be waived, in whole or in part,
by the Purchaser with respect to this Agreement in its sole and absolute
discretion.
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3.6 CONDITIONS PRECEDENT TO OBLIGATIONS OF THE COMPANY ON THE RESTRUCTURING
DATE. The Company's obligation to execute and deliver the Amendment No. 2 to the
Agreement is subject to (i) the fulfillment to its satisfaction, prior to or at
the Restructuring Closing, of the conditions set forth in Sections 3.2(a), (b),
(d) and (e) above, and in each case substituting the Restructuring Closing for
the Closing, and (ii) the execution and delivery of the Restructuring Agreement
by the Purchaser; provided that any or all of such conditions may be waived, in
whole or in part, by the Company with respect to this Agreement in its sole and
absolute discretion.
1.4 AMENDMENTS TO ARTICLE IV.
THE INTRODUCTORY LANGUAGE TO ARTICLE IV IS HEREBY AMENDED TO PROVIDE AS
FOLLOWS:
In order to induce the Purchaser to accept the Amended Notes, the Company
represents and warrants that the statements contained in this Article IV are
correct and complete as of the date of this Agreement and will be correct and
complete as of the Closing Date, the Additional Closing Date or the
Restructuring Closing Date as the case may be (as though made at and as of the
date of this Agreement and as though the Closing Date, Additional Closing Date
or Restructuring Date were substituted for the date of this Agreement throughout
Article IV):
1.5 AMENDMENTS TO ARTICLE VI.
SECTIONS 6.6(A), (C) AND (D), AND 6.7(B) AND (C) OF THE AGREEMENT ARE
AMENDED AND RESTATED IN THEIR ENTIRETY AS FOLLOWS:
6.6 OPTIONAL AND MANDATORY REDEMPTION.
(a) The Senior Discount Notes will be subject to redemption, in whole
or from time to time in part (in multiples of $1,000 of principal amount) at the
option of the Company at a price equal to 100% of the aggregate outstanding
principal amount thereof, plus any accrued and unpaid interest to the Redemption
Date.
(c) [omitted]
(d) Upon any partial prepayment or redemption of the Senior Discount
Notes, the principal amount so prepaid or redeemed shall be allocated to all
Senior Discount Notes at the time outstanding in proportion to the respective
outstanding principal amounts thereof, and a corresponding pro rata adjustment
shall be made in the minimum denomination of a Senior Discount Note pursuant to
Section 11.1.
6.7 MANDATORY OFFERS.
(b) On the Purchase Date for any Offer, the Company shall (i) in the
case of an Offer resulting from a Change of Control, accept for payment all New
Notes or portions thereof tendered pursuant to such Offer, and (ii) in the case
of an Offer resulting from one or more Securities Sales or Mezzanine Debt
Financings accept for payment all New Notes or portions thereof tendered
pursuant to such Offer that are required to be purchased pursuant to Section
7.13 hereof.
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(c) With respect to any Offer, (i) if less than all of the Senior
Discount Notes tendered pursuant to an Offer are to be accepted for payment by
the Company for any reason, the Company shall select on or prior to the Purchase
Date the Senior Discount Notes or portions thereof to be accepted for payment
pursuant to Section 6.2; and (ii) unless the Company defaults in the payment of
the purchase price for such Senior Discount Notes on the Purchase Date, interest
shall cease to accrue on such Senior Discount Notes on the Purchase Date;
PROVIDED, HOWEVER, that if the Company fails to purchase all Senior Discount
Notes accepted for payment, the Company shall purchase on a pro rata basis all
Senior Discount Notes, respectively, accepted for payment and interest shall
continue to accrue on all Senior Discount Notes not purchased.
1.6 AMENDMENTS TO ARTICLE VII
(a) ARTICLE 7 OF THE AGREEMENT IS HEREBY AMENDED AND RESTATED IN ITS
ENTIRETY AS FOLLOWS:
7.1 PAYMENT OF SENIOR DISCOUNT NOTES. The Company shall pay the principal
of, and premium, if any, and interest on, the Senior Discount Notes on the dates
and in the manner provided in the Senior Discount Notes. Holders must surrender
their Senior Discount Notes to the Company to collect principal payments.
Principal, premium, or interest shall be considered paid on the date due if, by
2:00 p.m., Boston, Massachusetts time, on such date, the Company shall have
executed wire transfers in immediately available funds designated for and
sufficient to pay such principal, premium or interest. To the extent lawful, the
Company shall pay interest (including Post-Petition Interest) on overdue
principal, premium and interest (without regard to any applicable grace period)
at a rate equal to 1.5% per annum in excess of the then applicable interest rate
on the Senior Discount Notes.
7.2 REPORTS
(a) To the extent permitted by applicable law or regulation, whether
or not the Company is subject to the requirements of Section 13 or 15(d) of the
Exchange Act, the Company shall file with the Commission all quarterly and
annual reports and such other information, documents or other reports (or copies
of such portions of any of the foregoing as the Commission may by rules and
regulations prescribe) required to be filed pursuant to such provisions of the
Exchange Act. The Company shall mail to the holders of the Senior Discount Notes
at their addresses appearing in the register of Senior Discount Notes, at the
time of such mailing, within 10 days after it files the same with the
Commission, all information, documents and reports that it is required to file
with the Commission pursuant to this Section 7.2. If the Company is not
permitted by applicable law or regulations to file the aforementioned reports,
the Company (at its own expense) shall mail to the holders of the Senior
Discount Notes at their addresses appearing in the register of Senior Discount
Notes, at the time of such mailing within 5 days after it would have been
required to file such information with the Commission, all information and
financial statements, including any notes thereto and with respect to annual
reports, an auditors' report by an accounting firm of established national
reputation, and a "Management's Discussion and Analysis of Financial Condition
and Results of Operations," comparable to the disclosure that the Company would
8
have been required to include in annual and quarterly reports, information,
documents or other reports, including, without limitation, reports on Forms
10-K, 10-Q and 8-K, if the Company was subject to the requirements of such
Section 13 or 15(d) of the Exchange Act.
(b) At any time when the Company is not permitted by applicable law or
regulations to file the aforementioned reports, upon the request of a holder of
a Senior Discount Note, the Company will promptly furnish or cause to be
furnished such information as is specified pursuant to Rule 144A(d)(4) under the
Securities Act (or any successor provision thereto) to such holder or to a
prospective purchaser of such Senior Discount Note designated by such holder, as
the case may be, in order to permit compliance by such holder with Rule 144A
under the Securities Act.
7.3 COMPLIANCE CERTIFICATE. The Company shall deliver to the Holders,
within 135 days after the end of each fiscal year of the Company, an Officers'
Certificate stating that (i) a review of the activities of the Company and its
Subsidiaries during the preceding fiscal year has been made to determine whether
the Company has kept, observed, performed and fulfilled all of its obligations
under this Agreement and the Senior Discount Notes, (ii) such review was
supervised by the Officers of the Company signing such certificate, and (iii)
that to the best knowledge of each Officer signing such certificate, (A) the
Company has kept, observed, performed and fulfilled each and every covenant
contained in this Agreement and is not in default in the performance or
observance of any of the terms, provisions and conditions of this Agreement (or,
if a Default or Event of Default occurred, describing all such Defaults or
Events of Default of which each such Officer may have knowledge and what action
the Company has taken or proposes to take with respect thereto), and (B) no
event has occurred and remains in existence by reason of which payments on
account of the principal of, or premium, if any, or interest on, the New Notes
are prohibited or if such event has occurred, a description of the event and
what action the Company is taking or proposes to take with respect thereto.
(b) So long as not contrary to the then current recommendations of the
American Institute of Certified Public Accountants, the Officers' Certificate
delivered pursuant to Section 7.3(a) shall be accompanied by a written statement
of Deloitte & Touche LLP, the Company's independent public accountants (or
another independent accounting firm of established national reputation
reasonably satisfactory to the Holders), that in making the examination
necessary for certification of such financial statements nothing has come to
their attention that would lead them to believe that the Company has violated
any provisions of Sections 7.1, 7.5, 7.7, 7.10, 7.13, or Article VIII, or if any
such violation has occurred, specifying the nature and period of existence
thereof, it being understood that such accountants shall not be liable directly
or indirectly to any Person for any failure to obtain knowledge of any such
violation.
