Exhibit 2.1
STOCK PURCHASE AGREEMENT
OF SERIGRAFICA CHILENA SOCIEDAD ANONIMA
NOW SCIENTIFIC GAMES LATINO AMERICA S.A.
SCIENTIFIC GAMES CHILE LIMITADA
AND
EPICENTRO S.A. ET AL.
In Santiago, Chile, on June fifth two thousand two, before me, ▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇, attorney, Titled Notary Public of the Eleventh Notary of
Santiago, with an office at Doctor ▇▇▇▇▇▇▇ del Rio number three hundred twenty
two of this city of Santiago, appear before me: ▇▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇,
Chilean, married, commercial engineer, national identification number seven
million fifty three thousand six hundred fifty hyphen one, in representation, as
will be evidenced, of "EPICENTRO S.A.", commercial entity, Rut 96.555.690-7,
both domiciled in Santiago, Ejercito Avenue number five hundred twenty one; and
▇▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, Chilean, married, commercial engineer, national
identification card number five million five hundred forty six thousand seven
hundred ninety one hyphen nine, in representation, as will be evidenced, of
"INVERSIONES Y ASESORIAS ICULPE LIMITADA", an entity of the type indicated, Rut
ninety six million five hundred thirty six thousand eight hundred fifty hyphen
seven, both domiciled in Santiago, Apoquindo Avenue number three thousand,
office number one thousand six hundred two, hereinafter referred to as "Iculpe
Ltda.", on the one hand, as sellers, and hereinafter referred to collectively as
the "Sellers"; and on the other hand, ▇▇. ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, American,
married, businessman, Passport No. ▇▇▇▇▇▇▇▇▇, issued in the United States of
America, domiciled at ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇,
here [in Chile] in passing, and ▇▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ RIESCO, Chilean, married,
attorney, national identification number five million seven hundred forty two
thousand, eight hundred ninety seven hyphen K, domiciled in ▇▇▇▇▇▇▇▇, Moneda
street number one thousand one hundred thirty seven, ninth floor, both in
representation, as will be evidenced, of "SCIENTIFIC GAMES CHILE LIMITADA",
commercial entity, Rut seventy seven million seven hundred fifty seven thousand
fifty hyphen one, domiciled in ▇▇▇▇▇▇▇▇, Moneda Street number one thousand one
hundred thirty seven, office number eighty six, hereinafter referred to as the
"Buyer"; and ▇▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Riesco, individually, in representation of
"SCIENTIFIC GAMES CORPORATION", corporation formed pursuant to the laws of the
state of Delaware, United States of America, domiciled in seven hundred fifty
Lexington Avenue, New York, New York ten thousand twenty two, United States of
America, hereinafter also referred to as "SGUSA" or the "Guarantor", the
representatives being over eighteen years old, evidence their identity with
their respective identification cards and state that: They have agreed to enter
into the following Stock Purchase Agreement, hereinafter the "Agreement", of
Serigrafica Chilena Sociedad Anonima, hereinafter the "Company", which will be
bound by the pertinent legal dispositions and, in particular, by the terms and
conditions hereinafter set forth:
6
First: SHARES
1.1 Epicentro S.A. owns 1,116,163 shares of the Company according to title
certificates number one for 982,223 shares, issued on March six two thousand
two, and number six for 133,940 shares, issued on May twenty four, two thousand
two, registered on page one of the Company's Shareholder Registry. Iculpe Ltda.
owns 124,018 shares of the Company, according to title certificate number four
issued on April 22 two thousand two, registered on page three of the Company's
Shareholder Registry. The aforementioned shares are all of the issued and
outstanding shares of the Company.
1.2 The Company owns and controls the following subsidiaries (the
"Subsidiaries"), all limited liability companies, formed pursuant to the laws of
the Republic of Chile, having title to 99% of the ownership rights of each one
of them: (1) Serchi Exportadora Limitada; (2) Serchi Comercializadora de
Materiales Limitada, and (3) Serchi Prestacion de Servicios Limitada. The owner
of the remaining 1% of the ownership rights of each one of the Subsidiaries is
"Inversiones LH S.A." Annex 1.2 of this Agreement contains a summary of the
organizational documents (and any amendments thereto) of each one of the
Subsidiaries.
1.3 By means of a private document named "Offer to the Shareholders of
Serigrafica Chilena S.A." (Oferta de Compra de Acciones de Serigrafica Chilena
S.A.), dated March 18, 2002, Scientific Games Corporation offered to purchase
from the shareholders of the Company, through a subsidiary which it would
organize for that purpose, sixty-five percent of the shares issued and
outstanding of the Company, this is 806,118 shares (the "Shares"), which offer
was accepted by the Sellers.
1.4 The Sellers declare that the Shares of the Company which are the subject of
this Agreement are free of all liens, pledges, usufruct, charges, restrictions,
embargos, litigation, nullification proceedings, preference rights by third
parties, prohibitions or ownership limitations of any type or nature, which
could in any way affect their sale and transfer to the Buyer or any right of the
Buyer with respect to the same; also, the shares are fully paid and confer to
the Buyer the economic and political rights established by the Company bylaws,
with the Sellers responding to their stability in accordance with the law.
1.5 For all applicable circumstances of the Agreement, the "Closing Date" will
be understood to be May 31, 2002.
Second: SALE AND PURCHASE
2.1 By means of this agreement, Epicentro S.A., represented by ▇▇. ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ Martinez, sells, grants and transfers to Scientific Games Chile
Limitada, on whose behalf ▇▇. ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and ▇▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Riesco
purchase, accept and acquire, 725,506 shares of the Company.
2.2 By means of this same agreement, Iculpe Ltda., represented by ▇▇. ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ Gutierrez, sells, grants and transfers to Scientific Games Chile
Limitada, on whose behalf ▇▇. ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and ▇▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Riesco
purchase, accept and acquire, 80,612 shares of the Company.
7
2.3 Included in the purchase and sale and transfer of the Shares and their
respective prices, are all of the assets and rights with respect to capital,
revaluations, accumulated profits, dividends that have not been distributed or
other reserve or commercial funds of any type, purpose or denomination,
including those that are found accumulated in any fund without having been
distributed and even when there exist pending agreements of compliance for their
distribution, or any other benefits attributed to the ownership of the Shares,
in proportion to the shares that are sold, whether arising from the present
transaction or others previous thereto.
2.4 The concept of true dominion rights over the shares being sold is made
effective by the present transaction, with the delivery of the certificates of
title representing the shares from the Sellers to the Buyer, the former
[Sellers] having the capacity and intention to transfer their ownership and the
latter [the Buyer] the capacity and intention to acquire it.
