IGT-LVGI BINDING TERM SHEET
Exhibit
10.25
***Text
Omitted and Filed Separately
with
the Securities and Exchange Commission.
Confidential
Treatment Requested
Under
17 C.F.R. Sections 200.80(b)(4)
and
240.24b-2
IGT-LVGI
BINDING TERM SHEET
This
binding term sheet (“Term Sheet”) sets forth the agreement of the parties with
regard to a second proposed investment transaction (“Second Investment
Transaction”) between IGT (“IGT”) and Las Vegas Gaming,
Inc. (“LVGI”).
1. Initial
Payment
On the same business day as the
execution of this Term Sheet, IGT shall provide to LVGI an advance of $1.5
million U.S. dollars (“The Advance”). If the parties do not reach a
signed Second Investment Agreement on or before August 15, 2009, IGT will have
the option of: (1) converting its $1.5 million advance into LVGI’s Series K
Convertible Preferred Stock offering (presently under way with […***…]) at a
price per share of $3.25 if such offering is not completed, and at the offering
price if it is completed; or (2) at the completion of the […***…] round and upon
IGT’s written request, have the $1.5 million dollars paid back to
IGT. If IGT elects to convert into Series K Convertible Preferred
Stock, the advance shall be converted to such shares of stock, which are
equivalent to IGT’s advance when considering the closing price of that stock
offering.
If LVGI
is unable to complete its Series K Convertible Preferred Stock offering, as
described above, prior to August 15th 2009
The Advance shall become immediately due and payable and LVGI does hereby grant
a security interest in all of its present and future assets as security for such
obligation. LVGI will take all necessary actions to perfect all such
security interests as soon a practicable..
2. Second
Investment Agreement
IGT and LVGI shall endeavor to enter
into a Second Investment Agreement, which provides for IGT’s investment of a
total of $3.0 million U.S. dollars (“Investment Funds”) in LVGI, inclusive of
the advance identified in Section 1. In exchange for the
Investment Funds, LVGI will issue to IGT a single share of Series J
Convertible Preferred Stock, cash dividend mandatory at 5% payable on January 1
of each calendar year, convertible into Common Stock Series A at the price that
LVGI’s Series K Convertible Preferred Stock offering closes (presently under way
with […***…]) at the offering price at which such transaction closes, and, if it
does not close at the per share price of $3.25. The annual dividend
will be personally guaranteed by both ▇▇▇▇ ▇▇▇▇, Chairman of the Board, and
▇▇▇▇▇ ▇▇▇▇▇▇▇, Chief Financial Officer, of LVGI. LVGI shall solely
use the Investment Funds for the development of IGT sb software applications and
PlayerVision® software applications.
***Confidential
Treatment Requested
1
3. Addendums
to Prior Agreements
IGT and LVGI previously entered into an
Investment Agreement, a License and Application Support Agreement (LASA), a
Retrofit Agreement and an Intellectual Property Access Agreement
(IPAA). IGT and LVGI shall incorporate the following terms, in
principle, into those agreements by modification or addendum thereto, as
follows:
a. (LASA – 7.2) Article 7.2 of the
existing License and Application Support Agreement shall be amended to require
that LVGI use its best efforts to utilize IGT’s sb Media Manager as the default
infrastructure for delivery of LVGI’s PlayerVision® applications, where such is
applicable and technically feasible.
b. (LASA – 5.7) The License and
Application Support Agreement shall have a new Section 5.7,
which shall require LVGI to provide development support for IGTsb applications
requested by IGT (“IGT Requested Applications”). LVGI’s required
support for IGT Requested Applications will be capped at […***…] of LVGI’s then
available development resources. All IGT Requested Applications
developed by LVGI shall remain the property of LVGI. The development
time dedicated to IGT Requested Applications shall be billed at LVGI’s published
engineering development rate, less a […***…] discount.
c. (LASA – 6.1) Article 6.1 of the
License and Application Support Agreement shall be amended so that the
distribution fee identified increases from […***…] to […***…]. Of the
[…***…] distribution fee, IGT agrees that a minimum of […***…] and up to […***…]
(i.e. no less than […***…] and up to […***…], of the […***…]) shall become paid
as commissions or bonuses to its sales employees.
d. (LASA – 6.5) The existing License and
Application Support Agreement shall have a new Section 6.5
whereby LVGI grants to IGT a “most favored distributor” status such that IGT is
granted the most favorable terms available on all LVGI’s software distributor
rates for LVGI’s server-based applications.
e. (IPAA – 3.03) The existing
Intellectual Property Access Agreement shall have a new Section 3.03
whereby LVGI agrees that IGT shall have the right to have-initiated, coordinate,
finance and assist in the prosecution, defense and enforcement of all LVGI owned
Intellectual Property to which IGT has a right of first refusal.
f. (LASA – 7.4) The existing License and
Application Support Agreement shall include a new Section 7.4 whereby LVGI shall
be required to escrow the source code for applications that connect to IGT
systems. IGT shall have the right to access the escrowed source code
only in the event LVGI becomes insolvent. IGT’s rights to utilize such
software shall be (if released) unlimited.
4. Timing
The
signing of the Second Investment Agreement and the addendums to the Prior
Agreements and the final funding is expected to occur by February 27,
2009.
***Confidential Treatment
Requested
2
5. Global
Terms
a. Confidentiality
of any information regarding the proposed Second Investment Transaction
including the existence and provision of this Term Sheet, the proposed terms and
all transaction-related discussions shall be governed by the Mutual Confidential
Disclosure Agreement between the parties effective on May 20, 2008.
b. LVGI
and IGT shall each bear their own fees and expenses in connection with this Term
Sheet and the Second Investment Transaction.
In witness whereof, each of the undersigned
has set his hand this 13th day of February 2009.
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IGT
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LVGI
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Signed:
/s/ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇
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Signed:
/s/ ▇▇▇ ▇.
▇▇▇▇▇▇▇
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Printed
name: ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇
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Printed
name: ▇▇▇
▇.
▇▇▇▇▇▇▇
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Title:
Executive Vice President -
Corporate
Strategy
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Title: President and Chief
Executive
Officer
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LVGI and
Individually:
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Signed: /s/ ▇▇▇▇▇▇▇
▇. ▇▇▇▇
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Printed
Name: ▇▇▇▇▇▇▇ ▇.
▇▇▇▇
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Title:
Chairman of the
Board
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LVGI and
Individually:
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Signed:
/s/ ▇▇▇▇▇
▇▇▇▇▇▇▇
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Printed
Name: ▇▇▇▇▇
▇▇▇▇▇▇▇
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Title:
Chief Financial
Officer
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3