(c) The Company will, so long as any of the Senior Discount Notes are
outstanding, deliver to the Holders, promptly after any Officer of the Company
becomes aware of (i) any Default or Event of Default, or (ii) any default or
event of default under any other mortgage, agreement or instrument that could
result in an Event of Default under Section 9.1, an Officers' Certificate
specifying such Default, Event of Default or default and what action the Company
is taking or proposes to take with respect thereto.
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7.4 STAY, EXTENSION AND USURY LAWS. The Company covenants (to the extent
that it may lawfully do so) that it will not at any time insist upon, plead, or
in any manner whatsoever claim or take the benefit or advantage of, any stay,
extension or usury law wherever enacted, now or at any time hereafter in force,
that might affect the covenants or the performance of its obligations under this
Agreement and the Senior Discount Notes; and the Company (to the extent it may
lawfully do so) hereby expressly waives all benefit or advantage of any such
law, and covenants that it will not, by resort to any such law, hinder, delay or
impede the execution of any power granted to the Holders pursuant to this
Agreement, but will suffer and permit the execution of every such power as
though no such law has been enacted.
7.5 LIMITATION ON RESTRICTED PAYMENTS.
(a) The Company shall not, and shall not permit any Subsidiary to,
directly or indirectly, make any Restricted Payment, except payments,
prepayments, repurchases, redemptions and acquisitions with respect to
Indebtedness not incurred in violation of Section 7.7.
(b) NOTWITHSTANDING SECTION 7.5(A), THE FOLLOWING RESTRICTED PAYMENTS
MAY BE MADE: (I) THE REDEMPTION OF THE SERIES D PREFERRED STOCK, THE AMENDED
NOTES, AND THE NEW NOTES UNDER THE TERMS AND PROVISIONS OF THE RELEVANT
AGREEMENT CONTROLLING EACH INSTRUMENT; (II) REPURCHASE OF ANY COMMON STOCK
PURSUANT TO THE PROVISIONS OF THE MANAGEMENT INCENTIVE PLAN AT A REDEMPTION
PRICE NO GREATER THAN THE PRICE AT WHICH SUCH SHARES WERE ORIGINALLY SOLD; (III)
THE ISSUANCE OF THE UNITS; AND (IV) THE ISSUANCE OF THE SERIES E WARRANT.
7.6 CORPORATE EXISTENCE. Subject to Article VIII, the Company will do or
cause to be done all things necessary to preserve and keep in full force and
effect its corporate existence and the corporate or similar existence of each of
its Subsidiaries in accordance with the respective organizational documents of
each of its Subsidiaries and the rights (charter and statutory), licenses and
franchises of the Company and each of its Subsidiaries; provided, however, that
the Company shall not be required to preserve any such right, license or
franchise, or the corporate or similar existence of any Subsidiary, if the
Company's Board of Directors shall determine that the preservation thereof is no
longer desirable in the conduct of the business of the Company and its
Subsidiaries taken as a whole and that the loss thereof is not adverse in any
material respect to the holders of the Senior Discount Notes and the Warrants.
7.7 LIMITATION ON INDEBTEDNESS.
(a) Except as set forth in this Section 7.7, the Company shall not,
and shall not permit any Subsidiary, after the date hereof, directly or
indirectly, to Incur any Indebtedness (including Acquired Indebtedness) without
the prior written consent of the holders of a majority of the then outstanding
Senior Discount Notes. For purposes of this Agreement, Indebtedness of any
Acquired Person that is not a Subsidiary, which Indebtedness is outstanding at
the time such Person is acquired by the Company or a Subsidiary or becomes, or
is merged into or consolidated with, a Subsidiary, shall be deemed to have been
Incurred by the Company or the acquiring Subsidiary at the time such Acquired
Person becomes, or is merged into or consolidated with, a Subsidiary.
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(b) Notwithstanding Section 7.7(a) the Company and its Subsidiaries
may Incur, after the date hereof, any of the following Indebtedness:
(i) Indebtedness outstanding at the date evidenced by the New
Notes and the Amended Notes, including any Indebtedness evidenced hereof as
set forth on SCHEDULE 4.8, including the Indebtedness by notes issued as
payment-in-kind for interest payments due and payable under the Amended
Notes and the New Notes;
(ii) Indebtedness to any Wholly-Owned Subsidiary of the Company
or Indebtedness of any Subsidiary to the Company (provided that such
Indebtedness is at all times held by the Company or a Wholly-Owned
Subsidiary of the Company); PROVIDED, HOWEVER, that for purposes of this
Section 7.7, upon either (A) the transfer or other disposition by any such
Wholly-Owned Subsidiary of any Indebtedness so permitted to a Person other
than the Company or another Wholly-Owned Subsidiary of the Company or (B)
the issuance, sale, lease, transfer or other disposition of shares of
Capital Stock (including by consolidation or merger) of such Wholly-Owned
Subsidiary to a Person other than the Company or another such Wholly-Owned
Subsidiary, the provisions of this clause (ii) shall no longer be
applicable to such Indebtedness and such Indebtedness shall be deemed to
have been Incurred by the Company at the time of such transfer or other
disposition;
(iii) Refinancing Indebtedness with respect to Indebtedness that
was Incurred prior to the date hereof or, if incurred after the date
hereof, was Incurred in compliance with the provisions of this Agreement;
PROVIDED, HOWEVER, that (A) the principal amount of such Refinancing
Indebtedness shall not exceed the principal amount (or accreted value, in
the case of Indebtedness issued at a discount) of the Indebtedness so
extended, refinanced, renewed, replaced, substituted, defeased or refunded
(plus the amount of fees, costs and expenses incurred and the amount of any
premium, penalties, breakage costs and other similar amounts required to be
paid in connection with such refinancing pursuant to the terms of the
instrument governing the Indebtedness so extended, refinanced, renewed,
replaced, substituted, defeased or refunded or the amount of any premium
reasonably determined by the Company as necessary to accomplish a
refinancing by means of a tender offer or privately negotiated repurchase,
which determination shall be supported by a fairness opinion from an
Independent Financial Advisor, plus the fees, costs and expenses of such
tender offer or repurchase); and (B) the Refinancing Indebtedness shall (1)
have a Weighted Average Life to Maturity equal to or greater than the
Weighted Average Life to Maturity of the Indebtedness being extended,
refinanced, renewed, replaced, substituted, defeased or refunded; (2) not
have a final scheduled maturity earlier than the final scheduled maturity
of the Indebtedness being extended, refinanced, replaced, renewed,
substituted, defeased or refunded; (3) not permit redemption at the option
of the holder earlier than the earliest date of redemption at the option of
the holder of the Indebtedness being extended, refinanced, renewed,
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replaced, substituted, defeased or refunded; and (4) rank no more senior or
be at least as subordinated, as the case may be, in right of payment to the
New Notes, the Series D Preferred Stock and the Senior Discount Notes as
the Indebtedness being extended, refinanced, replaced, renewed,
substituted, defeased or refunded;
(iv) Senior Indebtedness of the Company not to exceed an
aggregate of $4,000,000 (inclusive of amounts outstanding as of the date of
this Agreement), including without limitation, Indebtedness owed to Silicon
Valley Bank under the Company's secured credit facility, or any successor
or similar secured credit facility.