Third: PRICE
3.1 The purchase price (the "Price") of the shares which are the subject of this
Agreement is 3,900,000 dollars of the United States of America, plus the earnout
described in the following section. Of the aforementioned Price, 90%, that is
3,510,000 dollars of the United States of America, belong to Epicentro S.A., and
10%, that is 390,000 dollars of the United States of America, belong to Iculpe
Ltda. It is noted, for any applicable purposes, that the initial price per share
is $4.838.
3.2 The Price established in the preceding paragraph is hereby paid in pesos,
Chilean currency, according to the "observed dollar" exchange rate provided by
the Central Bank of Chile, which results in a total of 2,576,886,000 pesos, an
amount that the sellers declare received in the proportion previously
established, to their complete satisfaction.
Fourth: EARNOUT
4.1 Additionally, in consideration and as additional payment for the same Shares
indicated in section two, and subject to the fulfillment of the conditions that
are established in the following paragraph, the Buyer agrees to pay the Sellers
an earnout of up to US$4,355,000 ("Maximum Earnout"), paid in four annual
installments in the following maximum amounts and due dates: (i) a first
installment of up to US$875,000, which payment must be made on March 31, 2003 at
the latest; (ii) a second installment of up to US$1,160,000, which payment must
be made on March 31, 2004 at the latest; (iii) a third installment of up to
US$1,160,000, which payment must be made on March 31, 2005 at the latest; and
(iv) a final installment of up to US$1,160,000, which payment must be made on
March 31, 2006 at the latest.
4.2 The payment of the aforementioned earnout installments is subject to the
condition that the Company obtain, during the years 2002 (partial year from
April to December), 2003, 2004, and 2005, the following earnings referred to as
"EBITDA," which are expressed in US dollars and which are defined as the
consolidated profits of the Company and its Subsidiaries after adding to each
year's net earnings, taxes, depreciations, amortizations and interest expenses
and subtracting interest income, determined in accordance with the accounting
principles generally accepted in the Republic of Chile and applied on a
consistent basis, excluding Chilean inflation adjustments, and evidenced by
their duly audited balance sheets and income statements:
8
Year EBITDA (US$)
-------------------------------------------------------------------------
2002 (April to December) 1,485,000
2003 2,280,000
2004 2,520,000
2005 2,760,000
Total 9,045,000
For the purpose of determining the foregoing EBITDA targets, the currency
conversion to US dollars shall be performed at the end of each calendar month at
the average rate for that month.
4.3 If in any of the years previously indicated the Company does not obtain the
EBITDA budgeted for that year, the Buyer will only be obligated to pay to the
Sellers a portion of the earnout installment established for that year, with a
penalty equivalent to two times the percentage of EBITDA that was not achieved.
For example, if the EBITDA established for the respective year is only achieved
by 90%, meaning there exists a 10% deficit, the Buyer will only have to pay 80%
of the earnout installment established for that year. In any case, if the EBITDA
target is not reached by more than 20%, that is, the EBITDA obtained does not
reach 80% of the EBITDA budgeted for the respective year, no payment will be
made for that year.
4.4 If by March 31, 2006, the payment due date of the last earnout installment,
the Sellers have not received the total payment of the aforementioned earnout,
due to not having achieved in one or more years the budgeted EBITDA, the Sellers
will have the right to an additional payment determined as follows: (i) the
percentage representing the sum of the EBITDA effectively achieved during the
years 2002 (partial year from the April to December), 2003, 2004 and 2005, over
the total of the EBITDA budgeted for those same years, that is, $9,045,000, will
be calculated by dividing the sum of the EBITDA effectively obtained by
9,045,000 and multiplying the result by 100; (ii) the percentage obtained will
be applied to the Maximum Earnout, that is, to $4,355,000; and (iii) if the
amount obtained with the previous operation was greater than the sum of the
earnout payments received by the Sellers during the years 2003, 2004, 2005 and
2006, they [the Sellers] will have the right to payment of the difference, with
the limitation that, in no event, will the sum of the earnout payments made and
the additional payment agreed to in this paragraph, exceed $4,355,000, the
agreed to Maximum Earnout. In the event that the result of the operation is
equal to or less than the amount effectively paid to the Sellers in years from
2003 to 2006, they [the Sellers] will not have the right to the additional
payment described in this paragraph.
4.5 In order to determine and prove the achievement or level of achievement of
the budgeted EBITDA for the years 2002 (partial year from the April to
December), 2003, 2004 and 2005, the company will prepare general balance and
income statements to December 31 of each one of those years, which balance
sheets and income statements will have to be audited by a firm of external
auditors which is to be designated as indicated in paragraph 4.8 herein and
delivered to Buyer, at the latest, on March 15 of each one of the years from
2003 to 2006. The external auditing firm will have to certify the achievement or
level of achievement of the budgeted EBITDA for each one of the aforementioned
years. Likewise, once the 2005 statements have been completed, and at the latest
on March 15, 2006, the external auditing firm will have to certify the
percentage that represents the sum of the EBITDA effectively obtained during the
years 2002 to 2005 over the total of the EBITDA budgeted for the same years.
9
4.6 The payment of each one of the agreed to earnout installments, or the
percentage of the same paid pursuant to what is stated in paragraph 4.3, will
have to be made within the 15 business days following the date in which the
auditing firm issues the certificate referred to in paragraph 4.5 above, as long
as the general balance sheets and income statements have been delivered to the
Buyer as indicated in paragraph 4.5, and, in any event, within the time frame
ending March 31 of the years 2003 to 2006. The payment of the difference
referred to in paragraph 4.4, if applicable, will have to be made within the 15
business days following the date in which the auditing firm certifies the
percentage that represents the sum of the EBITDA effectively obtained during the
years 2002 to 2005, over the total of the EBITDA budgeted for those same years,
a time frame that will not go beyond March 31, 2006 as long as the Buyer has
received the certification of the auditing firm within the term stated in
paragraph 4.5 above. A delay in the delivery of the certificates that the
auditing firm has to issue will result in the postponement of the due date of
the applicable earnout installment or the aforementioned additional payment, by
the same number of days that the delivery of the respective certificate is
delayed, during which no penalty interest, as defined in paragraph 4.7 below,
will accrue.
4.7 The earnout installments and the additional payment described in the
preceding paragraphs will not incur interests, except in the event of default or
simple delay in payment, in which case, if the corresponding payment has not
been made during the 15 business days following the receipt by the Buyer and
SGUSA of a written notice sent by the Sellers with respect to the delay or
default, penalty interests will accrue at a rate of 1% per month calculated in
US dollars on the US dollar amount of the payment due.
4.8 The external auditing firm which has to certify the achievement or level of
achievement of the budgeted EBITDA will be the same firm as is designated at the
general meeting of shareholders of the Company to audit its financial
statements, provided that the firm named, unless there is unanimous agreement to
the contrary, will be one of the following auditing firms: Price Waterhouse
Coopers, KPMG Peat Marwick, Ernst & Young or Deloitte & Touche.