7.8 LIMITATION ON TRANSACTIONS WITH AFFILIATES.
(a) Neither the Company nor any of its Subsidiaries shall enter into
any transaction or series of transactions to sell, lease, transfer, exchange or
otherwise dispose of any of its properties or assets to or to purchase any
property or assets from, or for the direct or indirect benefit of, an Affiliate
of the Company or of any Subsidiary of the Company, make any Investment in or
enter into any contract, agreement, understanding, loan, advance or Guarantee
with, or for the direct or indirect benefit of, an Affiliate of the Company or
of any Subsidiary of the Company (each, including any series of transactions
with one or more Affiliates, an "Affiliate Transaction"), unless (i) the Board
of Directors of the Company or the relevant Subsidiary determines, as evidenced
by a Board Resolution, that the terms of such Affiliate Transaction are fair and
reasonable to the Company and no less favorable to the Company or the relevant
Subsidiary than those that could have been obtained at that time in a comparable
arms-length transaction by the Company or such Subsidiary with an unrelated
Person, (ii) such transaction has been approved by a majority of the Board of
Directors of the Company or the relevant Subsidiary who have no direct or
indirect interest in the Affiliate Transaction or in the Affiliate that is a
party to the Affiliate Transaction, or in any other party that is an Affiliate
of any such Affiliate, and (iii) the Company shall have delivered to the Holders
an Officers' Certificate certifying that the conditions set forth in clauses (i)
and (ii) above have been satisfied.
(b) Neither the Company nor any of its Subsidiaries shall enter into
an Affiliate Transaction involving or having a potential aggregate value of more
than $1,000,000 unless, in addition to the requirements of (a) above, the Board
of Directors of the Company or the relevant Subsidiary shall first have received
a written opinion from an Independent Financial Advisor for the benefit of the
Company and the Holders, which firm is not receiving any contingent fee or other
consideration directly or indirectly related to the successful completion of the
Affiliate Transaction, to the effect that the proposed Affiliate Transaction is
fair to the Company from a financial point of view.
(c) The provisions of this Section 7.8 shall not apply to (i) any
Restricted Payment that is made in compliance with the provisions of Section
7.5, (ii) the reasonable and customary fees and compensation paid to or
indemnity provided on behalf of, officers, directors, employees or consultants
of the Company or any Subsidiary, as determined by the Board of Directors of the
Company or such Subsidiary or the senior management thereof in good faith, (iii)
transactions exclusively between or among the Company and any Wholly-Owned
Subsidiary or exclusively between or among Wholly-Owned Subsidiaries provided
12
such transactions are not otherwise prohibited by this Agreement, and (iv) any
Affiliate Transaction in existence as of the date hereof (including but not
limited to the Management Incentive Plan), the terms of which are listed on
SCHEDULE 4.27.
7.9 LIMITATION ON LIENS. The Company shall not, and shall not permit any of
its Subsidiaries to, Incur, assume, suffer to exist, create or otherwise cause
to be effective any Lien on any asset now owned or hereafter acquired, or any
income or profits therefrom or assign or convey any right to receive income
therefrom to secure any Indebtedness except: (a) Permitted Liens (other than
Permitted Liens described in clause (i) of the definition thereof), (b) Liens
existing as of the date hereof (and any extension, renewal or replacement Liens
upon the same Property subject to such Liens, provided the principal amount of
Indebtedness secured by each Lien constituting such an extension, renewal or
replacement Lien shall not exceed the principal amount of Indebtedness secured
by the Lien theretofore existing, plus amounts described in Section
7.7(b)(iii)(A) with respect to permitted Refinancing Indebtedness), (c) after
the Security Opinion Date, Liens securing Indebtedness of any Subsidiary of the
Company, PROVIDED that (i) such Liens are limited to Property or assets of such
Subsidiary, (ii) the Indebtedness secured by such Liens was not Incurred in
violation of this Agreement and (iii) the Indebtedness secured by such Liens is
not subordinated to or junior in right or priority of payment in any respect to
any other Indebtedness of such Subsidiary; (d) after the Security Opinion Date,
Liens as defined in clause (i) of the definition of Permitted Liens; and (e)
Liens replacing, extending or renewing, in whole or in part, any Lien described
in the foregoing clauses (a) through (d), including in connection with any
refinancing of the Indebtedness, in whole or in part, secured by any such Lien
effected in accordance with Section 7.7, PROVIDED that if any such clauses limit
the amount secured by or the Property or assets subject to such Liens, no such
replacement, extension or renewal shall increase the amount of Indebtedness or
the Property or assets subject to such Liens.
7.10 PAYMENT OF TAXES AND OTHER CLAIMS. The Company shall, and shall cause
each of its Subsidiaries to, pay or discharge, before the same shall become
delinquent, (a) all Taxes, assessments and governmental charges (including
withholding taxes and penalties, interest and additions to taxes) levied or
imposed upon it or any of its Subsidiaries or properties of the Company or any
of its Subsidiaries and (b) all lawful claims for labor, materials and supplies
that, if unpaid might by law become a Lien upon the Property of it or any of its
Subsidiaries; PROVIDED, HOWEVER, that the Company shall not be required to pay
or discharge or cause to be paid or discharged any such Tax, assessment, charge
or claim if either (i) the amount, applicability or validity thereof is being
contested in good faith by appropriate proceedings and an adequate reserve has
been established therefor to the extent required by GAAP or (ii) the failure to
make such payment or effect such discharge (together with all other such
failures) would not have a Material Adverse Effect.
7.11 RESTRICTIONS AGAINST LIMITATIONS ON UPSTREAM PAYMENTS. The Company
shall not, and shall not permit any Subsidiary of the Company to, create or
otherwise cause or suffer to exist or to become effective any Payment
Restriction or other encumbrance or restriction on the ability of any Subsidiary
of the Company to (a) pay dividends or make any other distributions on its
Capital Stock or any other interest or participation in, or measured by, its
profits owned by, or pay any Indebtedness owed to, the Company or a Subsidiary
of the Company, (b) make loans or advances to the Company or a Subsidiary of the
Company, or (c) transfer any of its Properties or assets to the Company or any
13
Subsidiary of the Company, except for such Payment Restrictions or encumbrances
existing under or by reason of: (i) applicable law; (ii) any instrument
governing Indebtedness or Capital Stock of a Person acquired by the Company or
any of its Subsidiaries as in effect at the time of such acquisition (except to
the extent such Indebtedness was Incurred in contemplation of or in connection
with such acquisition), PROVIDED, that such restriction is not applicable to any
Person, or the Property or assets of any Person, other than the Acquired Person;
(iii) non-assignment provisions in leases entered into in the ordinary course of
business and consistent with past practices; (iv) instruments governing purchase
money Indebtedness for Property acquired in the ordinary course of business that
only impose restrictions on the Property so acquired; (v) any agreement for the
sale or disposition of the Capital Stock or assets of such Subsidiary, PROVIDED
that such restriction is only applicable to such Subsidiary or assets, as
applicable; or (vi) Refinancing Indebtedness permitted under this Agreement with
respect to Indebtedness described in clauses (ii), (iii) or (iv), PROVIDED that
the restrictions contained in the agreements governing such Refinancing
Indebtedness are no more restrictive in the aggregate than those contained in
the instrument governing the Indebtedness being refinanced immediately prior to
such refinancing.
7.12 CHANGE OF CONTROL. Upon the occurrence of a Change of Control (such
date being the "Change of Control Trigger Date"), each Holder will have the
right to require the Company to repurchase all or any part of such Holder's
Senior Discount Notes pursuant to the Offer (but, with respect to any partial
tender of Senior Discount Notes, the Company shall only be required to purchase
principal amounts in integral multiples of $1,000) at a purchase price in cash
equal to 101% of the aggregate principal amount thereof, plus accrued and unpaid
interest to the Purchase Date. The Offer shall be effected in accordance with
Section 6.7 and Article VI (to the extent applicable) and the provisions of this
Section 7.12; provided, however, that this Section 7.12 shall not apply if the
Company instead elects to redeem all Senior Discount Notes as provided in
Section 6.7(f).
7.13 REDEMPTION FROM THE PROCEEDS OF SECURITIES SALES AND MEZZANINE DEBT
FINANCINGS.
(a) The Company will not, and will not permit any of its Subsidiaries
to, undertake any Securities Sale or any Mezzanine Debt Financing, unless: (i)
the Company or the applicable Subsidiary receives consideration, which, at the
time of such Securities Sale or Mezzanine Debt Financing, is at least equal to
the fair market value of the Capital Stock or other equity or debt securities
sold or otherwise disposed of (as determined in good faith by the Board of
Directors of the Company evidenced by a Board Resolution); and (ii) the Net Cash
Proceeds received by the Company or such Subsidiary, as the case may be, from
such Securities Sale or Mezzanine Debt Financing are applied in accordance with
this Section 7.13.
(b) As soon as practicable, but in no event later than 10 Business
Days after any date (with respect to both a Securities Sale or a Mezzanine Debt
Financing, a "Repayment Trigger Date") that the aggregate amount of Net Cash
Proceeds from all such Securities Sales or Mezzanine Debt Financings occurring
on or after the date hereof, then:
(i) if such Net Cash Proceeds exceed $5,000,000, but are less
than or equal to $10,000,000, then the Company shall commence an Offer to
purchase the maximum principal amount of Amended Notes (and if no Amended Notes
14
remain outstanding then New Notes) that may be purchased using Fifty Percent
(50%) of any such Net Cash Proceeds in excess of $5,000,000 but less than or
equal to $10,000,000; or
(ii) if such Net Cash Proceeds exceed $10,000,000, then the
Company shall commence an Offer to purchase the maximum principal amount of
Amended Notes (and if no Amended Notes remain outstanding then New Notes) that
may be purchased using One Hundred (100%) of any such Net Cash Proceeds in
excess of $10,000,000;
in any case, subject to reduction in the event holders of New Notes or Amended
Notes tender such Notes for redemption pursuant to Section 6.7 of the Securities
Purchase Agreement for the New Notes, or this Agreement, as applicable, at an
offer price of $1.00 for every $1.00 of principal amount, plus accrued and
unpaid interest to the Purchase Date. The Offer shall be effected in accordance
with Section 6.7 and Article VI (to the extent applicable) and the provisions of
this Section 7.13. To the extent that any such Net Cash Proceeds remain after
completion of an Offer, the Company may use the remaining amount for any purpose
permitted by this Agreement.
7.14 MAINTENANCE OF PROPERTIES. The Company will cause all properties used
or useful in the conduct of its business or the business of any Subsidiary of
the Company to be maintained and kept in good condition, repair and working
order, subject to normal wear and tear, and supplied with all necessary
equipment and will cause to be made all necessary repairs, renewals,
replacements, betterments and improvements thereof, all as in the judgment of
the Company may be necessary so that the business carried on in connection
therewith may be properly and advantageously conducted at all times; provided,
however, that nothing in this Section 7.14 shall prevent the Company from
discontinuing the operation or maintenance of any of such properties if such
discontinuance is, as determined by the Company in good faith, desirable in the
conduct of its business or the business of any Subsidiary and not
disadvantageous in any material respect to the Holders.
7.15 MAINTENANCE OF INSURANCE. The Company shall, and shall cause its
Subsidiaries to, (a) keep at all times all of their properties which are of an
insurable nature insured against loss or damage with financially sound and
reputable insurers to the extent that property of similar character is usually
so insured by corporations similarly situated and owning like properties in
accordance with good business practice, and (b) will maintain with financially
sound and reputable insurers insurance against other hazards and risks and
liability to persons and property to the extent and in a manner customary for
corporations in similar business similarly situated. The Company shall, and
shall cause its Subsidiaries to, use the proceeds from any such insurance policy
to repair, replace or otherwise restore the property to which such proceeds
relate, except to the extent that a different use of such proceeds is, as
determined by the Company, in good faith, desirable in the conduct of its
business or the business of any Subsidiary and not disadvantageous in any
material respect to the Holders.
7.16 COMPLIANCE WITH LAWS. The Company shall comply, and shall cause each
of its Subsidiaries to comply, with all applicable statutes, rules, regulations,
orders and restrictions of the United States of America, all states and
municipalities thereof, and of any governmental department, commission, board,
regulatory authority, bureau, agency and instrumentality of the foregoing, in
15
respect of the conduct of their respective businesses and the ownership of their
respective properties, except such as are being contested in good faith and by
appropriate proceedings and except for such noncompliance as would not in the
aggregate have a Material Adverse Effect.
7.17 LIMITATION ON ISSUANCES AND DISPOSITIONS OF CAPITAL STOCK OF
SUBSIDIARIES. The Company (a) shall not, and shall not permit any Subsidiary to,
transfer, convey, sell, or otherwise dispose of any Capital Stock, or securities
convertible into or exercisable or exchangeable for, or options, warrants,
rights or any other interest with respect to, Capital Stock of a Subsidiary to
any Person (other than the Company or a Wholly-Owned Subsidiary) unless such
transfer, conveyance, sale, lease or other disposition is of 100% of the Capital
Stock of such Subsidiary held by the Company and the Net Cash Proceeds from such
transfer, conveyance or sale are applied in accordance with Section 7.18 hereof
and (b) shall not permit any Subsidiary to issue shares of its Capital Stock
(other than directors' qualifying shares), or securities convertible into or
exercisable or exchangeable for, or options, warrants, rights or any other
interest with respect to, its Capital Stock to any Person.
7.18 LIMITATION ON SALE OF ASSETS. The Company shall not, and shall not
permit any of its Subsidiaries to undertake an Asset Disposition.
1.7 AMENDMENTS TO ARTICLE IX.
(a) SECTION 9.1(A) OF THE AGREEMENT IS HEREBY AMENDED AND RESTATED IN
ITS ENTIRETY AS FOLLOWS:
9.1 EVENTS OF DEFAULT.
(a) Each of the following constitutes an "Event of Default": (i) the
Company shall fail to make any payment in respect of (A) the principal of or
premium, if any, on the New Notes or the Senior Discount Notes as the same shall
become due, whether at maturity, upon acceleration, redemption or otherwise, or
(B) interest on or in respect of any New Notes or the Senior Discount Notes as
the same shall become due, and such failure shall continue for a period of 15
Business Days; (ii) failure by the Company for 30 days after receipt of notice
from the Holders of at least 25% of the principal amount of the outstanding New
Notes to comply with any other provisions of this Agreement, the Amendment No. 2
to the Securities Purchase Agreement, the Restructuring Agreement, the Senior
Discount Notes or any New Notes; (iii) default under any mortgage, agreement or
instrument under which there may be Incurred or by which there may be secured or
evidenced any Indebtedness for money borrowed by the Company or any of its
Subsidiaries (or the payment of which is guaranteed by the Company or any of its
Subsidiaries) whether such Indebtedness now exists, or is created after the date
hereof if (A) such default results in the acceleration of such Indebtedness
prior to its express maturity or shall constitute a default in the payment of
such Indebtedness at final maturity of such Indebtedness, and (B) the principal
amount of any such Indebtedness that has been accelerated or not paid at
maturity, when added to the aggregate principal amount of all other such
Indebtedness that has been accelerated or not paid at maturity, exceeds
$250,000, (iv) failure by the Company or any of its Subsidiaries to pay final
16
judgments, the uninsured portion of which exceeds $250,000, which judgments are
not paid, discharged, bonded or stayed for a period of 90 days after the date of
entry thereof; (v) if under any Bankruptcy Law, (A) the Company or any
Subsidiary commences a voluntary case, consents to the entry of an order for
relief against it in an involuntary case, consents to the appointment of a
Custodian of it or for all or substantially all of its Property, or makes a
general assignment for the benefit of its creditors, or (B) a court of competent
jurisdiction enters an order or decree, and such order or decree remains
unstayed and in effect for 60 days, that is for relief against the Company or
any Subsidiary in an involuntary case, appoints a Custodian of the Company or
any Subsidiary or for all or substantially all of the Property of the Company or
any Subsidiary, or orders the liquidation of the Company or any Subsidiary; and
(vi) any of the Transaction Documents shall cease, for any reason, to be in full
force and effect in any material respect, except as a result of an amendment,
waiver or termination thereof as contemplated or permitted hereby, or the
Company shall so assert in writing.
Any notice of default delivered to the Company by the Holders of New Notes must
be in writing and must specify the Event of Default, demand that it be remedied
and state that the notice is a "Notice of Default."
1.8 AMENDMENTS TO ARTICLE XI.
(a) SECTION 11.2(B) OF THE AGREEMENT IS HEREBY AMENDED AND RESTATED IN
ITS ENTIRETY AS FOLLOWS:
11.2(b) EXECUTION AND AUTHENTICATION. Two Officers of the Company (each of
whom shall have been duly authorized by all requisite corporate actions) shall
sign each Senior Discount Note for the Company by manual or facsimile signature.