4.9 The payment of each earnout installment and the additional payment, if
applicable, will be made in pesos, Chilean currency, or, given prior mutual
agreement of the parties, in shares of SGUSA. If the payment is made in pesos,
the "observed dollar" exchange rate provided daily by the Central Bank of Chile,
as is in effect on the business day preceding the date of the payment, will
apply. If the payment is made using shares of SGUSA, the market value of the
shares on the date of payment will be used, and it will be paid in the
aforementioned proportion to the Sellers, that is, 90% of the corresponding
shares for Epicentro S.A. and the remaining 10% of the shares for Iculpe S.A.
During the twenty-four hours following the delivery of the shares of SGUSA to
the Sellers, the Sellers will proceed to the sale, in the open market, of the
aforementioned shares of SGUSA, a sale that they will have to consummate using
securities brokers who are selected by the parties' mutual agreement, with the
Buyer's guaranty that the net price that the Sellers receive for the sale of the
shares of SGUSA, not including the brokers commissions, exchange expenses and
remittance expenses, will be at least equivalent in dollars to the corresponding
earnout installment or the additional payment, as the case may be. If the net
value that the Sellers receive for the sale of such shares were inferior to the
earnout installment or the additional payment in U.S. dollars, the Buyer will
have to pay the difference to the Sellers, in the aforementioned proportion, in
available funds, within the term of five business days following the date of the
sale of the shares. During the same term of five business days, the Sellers will
10
have to receive the purchase price of the shares. On the contrary, if the net
value that the Sellers receive with the sale of the aforementioned shares were
superior to the corresponding earnout installment or the additional payment, as
the case may be, in US dollars, the Sellers will have to deliver the difference
to the Buyer, in cash, in available funds, with Scientific Games Corporation
having the authority to retain the difference and deliver it directly to the
Buyer.
Fifth: GUARANTIES
The obligations incurred by the Buyer under the terms of this Agreement are
guaranteed as follows:
5.1 Joint responsibility of Scientific Games Corporation. In consideration of
the benefit, either direct or indirect, received by SGUSA, in this transaction
and by means of this Agreement, SGUSA, represented as indicated in the
introduction, duly authorized by the Board of Directors of SGUSA, hereby
establishes itself, for the benefit of the Sellers, who accept, as the guarantor
of the obligation to pay the earnout and any related amounts established in
section 4 above, to which its subsidiary, Scientific Games Chile Limitada, is
bound as Buyer in this Agreement, binding itself under the same terms as if it
were the direct obligor. SGUSA (also referred to in this Agreement as the
"Guarantor") accepts all of the extensions, renewals, amplifications or
modifications that may be made to the Buyer's earnout payment obligations under
this Agreement, without any reservations or exclusions, maintaining its joint
responsibility until all of the guaranteed obligations are fulfilled by the
Buyer. Notwithstanding the extent of the obligations of SGUSA as guarantor, no
payments by SGUSA as Guarantor will be made until thirty business days following
the receipt by SGUSA of a written notice from Sellers with respect to any
default or delay by the Buyer. It is hereby noted that the guaranty of SGUSA
will only be maintained while the agreed to earnout payment obligation is
outstanding, and it will terminate once the payment is completely satisfied.
5.2 Commercial pledge and prohibition to encumber or alienate the Shares.
5.2.1 In order to guaranty all and each one of the principal and secondary
obligations incurred by the Buyer in this Agreement, especially the payment of
the earnout described in section four of this Agreement, its suspensions and
expenses, if any, the Buyer makes, for the benefit of Sellers, who accept, a
commercial pledge, in conformity with Title XV, Book II of the Commercial Code,
of 425,275 shares of the Company, of the 806,118 total shares that are the
subject of this Agreement. The Sellers are obligated to release this pledge, in
quantities that are directly proportional to the amount of earnout payments
made, upon the satisfaction by the parties of each year's earnout installment by
means of payment or in any other way agreed to by the parties in this document,
in particular when payment is made in the manner agreed to by the parties in
paragraphs 8.2, 8.3, and 8.4 of this Agreement. Once the agreed to earnout has
been completely satisfied, the Sellers shall release the pledge in its entirety.
5.2.2 In addition, the Buyer is prohibited from encumbering or alienating
all of the Shares (which are the object of this agreement) while the earnout
payment obligation described in section four of this agreement is outstanding,
unless otherwise agreed to in writing by the Sellers. Once the earnout payment
is made, the prohibition established in this paragraph will be lifted.
11
5.2.3 The parties empower the Notary authorizing this document to notify
the Company's General Manager of the formation of the commercial pledge and the
prohibition with respect to encumbrance or alienation of the shares which is
established in the preceding paragraphs and in paragraph 6.4 of this agreement,
to take note of these in the Company's Shareholders' Registry, require the
issuance of the appropriate titles to the shares and to deliver them to the
parties.
Sixth: OTHER OBLIGATIONS
6.1 By the Closing Date, there will not have occurred any substantial material
changes in the liabilities, assets, or net value of the Company since the
general balance prepared as at December 31, 2001, which changes have not been
approved in writing by the Buyer. Material changes include, without limitation,
changes resulting from paid dividends, credit incurred, and payments made
outside of the ordinary course of business. As evidence of this obligation, the
Company will prepare general balance and income statements as of the Closing
Date, which balance and statements they will deliver to the parties no later
than June 21, 2002. Likewise, the general balance and income statements as at
December 31, 2001, will be filed with the original copies kept by the notary,
under No. ________, at the end of the notarial registry of the present month.
6.2 Prior to the Closing Date, the loans identified in Annex 6.2 due by the
Company to Epicentro S.A. ("Loans"), in an aggregate amount of US$1,511,000 as
of their due date, have been modified, notwithstanding the terms of any
agreement among the Company, the Subsidiaries and any of the lenders, in the
following manner: (i) the total amount of the aforementioned Loans, including
any adjustments and interest incurred up to the Closing Date, will become due
and will be paid in its totality in one single payment equal to US $1,511,000 on
December 31, 2010, and (ii) beginning on the Closing Date, none of the Loans
will incur any type of interests, and (iii) in no event will the aforementioned
loans be paid before their due date, that is, December 31, 2010.
6.3 Simultaneously with the execution of this Agreement, the Sellers will
deliver to Buyer the following documents: (i) a consent and authorization
certificate signed by the shareholders or partners of each Seller, by means of
which the aforementioned shareholders or partners approve the terms and
execution of this Agreement and the fulfillment of all of the acts or
transactions to be made pursuant to the terms of this Agreement; (ii) an opinion
of counsel to the Sellers and the Company in form and substance equivalent to
that found in Annex 6.3; and (iii) a Shareholders' Agreement, which will be
executed by Sellers and Buyer. The Sellers will also complete and execute
certain documents required by Scientific Games in order to comply with North
American laws that regulate the exchange and issuance of securities.