If an Officer whose signature is on a Senior Discount Note no longer holds that
office at the time the Senior Discount Note is issued, the Senior Discount Note
shall nevertheless be valid. The Company's seal shall be reproduced on each
Senior Discount Note.
With respect to the sale and issuance of the Senior Discount Notes, the
Company shall authorize for issuance, upon the execution and delivery of this
Agreement, Senior Discount Notes in an aggregate principal amount up to
$7,500,000. In no case shall the aggregate principal amount of outstanding
Senior Discount Notes exceed $7,500,000 at any time, except as provided in
Section 11.5.
(b) SECTION 11.12 OF THE AGREEMENT IS HEREBY AMENDED AND RESTATED IN
ITS ENTIRETY AS FOLLOWS:
11.12 RESTRICTIVE LEGENDS. Except as otherwise permitted by this Section
11.12, each Amended Unit, and each Amended Note and Common Stock Purchase
Warrant certificate (or Common Stock certificate issued on exercise thereof),
issued pursuant to this Agreement shall be stamped or otherwise imprinted with a
legend in substantially the following form:
17
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, NOR PURSUANT TO THE
SECURITIES OR "BLUE SKY" LAWS OF ANY STATE. SUCH SECURITIES MAY NOT BE
OFFERED, SOLD, TRANSFERRED, PLEDGED, HYPOTHECATED OR OTHERWISE ASSIGNED,
EXCEPT PURSUANT TO (i) A REGISTRATION STATEMENT WITH RESPECT TO SUCH
SECURITIES WHICH IS EFFECTIVE UNDER SUCH ACT, (ii) RULE 144 OR RULE 144A
UNDER SUCH ACT, OR (iii) ANY OTHER EXEMPTION FROM REGISTRATION UNDER SUCH
ACT RELATING TO SUCH ACT, PROVIDED THAT, IF REQUESTED BY THE COMPANY, AN
OPINION OF COUNSEL REASONABLY SATISFACTORY IN FORM AND SUBSTANCE IS
FURNISHED TO THE COMPANY THAT AN EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF SUCH ACT IS AVAILABLE.
IN ADDITION, ANY SALE, ASSIGNMENT, TRANSFER, PLEDGE OR OTHER DISPOSITION OF
THIS SECURITY IS RESTRICTED BY, AND THE RIGHTS OF THE HOLDER OF SUCH
SECURITY ARE SUBJECT TO THE TERMS AND CONDITIONS CONTAINED IN, A SECURITIES
PURCHASE AGREEMENT DATED AS OF SEPTEMBER 30, 1997 (AS AMENDED), A COMPLETE
AND CORRECT COPY OF THE FORM OF WHICH WILL BE FURNISHED BY THE ISSUER TO
THE HOLDER HEREOF UPON WRITTEN REQUEST AND WITHOUT CHARGE.
The Company shall maintain a copy of this Agreement and any amendments
thereto on file in its principal office, and will make such copy available
during normal business hours for inspection to any party thereto or will provide
such copy to the Purchaser upon its request.
Whenever the legend requirement imposed by this Section 11.12 shall
terminate, as hereinabove provided, the respective holders of Securities for
which such legend requirements have terminated shall be entitled to receive from
the Company, at the Company's expense, Senior Discount Notes or new Common Stock
Purchase Warrant certificates, as applicable, without such legend.
ARTICLE II
MISCELLANEOUS
2.1 EFFECTIVENESS OF AMENDMENT NO. 2. On the Restructuring Closing Date,
upon execution and delivery of this Amendment, $39.75 million aggregate
principal amount of the Senior Discount Notes, and any interest accrued thereon,
and any interest that has accrued on the remaining aggregate $7.5 million
principal amount of Senior Discount Notes through July 15, 1999, will
automatically be cancelled, without any further action by either of the parties.
In addition, upon execution and delivery of this Amendment, any amendments to
the remaining $7.5 million aggregate principal amount of the Senior Discount
Notes contained in this Amendment will automatically become effective as of the
Restructuring Closing Date without any further action by either of the parties.
18
2.2 SEVERABILITY. Any provision of this Amendment that is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof or affecting the validity or enforceability of such
provisions in any other jurisdiction.
2.3 SUCCESSORS AND ASSIGNS. All covenants, promises and agreements by or on
behalf of the respective parties which are contained in this Amendment shall
bind and inure to the benefit of the successors and assigns of all other
parties. The terms and provisions of this Amendment shall inure to the benefit
of and shall be binding upon any assignee or transferee of the Purchaser, and in
the event of such transfer or assignment, the rights and privileges herein
conferred upon the Purchaser shall automatically extend to and be vested in, and
become an obligation of, such transferee or assignee, all subject to the terms
and conditions hereof. In connection therewith, such transferee or assignee may
disclose all documents and information which such transferee or assignee now or
hereafter may have relating to this Amendment, subject to full compliance with
Section 13.9 of the Agreement.
2.4 GOVERNING LAW. THIS AMENDMENT SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, AND THE RIGHTS OF THE PARTIES SHALL BE GOVERNED BY, THE
INTERNAL LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF CONFLICT
OF LAW.
2.5 SERVICE OF PROCESS. The Company (a) hereby irrevocably submits itself
to the jurisdiction of the state courts of the State of New York and to the
jurisdiction of the United States District Court for the Southern District of
New York for the purpose of any suit, action or other proceeding arising out of
or based upon this Amendment or the subject matter hereof or thereof brought by
the Purchaser or its successors or assigns and (b) hereby waives, and agrees not
to assert, by way of motion, as a defense, or otherwise, in any such suit,
action or proceeding, any claim that it is not subject personally to the
jurisdiction of the above-named courts, that its property is exempt or immune
from attachment or execution, that the suit, action or proceeding is brought in
an inconvenient forum, that the venue of the suit, action or proceeding is
improper or that this Amendment or the subject matter hereof may not be enforced
in or by such court, and (c) hereby waives any offsets or counterclaims in any
such action, suit or proceeding (other than compulsory counterclaims). The
Company hereby consents to service of process by registered mail at the address
to which notices are to be given. The Company agrees that its submission to
jurisdiction and its consent to service of process by mail is made for the
express benefit of the Purchaser. Final judgment against the Company in any such
action, suit or proceeding shall be conclusive and may be enforced in other
jurisdictions (x) by suit, action or proceeding on the judgment, a certified or
true copy of which shall be conclusive evidence of the fact and of the amount of
any indebtedness or liability of the Company therein described or (y) in any
other manner provided by or pursuant to the laws of such other jurisdiction;
PROVIDED, HOWEVER, that the Purchaser may at its option bring suit or institute
other judicial proceedings against the Company or any of the Company's assets in
any state or federal court of the United States or in any country or place where
the Company or such assets may be found.
2.6 WAIVER OF JURY TRIAL. THE PARTIES HERETO HEREBY WAIVE TRIAL BY JURY IN
ANY LITIGATION, SUIT OR PROCEEDING, IN ANY COURT WITH RESPECT TO, IN CONNECTION
19
WITH, OR ARISING OUT OF THIS AMENDMENT, OR THE VALIDITY, PROTECTION,
INTERPRETATION, COLLECTION OR ENFORCEMENT THEREOF, PROVIDED, HOWEVER, THAT WITH
RESPECT TO ANY COMPULSORY COUNTERCLAIM (I.E., A CLAIM BY ONE PARTY AGAINST
ANOTHER PARTY WHICH IF NOT BROUGHT IN SUCH ACTION WOULD RESULT IN THE PARTY
BRINGING SUCH CLAIM BEING FOREVER BARRED FROM BRINGING SUCH CLAIM), THE PARTY
BRINGING SUCH CLAIM SHALL HAVE THE RIGHT TO RAISE SUCH COMPULSORY COUNTERCLAIM
IN ANY SUCH LITIGATION.
2.7 COUNTERPARTS. This Amendment may be executed simultaneously in two or
more counterparts, each of which shall be deemed an original, and it shall not
be necessary in making proof of this Amendment to produce or account for more
than one such counterpart.
2.8 SATISFACTION OF WAIVER AND CONSENT. By signing below, the Purchaser
represents and acknowledges that the requirement on the part of the Company to
obtain the written consent of the Holders of at least a majority in aggregate
principal amount of the then outstanding Senior Discounts Note prior to any
amendment to the Agreement or the Senior Discount Notes, is hereby waived.
2.9 MERGER. This Amendment, Amendment No. 1 to the Agreement, the Senior
Discount Notes and the Restructuring Agreement constitute the entire agreement
of the Company and the Holders and express the entire understanding of the
Company and the Holders with respect to the Senior Discount Notes.
2.10 ASSISTANCE WITH GAMING APPROVALS.
(a) The Company will and will cause its Gaming Subsidiaries to assist
the Purchaser and pay all expenses of the Purchaser (including fees of counsel)
in obtaining all approvals of any Gaming Authority or other Governmental Body
that are required by law, including, without limitation, the Gaming Laws, for or
in connection with any action or transaction contemplated by the Transaction
Documents, including any approvals required for the conversion of the Series D
Preferred Stock.
(b) Following the Closing Date, the Purchaser shall not be obligated
to make any filing under the Gaming Laws of any other jurisdiction, and shall
not be required to apply for licensure or registration, seek a finding of
suitability or a waiver of licensing, registration or suitability requirements
or seek any similar approval of any Gaming Authority or other Governmental Body
under the Gaming Laws (collectively, a "GAMING APPROVAL"). In the event any
applicable Gaming Authority or other Governmental Body requires the Purchaser to
apply for a Gaming Approval, the Company will or will cause the relevant Gaming
Subsidiary to, at Purchaser's request, withdraw from such jurisdiction and not
sell its products or otherwise conduct its business in such jurisdiction in a
manner that would otherwise require Purchaser to be required to apply for a
Gaming Approval of any Gaming authority or other Governmental Body under the
Gaming Laws of such jurisdiction. The Company further agrees that it will not
and will cause its Gaming Subsidiaries not to seek any remedy against the
Purchaser, either at law or in equity, for the Purchaser's failure or refusal to
apply for a Gaming Approval, including, without limitation, seeking the
divestiture by the Purchaser of the Series D Preferred Stock, the Amended Notes,
the New Notes or any other securities of the Company then held by the Purchaser.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
20
AMENDMENT NO. 2 TO
SECURITIES PURCHASE AGREEMENT
AND UNITS OF SENIOR DISCOUNT NOTES
COMPANY SIGNATURE PAGE
If this Amendment is satisfactory, please so indicate by signing the
applicable attached signature page of this Amendment and delivering such
counterpart to the Company whereupon this Amendment will become binding among
the parties hereto in accordance with its terms.
SILICON GAMING, INC.,
a California corporation
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
----------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: President and Chief Executive Officer
AMENDMENT NO. 2 TO
SECURITIES PURCHASE AGREEMENT
AND UNITS OF SENIOR DISCOUNT NOTES
PURCHASER SIGNATURE PAGE
Accepted and agreed as of the Aggregate Principal Amount of
date first written above: Senior Discount Notes
to be Cancelled: $39,750,000
B III CAPITAL PARTNERS, L.P.,
a Delaware limited partnership
By: DDJ Capital III, LLC,
its General Partner
By: DDJ Capital Management, LLC,
its Manager
By:
-----------------------------------
Name:
Title: Member
Address: c/o DDJ Capital Management, LLC Aggregate Principal Amount of Senior
Attn: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Discount Notes to be Amended:
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇ ▇▇,▇▇▇,▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Nominee (name in which the Amended Notes are to be registered, if different than
name of Purchaser):
▇▇▇▇▇▇▇ SACHS & COMPANY FFC: BIII CAPITAL PARTNERS, L.P.
(Nominee's Name)
EXHIBIT A
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, NOR PURSUANT TO THE SECURITIES OR "BLUE
SKY" LAWS OF ANY STATE. SUCH SECURITIES MAY NOT BE OFFERED, SOLD, TRANSFERRED,
PLEDGED, HYPOTHECATED OR OTHERWISE ASSIGNED, EXCEPT PURSUANT TO (i) A
REGISTRATION STATEMENT WITH RESPECT TO SUCH SECURITIES WHICH IS EFFECTIVE UNDER
SUCH ACT, (ii) RULE 144 OR RULE 144A UNDER SUCH ACT, OR (iii) ANY OTHER
EXEMPTION FROM REGISTRATION UNDER SUCH ACT RELATING TO SUCH ACT, PROVIDED THAT,
IF REQUESTED BY THE COMPANY, AN OPINION OF COUNSEL REASONABLY SATISFACTORY IN
FORM AND SUBSTANCE IS FURNISHED TO THE COMPANY THAT AN EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF SUCH ACT IS AVAILABLE.
IN ADDITION, ANY SALE, ASSIGNMENT, TRANSFER, PLEDGE OR OTHER DISPOSITION OF THIS
SECURITY IS RESTRICTED BY, AND THE RIGHTS OF THE HOLDER OF SUCH SECURITY ARE
SUBJECT TO THE TERMS AND CONDITIONS CONTAINED IN, A SECURITIES PURCHASE
AGREEMENT DATED AS OF September 30, 1997, as amended, A COMPLETE AND CORRECT
COPY OF THE FORM OF WHICH WILL BE FURNISHED BY THE ISSUER TO THE HOLDER HEREOF
UPON WRITTEN REQUEST AND WITHOUT CHARGE. SUCH AGREEMENT, AMONG OTHER THINGS,
RESTRICTS THE DETACHMENT OF THIS SENIOR DISCOUNT NOTE FROM THE COMMON STOCK
PURCHASE WARRANTS ATTACHED HERETO.
SILICON GAMING, INC.
SENIOR DISCOUNT NOTE DUE NOVEMBER___, 2004
No. $7,500,000
Silicon Gaming, Inc., a California corporation (hereinafter called the
"COMPANY", which term includes any successor entity under the Agreement
hereinafter referred to), for value received, hereby promises to pay to ▇▇▇▇▇▇▇
▇▇▇▇▇ & COMPANY FFC: B III CAPITAL PARTNERS, L.P., a Delaware limited
partnership, or registered assigns, the principal sum of Seven Million Five
Hundred Thousand Dollars on November ___, 2004.
Interest Payment Dates: January 1 and July 1 beginning on January 1, 2000
Record Dates: December 15 and June 15
Reference is hereby made to the further provisions of this Senior Discount
Note set forth on the following five (5) pages, which further provisions shall
for all purposes have the same effect as if set forth at this place.
Reference is hereby made to the Restructuring Agreement, dated __________,
1999, by and between the Company and B III Capital Partners, L.P. (the
"RESTRUCTURING AGREEMENT"). All capitalized terms not defined herein shall have
the meanings ascribed to them in the Restructuring Agreement.
IN WITNESS WHEREOF, the Company has caused this Senior Discount Note to be
signed manually or by facsimile by its duly authorized officers and a facsimile
of its seal to be affixed hereto or imprinted hereto.
SILICON GAMING, INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: President and Chief Executive
Officer
Senior Discount Note due __________, 2004
1. INTEREST. The Company promises to pay interest on the principal amount
of this Senior Discount Note at the rate and in the manner specified below.
Interest on this Senior Discount Note will accrue at 10% per annum from July 15,
1999 until maturity and will be payable semiannually in cash, subject to Section
2 set forth below, on January 1 and July 1 of each year beginning on January 1,
2000, or if any such day is not a Business Day on the next succeeding Business
Day (each an "INTEREST PAYMENT DATE"), to the holder of record on the
immediately preceding June 15, or December 15, as the case may be. Interest on
this Senior Discount Note will accrue from the most recent date on which
interest has been paid or, if no interest has been paid, from July 15, 1999,
provided that the first Interest Payment Date shall be January 1, 2000. The
Company shall pay interest on overdue principal and premium, if any, from time
to time on demand at the rate of 1.5% per annum in excess of the interest rate
then in effect and shall pay interest on overdue installments of interest
(without regard to any applicable grace periods) from time to time on demand at
the same rate to the extent lawful. Interest will be computed on the basis of a
360-day year of twelve 30-day months.