Specifically, the parties will execute the "Subscription Agreement" to confirm
the circumstances under which Scientific Games will be able to make any payment
to the Sellers using shares of SGUSA.
6.4 As a counterpart to the obligation contained in paragraph 5.2.2 of this
agreement, the Sellers are bound by a prohibition to encumber or alienate the
shares of the Company that they are maintaining under their control (not being
sold), a prohibition which will be binding until March 31, 2006. The prohibition
established in this paragraph will not affect the sales of shares of the Company
that the Sellers make to each other, or to their transfer or sale to a company
that both Sellers form for the purpose of consolidating their shares in one
person, as long as the new
12
company agrees to be bound by the terms of this agreement and those of the
Shareholders' Agreement which the parties are entering into on the date hereof.
Seventh: REPRESENTATIONS AND WARRANTIES OF SELLERS WITH RESPECT TO THE
SELLERS AND THE SHARES
The Sellers declare and guaranty to the Buyer and the Guarantor as follows:
7.1 Organization and Related Matters. That the Sellers are entities organized
according to the laws of the Republic of Chile, validly existing and in good
standing. The Sellers and their representative have full power and are duly
authorized and capacitated, including by having the required corporate
authorizations, to enter into, execute and fulfill this contract and give effect
to the transactions contemplated herein.
7.2 Ownership of Shares. That the Sellers own 100% of the issued and outstanding
shares of the Company, as indicated in paragraph 1.1 of this agreement. The
Shares (which are the object of this agreement) are free of all liens, pledges,
usufructs, charges, restrictions, precautionary measures, embargos, litigation,
nullification proceedings, preference rights by third parties, prohibitions or
limitations to any type of control ("Liens"), which could in any way affect the
sale and transfer to the Buyer. Likewise, the Shares are duly authorized, issued
and outstanding and registered under the name of its respective owners in the
Company's Shareholders' Registry, and no legend or other reference to any Liens
are noted in such Registry. The transfer of the Shares will convey to Buyer
their valid title and right of ownership of the Shares, free of any Liens.
7.3 Authorization and Absence of Conflicts. The execution and performance of
this Agreement by the Sellers has been duly and validly authorized by all
necessary action, corporate or otherwise, on the part of Sellers. This Agreement
does not require filing, registration or authorization with any governmental
entity or agency. This Agreement constitutes the legal, valid and binding
obligation of Sellers in accordance with its terms. Except as disclosed in Annex
6.2, Sellers are not creditors of the Company or its Subsidiaries.
7.4 Legal Proceedings. On the date of this Agreement, there is no claim,
complaint, petition, investigation, lawsuit or other proceeding, whether civil,
administrative labor or criminal, before any arbitrator, court or governmental
agency ("Action") pending or threatened against the Sellers that might
reasonably affect or be expected to have an adverse effect on Sellers' ability
to perform their obligations under this agreement.
7.5 Absence of Brokers and Intermediaries. No agent, intermediary, investment or
commercial banker, or other person engaged by or acting on behalf of Sellers,
the Company or any of their subsidiaries or their respective affiliates in
connection with the negotiation, execution or performance of this Agreement, is
or will be entitled to any brokerage or intermediary's or similar fee or other
commission as a result of this Agreement or the transactions contemplated
herein.
13
Eighth: REPRESENTATIONS AND WARRANTIES OF SELLERS WITH RESPECT TO THE
COMPANY
8.1 The Sellers represent and warrant to the Buyer and the Guarantor as
follows:
8.1.1 Organization and Related Matters. The Company and each of the
Subsidiaries are entities duly organized, validly existing and in good standing
under the laws of the Republic of Chile. The Company and its Subsidiaries each
have all necessary corporate power and authority to own or lease their
respective properties and assets and to carry on their respective businesses as
currently conducted.
8.1.2 Absence of Conflicts. The execution, delivery and performance of
this Agreement, the transfer and delivery of the Shares and the registration of
the Shares in the name of the Buyer in the Company's Shareholder Registry
immediately following the closing, and the execution, delivery and performance
of any related agreements or transactions contemplated in this Agreement by
Sellers do not violate or contravene the charter documents or by-laws of the
Sellers, the Company, or any of the Subsidiaries, nor do they violate any law,
nor require any approval or permit from any third party, except as stated in
this Agreement, nor contravene, conflict with or constitute a breach or default
of any material contract of which the Company or any Subsidiary is a party.
8.1.3 Shares. Capital stock of the Company consists solely of 1,240,181
common shares, of which all have been issued and subscribed. Paragraph 1.1 sets
forth a list of all authorized, issued and outstanding shares of the Company
owned by the Sellers, and registered in the Company's Shareholder Registry.
There are no options to acquire any shares of the Company, as well as no
treasury shares. Annex 1.2 sets forth a summary of each Subsidiary, which
entities are the only entities in which the Company has any type of ownership or
control. There are no options to acquire any shares of any such company, as well
as no treasury shares. There do not exist any liens or restrictions that could
affect the rights of the Company in its Subsidiaries. There are no contracts or
other purchase or subscription rights, nor contracts or other obligations to
issue or grant any right to acquire shares of the Company, or rights in any
Subsidiary, or to restructure or recapitalize the Company or any Subsidiary. All
shares of the Company were validly issued, are fully paid and freed, and are
duly registered in each of the respective stock registry books. At closing,
Buyer will own a majority of the issued and outstanding shares of the Company,
and by virtue of the ownership of the Shares, shall control the majority of the
voting rights of the Company.
8.1.4 Financial Statements; Changes; Contingencies
(a) Prior to the execution of this Agreement, Seller shall have
delivered to Buyer true and complete copies of the following financial
statements: (i) the audited general balance sheets of the Company and its
Subsidiaries consolidated as of December 31, 1999, December 31, 2000 and
December 31, 2001, income statements and the related audited consolidated
statements of operations, net worth and cash flows for each of the fiscal years
then ended, together with a true and correct copy of the corresponding report,
audited by the auditing firm designated at the general meeting of shareholders
of the Company to audit its financial statements, and all letters of said
accountants with respect to the results of those audits (the "Audited Financial
Statements"); and (ii) general unaudited balance sheets of the Company, and its
Subsidiaries, consolidated as of April 30, 2002 (hereinafter, the "Most Recent
Balance Sheet"), income statements and related unaudited consolidated statements
of operations, net
14
worth and cash flows corresponding to the period of time ending on said date
(the "Unaudited Financial Statements," and together with the Audited Financial
Statements, hereinafter, the "Financial Statements").