The Accreted Value of this Senior Discount Note shall accrete, for purposes
of calculating any Redemption Price or Purchase Price and for all other purposes
in determining Accreted Value, in the period during which this Senior Discount
Note remains outstanding, at _____% per annum from the date hereof until July
15, 2004 on a semi-annual basis compounding on each January 1 and July 1, using
a 360-day year comprised of twelve 30-day months, commencing on the date of
issuance of this Senior Discount Note, and shall cease to accrete upon payment
in full or the earliest of __________, 2004, any Redemption Date or any Purchase
Date.
2. METHOD OF PAYMENT. The Company will pay interest on this Senior Discount
Note (except defaulted interest) to the Person who is the registered Holder of
this Senior Discount Note at the close of business on the record date for the
next Interest Payment Date even if such Senior Discount Note is canceled after
such record date and on or before such Interest Payment Date. Interest may be
paid, at the Company's option, in cash or by the issuance of additional Senior
Discount Notes. The issuance of such promissory notes shall constitute "payment"
of the interest for all purposes of this Note. Notwithstanding the two
immediately preceding sentences, the Company will be required to pay interest on
this Note in cash if on any Interest Payment Date the Company's EBITDA/total
debt ratio for the 12 month period ending the September 30 (in the case of
payments due January 1) or March 31 (in the case of payments due July 1)
immediately preceding such Interest Payment Date exceeds 2.5 to 1.0. Holders
must surrender Senior Discount Notes to the Company to collect principal
payments on such Senior Discount Notes. Other than payment of interest in the
form of additional Senior Discount Notes, the Company will pay principal,
premium, if any, and interest in money of the United States that at the time of
payment is legal tender for payment of public and private debts. However, the
Company may pay principal, premium, if any, and interest by wire transfer of
Federal funds, or interest by check payable in such money, and any such check
may be mailed to a Holder's registered address.
3. RESTRUCTURING AGREEMENT. Pursuant to the Restructuring Agreement, dated
as of November ___, 1999, by and between the Company and the Purchaser named
therein, this Senior Discount Note is issued in replacement of, and in full
substitution for, Senior Discount Notes No. 1 and No. B-1 due September 30,
2002.
The Company issued the Senior Discount Notes No. 1 and No. B-1 pursuant to
a Securities Purchase Agreement, dated as of September 30, 1997, by and between
the Company, as issuer of the Senior Discount Notes, and the Purchaser named
therein and as amended by Amendment No. 1 to the Securities Purchase Agreement
and Amendment No. 2 to the Securities Purchase Agreement (collectively referred
to herein as the "AGREEMENT"). The terms of the Senior Discount Notes are those
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stated in the Agreement and herein. The Senior Discount Notes are subject to,
and qualified by, all such terms, certain of which are summarized herein, and
Holders are referred to the Agreement (all capitalized terms not defined herein
shall have the meanings assigned them in the Agreement). The Senior Discount
Notes are general obligations of the Company limited to $7,500,000 in aggregate
principal amount. Reference is hereby made to the Agreement for a description of
the properties and assets in which a security interest has been granted, the
nature of the security, the terms and conditions upon which the security
interests were granted.
4. REDEMPTION PROVISIONS. The Senior Discount Notes will be subject to
redemption, in whole or from time to time in part (in multiples of $1,000 of
principal amount) at the option of the Company at a price equal to 100% of the
aggregate outstanding principal amount at maturity.
Notwithstanding the foregoing, if any Gaming Authority requires that any
Purchaser, Holder or beneficial owner of the Senior Discount Notes must be
licensed, qualified or found suitable under any Gaming Laws and such Purchaser,
Holder or beneficial owner of the Senior Discount Notes fails to apply for a
license, qualification or finding of suitability within 30 days after being
requested to do so by any Gaming Authority (or such lesser period that may be
required by such Gaming Authority), or, if any Purchaser, Holder or beneficial
owner of the Senior Discount Notes is not so licensed, qualified or found
suitable, the Purchaser, Holder or beneficial owner of the Senior Discount Notes
shall comply with any order by such Gaming Authorities requiring that such
Person dispose of any Securities held by it; provided, however, that in the
event the Purchaser, Holder or beneficial owner of the Senior Discount Notes
does not comply with such order within the required period, the Company shall
have the option as its sole remedy with respect to the Senior Discount Notes to
call for redemption the Senior Discount Notes held by such Purchaser, Holder or
beneficial owner at a price equal to the Accreted Value thereof on the
Redemption Date, plus accrued and unpaid interest to the Redemption Date.
In addition, if not previously redeemed, the Senior Discount Notes will be
subject to redemption (a "CHANGE OF CONTROL REDEMPTION") at the option of the
Holders, in whole or in part, at any time within 30 days after the completion of
an Offer made as a result of a Change of Control, at a redemption price equal to
101% of the principal amount thereof, plus accrued and unpaid interest to the
Purchase Date, subject to certain conditions set forth in the Agreement.
In addition, the Senior Discount Notes will be subject to redemption
("SECURITIES SALE REDEMPTION") at the option of the Holders, in whole or in
part, following a Securities Sale or a Mezzanine Debt Financing, from the Net
Cash Proceeds of such Securities Sale or Mezzanine Debt Financing, subject to
the provisions of Section 7.13 of the Agreement; provided that an Offer to make
a Securities Sale Redemption shall be made by the Company only if, and to the
extent that, the aggregate amount of Net Cash Proceeds from all such Securities
Sales or Mezzanine Debt Financings occurring on or after the date hereof exceed
$5,000,000. In the event of a Securities Sale Redemption, the Senior Discount
Notes will be redeemable at the aggregate principal amount plus any accrued and
unpaid interest to the Purchase Date.
5. MANDATORY OFFERS. (a) Within 10 days after any Change of Control Trigger
Date, any Repayment Trigger Date or any Excess Proceeds Date, the Company shall
mail a notice to each Holder stating a number of items as set forth in Section
of the Agreement.
(b) Holders may tender all or, subject to Section 7 below, any portion
of their Senior Discount Notes in an Offer by completing the form below entitled
"OPTION OF HOLDER TO ELECT PURCHASE."
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(c) Promptly after consummation of an Offer, (i) the Company shall
mail to each Holder of Senior Discount Notes or portions thereof accepted for
payment an amount equal to the purchase price for, plus any accrued and unpaid
interest on, such Senior Discount Notes, (ii) with respect to any tendered
Senior Discount Note not accepted for payment in whole or in part, the Company
shall return such Senior Discount Note to the Holder thereof, and (iii) with
respect to any Senior Discount Note accepted for payment in part, the Company
shall authenticate and mail to each such Holder a new Senior Discount Note equal
in principal amount to the unpurchased portion of the tendered Senior Discount
Note.
(d) The Company will (i) publicly announce the results of the Offer to
Holders on or as soon as practicable after the Purchase Date, and (ii) comply
with Rule 14e-1 under the Securities Exchange Act of 1934, as amended, and any
other securities laws and regulations to the extent applicable to any Offer.
6. NOTICE OF REDEMPTION OR PURCHASE. At least 30 days but not more than 60
days before any Redemption Date the Company shall mail by first class mail a
notice of redemption to each Holder of Senior Discount Notes or portions thereof
that are to be redeemed.
7. SENIOR DISCOUNT NOTES TO BE REDEEMED OR PURCHASED. The Senior Discount
Notes may be redeemed or purchased in part, but only in whole multiples of
$1,000 unless all Senior Discount Notes held by a Holder are to be redeemed or
purchased. On or after any date on which Senior Discount Notes are redeemed or
purchased, interest ceases to accrue on the Senior Discount Notes or portions
thereof called for redemption or accepted for purchase on such date.