(b) All of the aforementioned Financial Statements (i) were prepared
in accordance with generally accepted accounting principles in the Republic of
Chile, applied in each case in a manner consistent with previous periods of
time, and (ii) accurately represent the consolidated financial condition and
results of operations of the Company and its consolidated Subsidiaries as of the
respective dates thereof and for the respective periods covered thereby. Since
December 31, 2001 there have been no changes in any of the accounting policies,
practices or procedures of the Company or any of its Subsidiaries.
(c) Unless expressly stated in this Agreement, since the date of the
Audited Financial Statement until and including the Closing Date, neither the
Sellers nor the Company nor its Subsidiaries have: (i) conducted their
respective businesses in any way outside the ordinary course of business and
inconsistent with past practice; or (ii) amended, terminated, renovated, or
re-negotiated any Material Contract, or have defaulted on any of the obligations
under any Material Contract, or have acted in any way that could endanger the
continuity of the relationships with their suppliers or important clients; or
(iii) incurred or agreed to incur (A) absolute or contingent obligations
establishing payment by the Company or the Subsidiaries of an amount of more
than US$10,000, outside of the ordinary course of business, or (B) operating
liabilities to an extent that the ratio of operating liabilities to net sales
has increased in comparison to the ratio for the comparable period of the fiscal
year that ended in December of 2001; or (iv) financed, guaranteed or extended
credit, or has agreed to finance, guarantee or extend credit, to any person,
excluding ordinary transactions with clients; or (v) except as indicated in
Annex 8.1.4(c)(v), granted any increase in the compensation or benefits to the
directors, executives, officers, employees or workers of the Company or of their
Subsidiaries, or paid any bonuses to any person, or entered into any employment
agreement, collective agreement, or employment termination agreement, or fired
employees, other than in the ordinary course of business, consistent past
practices; or (vi) sold, transferred, mortgaged, encumbered or in any other way
disposed of any other assets or liabilities, except (A) in the case of
disposition of goods, for an aggregate amount of no more than US$10,000, (B) in
the ordinary course of business, and (C) as contemplated in this Agreement; or
(vii) issued, sold, redeemed or acquired, debt or shares (or other securities
that give right to acquire shares or participate in some way in the capital or
earnings) of the Company or any of the Subsidiaries, or agreed to do any of the
aforementioned acts; or (viii) declared, issued, separated, made or paid any
dividend or other distribution of shares, whether in money, other personal
goods, real estate or other item of value, to its shareholders, or divided
(split), combined, distributed or reclassified any type of shares of the Company
or any of the Subsidiaries; or (ix) changed or amended the organizational
documents of any of the Subsidiaries; or (x) made any disbursements for
investment of capital or commitments related thereto; or (xi) made any
investment, whether by means of a purchase, contribution of capital, transfer of
goods, or any another way, in any other juridical person; or (xii) managed or
indirectly terminated or reduced or agreed to terminate or reduce any financial
line of credit, or the availability of any funds under any other agreement or
arrangement, except for the use of said funds in the ordinary course of
business; or (xiii) acquired or agreed to acquire by mergers or consolidations
with, purchase of assets or stock of, or in another way, any business or
company, partnership, association, or other business entity or division thereof;
or
15
(xiv) committed to or agreed to commit to realize any act prohibited by this
section [8.1.4(c)]; or (xv) settled any lawsuits or demands.
(d) Since the date of the Most Recent Balance Sheet, up to and
including the Date of Closing of this Agreement, neither the Company nor the
Subsidiaries have taken any measures or celebrated any contracts outside the
ordinary course of business, entered into any material agreement, and there have
been no important changes in the business, in the outcome of operations, nor in
the financial situation of the Company, or of the Subsidiaries since December
31, 2001.
8.1.5 Taxes
(a) All income tax returns required to be filed by or on behalf of
the Company, any of its Subsidiaries or any predecessors of any of them, have
been timely filed with the appropriate tax authorities or, if not, requests for
extensions were timely filed and any such extensions were granted, have not
expired and will not expire prior to the Closing.
(b) Each such income tax return was true, complete and correct in
all relevant aspects.
(c) All foreign, national, or municipal taxes, charges, duties,
fees, payments or other assessments, including income, sales and use, value
added, excise, franchise, real and personal property, stamp, transfer, social
security, environmental, net worth, gross receipt, capital stock, production,
business and occupation, disability, employment, payroll, severance or
withholding tax or charge imposed by any governmental entity, any interest and
penalties (civil or criminal) related thereto ("Taxes") for which the Company or
any of its Subsidiaries is liable and that have become due, have been paid in
full and to the extent the liabilities for such Taxes have not become due to
this date, adequate reserves have been established on the Financial Statements.
(d) Except as set forth in Annex 8.1.5(d), there is no expectation
that any tax authority assess any additional Taxes on the Company or the
Subsidiaries for any period for which tax returns have been filed.
(e) That the net operating losses, accounted for in the books or
financial statements of the company and their Subsidiaries as of December 31 of
1999, 2000 and 2001, are valid, are backed by the necessary accounting
documentation and, in accordance with applicable Chilean tax laws as of this
date, (i) were validly deducted from the taxable income generated by the Company
and its Subsidiaries, as the case may be, for the years 1999, 2000 and 2001, and
(ii) can be deducted from the future taxable income generated by the Company and
the Subsidiaries, as the case may be, without limitation as to time and until
their complete absorption.
8.1.6 Contracts
(a) There are no contracts, promises, stipulations, or contractual
obligations of any type or nature which are not accurately reflected in the
Financial Statements, or that the Company has not disclosed in writing and made
available to Buyer, or that the Company has
16
purposely concealed from Buyer. The Company and its Subsidiaries have complied
with all contractual responsibilities and obligations.
(b) All of the consents and approvals that are required of third
persons with respect to any of the contracts listed on Annex 8.1.6(b) so that
said contracts remain in force under the same terms and conditions and so that
this Agreement does not represent a default thereof, have been obtained before
the Closing by the Sellers, the Company, or the Subsidiaries.
8.1.7 Personal and Real Property; Ownership Rights; Leases. Except as set
forth in Annex 8.1.7, the Company and each of its Subsidiaries have good and
marketable title to or other right to use, free and clear of all Liens (and, in
the case of real property, not subject to any servitudes [rights of way],
building use restrictions, reservations or limitations of any other type), all
of their respective assets and properties, except for Liens that appear in the
Financial Statements, and the Company and each one of the Subsidiaries are
owners and, as such, have the unrestricted right to use, and after the Closing
will continue to be owners and, as such, continue to have the unrestricted right
to use, of all the goods or assets that used by them in the production,
distribution and marketing of their products.