8. DENOMINATIONS, TRANSFER, EXCHANGE. The Senior Discount Notes are in
registered form without coupons in denominations of $100,000 and integral
multiples thereof (subject to adjustment as provided in the Agreement). The
transfer of Senior Discount Notes may be registered and Senior Discount Notes
may be exchanged as provided in the Agreement. Holders seeking to transfer or
exchange their Senior Discount Notes may be required, among other things, to
furnish appropriate endorsements and transfer documents and to pay any taxes and
fees required by law or permitted by the Agreement. The Company need not
exchange or register the transfer of any Senior Discount Note or portion of a
Senior Discount Note selected for redemption or tendered pursuant to an Offer.
9. PERSONS DEEMED OWNERS. The registered holder of a Senior Discount Note
may be treated as its owner for all purposes.
10. AMENDMENTS AND WAIVERS. (a) Subject to certain exceptions, the
Agreement and the Senior Discount Notes may be amended or supplemented with the
written consent of the Holders of at least a majority in aggregate principal
amount of the then outstanding Senior Discount Notes, and any existing Default
or Event of Default or compliance with any provision of the Agreement or the
Senior Discount Notes may be waived with the consent of the Holders of at least
a majority in principal amount of the then outstanding Senior Discount Notes.
(b) Notwithstanding Section 10(a) above, the Company may amend or
supplement the Agreement or the Senior Discount Notes without the consent of any
Holder to: cure any ambiguity, defect or inconsistency; provide for
uncertificated Senior Discount Notes in addition to or in place of certificated
Senior Discount Notes; or make any change that would provide any additional
rights or benefits to Holders or not adversely affect the legal rights under the
Agreement of any Holder.
(c) Certain provisions of the Agreement cannot be amended,
supplemented or waived without the consent of each Holder of Senior Discount
Notes affected.
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11. DEFAULTS AND REMEDIES. Events of Default include: (i) the Company's
failure to make any payment in respect of (A) the principal of or premium, if
any, on the Senior Discount Notes as the same shall become due, whether at
maturity, upon acceleration, redemption, or otherwise, or (B) interest on or in
respect of any Senior Discount Notes as the same shall become due and such
failure shall continue for a period of 15 Business Days; (ii) failure by the
Company for 30 days after receipt of notice from the Holders of at least 25% of
the outstanding Senior Discount Notes to comply with any other provisions of the
Agreement or the Senior Discount Notes; (iii) default under any mortgage,
indenture or instrument under which there may be issued or by which there may be
secured or evidenced any Indebtedness for money borrowed by the Company or any
of its Subsidiaries (or the payment of which is guaranteed by the Company or any
of its Subsidiaries) whether such Indebtedness now exists, or is created after
the date hereof, if (A) such default results in the acceleration of such
Indebtedness prior to its express maturity or shall constitute a default in the
payment of such Indebtedness at final maturity of such Indebtedness, and (B) the
principal amount of any such Indebtedness that has been accelerated or not paid
at maturity, when added to the aggregate principal amount of all other such
Indebtedness that has been accelerated or not paid at maturity, exceeds
$250,000; (iv) failure by the Company or any of its Subsidiaries to pay final
judgments, the uninsured portion of which exceeds $250,000, which judgments are
not paid, discharged, bonded or stayed for a period of 60 days after the date of
entry thereof; (v) if under any Bankruptcy Law, (A) the Company or any
Subsidiary commences a voluntary case, consents to the entry of an order for
relief against it in an involuntary case, consents to the appointment of a
Custodian of it or for all or substantially all of its property, or makes a
general assignment for the benefit of its creditors, or (B) a court of competent
jurisdiction enters an order or decree, and such order or decree remains
unstayed and in effect for 90 days, that is for relief against the Company or
any Subsidiary in an involuntary case, appoints a Custodian of the Company or
any Subsidiary or for all or substantially all of the Property of the Company or
any Subsidiary, or orders the liquidation of the Company or any Subsidiary; and
(vi) any of the Transactions Documents shall cease for any reason, to be in full
force and effect, in any material respect, except as a result of an amendment,
waiver or termination thereof as contemplated or permitted hereby, or the
Company shall so assert in writing.
12. NO RECOURSE AGAINST OTHERS. No director, officer, employee,
incorporator or shareholder of the Company shall have any liability for any
obligation of the Company under the Agreement or the Senior Discount Notes or
for any claim based on, in respect of, or by reason of, any such obligation or
the creation of any such obligation. Each Holder by accepting a Senior Discount
Note waives and releases such Persons from all such liability, and such waiver
and release is part of the consideration for the Issuance of the Senior Discount
Notes.
13. SUCCESSOR SUBSTITUTED. Upon the merger, consolidation or other business
combination involving the Company or upon the sale, assignment, transfer, lease,
conveyance or other disposition of all or substantially all of the Company's
properties and assets, the Surviving Person (if other than the Company)
resulting from such Disposition shall succeed to, and be substituted for, and
may exercise every right and power of, the Company under the Agreement with the
same effect as if such Surviving Person had been named as the Company in the
Agreement.
14. GOVERNING LAW. This Senior Discount Note shall be governed by and
construed in accordance with the internal laws of the State of New York, without
regard to the conflict of laws provisions thereof.
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15. CUSIP NUMBERS. The Company will use reasonable efforts to cause CUSIP
numbers to be printed on the Senior Discount Notes and to use CUSIP numbers in
notices of redemption as a convenience to Holders. No representation is made as
to the accuracy of such numbers either as printed on the Senior Discount Notes
or as contained in any notice of redemption and reliance may be placed only on
the other identification numbers printed on the securities.
16. COPIES OF AGREEMENT. The Company will furnish to any Holder upon
written request and without charge a copy of the Agreement, which has in it the
text of this Senior Discount Note. Requests may be made to: Silicon Gaming,
Inc., ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attn: President.
17. CERTAIN INFORMATION OBLIGATIONS. To the extent permitted by applicable
law or regulation, whether or not the Company is subject to the requirements of
Section 13 or 15(d) of the Exchange Act, the Company shall file with the
Commission all quarterly and annual reports and such other information,
documents or other reports (or copies of such portions of any of the foregoing
as the Commission may by rules and regulations prescribe) required to be filed
pursuant to such provisions of the Exchange Act. At any time when the Company is
not permitted by applicable law or regulations to file the aforementioned
reports, the Company shall mail to the Holders, within five days after it would
have been required to file the same with the Commission, all information that
the Company would have had to provide to the Commission if the Company had been
subject to Section 13 or 15(d) of the Exchange Act. Also, at any time when the
Company is not permitted by applicable law or regulations to file the
aforementioned reports, upon the request of a Holder of a Senior Discount Note,
the Company will promptly furnish or cause to be furnished such information as
is specified pursuant to Rule 144A(d)(4) under the Securities Act (or any
successor provision thereto) to such Holder or to a prospective purchaser of
such Senior Discount Note, as the case may be, in order to permit compliance by
such Holder with Rule 144A under the Securities Act.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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ASSIGNMENT FORM
To assign this Senior Discount Note, fill in the form below:
FOR VALUE RECEIVED the undersigned hereby sell(s), assign(s) and transfer(s)
unto ___________________________________________________________________________
________________________________________________________________________________
(Please insert social security or other identifying number of assignee)
at _____________________________________________________________________________
(Please print or typewrite name and address including postal zip code of
assignee)
the within Senior Discount Note and all rights thereunder, hereby irrevocably
constituting and appointing ________________________________________ to transfer
said Senior Discount Note on the books of the Company. The agent may substitute
another to act for him.
Date: Your Signature:
----------------- ------------------------------------------
(Sign exactly as your name appears on the
other side of this Senior Discount Note)
Signature Guarantee:____________________________________
OPTION OF HOLDER TO ELECT PURCHASE
If you elect to have this Senior Discount Note purchased by the Company
pursuant to Section 7.12 of the Agreement, check the box: [ ]
If you elect to have this Senior Discount Note purchased by the Company
pursuant to Section 7.13 of the Agreement, check the box: [ ]
If you elect to have only part of this Senior Discount Note purchased by
the Company pursuant to Section 7.12 or 7.13 of the Agreement, state the amount
(multiples of $1,000 only):
$_________________
Date: Your Signature:
----------------- ------------------------------------------
(Sign exactly as your name appears on the
other side of this Senior Discount Note)
Signature Guarantee:____________________________________
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