8.1.8 Legal Proceedings
(a) Except as established in Annex 8.1.8(a), there are no demands or
proceedings pending or threatened against, relating to or affecting the Company
or any of the Subsidiaries or any of their respective assets and properties
which if determined adversely to the Company or a Subsidiary, could result in
(x) a judicial order against the Company or any of the Subsidiaries that could
materially affect its businesses or operations, or (y) in losses to the Company
or any of the Subsidiaries that, individually or in the aggregate, exceed
US$10,000;
(b) There exists no decree, nullification of a contract, judgment,
order, ruling, or writ ("Orders") outstanding against the Company or any
Subsidiary.
8.1.9 Compliance with Law/Permits. The Company and the Subsidiaries are
organized and have conducted and currently conduct their respective businesses
in compliance with all applicable laws, and any permits, licenses, rights or
authorizations issued or required to be issued, whether by an entity of the
Chilean government, regional authorities, or any other corresponding entity,
including without limitation, permits related to labor and environmental laws.
The execution of this Agreement and the fulfillment of all the obligations,
conditions and transactions contemplated in this Agreement, do not violate any
applicable law and do not require any governmental or regional authorization.
For the purpose of executing this Agreement and after the execution thereof, the
Company and the Subsidiaries will continue to conduct their respective
businesses in fulfillment of all applicable laws, with all of the permits,
licenses, rights or authorizations issued by Chilean governmental bodies and
authorities, regional authorities, or any other corresponding entity, as they
have done so in the year prior to the Closing Date.
8.1.10 Intellectual Property. The Company and the Subsidiaries own or have
licenses to all registered trademarks, service marks, patents, software and
other intellectual property ("Intellectual Property") required for the operation
of their respective businesses, free and clear
17
of any Liens. All of the aforementioned licenses, of the Company as well as of
the Subsidiaries, have been duly issued by, registered or filed with (as the
case may be) all applicable governmental entities, and have been properly
maintained and renewed in accordance with all applicable laws.
8.1.11 Environmental Compliance
(a) The Company and the Subsidiaries have complied with all
environmental obligations established in the applicable environmental laws and
regulations of the Republic of Chile.
(b) There are no pending or, to the knowledge of the Company, there
are no threatened claims, governmental actions or remedial orders with respect
to the Company or any of the Subsidiaries or any of their respective
predecessors or properties with respect to environmental matters.
8.1.12 Employees; Labor Matters. The Company and its Subsidiaries have
complied with all labor laws, regulations and obligations, including without
limitation, the making of necessary provisions, withholdings, and reserves for
the corresponding labor obligations, except for such obligations as are less
than US$1,000.00 individually or US$10,000.00 in the aggregate.
8.1.13 Absence of Obligations Not Revealed. The Company and its
Subsidiaries have no undisclosed obligations of any nature, except for
obligations included in the Most Recent Balance Sheet or fully reserved against
in the Most Recent Balance Sheet, nor current liabilities incurred in the
ordinary course of business since the date of the Most Recent Balance Sheet
which are significant in amount.
8.1.14 Disclosures. All information provided by Sellers to Buyer to
undertake the due diligence of the Company and its Subsidiaries which the Buyer
has completed is true, accurate, correct, and complete.
8.1.15 Registry of Shares. The Company's Shareholder Registry is complete,
up to date, and has been put at the disposal of the Buyer for its review.
8.1.16 Insurance. The Company and each one of its Subsidiaries maintains
the insurance policies listed in Annex 8.1.16, which policies are necessary for
the protection of the respective assets and properties of the Company and each
one of the Subsidiaries and to ensure the conduct of their businesses as they
have been conducted in the year prior to the Closing Date. The insurance
policies are in quantities that are appropriate and customary for the assets,
properties and businesses of the Company and the Subsidiaries.
8.1.17 Loans. All of the consents and approvals that are required from
third parties with respect to any modification of the Loans listed in Annex 6.2
so that the Loans comply with the terms of paragraph 6.2 above and that this
Agreement does not present a breach thereof, have been obtained before the
Closing by the Sellers, the Company, and the Subsidiaries.
8.2 In the event that during the four years following the Closing Date there is
revealed a lack of accuracy or truthfulness [a misrepresentation] or any breach
of the declarations and warranties
18
of the Sellers detailed in the preceding paragraphs that carries or produces any
detriment to the Company, the Sellers, collectively, will have an obligation to
pay to the Company an amount equal to any payment, claim, responsibility or
other expense made or incurred by the Company to any person or entity by reason
of the deficiency [the misrepresentation] or breach including, without
limitation, expenses incurred in the defense of any claim; If within the 30 days
following the receipt by the Sellers of a notice written by the Buyer with
respect to the amount due by the Sellers to the Company for the aforementioned
issues, the Sellers do not make full payment of the corresponding amount due,
the Buyer will have the right to discount from the earnout installments,
including the additional payment described in paragraph 4.4 of this document,
the amount equivalent to the compensation supposedly due to the Company by the
Sellers and claimed by the Buyer, and the Buyer shall give the amount that it
retains or discounts to the Company's account, on behalf of the Sellers, as
described in the following sections.
8.3 Once the notice mentioned in the previous paragraph is received and within
the same 30 day term previously stipulated, the Sellers will be able to do the
following: a) accept the claim formulated by the Buyer, in which case the amount
retained by the Buyer shall be given to the Company as the definitive payment of
the indemnity amount owed by the Sellers to the Company; or b) accept the
continuance of the claim made by the Buyer, but manifest to the Buyer their
decision to defend, at the Sellers' expense, the matter before the courts,
entities or instances that legally follow, in which case the retention made by
the Buyer should be given to the Company as a provisional measure, subject to
restitution by the Company to the Sellers, partially or completely, in the event
that the Sellers obtain a judgment or decision favorable to the Company; or c)
manifest to the Buyer their disagreement with respect to the proceeding of the
claim and/or their obligation to indemnify and/or the disputed amount, and of
their intention to submit the matter to arbitration according to the process
established in section twelve of this agreement, in which case the amount
retained by the Buyer shall also be given to the Company as a provisional
measure, subject to restitution by the Company to the Sellers in the event that
they obtain a favorable judgment or decision in the arbitration proceeding. The
amounts retained and given to the Company by the Buyer, on behalf of the
Sellers, as provisional, shall be maintained by the Company in an interest
bearing account which is independent of the other company accounts, in dollars
of the United States of America, in one of the four principal commercial banks
in Santiago, Chile, with the purpose of being able to respond to contingent
restitutions that the Company may have to give to the Sellers. In the event that
the Company has to give back to the Sellers all or part of the money retained
and given to it [the Company] by the Buyer as a provisional measure, the
restitution will have to be made in pesos, Chilean currency, according to the
"observed dollar" exchange rate daily provided by the Central Bank of Chile
applicable on the date of such restitution, plus interest earned in the
aforementioned account.
8.4 Each time that the Buyer makes a retention [retains amounts] with respect to
the earnout agreed to in section four, including the additional payment
described in paragraph 4.4, and gives it to the Company as a provisional
measure, it shall give notice of this event to the Company, imposing on it an
obligation of restitution if applicable according to what is stated in the
aforementioned paragraph 8.3.
8.5 Notwithstanding the interests described in paragraph 8.3 above, the parties
agree that, during any period of time in which there is any dispute, made in
good faith, with respect to any breach or default of the declarations and
warranties of Sellers or with respect to the liability of
19
the Company by reason of any breach or default of such declarations, the 1% of
interest described in paragraph 4.7 of this agreement will not be incurred with
respect to any earnout or additional payment. Any payment that the Sellers have
to make under the terms of this section shall be made in pesos, in available
funds or in any other way that is established by mutual agreement between the
Buyer and the Sellers. In any case, any payment, reimbursement, indemnity or
compensation due by the Sellers by reason of a lack of truth, accuracy
[misrepresentation] or breach of one or more of the declarations and/or
warranties contained in this section eight, will always be for the benefit of
the Company and will have the limits that are established in the following
paragraphs.
8.6 The reimbursement obligation or payment to the Company that is assumed by
the Sellers pursuant to paragraph 8.2 above will have the following limits with
respect to amount: (a) For the period ending December 31, 2002, the liability of
the Sellers will be limited, as a maximum, to the total actual amount of the
earnout to which the Sellers have a right according to what is established in
section four of this agreement, which includes all of the earnout installments
and the additional payment through March 31, 2006 described in the
aforementioned section four; (b) commencing January 1, 2003 and until December
31 of that same year, the liability of the Sellers will be limited to a maximum
amount equivalent in pesos, Chilean currency, to US$1,000,000; (c) beginning
January 1, 2004 and until December 31 of the same year, the liability of the
Sellers will be limited to the maximum amount equivalent in pesos, Chilean
currency, to US$800,000; and (d) commencing January 1, 2005 and until December
31 of the same year, the liability of the Sellers will be limited to a maximum
amount equivalent in pesos, Chilean currency, to US$500,000. Taking into account
the fact that the financial statements are made as at December 31 of each year
and must be audited, the Buyer will be able to make any claims to Sellers that
it deems pertinent and suitable, with respect to the years 2002, 2003, 2004, and
2005, until March 31 of the year following each of those years.
8.7 The liability of the Sellers established in the preceding paragraphs in this
section shall not exceed the total amount of the actual earnout they [the
Sellers] are entitled to receive pursuant to what is established in section four
of this agreement.
8.8 The limits described in the preceding paragraphs will not be applicable to
the representation made in paragraph 8.1.5(e), with respect to the tax advantage
of the net operating losses, in which case the liability of the Sellers will be
for the actual amount of the damage suffered by the Company and/or its
Subsidiaries. The limits will also not be applicable if Sellers acted in bad
faith, in which case the maximum amount of the compensations and indemnities
will be raised to the amount equivalent to the sum of the [initial purchase]
Price and Earnout.
Ninth: REPRESENTATIONS AND WARRANTIES OF BUYER AND OF GUARANTOR
The Buyer and the Guarantor represent and warrant to the Sellers as follows:
9.1 Organization and Related Matters. The Buyer is a limited liability company
organized under the laws of the Republic of Chile and the Guarantor is a
corporation organized under the laws of the State of Delaware, U.S.A., both
validly existing and in good standing. The Buyer, the Guarantor and their
representatives have all powers and are duly authorized and capacitated,
20
including by having the required corporate authorizations, to enter into,
execute and fulfill this Agreement and to give effect to the transactions
contemplated herein.
9.2 Authorizations and Absence of Conflicts. The entering into and fulfillment
of this Agreement by the Buyer and the Guarantor have been duly and validly
authorized by the necessary acts, corporate and otherwise. This Agreement does
not have to be filed with or authorized by any governmental entity or agency.
This Agreement constitutes the legal, valid and binding obligation of the Buyer
and the Guarantor in accordance with its terms.
9.3 Legal Proceedings. On the date of execution of this Agreement, there is no
Action pending or threatened against the Buyer and/or the Guarantor that might
in any way affect or be expected to have an adverse effect on their ability to
fulfill their obligations under this Agreement.
9.4 Absence of Brokers or Intermediaries. No agent, intermediary, investment or
commercial banker, or other person engaged by or acting on behalf of Buyer
and/or Guarantor, or their respective affiliates in connection with the
negotiation, execution or performance of this Agreement, is or will be entitled
to any brokerage or intermediary's or similar fee or other commission as a
result of this Agreement or the transactions contemplated herein.
Tenth: FULFILLMENT OF THE OFFER
The parties acknowledge that with the performance of this Agreement, the
purchase offer made by Scientific Games Corporation by private document signed
on March 18th, 2002 and accepted by the Sellers, is deemed fulfilled in every
way, and the parties reciprocally grant each other the most extensive and
complete settlement of the terms thereof.
Eleventh: MISCELLANEOUS
11.1 Modifications and Waivers. This Agreement and any annex hereto may be
amended only by agreement in writing of Buyer, Guarantor and Sellers. No waiver
of any provision nor consent to any exception to the terms of this Agreement
shall be effective unless in writing and signed by the party to be bound and
then only to the specific purpose, extent and instance established therein.
11.2 Severability. The invalidity, ineffectiveness or unenforceability of any
provisions of this Agreement, or any part thereto, will not effect the Agreement
or the remaining terms or provisions, which shall remain in full force and
effect and which will have to be fulfilled in the agreed to manner, except if
the invalidity, ineffectiveness or unenforceability is with respect to an
essential element of the Agreement, in which case the result will be that
established by law.
11.3 Parties in Interest and Third Party Beneficiaries. This Agreement shall be
binding upon and inure to the benefit of each party, and nothing contained in
this Agreement, express or implied, is intended to confer upon any other person
other than the parties hereto, any rights or remedies of any nature whatsoever
under or by reason of this Agreement.
21
11.4 Subsequent Acts. The parties agree to perform the acts necessary and
execute the required public or private documents following the execution of this
Agreement in order to produce the results contemplated herein, in particular,
the transfer of Shares that are the subject of this Agreement. In particular,
the Sellers obligate themselves to cause Inversiones LH S.A. to transfer its
rights in each one of the Subsidiaries, which transfer will be made in the
following proportion: 0.9% for the Company and 0.1% for the Buyer. This transfer
shall be made within a reasonable time and no later than two months following
the Closing Date.
11.5 Assignment. The parties are prohibited from assigning this Agreement or the
rights and/or obligations arising from it.
11.6 Expenses. The parties shall each pay their own expenses in relation to the
negotiation, preparation and performance of this Agreement and the transactions
contemplated herein. Each party will be responsible for one half of the expenses
related to the present deed and its registration.
11.7 Language. Together with the execution of this Agreement, the parties submit
a translation of it into English, which will have the same value and will bind
the parties in the same manner and with the same effect than does this document
in Spanish. In the event of a discrepancy among the parties as to its
translation and/or interpretation, it will be resolved by the arbitrator who is
elected in conformity with section twelve below.
11.8 Notices. All notices or communications between the parties shall be deemed
made when delivered in writing personally or sent by fax, as long as any notice
sent by fax must also be sent by mail with 48 hour delivery (courier) or
certified mail, postage prepaid and return receipt requested, to:
Sellers (both Sellers):
----------------------
To: Epicentro S.A. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇-▇▇▇▇▇, Fax (56-2)
▇▇▇▇▇▇▇, attention Senor ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇. With a copy to: (1)
Inversiones y Asesorias Iculpe Limitada Avenida Apoquindo numero 3,000, office
1602, Santiago-Chile, Fax (▇▇-▇) ▇▇▇▇▇▇▇, attention senor ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇; and to (2) ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ y Compania, Abogados, calle Miraflores
numero 178, piso 16, Santiago-Chile, Fax (▇▇-▇) ▇▇▇▇▇▇▇, attention senor ▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇..
Buyers:
-------
To: Scientific Games Chile Limitada, calle Moneda numero 1137, oficina 86, Fax
(▇▇-▇) ▇▇▇ ▇▇▇▇, attention senor ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Riesco. With copy to: (1)
Scientific Games Corporation ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇,
▇▇▇ ▇▇▇▇▇, Fax ▇▇▇-▇▇▇-▇▇▇▇, attention Mr. C. ▇▇▇▇ ▇▇▇▇▇▇, ▇▇.; and (2) ▇▇▇▇▇,
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, LLP, 1230 Peachtree Street, N.E., Suite ▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇,
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, Fax ▇▇▇-▇▇▇-▇▇▇▇, attention ▇▇. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇;
and to (3) Aldunate y Compania calle Moneda numero 1137, piso 9, Santiago-Chile,
Fax (▇▇-▇) ▇▇▇▇▇▇▇, attention senor ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Riesco. Any change with
respect to the representative designated to receive communications or to the
information provided above, will be communicated in the form indicated in this
section. The notices will be deemed effective, in the event of personal
delivery, on the day of the delivery, and in the case of delivery by fax, on the
day of its remittance.
22
Twelfth: ARBITRATION
12.1 Any controversy, dispute or claim that arises among the parties with
regards to this Agreement or its ancillary documents or amendments, whether in
reference to its application, interpretation, performance or lack thereof,
resolution, duration, termination, validity or any other matter related thereto,
will be resolved by arbitration, in accordance with the Regulation of the Center
for Arbitration and Mediation of Santiago, which is backed by the public deed
issued on December 10, 1992 in the Notary of Santiago of Mr. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, modified by public deed issued on August 18, 1995 in the Notary of
Santiago of ▇▇. ▇▇▇▇ ▇▇▇▇▇▇▇▇▇, and that, being known and accepted by the
parties, is understood to be an integral part of this Agreement. The arbitration
shall be conducted in English as well as in Spanish.
12.2 The parties hereby grant an irrevocable special power of attorney to the
Chamber of Commerce of ▇▇▇▇▇▇▇▇ ▇.▇. so that, by written request of any of the
parties, it designate the arbitrator from among the members of the
aforementioned Arbitration and Mediation Center. The arbitrator will be an
attorney who has a mastery of the English language. Each of the parties will
have the optional right to reject, without cause, up to three of the people that
are elected as arbitrators by the Chamber of Commerce of Santiago.
12.3 There will be no recourse against the resolutions of the arbitrator, and
the parties expressly waive any rights thereto. The arbitrator is especially
authorized to resolve all matters related to its competence and/or jurisdiction.
12.4 The fees paid to the arbitrator and the joint expenses of the arbitration
will be paid by the parties in the manner and/or proportion established by the
arbitrator. Each party will pay any other expenses it incurs and its attorneys'
fees.
Thirteenth: APPLICABLE LAW
The present Agreement will be bound by and be interpreted pursuant to the laws
of the Republic of Chile. To that effect, the parties shall be deemed specially
domiciled in the city and municipality of Santiago and subject themselves to the
agreed to arbitral jurisdiction.
Fourteenth: SURVIVAL OF REPRESENTATIONS AND WARRANTIES.
Notwithstanding the general norms of prescription that are binding in the
Republic of Chile, the declarations, warranties and covenants contained in
section eight of this Agreement will survive for a term of four years since the
date of this Agreement.
Fifteenth: DECLARATION AS TO LEGAL CAPACITY AND REPRESENTATIVES
15.1 All and each of the signatories hereto declare that they have sufficient
powers to enter into this Agreement, agree to their terms and stipulations and
assume the rights and obligations included herein for their representatives and
governing bodies.
23
15.2 Without prejudice to the declarations of the preceding paragraph, it is put
on record with respect to the following persons: a) ▇▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ to represent Epicentro S.A., supported by public deed of May 31, 2002
granted in the Notary of Santiago of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇; b) ▇▇. ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ to represent Inversiones y Asesorias Iculpe Ltda., supported
by public deed dated November 26, 2001, granted in the Notary of ▇▇. ▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇; c) Mr. Clifff ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and ▇▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Riesco
representing Scientific Games Chile Limitada, backed by the supporting
disposition of the formation document of this entity, granted on April 26, 2002
in the Notary of Santiago of ▇▇. ▇▇▇▇ ▇▇▇▇▇▇▇ San ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇; and d)
Lastly, ▇▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Riesco to represent Scientific Games Corporation,
backed by special power of attorney granted on April 9, 2002, under number 4223,
in the registers of the Notary of Santiago of ▇▇. ▇▇▇▇ ▇▇▇▇▇▇▇ San ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇. The persons named above do not included themselves by reason of being
known by the Notary. In evidence and having previously read, the persons sign as
follows:
SELLERS:
EPICENTRO S.A.
____________________________________
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
INVERSIONES Y ASESORIAS ICULPE LIMITADA
____________________________________
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
[Signatures continue on following page]
24
BUYER:
SCIENTIFIC GAMES CHILE LIMITADA
____________________________________
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Riesco
____________________________________
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
GUARANTOR:
SCIENTIFIC GAMES CORPORATION
____________________________________
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Riesco
25
